francine: from flashes out and accuses canada and france of unfair practice is as the g7 summit kicks off. a marriage of convenience, the deutsche bank is resurrecting the idea of merging with commerce banks. and america's wiley coyote moment, as former fed chair says the u.s. economy and face a slowdown in 2020. ♪ good morning, this is bloomberg surveillance.

these are your markets, we are seeing a bit of a selloff across the board. story also saw some worse than expected data coming out of germany. european stocks are down a half of a percent. treasuries are pretty steady, looking at the euro-dollar. we will see next from a lot lot of investors and market participants will be the g7. most destructive and difficult g7's in recent history so we will look at what that means for global trade. withg up, we talk trade the chief investment officer of global equities at allianz. a.m. we will0 speak to wolfgang fink, from , and we will ask him about the underlying

strengths and weaknesses of the german economy. are joined by gabriela santos from jpmorgan. let's get straight to bloomberg first word news. says he can trump in vision signing a treaty with kim jong-un next week to formally and the korean war. raised the possibility of inviting cap to the white house and aims to persuade the dictator to give up his inntries and nuclear arsenal exchange for relief from u.s. economic sanctions. >> i would love to say it would happen, they have to denuclearize. it would not be acceptable otherwise. ,e cannot take sanctions off they are extraordinarily powerful. has secured a $50 billion standby arrangement from the imf to help restore investor confidence. that's after the government takes aim at inflation and widening the deficit. the rescue program is the

largest ever in imf history, though it will depend on how much the government tax -- taps. it comes amidst a emerging market shakeup that is affecting economies around the world and has forged central banks to hike interest rates. deutsche bank's chairman is said to have spoken with top shareholders about merging with a rival commerce bank. they discussed a combination of the two lenders with investors in recent months. this comes as germany's largest lender struggles with its turnaround plan. a spokesman declined to comment. day,l news, 24 hours a thousands of journalists, i and taylor riggs, this is bloomberg. francine: donald trump has lashed out at france and canada

ahead of the meeting in quebec, accusing them of unfair trade practices. that sets the tone for what is likely to be the most acrimonious summit in years, with trump facing off with other heads of state including issues like steel tariffs, iran, and climate change. the former fed chair says the u.s. economy could face a challenging slowdown as the administrations fiscal stimulus slows down. joining us now are our guests. . it is terrific news. if you look at the summit, the meeting, equities, where do you see a correction coming from? well, the global economy is in pretty good shape.

good expansion, growth coming through. the underlying fundamentals are pretty solid, good interest rates, bond yields staying low, so it will be supportive. but clearly, geopolitics are quite a big deal. we saw most recently, italy's addition to things we need to worry about, and a broad range of things that could come from left field. we need to remind ourselves the fundamentals are in good shape. francine: has the world economy heat -- peaked? well, they have, does you aren't going to get a repeat of the u.s. tax reform your but the biggest risk is equity and liquidity. you also have that against a backdrop of higher debt levels that you had post financial crisis. so i think the corporate debt

and increased bankruptcy is what we need to look at for something which could come through. francine: that would be where? u.s. or china? lucy: both. at u.s. debt levels, they have been rising very gradually to higher levels they were in precrisis. francine: so we need central-bank policy or a higher dollar? mark: i think a higher dollar could do that. that could be a catalyst for increased delinquencies. but i don't think we will see interest rates rise aggressively. lucy is right, the world is very indebted, inflation is difficult to see. i think interest will stay low. francine: what did you make of those comments? i think everybody knows the cartoon, but if you don't, he

was chasing the road runner and would fall off the edge of a cliff. is there a chance of a recession in the u.s.? lucy: that is not our current expectations. where you have evaluations that and you areel removing the relative support you have had, then clearly you are more vulnerable to any slowdown. and that is what he means. francine: do you see it as risk? i don't happen to believe the u.s. economy needed that stimulus. move from the u.s. administration. towardsloyment falls 3.5% and the economy grows, it wouldn't have felt to me like the time to introduce additional stimulus.

iat is going to run off, but wouldn't say that would be followed by a recession. francine: what happens with inflation? if we have a full-blown trade war, would be inflationary or deflationary? inflation is, at the moment, you are seeing some cyclical pressure from low unemployment and commodity prices. at the same time, you have long-term structural pressure, coming from debt and technology. we are not sure what the impact is, but it is generally pretty deflationary. that is the back shop, quite a mix. that, i think, is what markets are finding relatively difficult to get their heads around. i think that is why you are

seeing a lot of trade. francine: are we reaching volatility in these markets? lucy: that is right. i think markets will be skittish as we move into the summer. history suggests we must be getting more concerned as the u.s. trends towards full improvement -- employment. said, there are a lot of deflationary pressures out there. it is not a big risk on the horizon, but we have to remain vigilant. francine: so what does it mean for both of your investment strategies? do you hedge, protect yourself with gold? mark: we have not done that. we have taken money off the table in credit, also because of the leverage we have seen. corporate profits continue to come through.

equity valuations appear attractive, but we are less risky than we were because of the geopolitical backdrop. theirfinancials in against interest rates rising. francine: when you talk about political risk, has the markets been too complacent? we follow foreign policy day in and day out, but the market does not know how to price it. mark: looking at history, markets have an able to get through the geopolitical tensions we have seen. we have gotten through an awful lot of bad news, and markets have generally made progress. i think we need to keep the current situation in that context. but going back to italy, were we a continued move looking

at leaving the eurozone, that would be something we have to think about. francine: i made an italy chart. it is an italy versus spain chart. stop,s a italian underperforming with spanish peers, meaning it is widening the discount to the biggest as we try to figure out what italian leadership is doing. does it become attractive or would you stay away? mark: i think it does become attractive. i realize i've talking to an italian, but i see the concept as inconceivable. when that gets priced in, that is something we would find investable. francine: do you agree? yet, this is clearly a

decent by opportunity. francine: thank you both for joining us. both stay with us. stay with surveillance, plenty coming up, including deutsche bank talking about merger deals with rival commerce banks. we will be live in frankfurt with the details. and as we approach next week's meetings in latvia, we look at think the bank will end its asset program. this is bloomberg. ♪

♪ francine: this is bloomberg

surveillance. let's get straight to the bloomberg business flash in new york. bt ceo is leaving almost five years into his term at the helm of the former u.k. phone monopoly after they failed to win over investors. gavin patterson will step down and the board has stated a search to look for his replacement. they expect to have a successor in place, and he will continue until that time. china has raised $14,000 as they expand and develop new technology. the funding makes it the largest syntax firm. alibaba hase of paying service

and controls a large fund as it moves from areas into consumer lending and credit scoring. their --strial in internet in their shanghai debut has failed ambitions of helping his company a merge from under apple's waiting. the stock rose by 44 percent, conferring a market value of more than $60 billion. mostompany is now the valuable tech companies listed in shanghai or shenzhen. sao tome has one the stock approval and has learned the smartphone maker has passed their hearing and starts -- plans to start meeting investor demand. broadcom has reaffirmed the revenue forecast and reported profits that beat estimates. revenue will says

be about $5.5 billion. indicates robust sales of chips used in data center networks are helping to make up for lackluster demand in the smartphone business. that is your bloomberg business flash, i am taylor riggs. francine: thank you so much. the ecb is ready to end their , that isng program according to a bloomberg survey of economists. see theof respondents central bank setting an end date for asset purchases after next week's meeting, with 46% saying it will happen in july. analysts are confident by will phase out this year, so how should investors be positioning themselves? we are back with our guests. policy, you look at ecb can they afford to give an end

given the political turmoil in periphery europe and the week numbers from europe. do they do it because they cannot go on with the program? there is that, and their desire to get back to a normal pricing of risk. they have to balance that against the fragility of the economy. ,conomic news has been weaker and the political situation is more difficult. that's why he will be an interesting meeting. francine: do they have a case to start normalizing? mark: they do, and germany was certainly think that. growth has slowed in europe, and is still wearing nicely. the euro zone economy is in a much stronger position than it was. looking at it from afar, it will

be difficult to surpass the level of stimulus they are getting. francine: but germany's production i expect to be fell in april and we have had or news out of germany. if there is a trade war and it extends to autos, germany suffers more than any other country. ecb's to staynot input? mark: we will see how that trend involves. in germany continues to be week, we will see. the backdrop remains supportive for german growth, and i think it is difficult to justify the level of stimulus we are experiencing. francine: when it comes to equities, i do have a chart. overall, looking at european equities, are they good on valuation? lucy: they are more attractive than u.s. because the tech has continued to power ahead.

continued, plus, financials within europe underperforming because of italy. so you are now seeing more apparent value in europe then the u.s.. we do get to a stabilization of the italian situation, that would suggest we have seen the worst. plus, if you see tech beginning to fall back, i would have thought you would see the biggest divergence on that basis. mark: i agree, european equities look attractive. francine: we haven't talked about brexit. should ecb look at brexit? brexit is going to impact europe and the u.k., much less for europe than the u.k.. issue, but not something ecb is thinking about. i will the bank of england to think about that. francine: what does bank of

england do from here? there is a possible leadership challenge, a bill coming up. and we don't know whether the italian situation makes brussels take a hard stance. well, the u.k. economy has recovered a bit but is still week in global terms. and it can't really take interest rates rising because of the level of debt. much,lly can't take too so i don't think there's much they can do, particularly with brexit. francine: what would you buy in the u.k. markets? mark: that's a real challenge, because the u.k. stock market is not the economy. valuations are beginning to look quite interesting, because you can get a lot of great international businesses in the u.k.. i think there will be continued

pressure on the u.k., brexit will be ongoing headwind. absolutely not in brussels interest to make breakfast and easy experience. it would raise the risk of eurozone constituents where there is some fragility. while britain can leave the european union, and it will be a bad experience, we can leave without causing a financial accident. but you can't say that about a eurozone constituent, i think that would be a bad thing. francine: all right, mark and lucy stay with us. africa,a look at south and we did extend the slump after reaching 13 per dollar. we have several shirts. -- charts. certainly, that is one of the stories of the day. we look at g7, we look at the fed hikes, and what that means

for emerging markets. latestbecame the emerging-market central bank to deliver a surprise rate increase as the currency sank. in the meantime, let's get back to financials, once again, talk about possible consolidation. deutsche bank's chairman has spoke with shareholders about a possible merger, and bloomberg has learned that the proposal was discussed with investors and german government officials, though there are currently no formal discussions between the two banks. the obstacle will be deutsche bank's record low share prices. bloomberg now is our editor, and still with us are our guests. great to have you as always, i think we get you in here like every two days. does this make sense? like too weak banks

don't make a stronger bank. >> exactly. and we don't have any evidence of formal discussions between the or within the countries. -- companies. a consolidation in the home , but itcould yield would involve significant cost cuts. would probablyn need that to come with it. this possibled merger get the blessing from the german politicians? we will have to see how things unfold. clearly, the middle shine market, what you are referring to, is a very attractive one. it is gaining increasing

interest from outside germany, so this is the point where germans might look at the home market and think maybe this is a time to think about how we want to position. i know this is complete speculation and is very , we are supposed to see this on camera, but this is the beauty of life to the. are you expecting a wave of consolidation amongst european banks? lucy: yeah, commercial logic is consolidation, but then there is the politics of job losses, branch losses. in germany, that is a major issue. it makes sense. francine: does deutsche bank have to be in a stronger position to pull that off? it's just speculation, but they have to just be a better bank? elisa: yes, two banks are in the

midst of restructuring. so yes, it would be helpful if one of both would be stronger. apologies for falling apart. [laughter] police uphold all nighter's getting this news, so it's understandable. up next, more about the german banking sector and will be joined by goldman sachs out of germany and looking at the trade war impact on currency. looking at rand, the turkish lira, this is bloomberg.

♪ francine: this is bloomberg surveillance. let's check in on tictoc.

telecom giant shakes things up after securing a reprieve from the united states. former fed chairman ben bernanke he says the u.s. economy faces a wily coyote moment in 2020. and the most read story on the bloomberg terminal, find out why a black rocks biggest hedge fund needs talent as she officers exit. -- chief officers exit. and up top, markets are focused on today's g7 war of words. plenty more on our top stories, but that is a little glimpse of the bloomberg universe let's get state -- straight to first word news. >> president trump says he can in vision signing a treaty with kim jong-un to formally end the korean war. he also raised the possibility of inviting him to the white house. trump aims to persuade the

dictator to denuclearize in a strange from relief from economic sanctions. >> i would love to say it could happen, they have to denuclearize, if they don't, that would be unacceptable. we cannot take sanctions off, they are powerful. argentina has secured a $50 billion standby arrangement from the imf. that is as the government takes aim at double-digit inflation and a white thing that's widening deficits. the program, which would run for 36 months, is the largest in imf , and will depend on the government. it comes amidst an emerging market selloff shaking economies around the world, including brazil, turkey, indonesia, and mexico, and calls for central banks to hike rates.

deutsche bank chairman is said to have spoken with shareholders about merging with rival commerce banks. they have discussed a combination of two lenders, with investors and key german officials in recent months. that comes as deutsche bank struggles with its turnaround plan and a spokesman declined to comment. has moved economy past a rough stretch that ended a two-year run of growth, with forecasts pointing to renewed expansion. gross domestic products rank 6/10 of 1% in the first quarter, as a weaker reading of private consumption offset a strong one for capital. that's missed the median forecast of economists. while growth is poised to resume, it is expected to be slower than the 1.7 achieved in 2017. chinese imports surged last month while exports held up, suggesting both domestic and international demand to shrug

off uncertainty of trade friction with the u.s.. 12.6% in may, faster than forecasts. surplus of 24ade -- $24.9 billion billion. i am taylor riggs, this is bloomberg. francine: thank you so much, taylor. a slew of banks are calling for a return to emerging markets investors are searching for chief -- chief assets amidst concerns of a rising dollar. securedd, argentina has a $50 billion arrangement from the imf to help restore investor confidence, so what is in our emerging markets? -- are ourus on

guests. used to talk about structural reforms, now it is the fact they've issued a lot of debt. there has been a lot of investment into these emerging clearly investors have been reflected about markets, given how well markets have done. i think, you know, there is still good value, particularly in the asian markets. where they have had reformed economies and are less reliant on external financing. but some countries are relying on external financing, and the current backup is challenging. francine: asia, in india or indonesia, bonsai, currency side, equities? mark: i think all our attractive.

but you have to take a long-term view, accommodate volatility. if you say a long-term view, there is value emerging in these markets. francine: do you agree? lucy: completely. related, there is still structural growth in many industries. that will keep some extra growth growing their, whereas laugh and is much more affected. -- latin america is much more affected. we went from a goldilocks scenario to pick and choose. mark: well it is not a homogenous asset class, latin america and asia are very different. you have to be prepared to write out a volatile backdrop. francine: what would you buy, lucy? said, or would you be more selective in currencies?

equity's point of view, it is finding the right companies and the right industry. happen so many of those to be in latin, in particular. francine: what would you do in columbia, for example? they have benefited from a crude price. so do you look at countries depending on the price of oil, or focus on the kind of valuation compared to how much dollar-denominated debt? lucy: just find where the companies are. francine: domestic companies? for example, in india, or their domestic companies you are looking for? we won companies that have the ability to compete globally. if they are domestic, that's fine. of the day, you want

to find companies which could compete on a global basis. francine: how much do you look at equities? if we do a high chart of your favorite investment strategy, how much do you have in bonds as opposed to equities? mark: it depends on the benchmark. overweight equities, underweight fixed credits would be the overview for our assets. francine: currencies? mark: we don't take a big view on currencies. ishappen to think the dollar overvalued and think the fiscal stimulus of the u.s. is enjoying will lead to an expansion of budget. that has historically been negative for the dollar, as well as purchasing power parity. the dollar looks a bit overvalued, i think it will ease back. but we generally don't take currency positions. francine: do you think the dollar is overvalued?

is it something you don't look at and general? lucy: we don't. francine: i want to talk about tech, are they overvalued, or are there companies like the chipmakers or the supply chain that we need to be looking at. technology, overall, has been the leader and for the last three years. they have really come back from the facebook cambridge analytical concerns. they are looking, despite that, not that expensive. they are only at 15-20% premium in the market that is hiding some areas of over a valuation. stuff that has a trend behind it, fiber, cloud, it is looking pretty overvalued.

but for the sector as a whole, not so. why think there are reasons it could still continue, but in the short-term, a great run. francine: do you look at tech from a valuation now point of view, or a longer-term? jobs, peopleew displaced, driverless cars, ai. mark: we do look at tech. we are living through and how techimes performs is going to be very important for the markets, generally. and the technology internet has enabled companies to establish powerful global competitive advantages in a way that is unprecedented. companies are generating huge amounts of cash as the

transformation in the way business is done grows throughout the world. i would say the key risks, from a regulatory intervention, certainly for the big names we are familiar with, there has to be risk at some stage. just because of monopolistic backdrops. that would be my key concern, but the business backup is fantastically. -- powerful. francine: thank you both for joining us. goldman sachs alumni have a long history of taking senior positions in government on both sides of the atlantic. is the the most recent former cohead of the banks of german operations, who is now at germany's deputy finance minister. get over to the goldman sachs financial conference in frankfurt. matt, over to you. i am here with wolfgang, the

ceo of goldman sachs germany and austria. this is your 22nd annual financial conference in frankfurt. let me start by asking about consolidation. overnights,ur story but also over the past couple of weeks, there have been stories about commerce banks. you name it, there has been a lot more news about consolidation. do you feel this market will make it happen? first of all, good to be back here. in terms of your question, we have seen talk of that's all over europe. we have heard some policymakers saying it is necessary for european banks. conditions that, the , like the european banking union, and second the probability of those banks in

, cleaning up the balance sheets, getting costs under control, is also a topic which is mentioned as a prerequisite. as we work through that, i think we get to a point where we will see more consolidation. is coming, but we have some time to go before it is global and feasible. clearly, the deutsche bank commerce bank is a long way off. there are many hurdles. market seem german to you too small to support both of these banks? i think you have got over 100 at this conference. it is an overbank market, isn't it? in it selfhe market needs strong banks. this is a justified by what you see in the general economy, a

strong german economy. i would not say the market is too small, it is also profitable, if you look through it. i think the question is more about costs, costs of doing business, and how you can get two more profitability. part of the solution is a merger, you have to have the european scope in mind and think about how you wrote these businesses, consolidate market europeannd get to a rather than german only asset. matt: how far are we from a german banking union? your predecessor wes to join governments, you are in brussels often. do you the feeling it is some way off? again, a banking union is being worked on very intensively. matt: i remember when we were

supposed to have it done by june. wolfgang: we are getting there. there is commitment from all sides to advance, but there are open questions which are quite substantial. questions and the risks involved in such a scheme, i think it is some way off. are gettingcts, we closer, others will take time and work. matt: has italy thrown a wrench in the works? justang: i think it has made it clear that we needed and a common scheme, and solutions. we cannot work from crisis to crisis, we have to get a scheme in place. looks like the ecb will go ahead and talk about the end of quantitative easing, and we had a lot of volatility. i wonder how your business has been? business has been

very good, and steadily very good. it is more diverse than it used to be, and as markets move, we take our market share their. we have had a good year so far, a strong year. , these various businesses on the macro side and macro moves have clearly been interesting for us from a commercial perspective. and there are long-term banking assets and manage businesses which have progressed very well. matt: we were talking with markets earlier. the consumer facing business kicking off in the u.k., is there room in the german market? wolfgang: i think so. there is room in europe in general, but we want to be disciplined and cautious, step-by-step. but this market is clearly very interesting. time,thank you for your ceo of goldman sachs in germany and austria. francine, back to you. francine: great work on the

grounds, matt miller at the goldman sachs financial conference. up next, the u.k. softens its role, will be change be enough to tempt the saudi oil giants to move to london? we discuss that next. this is bloomberg. ♪

♪ economics, finance, politics, this is bloomberg surveillance. customer, a bloomberg you log on to tv right now, and this is how you want us. once you are there, you can send us questions for our guests. i am doing it live, as we speak. you click underneath the screen and can ask some questions directly to lucy and mark. let's get straight to the bloomberg business flash. isdeutsche bank's chairman said to have spoken with top shareholders about merging with rival commerzbank. they discussed a combination of lenders with investors and key government officials, and comes as deutsche bank struggles with

its turnaround plan. a spokesman declined to comment. bt's ceo is leaving five years into his term after a strategy reset last month failed to win over investors. gavin patterson will step down later this year, and they have started a search to identify his replacement. the company expects a successor in place during the second half, and patterson will continue until that time. china's ant financial has raised $14 billion in its latest funding round as it accelerates and develop new technology. the funding makes it's the world's largest sin tech firm. alibaba is already the large -- the largest firm in asia and moves from consumer lending to

credit scoring. foxconn has scored a thumbs-up it is shanghai debut. they have helped the company emerged from under apple's way, the stock rose from the maximum 44%, confirming a market value of $60 billion. the company is now we must not able tech company listed in shanghai where shenzhen. xiao mei has won hong kong approval for their initial public offering, and has learned the smart phone maker past its listing hearing yesterday, and plans to start engaging investor demand in the next few days. it would be the first listing with weighted of voting rights. that's your bloomberg business flash. francine: the u.k. is pressing to attract state-controlled companies like saudi aramco.

they said they would introduce a new category of premium listing rules, designed for commercial companies in full by a sovereign country. the will change would take effect next month. for more on all of this, we are by a bloomberg editor, and our guests are still with us. thank you for sticking around, how big of a deal is this? it could, if the ipo happens. would say is it is coming at quite a big cost, and we have seen the reaction already. we knew it was not wildly popular in the city, and today the statement was pretty of the severus. to one line, which i'm going paraphrase, is we have onerous rules but not for those who practice it. which i think is spot on. they have a, if

sovereign backed company in london, shouldn't they follow the rules of everyone else? some are saying it is disappointing, that it fails to for whya justification these categories are different than the rest. but how does saudi aramco take it? stuart: i would imagine they are quite pleased. they have not made a decision on whether they will list at all. they have not made a decision on whether they will list at all. maybe not the best markets to place in right now, we will see if it actually happens. it gives them an opportunity, optionality, but that decision has been taken. francine: what do you make of this? the ipo of saudi aramco will be a high-profile, lucrative experience for whatever capital market enjoys

that listing. we appear to be in a race with new york. and the fca is trying to encourage the listing here. i think it is all about how you protect minority shareholder rights. just to ensure that minority shareholders will be protected. we have got terrific governance in the u.k. despite headlines, globally, good corporate confidence. the asset management and specifically wants to make sure that is maintained. lucy: exactly right. short-term commercial expediency is a big deal, but at the same time, long-term reputation is important. missine: are the rules to this company in the u.s. more stringent or the they choose london because of the unpredictability of the current white house? stuart: there is an element of that, and the problems of the

9/11 lawsuits. moving as you start assets in the u.s., you have the potential of opening up to a liability for their. clearly, that has to be a factor. francine: do we have an idea of a timeline of when they would list international? stuart: short answer is no. the indication we have had is 2019, but then again, we got an indication it would be this year. to be fair, they don't have to do it, clearly there is an aspiration, but it's not like they are absolutely forced. it -- can be saudi stock exchange take the ipo on its own? and is there a target for an oil price that they would feel more comfortable listing abroad? think it would struggle to get away 5% of the company. rightt know what the number is, but it is a fairly close market, and it will swap everything else on that basis,

you want a small percent. we are going to have to see oil prices for more than $100, at least. francine: thank you for joining stuart, mark, and lucy. bloomberg surveillance continues in the next hour, tom keene joins me in new york. will be speaking to a chief investment officer. these are your markets, there seems to be more of a risk. on g7, that's the main focus, and then the meetings on south korea.

francine: trump lashes out. the u.s. president accuses

canada and france of unfair trade practices at the g7 summit in quebec. is said bank's chairman to resurrect the idea of merging with commerzbank. will the deal snap the lender out of its self-professed vicious circle. former fed chair ben bernanke says the u.s. economy could face a slow down in 2020 as trumps stimulus fades. this is "bloomberg surveillance." we have to talk about the g7. much worse than expected economic data out of germany. and the wily e coyote moment. it was a cartoon where you see a cartoon a -- a coyote running after a road runner and he falls on his back. tom: we will see which warner bros. character comes to the rescue. this g7 meeting is front and center.

it is extraordinary what has gone on in the last 24 hours. i have no idea what we will see this morning -- saturday morning if the president stays around into saturday evening. francine: i think he is leaving early to attend the summit with korea. to be the is said most acrimonious world summit in years. face off trump will against six other leaders when the group of seven meets in kobach. european -- meets in the back -- meets in quebec. presidentt -- predicts next week's summit with kim jong-un will be a great success. he says the two may sign a treaty formerly ending the korean war. president raise the possibility of inviting kim jong-un to the white house. if the summit does not go well, president trump says he is a list of 300 more sanctions to impose on north korea.

has come through with the biggest rescue program in its history for argentina. it is a $50 billion standby arrangement that will run for three years. the argentine government is dying to narrow the -- is trying to narrow the budget deficit. a global selloff has forced central banks to raise interest rates. it is a deal that would reshape the face of banking in germany. deutsche bank's chairman has spoken with shareholders about arrival -- a merger with rival commerzbank. there are no formal talks between the banks right now. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am taylor riggs. this is bloomberg. equities, bonds, currencies, commodities right

now. futures pullback, those are s&p futures. any number of reasons for that. francine mentioned the german data. vix 13.17. that is a big move. is 110 and comes in strong. canada 1.30. brazilian riau having a tough day of it. european stocks seemed to be falling and that is to do with the disappointing german data. -- andsee south african that reminds investors of the continuing danger in the emerging markets. the 10 year yield tumbled as much as nine basis points. the dollar edging higher.

the next step on the docket is the g7 of -- the g7, where trade disputes show a divide between the u.s. and longtime allies. it is all about the accra motif between the u.s. -- the acrimony between the u.s. president and donald trumprts, lashing out at emmanuel macron and justin trudeau. the french president responded that no head of state is eternal. joining us from quebec is our managing editor for european and african politics, andrew barden. how ugly will it get? said, there are a lot of worrying signs. emmanuel macron, who was the trump whisperer has taken his gloves often been very openly

critical of trump, saying he would not sign a declaration that was not in their interest. , more of a strain, but she said there would be a measured response. and justin trudeau has been increasingly critical of the u.s. , who is note trump looking like he will be a good guest in the sense that he is firing missiles left right and center on the eve of coming up here when you thought perhaps there may have been an opportunity for everybody to take the heat out of this and reach an agreement, it is the opposite that is happening. everybody is being aggressive and staking their ground. there is a lot of worrying signs ahead of this and that is being reflected in the markets today. what does it mean? when the g7 got along, we asked if the g7 was relevant.

is it more or less relevant now that it is tumultuous? andrew: i think it would be more relevant now. when everyone gets along it is more of a photo op and now you have for the first time in years some real meat on this. what we will be looking to see is to parse the statement. we were talking yesterday with the director of the g7 research group nt said the measure of success is is the world a better place because of the summit. and as the world a worse place because of the summit -- that happened in 1981 at the start of the cold war -- you're on the wrong track. we will have a summit that does not have a concluding statement, or all the countries come out and contradict each other as soon as things wrap up, we will be looking carefully to see what sort of agreement they can reach in the 24 hours. if anything -- and by the way,

at 10:30leaving early, on saturday morning, so he is only giving one day to see if they can make any progress on trade. all the signs are they may be moving in the opposite directions. meteorite hit 350 million years ago and the meteorite of donald trump has come in as well. this is the most historic g7 meeting. what do germany and france want out of this? what is the distinction, the fierceness of emmanuel macron and angela merkel? climate, allrism, of these things you can leave to one side. this is trade -- can we avoid of global trade war? what germany and france will want is to get the u.s. to sign on the paper, have some sort of language that would have the

u.s. commit to a rules-based multilateral order or say we agree that certain areas are unfair, but to at least get a positive signal. tom: you've been doing this for years. where are we going to go with the next g20 meeting or wherever the next g7 is as well? will the shatter the process through the trump administration? andrew: it could. before the meeting we had all the speculation of whether trump would show up. the fact that we are even in a situation where we are wondering if the vice president might represent instead of the president is very reflective of where we are. the g20 is later this year in argentina. we will have to see. it all starts with the next 24 hours. can we get the u.s. to sign up and at least change the correct -- the trajectory. now, it does not look like

-- it looks like everybody is very worried that the g7 is not going to be able to even reach that objective. andrew, thank you for much as always. andrew barden speaking to us from quebec. we will have much more from andrew throughout the day. let me kick off with you. how difficult is it for the markets to see the risks? difficult but i think you have to step back and think about what this is about. it looks to me that we have a pattern with the current white -- escalatinging some issues to avoid talking about other issues.

i think this might be one of them. the second thing is putting things in perspective. if you stay with a $50 billion kind of package, there is not much of an impact. but if you include all the retaliation issues and what the market impact might be, $475 billion is about 20% of total imports. thinkst thing i like to about is new politics and new diplomacy. i think in the same way we have television creating new politics in the 60's, you have the digital age creating new -- wecs, and we assume have seen the effects of that in italy and spain and the arab spring and we see the effects of that in the u.s. right now. we need to let the dust settle and i think it would provide an opportunity. annalisa, how much of

this is priced into the market? annalisa: i think the market shows a lot of volatility. global trade has been one of the of growth around over the course of last year. , ithis becomes an issue could lead to further volatility we do not anticipate a full trade war but what we see at the moment is what we have seen in france in the last few months is he comes out with threats to get a concession. he is not still at the point where he is going to concede and try to get some concession but hopefully the strategy will continue in the next few months.

the fact that he needs to face the coincidence of france and germany could be a tough player against him. have all these distractions, g7 this and g7 that, and we are enjoying dow 25,000. why are we seeing this? part of this is the new style of creating escalating issues to get something. that is the new negotiation style. ithink the market is saying know the pattern, so when is it getting real? the second thing is money is still cheap, rates are still row. you have good growth in companies. if you put that noise apart, actually, your markets and companies that can deliver good profits and good performance.

it is distinguishing between the noise and fundamentals. that means you have to be more tactical even if you have a long-term time horizon to make sure your portfolios are structured with local products and be very careful with any emerging markets in particular given the rising rate environment with the tensions we are seeing in trade and currency with where you put your bats. francine: thank you both for joining us. annalisa and virginie maisonneuve of eastspring investments. coming up in the next hour, a jp morgan management as it strategist. quite a lotyork -- of volatility. this is bloomberg. ♪

taylor: this is bloomberg surveillance. let's get your bloomberg business flash. shoredof apple foxconn -- stored. that gives foxconn a market value of $61 billion. it is the largest tech company listed in china. a billionaire wants foxconn to move beyond cranking out iphones. there is a report apple -- there will be fewer iphones this year. told suppliers to expect a 20% drop in component orders for phones debuting in the second half. some reports say apple is quite conservative when it comes to ordering parts. the parta shakeup at of a former u.k. phone monopoly

that has been struggling. the ceo will step down later this year after a strategy reset failed to win over investors. patterson has thousands of jobs in overhaul management. 36% sinceas fallen last august. that is your bloomberg business flash. starede: deutsche bank -- chairman is said to have spoken with shareholders about merging with commerzbank. understands he discussed the combination with investors. joining us is our bloomberg anchor matt miller. you know german institutions like no other. just the chairman discussing with shareholders. we do not know whether discussions actually started, right?

matt: thereof not been discussions between the two banks. it is just the chairman of deutsche bank, he has presided over the last three ceo changes. major been talking to the shareholders in his bank as well as government officials about the possibility of this plan. it is a plan we have been hearing about for a couple of years, so it is nothing new, but it could be one more possibility for the future of this bank as the shares tumbled to a historic low. belowe seen them trading 9.20 euros. , as well as commerzbank shares it does not look like investors are excited about this plan. how much stronger does deutsche bank have to be to do a merger successfully? both banks are in the

middle of a turnaround plan. it is not just deutsche bank. they are trying to cut 7000 jobs because germany is so over banked. every corner has a deutsche bank on one side of the street and a commerzbank on the other side. if they came together that would mean headcount reduction for a new bank and no jobs in banking going forward for a decade great government officials are probably not happy about the idea right now. labor unions are definitely not happy about the idea for the future. it could mean great synergies for investors and for the future of one german giant which we know is important in berlin. are the chairman and the ceo on the same page? is there any indication he has his own remit anywhere near the same page?

matthew: there is no indication of that. we do not know what they have been discussing. know the chairman has been on a different page than ceos in the past. has presided over the demolition of this once great on trading powerhouse. it has shrunk down to nothing. they cannot keep revenues up. they cannot get costs down and now their funding costs will rise after s&p cut their credit rating. it is a disaster is seen for this chairman. francine: thanks so much. .loombergs matt miller annalisa and with burgeoning mays a new -- and virginie maisonneuve. this is bloomberg. ♪

we: "bloomberg surveillance" are looking at -- kevin cirilli is in washington and will go to singapore this weekend. annalisauity markets, and virginie maisonneuve with eastspring investors. annalisa, let me go to you. as emmanuelonomy is macron angela merkel travel to quebec. where is the eu economy?

we have a number of quarters where the economy has run well above potential -- it does not mean the economy is going to collapse anytime soon. we have just reached full speed and at some point this one needs to be more sustainable. risks around the world like some negative impact from all the political events we have seen recently in italy that could have a negative impact, at least on a temporary basis on clearly arebut we still on the road of closing the gaps. francine: we are getting some live picture of vladimir putin

meeting with his chinese counterpart for the first time this year. president. chinese the iran nuclear deal expected to dominate the talks. this is a meeting that is being closely watched by markets to get a feel of the china involvement with any solutions with korea. what that means -- are the marking -- are the markets looking at it, yes. i do not know how much is trump -- is factored in. we also know the president is leaving early. this is bloomberg. ♪

4 francine: "bloomberg surveillance." let's check in on what's training.

we shake things up after securing a reprieve from the united states. we'll get the latest on that story at bloomberg.com. ben better than achey ben better than aingey says we face a wile e.i. coyotee moment. then up top, markets focused on today's g-7 as a war of words develops. let's get to the bloomberg first word news in new york with taylor rigs. taylor: president trump will face a back lash over his trade policies at the g-7 summit in quebec but won't be around for the end of the meeting and he'll leave canada for singapore where he'll meet next week with kim jong-un. he will have 24 hours to meet

with allies. the european union says it has low expectations. former federal reserve chairman warns the u.s. economy could face a challenging slowdown before the end of the president trump's first term. the powerful economic stimulus will fade in two years and then, quote, wile e. coyotee will fall off the cliff. texas has a state bid to convince the judge the care act is unconstitutional and is symbolic and any substantive action in the lawsuit will take months. on 24 hours, powered by more than 2,700 journalists and analysts in more than 120 countries. i'm taylor rigs, this is bloomberg. tom and francine?

francine: there's a joint news conference with vladimir putin and ping. if ever there was a press conference that could make markets move this is probably it because if you look at the peace efforts with the two koreas and the fact president trump is going to the summit in singapore in a couple days, then these are the two kingmakers, russia and china have a big influence on north korea and its leader. tom: it's been a fractious relationship since the 1950's and tension in the 1960's including gunfire across the border. what i find interesting is this dovetail of g-2 of the asian world with a fractious g-6 plus one in quebec now, you have to believe both of them will be students of quebec here in the next 48 hours. francine: and that's something that again has the potential to

move markets and we'll keep a very close eye on. investors are watching several risks in the coming days including the policy meetings of the world's three biggest central banks. the co-founder and co-chief executive of k.k.r. george roberts has an upbeat outlook and spoke with bloomberg's executive editor jason kelly. >> i think there's lots of room still to go. i don't think it's been felt yet with this tax change and cut has done. i had a breakfast with a friend of mine today that had a lot of offshore companies in cash and is bringing it all back and not only that he wasn't eligible in those countries because they were short to get the r&d credits you can get today and he's turning that money around to grow his business and expand it and everything else and think that's having a big impact. i think the relaxation in a lot

of rules and restrictions on business and the way that the atmosphere has changed in the country with respect to business is having a positive impact on him. i don't see any credit bubbles out there. the banks are all acting pretty responsibly and need to have a job to get a mortgage today. so a lot of the financial angst we've had in the past has been created by bubbles in real estate. that's not there. i think earnings will be pretty strong. u.s. companies. it's not just the u.s., in our portfolio, europe is growing faster than the u.s. so, you know, there's a lot of uncertainty, a lot of noise in the world. that's always going to be the case in the global economy that we have. but the underlying fundamentals are pretty good. barring any geopolitical

issues, i think what will eventually slow our economy down is rising interest rates, which is typically slows economies down and slows down housing and slows down automobiles, durables, everything else. i've even's seen inflation raise its ugly head yet and in many cases the company is pretty efficient. so you know, i'm not molly annish about it but i think this has a ways to go. >> one last question for you, last year you and your cousin helped create this firm, as you said, 2 years ago, name two co-presidents to help run the firm. how is that going so far? you're still in charge but have another generation coming up. >> i feel great about it. first of all, joe and scott have been in the firm over 20

something years. you know, they were babies when they came to work here. you know, joe has been responsible for building out our asian franchise for us which is pretty unique and scott really has build out everything other than private equity we have. they are good friends, their wives are friend and children know each other and go to the same school. i think they have the right chemistry to make this work and be successful. and at least in our business, if you can get two people working together, it's not easy but if you can do that, it's much more powerful than one. in terms of my life, it's pretty nice right now. so, you know, i focus on three things, that's our people, that's our performance and that's our strategy. and now anything that doesn't fit there, i say call joe and scott so life's pretty good. francine: they were at bear

stearns a few years ago and you heard the history with our jason kelly. mr. roberts is the west coast of k.k.r. francine, he's been hugely involved in california philanthropy and just one idea, the san francisco ballet he basically resurrected or even invented but george roberts, always interesting and really interesting to see the generational change. it's the toughest thing to do in private equity and entrepreneurial finance to get on to the next generation. francine: it was a good interview because he focused on his view on the u.s. economy and jason got him to talk about some of the financials and believed for the moment they're in a good place but he says banks are acting responsibly and he talks about the future leadership of course at k.k.r. as you say and regulation. tom: very good. we'll continue. lots going on right now and of course we're looking at deutsche bank and commerce bank through all of "surveillance" and there's a modest meeting

going on today in quebec and maybe they'll mention the washington capitals taking the stanley cup last night and we'll continue with our guests as well. bloomberg radio, your morning moscow. se to close in stay with us. this is bloomberg. ♪

francine: this is "bloomberg surveillance." morgan stanley is among a slew of banks calling for a return to emerging markets and comes as argentina secured a $50 billion stand by arrangement from the i.m.f. to help restore confidence. joining us is a managing editor

justin kerrigan is with us from the london desk with other guests. justin, thank you. let's start but. why do we have this broad mood today? justin: it's a big question because we have a backdrop of the central banks around the world taking a punch bowl away so a lot of people looking to see how this will impact on some of the weaker emerging markets. we saw a few weeks ago in argentina play out again in turkey and we saw of course the big sell-off in the real in the past three days in brazil and now what we're seeing is the same kind of phenomenon kicking in in south africa. a lot of this is about the fed and the possibility of the e.c.b. next week will announce after the first stages, the first steps towards removing stimulus.

francine: when you look at what some of the central banks took in terms of steps to avert the currency weakening further, is there anyone left? justin: yes, there are. what we're seeing with south africa and brazil and probably i would imagine we'll see the same kind of thing happening today is this sense among investors that they want the central banks to take action to stem the sell-off of these currencies but what we've seen in brazil and particularly south africa are central banks are reluctant to do that because they want to see first, at least this is what we're hearing, they want to see how it impacts the inflationary picture and won't take the currency sell-off as you like their rationale for lifting rates. south africa had this terrible g.d.p. print, the worst in nine years and would be unfortunate timing now to lift rates for them. tom: take justin carrigan's

reporting and fold it over to a g.d.p. guest which is the investment gain, is e.m. falling in recession over a number of reasons including they can't get their fiscal, their currency, and inflation act together? >> i don't think so, tom. i think what's happening is we'll have to be very careful about distinguishing which emerging market is what. so countries that have a high foreign debt burden or may be very dependent on oil imports will be more penalized than other countries. with that in mind, china, for example, is doing quite well. the other thing i think is quite important is with the increasing oil price which i think is in june on year 80%, you have to think when that base effect starts kicking in to lower the impact of the oil price and that's going to happen in august. so i think you will have pressure points that will be expressed in terms of currency

but once you pass that time in august, i think things will be much smoother. of course the last point is to see what happens with global growth. if global growth is maintained, a lot of the countries are quite open as economies and will benefit which then leads you to the question on trade we talked about earlier on. tom: or the old formulas working, you point out we stagger from country a to b to c and south africa gets to be country d today, fine. are the old formulas working for those troubled monetary experiments? justin: not so far. it would be very difficult to say turkey, for example, has succeeded in shoring up the lira. we saw a good reaction yesterday but you have to think it's maybe unfortunate timing because then we saw what happened in brazil and today the lira is on the risk of wave

as well. when you talk about form has, one of the things i think this is interesting is it doesn't look like a classic contagion picture but looks like the investors going through the emerging market picking off the weakest elements, where as we heard oil prices are a factor and where central banks aren't perhaps ahead of the curve as the investment currency might be looking for. tom: annalisa, how does oil fold in? i think our viewers understand the oil dynamics of the u.s. but what are they in europe with the high prices and going into the vienna meeting in days? annalisa: i think the european situation is at the turning point and we see the picture for inflation getting better. the central banks can start to think about normalization

and we don't really need to panic just to judge too much out of what is going on at the moment. francine: justin, there's a great story on the bloomberg terminal looking at the calls from some of the big banks, goldman is bullish on indian bonds and if you're a bloomberg customer or go on the website, it's a great story. do you see a couple countries in the emerging market space that look more attractive because they've been sold off too much? justin: absolutely. india, for example, is a classic case where we've got a very robust economy and yes, we've got the oil factor but if oil prices continue to ease off as we've seen lately, india is probably in a very good place. you look at some of the countries where there are no -- the current account, surplus countries, particularly in asia, those seem to be -- i think asia seems to be a region people are less worried than, for example, than in the americas. francine: where do you see the

most value? you also live in singapore and one of the things we've been trying to figure out with justin this morning is the asian markets were sold off as part of the emerging market route and have stronger fundamentals. virginia: absolutely. a view is within the emerging markets, china is still very attractive. we're seeing in the background this very strong structural revolution around a.i. and it's happening at a very fast pace and asia is at the heart of it. 58% of millenials live in asia and economies mended themselves versus the last crisis and you're in a stronger position at a time where china is maturing and becoming a technology leader and i'm positive on the region. tom: justin, i want to ruin your friday, which country is next? justin: oh, dear. don't ask me that. in terms of currencies now, you

can say mexico. if you want to choose a country that hasn't already been hit, mexico may be. we've got it going through, we've had turkey, the indian and indonesia has been much more plo active. tom: nobody cares. what's your call on the world cup, quick. justin: england. tom: how did i not know that? justin, thank you. justin: it's not the u.s. tom: not italy. francine: italy definitely won't win this one. thanks for reminding me. justin carrigan, our managing editor for global markets leaves us and virginie and annalisa stay with us. bloomberg users can interact with the charts at gtv.go. you dazzle your bosses at the

next meeting later today. this is bloomberg. rg. ♪

taylor: this is "bloomberg

surveillance" i'm taylor rigs. airbus has a new challenge for boeing. the european planemaker has control of a jet program. airbus will hold a majority stake in the partnership with the canadian company that will sharpen the battle for single aisle jets. there is a report the world's largest insulin producer may look at cutting 3,000 jobs. the danish business newspaper ays nova is trying to stay competitive in the midst of pricing in the u.s. they also may drop their long-term financial goals. shares of deutsche post are falling today. the german mail and parcel delivery service cut its guidance for this year. deutsche post says it will take a $588 million charge for restructuring. and the payments giant controlled by the chinese millionaire raised $14 billion in the latest funding round and

financial is said to be valued at $150 billion. investors in the latest round included singapore's sovereign wealth fund, the pink and silver lake. that's your bloomberg business flash. tom and francine? francine: thanks so much. we're seeing pictures we'll put out on social media for our radio listeners, a joint news conference in china by president ping and his visiting counterpart vladimir putin and i -- the conference just finished. what we heard from them is mr. putin saying north korea is ready for constructive work and mr. putin saying the russia-china talks were constructive and very businesslike and president xi saying they hope to promote cooperation in all areas. quite significant especially at this time we're trying to figure out the foreign policy

implications for longer term economic expansion to see these two leaders come together issuing what seems to be quite a strong statement, tom. tom: absolutely. no question about it. i find it absolutely stunning this imagery we just saw there as we compare it to the dance we'll see in st. lawrence seaway in quebec. extraordinary these two events are going on essentially at the same time. francine: tom, on to brexit, boris johnson has attacked teresa may's brexit policy. at a private dinner he said britain's approach should be more like the one that donald trump would take. the comments are at the end of to day there was a spot calm the rebellious cabinet. virginie, when you look at the implications of the concern we saw in italy and spain and the

impact this could have on weatherity, is it just as significant as the upheaval in politics? once again, teresa may seeing a challenge to her leadership. annalisa and virginie? virginie: it is the change of the digital world and changes in the spain and u.k. and the u.s. are very strong. i think it's thinking about how do we adapt to that on a longer term basis. on the shorter term i think brexit will drag for as long as possible and we have another 10 months as the rules are laid out right now but who knows if it will be further elongated. the thing is will teresa may survive the period or not? we're seeing tensions. unfortunately when you have more aggressive diplomacy as the white house is sort of giving out now, the comment that was made on we need to have something more aggressive

may come out and that is sort of an ex-came lation mode which may not bring the impact we want to have. francine: thanks for joining us, annalisa and virginie. we're seeing pictures of the two presidents, one of china and the other one of russia walking almost hand in hand after giving a joint news conference. for our radio listeners we'll push it out on social media, vladimir putin of russia saying north korea is ready for constructive work. again, if you look at the world order, these are probably the leaders closest to the north korean leader. 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 the question is when will the president exit the g-7 meetings?

the greeting will be frosty. america will speak of a reorganized world, pro tip, mr. president. chat up prime minister trudeau on the stanley cup champion and washington capitals goalie brandon holtby of lloyd minister saskatchewan. e.m. upset south africa. should chairman powell pay attention? and are the chairman and c.e.o. of deutsche bank anywhere near on the same page? good morning, everyone. this is "bloomberg surveillance." live from our headquarters in new york and francine in london. david davis, boris johnson, how good is prime minister may's weekend going to be? francine: probably going to be bad but to be fair she's had a couple bad weeks since she started. you also can suggest that actually every day is a bad week when it comes to leadership and yet she's still there and so she's seeing

attacks on all sides but first you need to find someone who can replace her if she's going to be replaced and is this just game theory and are they trying to attack her so she becomes a much more hard line pro brexit prime minister and whether that work is still to be seen, tom. tom: we'll see what she does in quebec and will be interesting to see president trump show up for one or two cups of coffee, we need our first word news with taylor rigs. taylor: said to be the most acrimonious world sum anytime years and president trump will face off with six other leaders when the group of seven meets in quebec. europeans are angry at the president over his threat to impose tariffs. france will to impose tariffs. france will not sign a formal statement at the end of the summit unless there are concessions from the u.s. president trump predicts next week's summit with kim jong union will be a great success and said the two may sign a treaty formally ending the korean war and the president

raised the possibility of inviting kim to the white house. if the summit does not go well, president trump says he has a list of 300 more sanctions to impose on north korea. the i.m.f. has come through with the biggest rescue program in its history for argentina and is a $50 billion stand by arrangement that will run for three years and the argentine government is trying to reduce double-digit inflation and narrow the budget. emerging markets have been rocked by a global sell-off that forced central banks to raise interest rates. leitner became president of deutsche bank he's been through four c.e.o.'s and strategic overhauls and now he's looking at a different solution to the bank problems and why he talked to deutsche bank share shoulders with a rival commerzbank. there's currently no talks going on. news 24 hours a day powered by more than 2,700 journalists and

analysts in more than 120 countries. i'm taylor rigs. this is bloomberg. francine and tom? tom: thank so you much. equities, bonds, currencies, commodities, a little negative. s&p negative and dow futures negative 167 and euro 118 comes back to 116. if you would, two more cups of coffee than president will have in quebec. dollar canada with weakness there as well. we're watching brazil and south africa as well. francine? francine: i need a cup of coffee, the end of the week is more difficult than the beginning. european stocks falling. we did have disappointing data out of germany that added a little bit of a risk. let's get the board up for you so i can talk you through it. look at emerging markets, we saw a rise in south africa's and which reminded investors of the continuing dangers in

emerging markets and treasury 10-year yield dipping the dollar edging higher, tom. tom: we need to go to quebec, lake ontario up to montreal and quebec city. this is where among others william howard taft, the president and chief justice used to summer. what an honor to have john taft with us earlier. matheson, the governor and what will you look for in the 7:00, 8:00 and 9:00 a.m. hour this morning? >> the u.s. president doesn't arrive in canada until late this morning and in fact he's on the ground for only 24 hours and is missing most of the second day of the summit and could leave before there's any sort of commun day or key statements. what they'll watch today is his

sitdown with the french president and then a working lunch to discuss trade and that will be where the tension points will really be. we'll get a bit of a sense from that shortly after because the traditional family photo will take place after that meeting and might give us a sense of the optics, the body language for the family photo, who walks in and talks with him and who doesn't talk with him. tom: remind me of cicely and who was on which golf cart and where they were in the photo-op as well. will there be a photo opportunity? can we even get there with the president of the united states? rosalind: it is on his schedule for today but he's due to meet the canadian prime minister late this afternoon and there's been a bit of talk around here in canada that meeting may not yet go ahead depending on how the discussions go early on in trade. obviously trump has been

treeding in the leadup to his visit, making it clear he's not going to come here and give concessions on trade and is being critical of canada and the french in that regard. francine: good morning to you from london. we were looking together at pictures of vladimir putin together with of course the president of china talking about korea and talking about more collaborations between those two countries. how do those two leaders actually interact with president trump? rosalind: the chinese president generally has a good relationship with donald trump aside from trade. the two of them have forged a bit of a friendship and is apparent in their public interactions and respect each other and these are both quite strong leaders and need each other certainly on north korea. and china has stood up the u.s. on trade. it can do so because it actually has some economic clout in the game and led the

u.s. to consider them more carefully. vladimir putin has an up and down relationship with the u.s. president and saw it in the last meeting where they didn't meet at all though there's talk of a summit in the coming months perhaps in austria. francine: the former trump allies, i don't know what you want to call them now but can they forgive them if they pull off the peace process with the koreans? rosalind: there's been a lot of damage done by the relationship and can you see it by the comments made publicly by the french president and even by canada, a bit more muted in terms of criticism coming public from the u.k. and japan. but these are countries that the u.s. has long established relationships with. they need each other on a bunch of things, not just trade but to change the iran nuclear deal

and even on north korea and probably some damage done to that but this said the two countries need each other and have been through bumps before. tom: it will be a incredible busy week and you're based in singapore. will we see any action at the post bar in fullerton's? not that i'd have any working knowledge. you're laughing at me. not only would i have any knowledge of the post bar at fullerton's but is it going to be cooperative in singapore? rosalind: they're going into the meetings saying the right things and even playing golf. we have little detail about the meeting and we know it will meet in the morning and mr. trump says it could have five minutes or five hours and they're vling trouble getting something out of it but the north korea leader, just the fact the meeting is happening

and he's getting that admission on the global stage. certainly at this stage the expectations for a productive outcome has to be low but there might be good rhetoric out there. tom: thank you. we move to washington. kevin sirily will have a beverage of my choice at the post bar at fullerton's. let's finish on singapore. what do you expect out of these meetings in singapore in frankly a distant number of days. kevin: they'll likely sign a peace treaty. the hard work will begin after the signing of the korean peninsula peace treaty and end the korean war and largely would be a show of geoglobal theatrics but we'll have to see -- kim kim john union jong-un will have to speak to

him to denuclearize. mike pompeo said -- secretary pompeo met with the north korean leader twice already and says he has been given assurances that the leader is quote, unquote willing to denuclearize. tom: we'll have to see and i like how you get to the distinction. let's get to quebec. it's become an important lot of stuff written in the last 24 hours on these important meetings. in a trade war every side loses, experiencing lost jobs and crippled businesses and higher prices for consumers. we learned the last time, call it the 1930's, the scale of these retaliatory tariffs isn't most concerning but the composition. these other countries think the g-6 has been far more strategic, the ratio of jobs lost to jobs gained from one study will be 16-1. it really sums up the tension

here. how will the white house and ow will washington react to an abbreviated, truncated trump trip? kevin: i'm going to be blunt and i think the white house cares less about the perception of our allies on trade than they do about the republicans within their own party heading into a midterm and the republicans within the president's party are putting much more pressure on him to recal late -- to recalibrate on trade. there was a moment in the rose garden where. trump was standing next to shinzo abe and gave a shoutout to boeing and mentioned boeing in particular for doing a defense deal with japan in terms of buying aircraft. boeing, of course, is one of the topmost important lobbying interest groups here inside of washington that is lobbying against what the president is proposing on trade.

francine: kevin, very quickly, anyone among -- look, the g-7 seems to be so frosty and people never have seen anything like it in recent history. is there anyone that can actually try to make president trump come more on side. i guess it used to be macron but he's gone pretty hard. does he listen to teresa may? kevin: no. frosty is putting it mildly. the french president and president trump have a warm relationship and the french president signaled he has frustrations with chinese president xi jiang ping and trying to stand in the world organization and that's a common ground interest. china can pressure the u.s. because of the june 12 summit in singapore and north korea. tom: thank you so much. greatly appreciate your chief washington correspondent with a strong week with us.

gabriel hasen patiently listening to g-6, g-7 discussions and part of that is of course the tensions across e.m. as well. i refuse to believe there isn't a knock-on effect. within all the study of the jp morgan mother ship, what's the linkage of these political event and what's the linkage of developing central banks with the e.m. right now? >> it's not necessarily rate hikes in and of themselves concerning performance but a link between a stronger dollar. what's really concerning for emerging markets really is dollar strength and what really sparked a bit of the volatility in the aamericanning markets and it would be more interesting to see stability with the fallen dollar and with a we expect. it would bring tablet to the emerging markets.

tom: bring up the charts. this is really good math on what's going on. it's not e.m. specific but a killer e.m. chart yesterday but this can go a number of different ways for e.m. which way they want? they need a weaker dollar. >> correct. tom: who affects a recent dollar? >> we would explain it in shift and risk appetite. we've had disappointments in growth outside of the u.s. while there is much more comfort with the u.s. growth due to the fiscal stimulus and some of these geopolitical tensions we've been discussing around trade might be contributing to a stronger dollar. so we need to have more comfort with the growth picture and in that sense the dollar would come back down which would be very positive for merging markets. francine: what struck us when we started coming in the

newsroom very early this morning were the comments by ben bernanke saying the market faces a wile e. coyotee moment and the fiscal stimulus came at the wrong time and you catch the end of it when you just could have a potential downturn. gabriela: let's say our expectation is around 3% growth this year. that's temporary. we don't expect that to be sustained beyond the next 12-month window or so. we do expect a teselle bration back down to the previous 2% race in growth. he wily coyotee technology doesn't mean we fall off a cliff but decelerate back to trend growth for the united states which is 2%. in that sense once investors realize that the growth that's much faster and accelerating outside the u.s. becomes

important and drives our dollar in the weaker term and becoming a positive for emerging markets. francine: could emerging markets drag down the world growth overview? i know it's linked to the dollar so if you expect the dollar to go down that probably wouldn't play out. but in the medium term we're seeing investor anxiousness because of the aamericanning markets. especially the ones in the news and argentina and turkey and brazil. those are big economies, certainly. but what about the other 75% of emerging markets we don't talk about that are actually in a much better place in terms of growth and earnings and in terms of vulnerabilities. those are the big economies like a korea, taiwan and we don't see the block in trouble and as a result it's a smal drag on global again.

tom: what is the sustainability of g.d.p. and how does it sustain revenue growth? what are you modeling for multinationals, is it above par revenue growth or enaway rather suddenly? gabriela: for multinationals the complar component is very important. very a positive global growth picture we still see in place which would be positive for multinationals but definitely would benefit from stability to a weaker dollar or we revise lower earnings for nationals and isn't at the time what we're doing but dollar strength would be negative for those companies as well. francine: back to emerging markets, we have a number of house calls for some of the emerging markets which have seen a slide but looks stronger than others and have india and indonesia, do you have any preferred imaging markets? gabriela: we have to be careful

about the outhighers, the argentina and brazil and turkeys of the world but where it leaves us is a good 75% or so at the index and do tend to be found in asia and we'd highlight here's china which has seen strong inflows the past couple weeks, korea, taiwan. india is a much more long term story but there's a lot of good stuff if we look lieu the headlines and more outhigher names. tom: is it time for tweets? it's that time in our show, folks we look at presidential tweets. here's the president on his way to quebec. e first one is on crime, high-tech, and a little thing on the democrats as well but critically or more in the bloomberg world on the summit and read it in its entirety. 70% da charges the u.s. a $2

tariff on dairy products. they didn't tell you that, did they? not fair to our farmers and if you want a good cup of coffee try tim horton's. too much to talk about. coming up, steve major of hsbc. really looking forward to that conversation. stay with us worldwide, this is bloomberg. ♪

taylor: this is "bloomberg surveillance." et's get your flash.

the stock rose by a maximum 44%. the market value of $61 billion. it's the largest tech company listed in main land china. fox conn. sticking with the apple story, there's a report apple has warned the supply chain there will be fewer iphone this is year. according to nikkei, apple told suppliers to expect a 20% drop in component records for phones debuting in the second half. the report says apple is conservative when it comes to ordering parts. there's a shakeup at the top of b.t. group, the former phone monopoly that's been struggling. gavin patterson will step down later this year after a strategy reset failed to win over investors. patterson cut thousands of jobs and overhauled management but the stock has fallen 36% since last august. and that's your bloomberg

business flash. tom and francine? francine: thank you so much, taylor. deutsche bank chairman said to have spoken with top shareholders about merging with rival commerce bank. bloomberg understands paul discussed the combination of the two with investors and key german officials in recent months. goldman sachs germany and austria executive discussed consolidation of german banking in the european financial conference in frankfurt. >> i think the question here is more about cost, cost of doing business and how can you basically get to more profitability? i think a part of the solution is clearly merging. but when you look at merging you have to have the european scope in mind and just think about how do you grow this business, consolidate markets and market shares. view than a european just a germanry only view. francine: joining us is an economist and a great piece.

to everyone who hasn't red it, this is the title, germany's banking turkeys won't fly any time soon. discuss. >> we just need a reality check after banks talk about mergers. yes there needs to be more m & a and deutsche bank is in a desperate situation with a new c.e.o. and has not capitalized on the new moment and don't know the strategy. and i think talk about a merger is great, sort of think of the future and to regulators but not what investors want to hear right now basically. francine: what's the business case for a merger further down the line? is there a business case merger case? we heard from brment n.p. paribas wanting to go to part. for the lucrative

lionel: we've been talking about deutsche bank buying commerzbank. you're diversifying your business and get to reduce costs and it's fantastic. we've been talking about it for years and it hasn't happened because the two banks are in dire straits on their own and to bring them together would double the amount of problems rather than having them. tom: the book value is nowhere. discuss the liquidity solvency state of deutsche bank? lionel: deutsche bank raised capital on its own last year and the share price is back to where it was in the 1990's. this is all about a bank that's just destroying value and diluting shareholders and is basically just not coming up with the right solutions. and i think for the chairman to be talking about a merger so

soon after he essentially engineered the overthrow of the last c.e.o. for a new guy who again has not explained what the bank is going to do i think is a big negative. the shares of deutsche bank are down today and tells you everything. tom: very good. lionel, thank you so much. love that article. i'll try to get it out for you across social media today. lionel with bloomberg opinion. hugh pill will join us with goldman sachs, our chief economist for europe and is a timely conversation with quebec. stay with us. this is bloomberg. ♪

tom: good morning, "bloomberg surveillance." the president tweeting and a heightened interest year with the trip to quebec and exit to singapore as well and goes to the g-7 meetings.

if you're looking forward to straightening out unfair trade deals with the g-7 countries if it doesn't happen, we come out even better. that's so important. we'll come back to that in the next block, we'll be joined by steven and rip up the script. he's with us today. right now your friday briefing with first word news and taylor rigs. taylor: president trump will face a backlash over his trade policies this weekend at the g-7 summit in quebec but won't be around for the end of the meeting. the president will leave canada tomorrow morning for singapore where he'll meet next week with north korea's kim jong-un. he will have 24 hours to meet with allies and the european union has low expectations. in beijing, china and russia are underscoring their growing relationship with the 25th meeting with the president xi jiang ping and president vladimir putin.

the two countries are described as america's top adversaries and they're talking to expand their military and economic and political ties. former fed chairman ben bernanke said the u.s. could face a challenging slowdown before the end of trump's first turn and said the powerful economic stimulus will fade in two years and wile e. coyote will go of off the cliff. and the trump administration will not defend obamacare in court and side with the bid that it is unconstitutional. the legal motion is symbol i goic and any substantive action in the lawsuit will likely take months. global news on tic-tock powered by more than 2,700 journalists and analysts in more than 120 countries. i'm taylor rigs and this is

bloomberg. tom: steven and tom kean care about the yankees and red sox and gabriela of jp morgan does not and we look at our world cup coverage in brazil. let's go to the screen if we could. we thank "the guardian" for this picture in london. fred, brazilian midfielder sfred suffer as sprained ankle or something. this is not the brazil of pele, is it? gabriela: you have to pronounce fred the brazilian way. tom: what do you think, a chance? gabriela: i hope so. because i turn into a passionate soccer fan. and we lost to germany 7-1 and absolutely heart-wrenching. it was truly a sad psychological moment. tom: we have a weaker brazilian

eal because of these brazilians? gabriela: i don't think fred has anything to do with it. tom: what's going on, this sn't pretty? gabriela: given the stress in the emerging market, brazil is vulnerable as a result of its really large fiscal deficit of 8% of g.d.p. and what else i'll say is investments have fallen apart and it was that growth would accelerate and been challenged by the trucker's strike which disrupted activity and the thesis is there would an business friendly candidate win in october. tom: we're thrilled to have gabriela with us with a better understanding. bring up the chart. this is not armen tina but yet

there'sed a jays enzis there which is overplayed. the himalayas aren't between -- the thed a adjanenyies are different. gabriela: argentina has a fiscal problem and combined with a currency account deficit and double-digit inflation and double-digit interest rates and is not the case in brazil. the similarities are few and far between i would say. tom: i'm tearing up. we have the argentina currency out to four digits, who else oes that but us? gabriela: where is it being held? tom: in st. petersburg. one is staying in a room $400 a night. francine: it's never a good look when a central bank has to

step in at the last minute, surprising the market with a surprise press conference saying fundamentals are strong and was the case in brazil. how do you interpret that? gabriela: there's pressure to raise interest rates when the market decelerates and brazil is pushing against it saying we have record low inflation levels below the band of our target and still have anemic economic growth and is not the time to raise interest rates. i think that's what he was trying to do is assure the market though they're not raising rates they still have a plan and through intervening tech swaps and trying to stabilize the currency that way. francine: the currency is at a two-year low. and i think it will be dictated by the election and the surveys and whether the far right or left continue dominating so the

central bank, it's counterproductive. tom: steve is with us and we read a stanley fisher mom graph and i call it the red book and basically stan fisher at the i.m.f. at the time saying you know what, we really miss this. what are we missing? you're u.s. centric, i understand that but i'm not rationalizing this as a discrete mark. >> 2017 was a year everyone got convinced a global accel bration in growth was coming around and march forward in the early parts of 2018 and everything is missing. every cylinder is missing and that's a problem. europe is slowing, asia is slowing and the u.s. is not producing the growth people anticipated. announcer: what are the event that turned discrete elements to a coalesced moment for chairman powell and mr. draggy as well. what are you looking for? steven: it's a yield curve

story that will change expectations of monetary policy. right now the yield curve has been flattening and is under 50 basis points and between two and 10 has been the dominant driver on the currency side of the equation. the stronger dollar has been having effects globally and continues to have an effect globally on commomid oriented countries where the dollar tend to dominate what happens with the commodity prices. i show up this charge every six hours. here's the trump election here and steeper yield curve. things are great and then they're not and down we go. we're churning here. what's the ramifications if we break through here, what are the ramifications of four rate hikes? steven: it will change everything because what typically happens during that business cycle there's a yield curve that happens well beyond the end of the expansion and

each of them brings in a bump to the night. the e. now is financial implication and there are huge banks of shadow activity going on in the united states and i'm afraid one of those could combust. francine: does the dislocation become bigger or self-adjust? steven: once you get the curve flattening further, it disrupts the yield curve then resteepens out and the recovery continues or the ex-pangs continues another two years. francine: when you're saying something could bust, is that the canary in the gold mine of global recession or financial crisis or would it be stand alone? steven: a couple things. one could be stand alone and there are company spembing issues and one large industrial company has a significant amount of borrowing that will have to be accomplished in the

next couple days and weeks and that becomes a real, real problem for us. and then there tends to be a situation that shows up we have a problem where basically a broader situation can happen in the banking industry related to the shadow banks. tom: is chairman powell the central banker of the world? at the end of the day with the happy talk and great u.s. economics and e.m. economics and strategy, is the bottom line chairman powell the essential banker to brazil and south africa, etc. gabriela: he focuses on inflation at 2% and full mployment. to the extent global events threaten these objectives, they're taken into account. i remember a speech of mr. powell at the international institute of finance and talking about the fed's view of emerging markets and this idea they do not see that as a constraint anymore for moving forward because of better

growth and a reduction in vulnerability. tom: great conversation and we'll continue this with a significant news flow today. even ricchuto and gabriela santos. bloomberg radio coast to coast from boston to washington. washington capitals. you're finally, if not partying, you need to. we have bloomberg daybreak. good morning.

taylor: this is "bloomberg surveillance." let's get your business flash. airbus has a new challenge for the american rival boeing.

the european planemaker has cole of bombardier's jet program and airbus will hold a stake in the canadian company and sharpen the battle with boeing in the market for single aisle jets. shares of deutsche post are falling, the german mail and parcel delivery service cut. they will take a $588 million dollar charge for restructuring. the payment giants controlled by the chinese billionaire raised $14 billion in the latest funding round. and financial is said to be valued at $150 billion. investors in the latest round included singapore's sovereign wealth fund. and that's your "bloomberg business flash." francine and tom? francine: we're getting breaking news out of the u.k., phillip hammond speaking in berlin and says the u.k. and e.u. are nearing the end of the

withdrawal agreement. for our international viewers, we are expecting a bill to be voted on shortly and expecting a white paper from the u.k. side to kind of drop their positions. mr. hammond saying there's a collaborative approach to the e.u., better than possibly expected and we'll continue following that speech very closely. what mr. hammond is talking about is the delabtive support from the e.u. and u.k. what he's not talking about is all of the unseating and possible leadership challenges we're seeing back at home in the u.k. within the conservative party. tom: i'm absolutely baffled by it but no more than maybe what the president of the united states is messaging on his way to quebec. a set of tweets. this is a short and sweet tweet we got 20 minutes or so. we'll rip up the script with steve and gabriela. looking forward to

straightening out unfair trade deals with the g-7 countries and this is key, steve, if it doesn't happen, we come out even better. we now go to the translationists from blum university, what is he thinking? >> he's still on the america first bandwagon and in history the last president to do this before he got turned around was richard nixon. this is the guiding motivation behind everything he's doing. there is a disbelief in trump's mind if we back away from these things the competitive pressures will result in a stronger and better america. tom: a great post today on the smithsonian images of president trump. nixon went to beijing and made one of the most courageous moves of the 21st century. trump is not capable of that to go to quebec and say let's change things around?

steven: i don't think he wants to do that. the players have changed and the g-7 is no longer the typical g-7. the other players happen to be doing their own thing in beijing and that's our real targets, which is a sideshow. mexico and gouf are important in general and we have to deal with canada and this third item. francine: talk about this. we're going after midterm elections and votes and that. they'll go of after singular things from the united states. i mean, there's two different approaches here, a bighammer, a hammer in a very discreate response from the european countries. steven: there's a greater dependence issue he's relying on. i'm not saying it's going to work. for every reserve currency is a huge current account. tom: this is critical and it's not going to work, you say. what's the axis, does it get figured out quickly or will it

take the length of the trump administration to where we know where we are? teven: it magnifies for years. you start things in the trade world and you don't know the ramifications for a very long period of time. francine: how should the markets few it, if you don't know the ramifications, you to take a to take a risk on or off, which do you choose? steven: it's driven by the currency and what continues to happen is the currency gelingts stronger and drives the global teselle bration and growth which is exactly what trump is trying to do to weaken everybody in the process this federal d puts reserve in a situation with a rapid rising currency and the only one who can change things is the federal reserve and the reason tom and i mentioned earlier is we can be looking at a change in terms of monetary expectations after we get a

somewhat flatter yield curve where suddenly the curve steepens out which has happened in a long assignment. francine: do you agree with that, gabriela? gabriela: our thoughts are more sanguine in terms of economic growth in the u.s. at this point we don't see the trade tensions disrupting the momentum that we have here, at least for the next 12 months and after that as we were discussing we see a deceleration but to a 2% sort of rate and not the end of the cycle and keeps us thinking in the hawkish side than perhaps four more next year. tom: what's in that is the news flow in the crush. this g-7 meeting, i can't fathom what you and your team will work out this weekend. it's truly historic going to world war ii. when do well-meaning central bankers, when do they blink on this?

gabriela: when it starts impacting growth. the u.s. has the benefit of having this nice fiscal stimulus at the same time there is perhaps a little bit of an uncertainty tax coming from all of these endless trade tension headlines but at the moment in time growth is still good. francine: i'm looking at german economics. tom: german economics simply did not happen in that report today, did it? francine: no. data is weaker than expected and let's for a moment park the issue of steel but if the u.s. administration goes after cars that potentially could also have a very significant impact on german g.d.p. tom: very good. let's show you how you start the morning. knees are shaking and you're at jp morgan and briefing yourself on brazilian football with gabriela, you can't do better than gtv.go and take a chart and bring that

puppy up and send it over to your terminal. that's pretty cool. this is bloomberg. ♪

tom: this is fun. francine in london and i in new york. mr. hammond speaking in london. speaking here, gabriela santos speaking and let's go to a chart now. it's a canada chart. i showed this many times before, thanks to the comments from canada of the two trudeaus, this is mr. trudeau sr., for those of you a younger ilk, there was a trudeau, not as good-looking, years ago, this is the long-term baby he can -- long term weakening of canada. you mentioned commodities in the centrality to our analysis and here's what we've been churning with younger trudeau as well. i would suggest given the

buffeting of oil, he's done a pretty good job of stabilizing canada given that price shock. steven: given the negotiations going on as well he has done a good job of stabilizing it and some of it has to do with the fact the canadian economy has continued to hold together despite what we're seeing in terms of significant pressures, especially in real estate markets. so you've got to balance going on in canada which is real estate on the negative side and oil on the positive side and the supply disruption in the united states due to the lack of pipeline. francine: gabriela, when you look at the kind of concerns about the economy and we talked about emerging markets and the fed, is there a data point in the next 2-3 weeks you'd be especially looking at? gabriela: in terms of the idea of dollar strife, we're taking a look at the growth of data coming from outside the united states and would agree, a lot

of the appreciation of the dollar has come from disappointment and growth outside of the united states. so the data points we're looking at comes from outside the u.s. economy and think it would be really important to look at stabilizing things like the june p.r.i. because we haven't seen the stabilization but it will come mostly outside of the u.s. to focus. tom: i look at all of this and when do we readjust on our central bank calls and when do they blink like governor kearney last year? gabriela: when it impacts the economy. tom: you say the yield curve. steven: i think it happens this summer. tom: you've got a basis point number within two decimal points? steven: if we get down in the 30 range that is when we'll start to see the rubber hit the road. tom: this has been brilliant ith the high point being fred.

brazilian world cup. we'll advance this discussion with others. thank you so much. this is an important weekend. we knew it would be but it's become evermore with quebec and then on to singapore and we'll have full coverage of that through the day and into the weekend. steven major of hsbc joining bloomberg in the 8:00 hour. i'm looking at the market with futures negative 16 and dow futures negative 153. please stay with us worldwide, this is bloomberg. ♪ two, down, back up!

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investors rush to safe haven assets. they look for cover. ben bernanke warns of a wily coyote moment. trump goes after canada on twitter as they duke it out over trade and climate change and i run. and deutsche dilemma. and stocks take a hit. daybreak.""bloomberg david westin has left me. we are ending the week with a bang. the safety of dollar-yen here down .4%. 110.00bounce above the level.