♪ presidentrancine: trump arrives for his historic meeting with kim jong-un. can he be persuaded to give up his nuclear weapons? the white house steps up its attacks on canada. are we headed towards a trade war? bitcoin slumps, extending this year's selloff to more than 15%. good morning and welcome to bloomberg surveillance. i am francine lacqua in london.

these are your markets and equities on the rise with the stoxx 600 gaining .6%. it is the fallout from that g7 that was defined as tumultuous. it is not having that much of an impact on euro-dollar. i'm looking at yen because there is a lot going on. if there is anxious this in the markets when it comes to foreign policy, it could be played out on the yen but for the moment, the dollar is steady. president trump in singapore to meet with the north korean leader. trump,up next, we talk trade, and the summit in with wolfgang piccolo and later we will speak with sadiq khan. let's get to first word news. administration has

stepped up its war of words against canada as the foreign minister condemned insults aimed at justin trudeau, while germany and france criticized the comments. peter navarro's personal attack on trudeau came in the wake of tweets from president trump. >> there is a special place in hell for any foreign leader that engages in bad diplomacy with president trump and then tries to stab him in the back on his way out the door. that is what bad faith justin trudeau did with that stunt press conference. >> china has reaffirmed its claims to be a free trade leader, criticizing what xi jingping calls shortsighted policies. speaking at the shanghai cooperation organization his , message was in contrast to the disarray at the g7 summit in quebec. he says the world must maintain the rules of the wto, support multilateral trade, and build a open economy.

global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm taylor riggs. this is bloomberg. francine: -- >> a year of withegic pages -- patience the north korean regime has failed. they will be met with fire and a. fury.e and rocket man is on a suicide mission for himself. sense forit makes north korea to come to the table. we are going to make a great deal for the world, for north korea, for south korea, for japan, for china.

francine: let's get more on the story, the historic summit in singapore. and kim jong-un have arrived, i had of tomorrow's one-on-one meeting. president trump has said he will know immediately whether the summit will be a success. >> how long will it take? the first within minute, i will know very quickly whether or not something good is going to happen. i also think i will know whether it will happen fast. francine: let's get your bloomberg team of reporters in singapore. ,e're joined by stephen engle near where the summit will take place as well as kevin cirilli, our own washington correspondent, headed to a fing by secretary mike pompeo shortly. stephen, when it comes to the success, who has more to gain?

definitely, i would say the koreans and also donald trump has a lot to gain and lose. i could not imagine i would be sitting here at the eve of the summit and saying that the united states president is having more trouble with kim then with north korea, on the verge of having a rapprochement with the north koreans and getting a framework for a peace deal with the north koreans. that is extraordinary as we stand here in front of the hotel on the hill behind me on sentosa island where that will take place tomorrow morning. all the focus will be at 9:00 in the morning, donald trump will know in the first minute or two what the attitude will be and kimher he can size up jong-un's intention to denuclearize.

wantnited states, they complete verifiable irreversible disarmament of north korea's nuclear capabilities. to north koreans do not want give up something they have worked hard to achieve. states tothe united pledge a reduction in the nuclear umbrella over its allies in east asia. there is so much to hammer out and we do not have indication of what the potential deliverables will be, other than this morning, the u.s. team met with the advance north korean team. they talked for about two hours to hammer out the last minute deals. both sides came out looking glum and said nothing. francine: kevin, you know the president. there a correlation without the g7 went and his relationship with the allies are at a record

low and the president needs the summit to go well? >> it is a great question. who wasto an advisor ,appy with president trump following his behavior at the g7. is thats came down to prime minister trudeau thought that because of the north korea summit, he would have an opening and president trump did not like that. tosident trump had intended sign that communique but went against it following prime minister trudeau's press conference. the white house press corps is staying, we are expecting senior administration officials to brief reporters ahead of the meeting between

president trump and kim jong-un. following this meeting, secretary pompeo is scheduled to tour asia, to continue to meet with u.s. allies about the follow-up from the meeting, japan, china, and other nations, including south korea. francine: stephen, let me come back to you. the north korean press talking about the summit. does this point to the fact that the north korean leader has an intent of making this work? >> i think he does have the intention to make this work. he sees the potential of the economy. he has seen what the south korean economy has done and the miracle of the chinese economy. wasnorth korean economy stronger than the chinese economy. he sees that potential. a key indicator was last week, when kim jong-un dismissed three of his key generals, the hawks

in the military. perhaps that is an indication he is trying to soften and meeting with donald trump tomorrow, we do not know what his goal will be to get from the americans. his agenda today is not known. we have not seen him since he met with the prime minister of singapore yesterday. he was all smiles. he is said to be hunkered down today, preparing for the summit tomorrow. singapore is picking up the hotel tap. we're lookingn, at a bloomberg chart, looking at how much does it play into his base? does his rating get boosted because he had a fight with g7 and does it get boosted if he does a deal with the koreas? with the issue of trade, the

base of the party is with president trump terms of withdrawing from nafta. that is why that aggressive rhetoric you are seeing from president trump. even he said the remarks in which he said it might be good for him should the u.s. withdraw from nafta but it would not be good for mexico or canada. in terms of how north korea plays into his ratings, i asked that question to a better and strategist -- a veteran strategist. he told me president trump likes to see it in the negotiation stages. people like marco rubio and bob ofker, who are critical president trump heading into this meeting, they are adamant he secure a long-term, denuclearization deal as opposed to something for purely political theatric reasons and something that would be

short-term. long-termoking for a commitment from kim jong-un, something that secretary pompeo guaranteed the u.s. would receive when secretary pompeo met with the north korean leader several weeks ago. francine: thanks. kevin cirilli and stephen engle. let's keep the conversation on the summit, joining us is wolfgang piccolo. he is copresident at teneo intelligence. what does china and russia have to do with all of this? not a complacency, but has china given its blessing? >> i think china is trying to be all for. -- alpha. the favored status for china is status quo. russia, there is a

feeling they are on the back foot. here is anything happening out of this meeting, we will see a flurry of diplomatic activity involving other countries in the region, after this one, assuming progress. francine: what are the chances of this succeeding? >> it depends what you define as success. francine: how do you define the -- define it? >> very low. it is good for show but the reality is the negotiations takes months to prepare and we do not have months. we should expect something about the peace process, how we can get to a peace deal between north korea and the u.s. the korean war potentially and an indication of what is next, what is the sequencing? that would be the best case

scenario, we do not know what is on the menu. are we talking about conventional weapons, human rights? how ambitious do they want to be? what is the verification system they put in place? francine: you could argue both leaders want a quick win. >> there is no quick win that can be a game changer. the quick win is, let's agree to talk more. francine: is that the only thing they are looking for or are they looking for something more sustainable? >> the quick win could be, and easing of sanctions. time, a could be talks about diplomatic recognition of the regime, while you keep the nuclear safeguard. from trump's point of view, it is about him showing he can meet

kim and talk to him and keep these ongoing. will the u.s. have to forgo some of the basis they have in the region? >> so much has been said. loss of regional allies here, south korea, japan, which are nervous about this. deal, the concern --t we have is that we will the moment you feel the u.s. some bella is becoming thinner because the u.s. wants to strike u.s. umbrella is becoming fan of because the u.s. wants to strike a deal. francine: coming up, we will talk about trump's deepening spat with canada and the chances of trade war. that is coming up next.

this is bloomberg. ♪

francine: this is bloomberg surveillance. i'm francine lacqua in london. let's get to the other big story moving the markets. at they g7, president trump broadsided allies by disavowing -- a statement they

previously agreed to. he lashed out at justin trudeau. the us officials kept up the war of words with u.s. -- with canada. there is a special place in hell for any foreign leader that engages in bad diplomacy with president trump and then tries to stab him in the back on his way out the door. that is what bad faith justin trudeau did with that stunt press conference. >> he did a disservice to the whole g7. >> trudeau did? >> yes. they were united. they came together. francine: what does the possibility of a trade war mean for global markets? wolfgang piccolo is still with us and we're joined by calentin marinov, credit agricole and

thushka maharaj, j.p. morgan chase. we are not seeing this anxious this played out on the markets -- wire markets ignoring it? we have lots of data. we have the fed on wednesday, the ecb on thursday. the market is overwhelmed. if we are going to see any reaction, that will be after we have seen the event risk laying out. -- playing out. given the competition between trump and the g7 escalating, that is followed by further tightening, be at the fed or the ecb, or that may play out as negative for risk correlated. overall currencies are relying on demand for the g7 for their growth. thecine: if you look at

main fault lines, you've presidential standoffs, central bank meetings, what do you think will influence markets? >> i think the fed, the central banks. what we have had is a stance toward getting toward policy. i think that is the key focus for risk sentiment. add some uncertainty. fed, the factthe they will be hiking in the face of this volatility is a key focus. francine: what are you expecting from the fed? a lot of it is priced in. will jay powell have to dance around these trade war issues? , what does acus is symmetric mean in terms of inflation target? the fed talks about having

inflation higher than the target. the second is, what happens when they get to neutral? , they've talked about 50 basis points in real terms. , it will be to that key to understand what the fed wants to do after that. do they want to pause, do they want to continue tightening based on fundamentals? how do they interpret the balance of frisk -- balance of risk? onhas not been very focused that third factor, it has been focused on getting to neutral. francine: speaking of that, my's bring you over to favorite chart, this tracks the risk appetite for the year. under expecting or are we

too complacent about a trade war? the words were nothing like i have ever heard from a g7. >> it was bad. it was a bad end to a sort of apprentice show. you cannot run a international negotiation like that. if you look at the statement, it was agreed. there was nothing meaningful. area when, the only you look at the text, was there a clear divide was about climate change. nobody was expecting anything meaningful. are we heading towards a trade war? no. america is becoming more isolated. point of view,an they came back with a idea that it is impossible to persuade

trump. they should focus more europe. francine: let's bring up the picture that was the picture of the weekend, when you see angela merkel with her fist on the table. a couple of the world leaders are thinking, i'm not sure what is going on. is that how the markets are interpreting it? does it mean we have peaked for world growth? the u.s. may be marginalized but they're still the biggest economy in the world and without the u.s., it is difficult to get anything on the table. a, for theoming from first time, we have an environment where global trade growth exceeded growth. they delivered efforts by the u.s. to change the overall international order, the rules-based international order, could contribute to a slowdown

contribute to the headwinds for global growth. that is not reflected in business sentiment yet. it is not reflected in hard data. the thing that is going to pave the way, create an environment which is less positive for risk assets, that risk appetite chart you showed was surprising, given the potentially negative outlook. things are not looking great, coming from this high point we have in terms of global growth. cautious and less constructive outlook for especially vacancies --t will be most exposed especially the currency's bill be most exposed to a global growth slowdown. few cornntified a seeds, the canadian dollar, the australian dollar, the new zealand dollar. if china is forced to absorb

more of u.s. exports and there will be a lot of import substitution between that and australia for example, is already exporting to china. francine: are there more risks to the upside? picture, weof our agree there is a shift in terms of moving away from strong momentum towards moderation. we're not of the view we're going to see a contraction over the next 12 to 18 months. it is slowing of the momentum rather than the overall growth. we expect u.s. growth to be above trend. stabilization outside of the u.s.. isthe near term, there uncertainty that needs to be built into risk assets. to 18 month horizon, we are pro-risk, pro-stocks

relative to bonds. our main exposure is in u.s. equities. we have a positive view on emerging markets. the headwinds are there. a specialwe will have block on emerging markets and we will look at the turkish lira. thank you all for joining us, wolfgang piccolo, calentin marinov, thushka maharaj, allstate with us. bitcoin takes other cryptocurrencies down with us. it is the start of a busy week. this is bloomberg.

francine: economic finance and politics. i'm francine lacqua in london. let's check in on what is trending on tictoc, what are the key singapore stocks to watch

around the there is a big sporting event beginning this weekend. what happens, we look at to the world cup and our most read stories on the bloomberg terminal. in thirdlace after the g7, angela merkel says she favors the u.s.-russia summit. in second place, cryptocurrencies lose. end up talk, a tie-in stocks jump. we're getting breaking news out of the u.k., a big week out of brexit when it comes to that bill. buttrade balance coming in industrial production is what we are looking for. urine year, 1.8% and manufacturing production worse -- year on year, 1.8% and

manufacturing reduction worst than expected. -- manufacturing production worse than expected. you can see the pound currently is at 133.91. let's get to first word news. here is taylor riggs. hashe trump administration stepped up its war of words against canada, even as the foreign minister condemned insults aimed at justin trudeau, while germany and france criticized the comments. white house trade advisor peter navarro's personal attack on trudeau came in the wake of tweets from president trump. >> there is a special place in ll for any foreign leader that engages in bad diplomacy with president trump and then tries to stab him in the back on his way out the door. that is what bad faith justin trudeau did with that stunt press conference.

china has reaffirmed its claim to be a free trade leader, criticizing what xi jingping calls shortsighted policies. speaking at the shanghai cooperation organization, his message was in contrast to the disarray at the g7 summit in canada. he says the world must maintain the rules of the wto, support multilateral trade, and build a open economy. in singapore, donald trump and kim jong-un are preparing for tomorrow's global summit. they flew in amid security and at the secluded hotel on sentosa island. an early sticking point is likely to be how to define denuclearization of the korean peninsula. kim will demand that the u.s. remove its weapons from the region. in the u.k., the millionaire brexit becker who cofounded

inve will be questioned parliament over his contact with russian officials. they want to know whether he profited from the meeting and whether he used the money to fund his campaign. that follows revelations he met e russian ambassador. he was one of the biggest donors before the election and was reportedly given more than 8 million pounds to leave the e.u. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm taylor riggs. this is bloomberg. francine? francine: thank you so much. it is going to be a busy week. coming out with a report on their ratio. they expect that to be about 14% to 2020.-- for 2018 it is also expected to invest in

future skills. there was a change at the top before the chief executive came in a couple of months ago. it also plans to sustain a dividend at current levels. ofare watching anything out korea, talking about trade wars with our guests. ,outh korea says it's president mr. moon, had a taliban -- had a telephone conversation with president trump. i do know know if we will have the details that that is all we have. i will bring you the latest. we had some ugly, economic data out of the u.k. dataacturing and economic worse than expected. hacking of a cryptocurrency exchange has fueled a selloff and reignited concerns. coinrail cited hacking.

for more, our cross asset reporter joins us from hong kong. what do we know about coinrail? coinraile know is that , they called it a cyber intrusion. they are saying about 70% of the cryptocurrencies they have under their control are in a cold notet, which is a storage connected to the internet, which makes it more secure, less vulnerable. affected and were about two thirds have been either frozen or recovered. the remaining 10%, that is what they are saying is under investigation, where they are taking a look at what is happening with that component. what we do not know is the

dollar value of the tokens affected and the details of how the hack occurred. there is still a lot to come from coinrail that we do not know. of thee: is this one reasons that cryptocurrencies are slumping? >> yes. reasons why it was surprising is because the exchange is not that large. it was onee hacking, of the 100 largest exchanges in the world by volume. with the move of bitcoin, a large move, we saw more than $40 billion wiped out in value across cryptocurrencies. other factors are ongoing security concerns. we have got those investigations in the u.s. and china, there is talk of china cracking down on companies.

the hack happened on the weekend , which you generally see less liquidity on the weekend and there is the potential for more price action because there is not as much liquidity. there is a confluence of factors. for some people, taking advantage or taking this is one reason to influence some of that selling. much, ourthan cross asset reporter in hong kong. it is our most read story on the terminal. coming up, we are on the central bank watch, it is a huge way, with the fed, ecb, and boj all announcing their policy decisions. theresa may prepares for her next brexit battle. the bill has been battered in the house of lords. will it survive a vote in the house of commons? that is coming up, this is bloomberg. ♪

francine: this is bloomberg surveillance. i'm francine lacqua in london. let's get to the bloomberg business flash. here is taylor riggs. hack alteredrrency holders of digital assets. it led to a $46 billion rout. bitcoin shares slumped more than 50%. a brought an abrupt end to more than two weeks of calm to the

digital currency and reignited concerns of the lightly regulated security. rolls-royce engine durability has worsened. it has detected new issues. 1000 enginescerns for the boeing plane. the company says following an agreement with u.s. manufacturers and regulators, 160 six engines are potentially affected, will undergo an inspection to assess the extent of the problem. world's biggest maker of the biggest battery jumped on its debut as investors met on rising demand for new energy cars. rose by the amperex maximum 44 percent, valuing the chinese company at about $12.3 billion. the manufacturer sold a 10% stake in its initial public offering on may 30.

that is your bloomberg business flash. francine: let's get ba to our top story, sanctions will be high on the agenda when president trump meets with north korea's leader tomorrow. there is growing excitement about the opportunity that might be oped up should trade restrictions be eased. three economic belts linking the koreas with china and russia. how president moon once to transform his northern neighbor. developing railways is the plan, with one in the middle of the peninsula. infrastructure could help north korea realize the value of its vast reserves. 200 essential resources are estimated to be under the ground, worth in excess of $6 trillion. among them, gold, and the single

biggest where earth deposit, crucial for electric vehicles and gadgets. a word of caution before poinvestors become giddy with expectati shortages, outdated facilities, and other obstacles put utilization rates are below 30%. the labor force is a bright spot. high literacy rates, low wages, and basic computer education may see north korea become a new asian tiger one day. we had, over the last couple of minutes, breaking news out of the u.k. we following everything and the koreas. this is what we found out from the u.k. data. it has had an impact on the pound. you can see that slide since we had construction data worse than

expected. construction posted a smaller than expected gain and that is casting fresh doubt on the health of the economy. the pound falling. piccolo,h us, wolfgang calentin marinov, thushka maharaj. if you look at the pound, i also had it on the screen. was this a blip or will it get worse? will the pound move on the back expect ther do we paper to be published to move the pound? expect some negative story in the price of the currency. more important data releases are still ahead, we of inflation, earnings data, wage growth. we will highlight real incomes continue to pick up. this bodes well for domestic demand. u.k.'s mainthey is that they

trading partner is slowing. we saw that, exports have been lower. most of the weakness may be due to weakness in domestic demand u.k.e e.u. ran the i would not interpret it as negative for the currency. we have the brexit discussion tomorrow in the parliament. greater involvement by the u.k. parliament in the brexit deal likely to be expected, overall a positive. francine: i wanted to ask you about brexit -- theresa may needs to keep the party together ahead of this vote -- will she be able to? she will. she is trying to rally the troops. i think they will manage to reverse some of these amendments , the vast majority of them. the real struggle will be for the right.

wants a think anybody confrontation, despite the noise , that is for show. there is no alternative. until july, she is safe. francine: what does it mean for your appetite for ssets? say is thatuld while we see the positive , a withdrawal could be positive for sterling, over the median term -- the medium-term, it gets built-in. we are positive on gilts. for the bank of england is we could hike once but that is largely in the price. the more important thing is how inflation you false over the next 12 to 18 months and that is more negative. -- evolvesn involves

over the next 12 to 18 months and that is me negative. in terms of equities, we're neutralizing that. francine: let's talk about treasuries. bring you to my chart, it is a 10 year treasury yield. it is a big week for central-bank policy decisions. tomorrow, we hear from argentina after it secured a imf lifeline. the u.s. federal is forecast to raise rates. the ecb is expected to discuss the end of its asset purchases and we roundup the week with japan and russia. what do investors want to hear from central banks? will get himng, i to repeat, he believes the fed wants to move as quickly as possible to hike rates. that could be dangerous. >> i think the fed is resolute

on getting to neutral. the fed is the fact hiking in the face of global uncertainty is negative for risk assets. there is a continued curve flattening in the u.s. make sense. how this affects the u.s. market, the length of the cycle is the determinant of where risks go. yields can rise modestly but not significantly. this concern we're seeing outside the u.s. francine: what about you? >> the risk for treasury yields are higher for here. the steepening of the curve remains to be seen. used bypening will be the fed to pack in as many rate hikes is possible before we see a flattening of the curve. in the u.s. in particular, where

as we may be heading towards a slow down which may be a year or a year and a half away from here, before that, the fed wants to be in a position to it dress slow down. -- to address look them. they can cut if needed. down theing meetings road could be seen as the fed trying to engineer a steepening of the curve, potentially by deliberately communicating they may be falling behind the curve by allowing that inflation risk to be priced in so that the fed will try to use that to hike further beyond what is priced in in the dotplot at the moment. francine: today, the most read story on the terminal is that italian bonds are surging, the euro is rallying after the

made assurances that they would stick to the currency. is that all they needed? discuss itdid not and the markets think it is a party? >> we have to take is good news the fact that italy's economy is not planning a exit. let's remember, this is a , a second-tier professor, we do not know anything about him until he was appointed. he has no political capital. we have seen some of the key guys in charge of the economy suggesting that the exit is on the table but all of the other things mentioned yesterday, we have to have a discussion. enjoy the rally. francine: how long will the rally last? to the 10 yearu

yield. >> i would say the political and premium is persistent the fact that the ecb is normalizing policy in the wake of this, is another reason why that premium should exist. in terms of comparing italy to spain, i would take the side of in terms of being more positive on their bond markets. in terms of our position, we are more neutral on italian bonds. i can see reasons to be positive on spain. the point about the euro membership, the fact it is a positive for italian bonds is a sign of where we are. italye ecb, i do not see on its own, derailing the ecb from normalization. -- we need toseat

see more contagion. francine: do you agree or do they pursue normalizing? what hasb will welcome been happening at the start of this week. they have been rallying since early today. represent easing of the financial conditions in the eurozone and this is the best environment for the ecb to consider normalizing or removing that support for the economy that has been in support. policy normalization is one of the key ingredients of our bull ish euro feel. because of the g7, the

dollar is no longer higher. india leading most currencies higher. think that more recently, what we're starting to experience is investors are realizing that u.s. per section is him could have important negative implications -- u.s. protectionism could have important negative implications for global growth. mentioned the canadian dollar, the australian dollar in the g10 space. you can expand that to the em. all currencies are likely to areer if emerging-market likely to continue further depreciation of currencies. francine: what is your take on emerging markets? >> we have a more positive view on em, in the equity space than

in debt. it is based on stronger fundamentals than we had. need to be targeted in our exposure rather than having a general positive view. >> agree on that. what we are looking at is political capacity to deal with more pressure because of the stronger dollar. there is not much political capacity across the board. francine: thank you all for joining us today, wolfgang piccolo, teneo intelligence, calentin marinov, and thushka maharaj. we're just looking at some pictures, this is what the markets are doing, european stocks rising. investors bracing themselves for one of the busiest weeks of the year. we're expecting a live news conference from the u.s. secretary of state, mike pompeo, holding a briefing ahead of this historic summit between

president trump and kim jong-un. we have all of our reporters on the ground. central banks, where the biggest risk is coming from, is it the fed? the ecb, the fact they are both tightening policy is a key factor in terms of risk asset. francine: are you expecting more volatility? >> the ecb and the fed could trigger more volatility. any hint that policy normalization likely to be less francine: bloomberg surveillance continues in the next hour. tom keene joins me out of new york. later today, will be speaking with sean spicer. he joins us at 5:30 london time.

we will ask him about the foreign policy of president trump and what happens in the white house. we're looking at the canadian dollar falling in the wake of the summit, which ended with fears over trade war spirit -- trade war spirit -- trade wars. will be right back. this is bloomberg. -- we will be right back. this is bloomberg. ♪

francine: summit in singapore. president trump arrives. can the north korean leader be

persuaded to give up his nuclear weapons? g7 discord as the rift widens between the u.s. and its allies as the white house steps up its attacks on canada. are we headed toward a trade war? bitcoin slumps after a south korean exchange is hacked, extending this year selloff to 60%. this is "bloomberg surveillance." what are the chances of a success between president trump and kim jong-un? it is hard to tell. this is the calm before the storm. officials on both sides met today looking pretty glum. if those are the tea leaves we read, that is to

not looking very good. a huge gap in the definition of denuclearization. the u.s. wanting immediate denuclearization and north korea wanting a step-by-step process and security to be guaranteed. that is not what the u.s. is after. it is talked to say what compromises will bmade tomorrow. it is hard to say whether something substantial will come out of it. francine: thank you so much. let's get straight to the bloomberg first word news. about: president trump is to see whether his back on north korea will pay off. now insident is singapore for the historic meeting with kim jong-un. the president is meeting -- is gambling jim will overcome --

president trump says he will know within the first minute if kim jong-un is serious about the nuclear's asian. -- about denuclearization. aide says president trump diss about the g7 statement to avoid looking week before the north korea summit. an aide accused north korea -- canada of stabbing the u.s. in the back. italy, bonds and stocks surged after the countries new finance minister said he was committed to staying in the euro. there was no discussion of leaving the shared currency. concernedhave been about the two europe skeptic parties that control the government. a new survey predicts the fed will not increase the pace of interest rate hikes this year. the portion of those expecting

three more rate increases this year dropped from march. the median estimate is for two --e increases, which masters which matches the fed's own tions. a currency hack in south korea has made the crypto slumped even worse. bitcoins tech line has now gone past -- bitcoins decline has not gone past 50%. 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. a year of strategic patience with the north korean regime has failed. they will be met with fire and fury.

rocket man is on a suicide mission for himself. believe that it makes sense for north korea to come to the table. we are going to make a great deal for the world for north korea, for south korea, for japan, for china. tom: it will be an extraordinary 48 hours in singapore. haslinda amin is there. we will pay attention to a fed meeting on wednesday, other important meetings as well. at the daya look chart before we dive into what we saw in quebec and what we will see in singapore. i did notice taylor mentioned the decline in bitcoin.

oil a bit off this morning. francine: i wish i saw italian bonds but i have the euro. there is quite a lot going on when it comes to italy on the back of the italian finance minister saying they are committed to the euro. italian bonds and stocks are surging. european stocks are rising. investors bracing for one of the busiest weeks of the year. we have three of the world's major central banks will set interest rates, and president trump will meet north korea's leader. let's get more on the historic summit in singapore. donald trump and the north korean leader have arrived ahead of tomorrow's meeting. trump has said he will know immediately whether the summit will be a success. >> how long would it take? i think within the first minute. very quickly i will know whether

or not something good is going to happen. i also think i will know whether or not it will happen fast. toncine: let's get back bloomberg anchor haslinda amin in singapore. the question tom and i have is what is a success? is it different for the u.s. that it is for the north koreans? haslinda: it depends. if you speak to president trump he has already tapered his expectations. initially he was looking for irreversible dismantling of nuclear weapons in north korea. then he said perhaps it is the end of the korean war. just recently he said perhaps this is just the beginning of a friendship between him and kim jong-un. if that works i happen, it is a success in itself.

it depends who you are speaking to. hastrump, the end goal deferred over the last few weeks. south korea once a roadmap. it wantstion that a dismantling will happen. maybe it will take more than one meeting, but it wants some kind of indication. it will happen sooner rather than later. francine: you've hit the nail on the head. it is all about sequencing. how do we deal is verification, even if there is agreement on both sides to denuclearize? how do you check to see if it is being done? haslinda: precisely. is, irreversible dismantling of nuclear capabilities, there is no euro versus billy here because north korea already has the knowledge if it dismantles its nuclear

capabilities it still has the knowledge to work on it should discussions fall apart. there is no justification, there is no finality. north korea is not able to do it all ov again. trusted, evena be if it -- even if international observers are allowed in its facilities. jong-un's father 18 years ago, they came close to dismantling but things fell apart, and now we have a north korea capable of firing that nuclear missile. jong-un is at the saint regis, trump is at the shangri-la, but the chinese are nowhere. how are the chinese looking at the summit? haslinda: you can call it the invisible hand.

,ithout the chinese support without the chinese prodding the sides together, the summit would not have happened. there is vested interest when it comes to the chinese. a lot is at stake. the chinese want success because u.s. toese want the remove its military might. the chinese want to impose its own military might in this part of the world, in all of asia. we are beginning to see that in the south china sea. with the u.s. presence in this part of the world, that is not going to happen anytime soon. it is in the chinese interest that the.s. and north korea have successful talks tomorrow. francine: thank you. joining us now is bluebay asset andgement head of strategy

a university of chicago finance professor. we will talk a little bit more about the g7 and the fact that the u.s. is losing its allies, there a -- but is correlation between the korea meeting and that president trump needs a success because he went so hard on canada? >> what it highlights is that for president trump doing bilateral deals whether that is trade or geopolitics with the forthcoming summit with kim jong-un or advocating a summit with pleasant -- with president -- itir putin of russia signals his biases and preferences. francine: how you make success? if you look at the players, success means different things to every stakeholder. >> that is the easy way to get a

deal done. everyone to find success in his own way, so everyone can be successful. that is part of the secret. you set up different goals in a way that everybody can achieve its own goal. luigi, good morning. ist i would like to know your interpretation of singapore,within within the pacific rim and within china. it is a different capitalism. are they still the tigers? -- in i would distinguish china we have a new form of state capitalism that is taking over and the question is that so far it has been very successful. internally, a lot of problems, including corruption. the long-term stability is in , especially as growth

will slow down and the demand of citizens will be for more freedom. there is a tension there and the question is how long this model will continue. luigi and mr. riley with us and we will continue off the desk this morning. in our next hour will be looking at these interesting international relations. the path from quebec to singapore and a fed meeting and we look at the equity markets. we'll bring in charles cantor of neuberger berman in our next hour. please stay with us. singapore, this is bloomberg.rom ♪

taylor: this is "bloomberg surveillance." i am taylor riggs. to a deal to buy division health care for $5.5 billion. the wall street journal says the deal is expected to take place today. anision has been conducting auction since its strategic review last fall. the engine durability problems are getting worse at rolls-royce. the company revealed new issues that will require extra repair shop visits on a further batch of its new turbines. the engines are used on the boeing 787. that is your bloomberg business flash. let's get to the other big geopolitical story.

moving the markets at the g7, donald trump has broadsided allies by disavowing a joint statement the u.s. had previously agreed to. rashtair of tweets, trump out at justin trudeau. criticized france the comments, but the u.s. kept worlds -- the war of words with canada. >> there is a special place in hell for anyone who'd

then tries to stab them in the back. that is what justin trudeau did. >> he really stabbed us in the back. he did a great disservice to the g7. they were united in the g7. ancine: thosgether. navarro and larry kudlow speaking on fox news and cnn. let's get back to david riley and luigi zingales. market is largely ignoring what looks like the g7 plus the u.s.. david: i am a little surprised myself. most of the time the g7 is a photo opportunity for leaders. occasionally it is important. i think what i found more worrying was not the split between the g six and the u.s. in terms of actual communique, which is plenty -- which is bland. trump issuedet where he seemed to threaten auto tariffs. that,ot want to overstate but i thought the tweet was more worrying than the other aspects. tom: that is a good observation.

luigi, my tweet of the weekend was from the university of michigan. economist.e young he put up from the world bank the average tariffs rate charged byons. canada is at the bottom japan and short. everyone else is on equal terrain. paul krugman said the same thing this weekend. the fact is the tariffs of the g7 are not all that high, are they? luigi: they are not. -- goingt of the week back to trade -- tom: i did that for you. g-sevenrade within the is by and large free. it is true that germany has a gigantic trade surplus and has

kept it for many years. the only time after world war ii they did not have it was during the reunification phase. a tradewant to keep surplus, this is not feasible long-term. a trade surplus, this is not feasible long-term. i think trump is trying to go after this fact, which is a problem for the west. it is a problem in europe. i think his goal is probably right, his methods are completely wrong. luigi, fallout at g7. could there be a fallout in terms of global trade? not long ago we were talking about firing on all cylinders. luigi: i think there is a risk in a global trade war. this risk is exacerbated by the tweet.

we know the auto industry is extremely politically powerful in germany. all of the regulation in europe is driven by the car industry in germany. itive to that industry andy would put up a real fight that might split not only the g7, but europe itself. i think there is a serious danger of the situation escalating. francine: we will get more on this possible split in europe. david riley and luigi zingales will be staying with us. hour, an the next economist and the author of "edge of chaos." we will talk about that and populism and brexit. at 6:30 in new york and 11:30 in london. this is bloomberg. ♪

francine: this is bloomberg surveillance. we have team coverage worldwide. the 20 selloff in cryptocurrencies has deepened as $42 billion dropped off the market over the weekend. hacking in south korea is being blamed for the slump. it follows off something we saw in the week when bitcoin dropped significantly. we saw a 50% fall year to date. bloomberg's eric joins us from

hong kong. coin -- what is it and what happened to it? >> it is a cryptocurrency exchange based in south korea. cryptocurrency exchanges allow people to trade cryptocurrencies and in this case they are a relatively small exchange but over the weekend they said there was something called a cyber intrusion, which is a hack. at the moment we know 70% of the cryptocurrencies under their control art in what is called a theywallet, which means have been taken on to a storage that is not connected to the internet, which means they are safe from a further hacking. the other 30% is the coins that were affected, and of those about two thirds are frozen or recovered. the remaining third are what we

are most interested in. those tokens are being investigated. we do not have any details on what the dollar value is of those tokens. or the manner in which their system was hacked or compromised. .t is still a developing story we are awaiting further updates. francine: thank you so much. bloomberg's eric lam from hong kong. bloomberg users can also interact with the charts on g tv . i had a good chart looking at risk. tom has a 30 year bull market. which one is best? log on to vote. this is bloomberg. ♪

francine: this is "bloomberg surveillance." haslinda amin is in singapore and tom keene is in new york.

let's check what is churning across the bloomberg universe. is a bigerg.com, there sporting event beginning this week. cupook ahead to the world and our most read stories on the bloomberg terminal in the last few hours -- german chancellor angelakel sa she favors a u.s. russia summit. second place, cryptocurrency loses $43 billion and the top italian bonds jumping. --'s not get word -- net let's now get more. taylor: angela merkel is trying to push global diplomacy forward after the g7 summit. she says she supports the idea of a summit between president trump and vladimir putin. german tv the president was not entirely wrong in pressing germany to increase defense spending. the leaders of china and

pressure are cementing the rise of an asian security block. xius paying and vladimir -- and vladimir putin -- the president of china criticized new forms of unilateralism and protectionism. in switzerland, voters overwhelmingly rejected a proposal to radically change the way banks lend money. the measure would have prevented commercial banks from lending more money than they would have had in deposits. central bank is the only source of new money. the swiss national bank president cause to date -- called it a dangerous experiment. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. riggs.ylor this is bloomberg. one of our most read stories, italian bonds and stocks surge after the country's new finance minister made

assurance they were committed to a single currency. said there was no discussion of any proposal to leave the euro. the government is determined to block market conditions that would push toward an exit. david riley and luigi zingales are both still with us. luigi was also one of the names of a possible finance ministry. if you had been finance minister, i note it is a difficult thing to express yourself on, do you think this government will hold together? there is a function in the market, given the rally we saw today, that everything is fine. we have a finance minister that is not anti-euro, and so the government holds. very: italy is in a special situation given the level of debt. that italyy thinks is doing fine, rates would be

lower and italy would be fine. if everyone thinks italy would not be fine, rates will behind and italy will end up defaulting . i think it is a structural weakness of the euro, when it was designed there was no mechanism in place to protect against this risk. own naturale your central bank, the central bank plays a role. without the central bank, you are at risk. when the euro was designed, economies do not think about this problem. i'm very glad the finance minister reassure the market. i think living under that threat is dangerous because any possible situation will create economic damage. even -- the cost in terms of interest rates is not going to be gigantic. the good nose is -- the good

news is we are coming off bonds issued in 2013 with high rates. i think the immediate cost of a rising interest rate would not be dramatic. however, the cost of bonds for weks and the ability -- could be back in a situation like 2011 where italy suffered gigantic economic cost for some political uncertainty at the european level. when angela merkel started to talk about the possibility of a , thent in every country the spread started to rise and italy entered a crisis. a big burdenis that any government in italy is facing. david, if i have my chart somewhere, there is my italian premium against spain. .ou own btp's

what is the case for being constructive on italian btp's? they are still pricing in some level of systemic risk. what the finance minister's comments confirmed and we have ,een by the five-star movement not to call another election which would have been a referendum, highlights the fact that neither the public nor political will for a euro exit. there is too much systemic risk being priced in at the moment. i think the other aspects of the italian government is they are not going to go on a mad physical splurge. there is a little bit of room for fiscal easing. i think you will see further tightening in btp's. we have repriced our high-level and that is going to stay the case. tom: luigi, what does italy need

from mario draghi? ?hat does italy need clearly a continuation of quantitative easing will help. what italy needs is some willingness of the eurozone to reform its self. this is what the italian people are demanding and the government is asking and this is where these -- where there is very little flexibility on the german side. over the weekend we got a couple of interviews that would seek to be more open-minded. if you read the articles, there is no openness whatsoever. there is no idea that there could be a fiscal union of any form whatsoever. with the presumption that germany is paying for everybody. germany is not paying a dime for italy so far. this idea that is common in

german newspapers that italians are beggars and do not say thank you for the money they receive is completely fake. clear thee has to market, maybe portugal has to clear the market. is italy in a position where they have to do a debt restructuring and clear the market? luigi: no. i think if growth continues as it is, i think italy can sustain the current level of debt. what i was saying earlier is we are on a the knife edge situation. it is easy when you are on the knife edge to fall on the wrong side. it is a tricky situation to be in. the only certainty in italy is volatility. concerns will remain in the weeks and months to,.

how do you play italy, when does it get to be attractive? i think btp's were attractive on a spread basis several days ago. as we approach the 200 level, then the risk/reward becomes less attractive. i think the key focus going forward is going to be around the budget. september/october. if as implied by the comments by the finance minister and other members of the new government, they will not be irresponsible in terms of their fiscal plan and i think they do have some room for maneuver on the fiscal side, they are running a budget gdp.it of 1.5% of as luigi said, growth continues to hold up. i think that could lead to

another lowering of those spreads. i think in the run-up to that we will have a reasonable amount of volatility. juneve the eu summit in which will maybe or maybe not up on some of the reform issues. francine: i was other -- i wonder whether you think the markets are disingenuous to do with immigration, and if there was something to go wrong with europe it would be because of immigration rather than something ugly going on at the finance ministry? two legsthink they are of the same problem. italy feels left behind in the immigration problem and the economic problem. europe does not exist on immigration. the most shocking thing over the weekend, have you heard any european leader make important statement about immigration? here we have one of the most important crisis is in many years and europe is missing in action.

if you want to have a real move forward, if you want to spirit,e a european europe needs to be present in the face of a national crisis. i think the fact that we have a system where we do not have mechanisms for intervention for military or immigration crisis and financial crisis is clearly something that is not going to last in the current form. francine: thank you so much. luigi zingales. david riley, thank you for joining us. we are also waiting for mike pompeo to hold a news briefing ahead of the meeting between donald trump and the north korean leader kim jong-il and. we will look -- kim jong-un. we will look at that and look at your markets. this is bloomberg. ♪

francine: this is "bloomberg surveillance." u.s. secretary of state is holding a news briefing ahead of the security -- this historic meeting between donald trump and kim jong-un. we are just listening to the secretary of state. let's have a listen to what he has to say. mpeo: this is truly a mission of peace. this afternoon the president called the president of japan and -- the prime minister of japan and the president of south korea. earlier today our ambassador led a delegation to meet with the vice foreign minister and her north korean delegation. the talks continue this afternoon, even as we sit here

now. they are moving quite rapidly and we anticipate they will come to their logical conclusion more quickly than we had anticipated. i want to address a report in the new york times that suggested the u.s. team lacks the expertise on dismantling the weapons program. i want to address that report directly. for over three months, a group of over a hundred experts across spent multiple times a week to address technical issues associated with dismantling north korea's weapons programs. experts from the military, the department of energy, including phd's and experts, and officials from the intelligence committee covering north korea. coversame experts also north korea's nuclear and biological and missile programs. these experts include dozens of

phd's who have expertise in nuclear weapons and biological weapons. iny have advanced degrees nuclear engineering, chemistry, and biology, and other relevant fields. on the ground in singapore, we have a team that includes the senior st experts in weapons of mass destruction can cover any technical needs the meetings may present. any suggestion the united states lacks the technical expertise across government or on the ground in singapore is mistaken. north korea has previously confirmed to us its willingness two deuclear rise -- nuclearize and we are eager to see if those words prove sincere. president trump believes kim jong-un has an unprecedented opportunity to change the check three of our relationship and

bring peace and prosperity to his country. summit willul the set the conditions for future productive talks. in light of how many flimsy agreements the united states has made in previous years, this president will ensure that no potential agreement will fail to adequately address the north korean threat. we seekmate objective from diplomacy with north korea has not changed. the complete and verifiable and europe versus old d nuclear station of the korean peninsula is the only outcome the uned states will accept. sanctions will remain until north korea eliminates its weapons of mass destruction programs. if diplomacy does not move in the right direction, those measures will increase. president trump recognizes chairman kim's desire for prepared to is ensure that a north korea free

of weapons of mass destruction is also a secure north korea. the president has also expressed his openness to expanding access to foreign investment and other economic opportunities for north korea if they take the right steps. all of the preparations for the summit have come together nicely. the president met this afternoon with the minister of singapore. was an important opportunity to thank the prime minister of singapore for his partnership in helping to make this summit a reality. singapore is home to over 4000 american companies and is a long-standing commercial partner. we thank them for their help in making the summit what it is. the president also had a chance to visit with our embassy team in singapore and thank them for their work to make the summit a success. for example, at tomorrow's summit there will be five -- there will be 5000 members of the media from all over the world covering this historic event. going intorump is

this meeting with confidence and eagerness for real progress. it clear that if kim arizes there's a brighter future for north korea. tomorrow we will get our indication if kim jong-un shares this vision. i'm happy to take a couple questions. >> [inaudible] reflects in part -- is that a shift in your position? >> there is no shift in the

policy. it is the case we are prepared necessary fornces the north koreans to engage in denuclearization. we are prepared to take action that will provide them sufficient certainty that they can be comfortable that denuclearization is not something that ends badly for them. just the opposite, that leads to a brighter, better future. point, with on that the umbrella of security assurances involve removing u.s. forces from south korea? sec. pomeo: i will not get into any of the details. i can only say this. we are prepared to take what will be security assurances that will be unique from what america has been willing to provide previously.

we think this is necessary and appropriate. >> wouldn't be erroneous to assume that is not in the table? sec. pompeo: you should not assume that because of the details i give that any question has merit. isi refuse to tell you what in it, you should refuse i am simply refusing to tell you what is in it and not draw any conclusions. there is going to be a lot of work left to do. there is a lot of detail to be provided. we will not conduct these negotiations in the open with the media. we will conduct them between the two parties so we have an opportunity for real success. >> we hear what the u.s. expects from the north.

[indiscernible] sec. pompeo: i think the first part of your question is the same question major garrett asked. what one side or the other may be prepared to do. i'm not going to speak to that. with respect to the second question, the context for these discussions is radically different than ever before. the backdrop against which these negotiations are taking way that isump is a

fundamentally different than before. the president has made it clear that until we get the outcome we are demanding, economic relief is not going to be provided. that is different. there was always a have pop assist that at some point the americans would take their foot off and allow the economic opportunities for the north and reduce the capacity to achieve the deal. we are not going to do that. these discussions that will take place tomorrow between chairman kim and preside trump will set the framework for the hard work that will follow. we will see how far we get, but i am optimistic we will have a successful outcome from tomorrow's meeting. it is the case in each of those countries, there are only two people that can make decisions of these magnitude and those people are going to be sitting in the room together tomorrow. secretary, the president said he will know within a minute whether kim jong-un is serious.

these are incredibly complicated issues that have tens of millions of civilians in the crosshairs. it is wise -- is it wise for the president to be going on his gut and have you established any conditions for the will -- for him to walk out tomorrow? sec. pompeo: i've made sure he has a chance to hear many different voices, all of the opportunities and risks and we have put these two leaders in the right place. as i said in answer to the previous question, president trump has laid out a process that is fundamentally different from the ones we have gone through before. i expect the process from tomorrow forward will also be , withentally different america working to try to provide an outcome that benefits both countries. that is different than what we have done before.

>> [indiscernible] sec. pompeo: i think the hypothesis is ludicrous. the united states has been full before. there is no doubt about it.

many presidents have signed off on pieces of paper to find out the north koreans did not promise what we thought they had or reneged on their promises. the v matters. we will make sure we set up a system robust to verify what happens. it is only once that happens that we will proceed apace. that is what has been missed before. .o back to reagan day, both of the countries will have to have sufficient trust in each other and do the verification each country needs that we do the things we commit to and the various documents we sign. if we sign subsequent documents. to ensure wehave take the actions necessary to follow through on those commitments. when we do we will have a verified deal and if we can get that far we will have had a

historic change in southeast asia, in north asia, and all around the world. question.t president trump had words for prime minister trudeau. you agree there is a special place in hell for the canadian prime minister? sec. pompeo: i came to talk abnorth korea, but i am happy to talk about work with our european partners as well. we would not be in this place or have this historic opportunity without the diplomatic work that has been done by our european partners. ansident trump has led enormous coalition, including the g7 partners, who have helped

us get to this point. i've every expectation they will continue to do that. there are always your tenants in relationships. i am confident the relationships between the united states and those g7 countries will move forward on a strong basis. i'm not concerned about our capacity to continue to do what we have to do to get the outcome we are looking for in north korea. >> do you agree with that statement? tom: secretary michael pompeo with comments and questions. the technical framework of the room made it hard to hear the questions. remarkable difference from the pace of secretary tillerson.

pompeo first in his class at west point and a kansas congressman. we have heard in some of the interviews we have done over the last number of days that a number of the cia troops have come over to the state department with mr. pompeo and are no doubt involved with this summit. interesting comments. haslinda amin is in singapore. what did you hear from the secretary of state? i think he shows a lot of confidence that something will come out of it. he came across like both sides are willing and one thing for this to be successful is he did say talks are progressing quicker than thought, and in the context of the discussion this time around is different from what we have seen before. he is confident, but the u.s. maintains the same thing. the u.s. says it wants to

nuclear's asian -- it once denuclearization and until that happens sanctions will not be lifted. north korea will have to acede and is so far from the indications it is not willing. let us see what happens tomorrow. an interesting conversation, interesting thoughts from pompeo. what comes through is confident something will come out of it. tom: haslinda amin with the singapore river behind her. we welcome you worldwide from london, from singapore, and from new york. here is taylor riggs. about to see is whether his bet on north korea will pay off.

>> president trump is about to see if his bet on north korea will pay off. secretary of state mike pompeo say preliminary talk with kim's government are progressing but sanctions will remain in place until north korea gets rid of nuclear weapons. a top white house aide said president trump disavowed the g7 summit to avoid looking weak. trudeaudlow said justin was stabbing the u.s. in the back with what he called sophomoric comments. he said he you as s -- he said were aeel tariffs backstabbing. jill vonnie told an italian newspaper there was no discussion of leaving the currency. investors have been concerned about the parties that are

controlling the government. a new survey predicts the federal reserve will not speed of interest rate hikes this year , according to a poll of economists. a proportion expecting at least three more hikes dropped slightly from a march. the median estimate is for 2 more. and cryptocurrencies exchange hack hasn't made the bitcoin flub worse. there has been a $49 billion selloff since friday and the selloff has gone past 50% as an exchange called coinrail said some currencies seem to have been stolen by hackers. global news 24 hours a day on 2700c powered by more than journalists. our quiet work this as we

have in international relations a day. commodities, one screen. features pretty much flat. not much going on. bitcoin is having a much challenging day. francine? francine: i am looking on the back of the briefing by mike pompeo. european equities have not really budged. they are rising. investors bracing for one of the biggest weeks of the year of which three of the major banks will set interest rates and do have president trump meeting north korea's leader. i am looking at italian bond yields which is having a resurgence after we heard from the finances minister saying they are committed. tom: a special edition of "bloomberg surveillance/" kevin cirilli is in north korea. we are greeted by our guest, charles kantor joins us from neuberger berman group llc and

we will try to touch on some things. weinberg is with us and we are thrilled to have his decades' of perspective and international economics. note.ote a china no doubt, china will be watching singapore. what will they be looking for? >> i think china is always looking for opportunity and the opportunity china has is to win north korea and to perhaps take south korea along with it. any stumble by the u.s. in this summit between president trump and of mr. kim is going to be an opportunity for china to exploit. at harvard, they talked about the tensions between the chronicle might of china and a weaker united states and you see it between u.s. gdp among

ational gdp how much stronger is china getting and how much weaker is the united states getting? carl: that is a question for arithmetic. if china is growing at 7% in the at 2%, maybe 3.5%, they are growing twice as fast. as they are starting off with gdp on the basis of purchasing power and of converting power -- ofrent gdp and the weight gdp. china's economy is probably another percentage point greater than the u.s. as a share of world gdp. the gap is there and will get wider. china will become more powerful. francine: has world growth peaked? was the g7 a peek? we saw a tweet from president trump that said they are looking at tariffs on carmakers for that

would hurt european growth. of windsre are a lot blowing in a different directions and trade is an overriding one. you have the slow down we are seeing in the european economy. productiondent in figures last week from france and in germany. this week, it promises to be negative. a slowing economy is a cloud over the world and economic outlook. what is interesting is to hear chancellor merkel say at one moment president trump has a point and germany should spend more on defense. it is a great way to get the economy going. germany has a surplus. maybe trump is giving mrs. merkel and angle. francine: when you look at world growth and tariffs and trade, how should markets be positioned? is it difficult for them to figure out because of the

instability of negotiations for president trump? president trump is a wildcard on a trade. he left the g7 summit threatening more tariffs on autos. i agree autos are important for europe and the united states. whether mr. trump and mr. trudeau gets along, that bilateral flow of cars between ,anada and the united states that is an important part of the u.s. auto industry. there are big pieces on the table. a lot of uncertainty. haslinda: what is the biggest risk here? is thehe biggest risk immediate risk -- i think the biggest risk is trade.

top disorderly end to the and north korea would be a big risk. i think those are the two biggest on the table and the background, the slow down in europe. even though it is a smaller part of the world, it would affect most major economies. tom: it is an international exercise. charles kantor is trying to figure out where to move in the equities market and he gives us a briefing. prodo you as a market synthesize all of what mr. weinberg is talking about? all of this noise and the uproar over the weekend? how do you use it and adapt within trying to not lose money? : we are stocked with the starting part of valuations and the degree to which there is in the degree the marginal safety, probably on the

margin, less attention to the global stuff going on. today is reasonable. we pay attention. we are very worried about global trade of because the markets are as interconnected today as ever. what takes place out of the u.s. influences all of our companies because so much of the revenue growth comes from emerging markets and developing economies. for now, on the shorter-term basis, we follow the volatility index on the equities tied and the credit side. on the credit side, it is all contained where there has been a dramatic pickup in volatility. of us enjoy the academics of foreign exchange. i remember when i first started studying years ago. you have lived foreign-exchange not only from south africa but sterling.

how do you fold foreign-exchange dynamics into trying to not lose money on the equity markets? the conversation is so important for the emerging markets policy makers. as you had a this surge in dollar value, the local central bankers have responded to a short-term shock in inflation by rates whichnflation are dampened demand. if they can set aside the supply side from the stronger dollar and focus on the local economies, it would be in a much better place. there is a tremendous amount of growth taking place in the emerging markets led by china, india and those markets will increase for you as manufactured goods and services. is with us. kantor dr. weinberg, thank you for joining us.

secretary of state pompeo's press confer' singapore. there will be a press conference on wednesday. a live leaving and will have a live interview. drew matus will join us. -- a live meeting and we will have a live interview. this is bloomberg. ♪

tom: good morning. a special edition of "bloomberg surveillance." we are looking at any number of things ban. is with us.or -- we are looking at any number of themes. half what around the world to get a smart on washington. we will bring in kevin cirilli.

-- halfway around the world to get smart on washington. senator mccain put out a tweet that went to the president. this is the way it is. how will his colleagues respond on capitol hill to his clarion call for response to quebec? kevin: it is interesting because republicans on capitol hill particularly centrists led by senator john mccain are arguing that president trump needs to change course. that said, from the administration's perspective, they feel confident that a nafta is not something that will help them with their political base. you have heard this from president trump who said it is not sure it would hurt the united states should they with the drop on the bilateral -- should they withdraw on the

bilateral deals. there are republicans on capitol hill that feel this administration needs to have a negotiation that is a long-term denuclearization deal. behind me tomorrow is where president trump and north korean leader kim jong on will meet. -- he isng to get going to need to get ratified. tom: mr. pompeo spoke and all of us will notice a difference from secretary tillerson. compare and contrast, pompeo's performance with that of advisors cuddle low and navarro over the weekend. -- kudlow and navarro. it seems to be starkly different messages and tone, as well. kevin: the administration is arguing the trade talks are not going to be impacting the denuclearization summit.

i was at the room across the island of the jw marriott where mike pompeo was set to address the reporters and global media. i can tell you that headlines crossing the terminal and he said there is no deal set without a complete denuclearization and they have a check and verify system in place should the north koreans agree to anything. secretary pompeo will be traveling asia after the summit to meet with u.s. allies to discuss the outcomes of this summit. tom: what will you look for in the next 24 hours? what is the agenda? kevin: president trump and kim jong-un will meet in that hotel right behind me tomorrow at about 9:00 a.m. asia time. 9:00 p.m. new york time. -- thatl be the most

will be the most monumental occurrence of the summit. delegations met but this is a one-on-one meeting between president trump and kim jong-un. tom: kevin cirilli, thank you, and singapore. is awe have in our desk wise guess, charles kantor and we are thrilled to bring you drew matus at metlife. with an all of the distractions we have right now, i believe there is a meeting on wednesday with said activity. -- fed activity. fed ishey -- i think the in a,d that markets stay not constrained way, but they do not want markets to be volatile. if it they do not go on wednesday, it could be more problematic.

tom: on a basis, we are not near restrictive, are we? >> i do not believe so. the taylor rules is probably in mid-freeze and we are not there that. we should probably be higher. you know how i feel. i do think fundamentals have changed. you take off a few basis points for demographic shifts. normal interest rate is going to be close to where it was precrisis. tom: from economics over to your world which is the real rate. is money free? >> money is less free. the real challenge and equity markets is the fight against the fundamental earnings and what you pay for their earnings against the prospects of higher rates.term that is the course of volatility. so much of the last decade, probably less from earnings

growth. last couple of years, as much from earnings growth and less for multiple expansion which will be a driver of volatility. to us, it is great, back basics. francine: do you expect more volatility to come and does it come from good volatility? drew matus: i think it is anxiety. i think people have trouble wrapping its head around the idea that u.s. could go well beyond the past record it said years ago. it,ink when we think about when we look at the forecasts from the street, most people put recession in the u.s. around 2020. of the past couple of weeks, it has been backing up. some people are saying 2020 and

maybe 2021. the fact of the matter is when you look at the next 18 months, there does not seem like a lot of risks to drive the u.s. economy into recession. it will take a shot but will take more than one s hock. francine: what kind of shock? instead of a g7, ag six plus six plust that -- a g one, is that the kind of shock? : i think if you look at 2000, 2001, it took corporate malfeasance and the stock market crash and a terrible attack on the u.s. it took multiple events to drive is in recession. we need to ask, what will get the u.s. consumer to pull back?

when there are more job openings then there are unemployed people? something has to break and it is hard looking at the current department to find out what that break would be. haslinda: speaking of shocks, asia is bracing for shocks even though the fed rate hike is factored in. we have had india and indonesia so the fed shouldn't tighten quickly given the impact on emerging markets. consider thed plight of the emerging markets? drew matus: years ago, one of is fed interest rates were to low and that was hurting emerging markets. now s too low -- now it is too high a it is hurting emerging markets. the fed is going as low as it can. i think a bigger risk of the global economy is if u.s.

inflation picks up and the fed has been on pause and have to play catch up. i think that is what the fed is trying to avoid at a gradual pace. haslinda: would you say the fed is right when it said it asian economies are poised and in a good position to navigate fed movement and policies? economyus: if the u.s. is growing, we will be important a lot to consumers and that will help the global economy and not just the u.s. economy. tom: a way to make america great again. gdp, -- while a gdp, you changed the avocado price at

whole foods. hasspirit that drew matus been one of the great advocates, some say it is going to roll over. you are shaking to your head. charles kantor: we spend the time with companies and the companies are seeing the same that drew refers to at the macro level. when you come to america, you come to work in a narrow place with innovation. as long as of the regulation reminds moderate -- remains modest and allow companies to allocate, you find a lot of employment and spending and a lot of confidence. of the been the hallmark economic system for many, many decades. tom: along that line, worried about fiscal challenges clicking in. you do not buy it, do you? drew matus: there will be fiscal

challenges. worrieder when we were treasury debt would disappear and there would not be enough to go around for i will store research reports on how fed could operate. five years prior, we will work with the deficits were too large. i have learned, deficits can be solved and most fiscal issues can be solved and they can be solved relatively quickly. francine: charles, talk to me about treasuries. do we see of flattening yield curve and does it start reversing? is thathe fed biggest dilemma? charles kantor: the yield curve has been a dilemma as the short end has gone up in the long the end has now moved much. the dilemma is as important as it relates to the influence on at present value of cash flows. the long end of the curve is pricing in reasonable real

growth and the move in the short term is a reflection of what the fed has done and expected to do. i think many decades ago as yield curves inverted, a bearish signal. i would be cautious as we move from extra low. as it relates to the inversion, should it happen, it is not enough. whenine: what is your take it comes to the higher dollar? this is where was a lot of the fault lines. does dollar go higher or does it stabilize? willes kantor: the dollar move as it relates to underlying economic growth. what impact the strengthening dollar has on emerging markets is where it's knees increased attention. many of the central banks are seeing strength in dollars.

-- is where it needs increasing attention. manifests in other markets, that will be a headwind for the supply of the u.s. goods across borders. haslinda: the fed and the ecb moving at different speeds and that could become more pronounced. what does it mean for the market and what should the market here in mind? i think the main thing in the united states is why the u.s. treasury yields are moving? they are moving because really higher andmoving they are a reflection of expectations for future u.s. growth. we are finally beginning to shed at the ideal we cannot grow above 2% in the united states. i think people had gotten it into their has that the best days were behind us.

markets are beginning to rethink it after we are seeing gdp growth that looks like it could be in excess of 3% in the second quarter. if the government had fixed the issues with the gdp in the first quarter, it probablwould have come in at 3%. we see the repeated 3% type numbers and people are beginning to rethink that the u.s. economy is on permanent stagnation phase. tom: charles kantor and drew matus with us. we heard from secretary of state pompeo about 30 minutes ago. looking forward to a busy schedule beginning at night but him -- beginning 9:00 p.m. tonight. up.isa coming ♪

francine: "bloomberg " and i am in london. haslinda, on the action where you are. a look of whether president trump can make a success of the summit. what is at stake? haslinda: a lot is at stake. denuclearization of the korean peninsula. that remains to be seen. the historic summit let's the 24 hours from now. all eyes on singapore. the meeting between president trump and kim jong-un. of first meeting of the 2, any sitting u.s. president and north korean counterpart. whether it will be successful, indications of macao early, he seems to be upbeat. he said talks are progressing. -- indications of pao early,

, he seems- of pompeo to be upbeat. he said the context of the talks is very different from the talks held previously.there's a sense. he did point out that demands from the u.s. remains the same, denuclearization of the korean peninsula quickly, completely. this may not be what north korea has in mind. we have to see what kind of concessions and compromises will be made tomorrow. francine: thank you. straight to bloomberg first word news. here is taylor riggs. said theike pompeo settlement between north korea can only have one accept the results. he spoke in singapore after meeting with north korean officials. >> the complete and verifiable denuclearization of the korean peninsula is the only outcome

the united states will accept. sanctions will remain until north korea eliminates weapons of mass destruction programs. does not move in the right direction and we hopeful it will continue to do willhose measures increase. taylor: he said the u.s. will help north korea with investments. angela merkel is trying to push global diplomacy forward after the g7 summit. she said she supports the idea of a summit between president vladimir putin. she told german tv the president was not entirely wrong in person germany to increase defense. of china and russia are cementing the rise of an asian security bloc. xi jinping and vladimir putin had a corporation organization at a meeting in china. ofcriticize of new forms

protectionism. anna switzerland, voters rejected a proposal to radically change the way banks lend money. it would've prevented commercial banks from lending more than they half in deposit that would've left the swiss central bank as the only source of new money. the president called it a dangerous experiment. global news 20 grams a day on -- and on tictoc on twitter 20 grams a day on air and on tictoc on twitter. i am taylor riggs. -- 24 hours a day on air and on tictoc on twitter. charles kantor and juventus with us -- and drew matus with us. i want to bring her in bring her new book is "on the edge of chaos." for more important is what story

is a chemist out of zambia to american university and then top oxford. -- and then to we are thrilled to have you today. when i look at singapore and the collapse of g7, i bring it over to the fragility's of g20. how fragile, after this weekend, 's g20 in on emerging markets institutions? : i would not say collapse of the g7. most of these requires some type of a reboot and innovation. the g20 is clearly vulnerable in a that respect. i do not think it means that institutions cannot survive in what i consider a shock to the system and the way of president trump. i think his approach to encouraging a new engagement is important. ofe generally, the issues

how these institutions will survive and what they will stand for is central and critical and must be debated. the fact that chancellor merkel is saying there are kernels of truth in what president trump is saying in regards to the need for russia, the debate from russia, tells us we need to revisit these challenging questions. tom: in these kernels of truth we heard,s a theme where these institutions will be with china is the heart of the matter as we have now pull china and to our global institutions? dambisa moyo: yes, i think that is the centraluestion. more fundamentally is these very fundamental ideological differences between the west, which we know has really carved a view around the individual. the idea of market capitalism and freedom and democracy are really about utility of the individual.

china's approach is utility of maximization and very often at the cost or at the concerns of the individual and how businesses react and how we will be able to compete in a world i've decidedmore, leading to more of the chinese view is the question at hand. tissues around globalization and concerns around democracy are pushing towards this greater debate. trumpne: overall, is the administration and brexit the solution or the problem? dambisa moyo: i think it is an artifact of broader problems. in my book, i talked about these problems bubbling under the economy. we can say stop markets are performing and we are seeing growth and improvement in unemployment numbers. there are structural problems that are threatened to end the global -- two upend the global

government. technology and the risk of a jobless underclass. francine: you have politicians there are trying to fix it. a phenomenon because of what we have seen in underlined economy which people are not part of the solution? dambisa moyo: i would say so. the collapse of social mobility. a whole host of other concerns degradation of living standards around the world. we have seen significant improvements. at the same time, we have seen a collapse of real wages and people in many parts of middle miracle have suffered -- middle -- havehave supper suffered and that is the impetus of trump and brexit. it falls to economics, i would argue and around living

standards. haslinda: you talk about an overhaul of. you talk about asia versus europe and a versus the u.s. which region needs it more? mybisa moyo: i think that fundamental believe in of these systems, i am not an item long. i think all of these systems have their caught intelligence. ogue.am not an ideol what china has done is show it can innovate and it was very close society. we have seen over the last three decades they have moved much more in engagement with the global economy and we see percolating at low levels, the rise of democracy. what i would argue for western society is that, unfortunately, we have been forced in

innovation and the financial crisis which these aspects have and therket capitalism questions around free markets and free people were up for innovation. tom: i want to fold visit to the real world. mentionsin her book richard dobbs and his team and they have done great work. what investors may need to lower their sites says mckenzie. fought against the and so has drew matus. do we need to lower our sites? o'er the idea on what a ceo has to figure out? : i would hope not in the challenge the ceo faces, can they innovate --

against the backdrop of the last 8-10 years. as rates increase and cash flow increases it meaningfully against a change fiscal policy and a lower taxes, the challenge is can they take risk? can they innovate? let us hope they are not -- let hope hope they continue to bele that tomorrow will be better than yesterday. htm: you have foguth -- foug this. the idea of a fed going into a new lower terminal rate. you have not bought it. where we were to in 2006 of a run rate of the u.s. economy and the g7? drew matus: it will be a little slower. a lot of countries, china experiencing

demographics that will push down potential growth rates. ours is very modest. one of the reasons people are focused the debate on immigration, they tend to be risk takers. they are abandoning their homes and coming to the united states and trying to do something with that. what you do is you bring in a lot of people who have traits you want in your economy. you want people who are risk takers and the like. as we are able to grow and maintain a growth rate in the shorter term of around 3%. you will see productivity rebound. attract.egin to is there will be more people want to come to be an estate and there will be more growth -- to the united states and there will be more growth. the period after the great recession, a period to look away from.

francine: thank you. charles kantor and drew matus and dambisa moyo will be staying with us. we will bring you our interview with the london of mayor, he is sadiq khan. relations.k foreign this is bloomberg. ♪

taylor: i am taylor riggs. apex partners may make an offer for bca marketplace. the private equity firm's proposal was rejected last month. 8 to make ail july firm bed or walk away.

walk away. investors are betting on a new energy cars in china. solar of the largest batteries soared. customers include volkswagen. increased group has criticism that jeff bezos became the richest man on the backs of low paid workers. amazon says it has identified the concerns and is addressing them. that is your business flash. francine: thank you. emerging markets had a rocket -- rocky market. tomorrow, we hear from argentina's central bank after the country secured a $50

million credit line. charles kantor and . ♪oomberg surveillance -- drew matus and dambisa moyo. that mean we can continue growing from here. i would say your less optimistic that some. dambisa moyo: i am less optimistic. the reason i talk about returns declining because we have structures that have not been addressed. the u.s. has been harping on debts and deficits that will come to mind over the next 30 years and we need to address that. the cost of capital is quite meaningful. we have to recognize that policy has been incredibly supportive for the kinds of record-breaking

numbers we have seen in the stock market. there's a will question in the world of proionism, not protections of goods and services and the movement of people and whether we will need economic growth from the imf has argued we will see a slow down by 2020 in the global economy. tom: we are seeing a barrage of accounting changes. i did a davos panel a few years ago. this transparency within your world. is there a shadow banking or transactional world out there we do not know much about? dambisa moyo: i would argue, i do not want to make it sound like it is shrouded in dodgy behavior but the dislocated markets as emerging markets tend to be means relying on some buyout from's for exposure.

these markets are not as transparent as you would see in a more developed economy and that creates challenges. i am optimistic we will see more transparency not because of incidences because of things abroad but more generally because of social media and emphasis of more regulation. i think there will be more pressure for emerging markets investment to become more to the forth. we saw a massive outflow, the biggest in 18 months in may. can emerging markets avoid a crisis? : we can't just talk about emerging markets but the countries involved. if we just talked about emerging markets, there will be challenges. i think a lot will because it traded in certain countries --

concentrated in certain countries and others will be doing fines and benefiting that as the. is growing and u.s. growth will pull along a lot of the rest of the world. will you be kantor, u.s. centric in your transactions? : you cannotor operate in just the u.s. centric view. companies have found ways to take their goods and services to the global market. the u.s. interview only work in specific instances like us home builder. i want to come to drew's optimism. this idea, are we midcycle or late cycle or the end of the cycle? i think he paints a positive picture that we are by no means anywhere near the end of the cycle. if that is true, equity returns will be handsome from here

because the starting point of valuation is not demanding against that view. i share his optimism. second andngs growth primitive slow from the breakneck speed that you got from lower taxes, i think equity returns will be quite prosperous. tom: i want to switch to a single best chart. i put this together. these charts, this is the u.s. share of global gdp declining modestly.ars, this is the miracle of china. their share of gdp coming up a few years ago at 50% and we are down at 25%. at some point, we will cross. andt a fact we will cross

china will have a larger part of gdp? a separate question, what is president trump going to do about it? : i am optimistic that china, 50 years from now, will be a bigger share. impact in many other parts especially emerging markets, one could argue, perhaps it is a bigger share of the world gdp. i do not think the next equilibrium will be a linear path. i think there will be a lot of challenges. i would not dare to try to suggest when it might occur. i am a bullish on the fundamentals in the united states in terms of it being a place where it has water and traditionally it has been able to attract immigrants, which are risk takers. there are very positive stories

in the united states. the united states remain the country that is good at innovating and changing direction very quickly. it feels like it is at the wrong path. i would argue and i would hope president trump and the administration recognize we have been in the world of protectionism before after the 1930's depression. that did not work. it slowed down the recovery and increased unemployment. and growth was particularly hampered. we know what happens in a word of acute protectionism. i hope it is taxes and not a new position. francine: where are the markets complacent? of possibleecter protectionism, it seems like the markets are largely ignoring it. are they not thinking it is a possibility? drew matus: i think they are waiting and seeing. you hear a lot of noise about

trade and do not see a huge amount on the other side. tohink people are waiting see what happened with the trader numbers and tariffs before they try to price it in. side, it islitical difficult to price geopolitical risks and that's when you see the markets run around when people try to price the risks because we are not good at it on wall street for tom: we are not good at wall street and i think we have experienced that. what are we missing in the markets right now? what are you worried about? charles kantor: if it is complacency, he is in the bond market against valuation. markets in the bond against valuation. the influence that low yield has had on corporate capital allocations and the degree to which capital has been allocated against the cost of money as

opposed to the cost of equity and the degree to which a bad investments have taken place which will hurt future growth later. if the complacency is out there, not in the equity market and may in the bond market. tom: i did a calculation of turkish really yield a couple of days ago. the idea in america we would get a tangible real deal, do you deal with that every day? : drew isantor probably better to answer that. drew matus: we have seen that. on inflation break even levels, kind of 215. we are not seeing the expectation that inflation will accelerate permit despite the call, they talk about inflation. it is not inflation driving it but a rethinking of how fast the

u.s. economy can grow. haslinda: i get the final question. yields and -- and be friends? drew matus: i will turn to charles and i say yes. i think the growth is reflective. charles kantor: i would agree. the problem is that everything is correlated. low yields remain high stock prices and now high-yield will mean higher stock prices. things are so unusual. there is more global growth and more real growth and that is good for earnings a good for risk assess and will provide challenges for emerging markets. what are you going to look for in singapore? : i am notyo optimistic we will have a long-term sort of strategy outlined. i think it is a very, perhaps, we are over our optimism.

i think it will be a very early conversation to allow the sort of people who are the worker and havectually engage a more concrete discussion about a path to denuclearize korean area. i do not think we should have anything expectations there will be a massive agreement. i do worry that perhaps there is too much euphoria put in here. tom: dambisa moyo, thank you. the new book. drew matus and charles kantor, thank you. and thank you to haslinda and kevin cirilli. we continue our coverage for you look for substantial coverage this evening and singapore. stay with us on bloomberg radio. jon ferro will get it going. this is bloomberg. ♪

>> the context for the discussions is radically different than ever before. president trump and kim jong-un prepared to move for a historic face-to-face and will have the first minute alone to size each other up. backstabbing. an abrupt180 an -- 180. rate decisions within 24 hours of each other. the place the whole world is focused on right now is singapore. i am david westin with alix steel. this week's packed for alix: it is. you did work on singapore. he