: good morning, from bloomberg's headquarters in london, i am anna edwards. watching the dots. bond traders brace for moves in the wake of today's fed decision. what will policymakers signal about the path ahead? now.s averted for to resume a serves of brexit rebellion by pro-eu lawmakers in her own party. can she unite the whirring factions before they bring down the government? re-think.s they plan to cut.

one in 10 jobs in elon musk reassures everyone that car production is on track. ♪ anna: good morning, everybody. this is "bloomberg daybreak: europe." matt is in berlin, i am in london. the first quarter for a bit came in at 951 million euros, ahead of the estimate of 818 million euros. the sales numbers oh, does look a bit lighter than estimates. the short positions hit a record high ahead of the first quarter earnings, so bear that in mind when looking for market reaction , if the market was set up short

of these shares, it will be interesting to keep that in mind. matt, let us talk about where we are on global market, given all the drama in singapore yesterday, the trump kim salmon. is i what the risk greater has for us on a day to. by aarkets are keepingn vet, and we have plenty of central bank news flow to keep us busy. the chinese market is under pressure because of zte has opened shares their, and we will have more details on that later. we put the dollar here because it's looks like havens are weakening just a bit. the yen dropping a bit in the wake of what we saw there between trump and kim come the pledges around denuclearization. they were lacking in detail or with detail, depending on your view. it seems that if we are going to get a hike from the fed later on

today, there are plenty of other headlines to watch for when comes to the fed, particularly what they say about unemployment, growth, neutral rates in the u.s.. the ecb an are ill on the slate of this week. we had u.s. inflation in line with estimates over the past 24 something else to factor in. good morning, matt. matt: good morning, anna. i wanted to point out a story that caught my eye this morning. risingalyst saying that rates and rising debt deficits at the same time are a suicide mission. as we go into the fed meeting trying to figure out what they will do, three or four times this year, and three times next year, we will see when we get the fed expectations. no matter what, the path is higher. deficits are going to be increasing as well. jeff gordon luck looking at deficits at about 125%, of the gross domestic product after

2030 he is concerned that that will push. 10 year yields up. 10 year yields in white on this chart, this goes back to 2000. you can see deficits in the blue lines getting bigger and bigger, since the financial crisis. we are looking at a 10 year yield of just under 3% right w. he thinks that it will double to 6%. that is a concern of jeff, what e mo read stories on the terminal today. anna: yes, and we'll talk about that and the fed rate decision, thinking about his comment on that regard. anlooks as if we could see upside for u.s. equity marts at tta of the trading day. up between two and 3/10 of a percentage for the s&p, the dow and the nasdaq. a look at what is happening on the program, to resume scrambling for a brexit compromise. we will speak to our next guest, ceo of a manufacturing association in the united

kingdom. what he has to say about the customs union, conversations, standards, visas, all of that stuff. let us get the first word news update, here is juliette saly in singapore. >> anna, thank you. with a rate hike seen as a given, bond traders have raised forajor move in the aftermath of today's five decision. betting on the timing and pace of the rate increases. the yearcond half of and beyond. that leaves plenty of room for market moves depending on what officials signal in key areas. join us at 7 p.m. united kingdom time for the fed decisionh inst analysis, with top guests including janus capital management fund manager, bill gross. north korean leader kim jong-il and has said that donald trump offered to lift sans against himent when they met here in singapore.

that is in contrast with the u.s. president's rhetoric that the economics structures would remain. this comes as trump repeated that he can do a deal with north korea, saying that he is certain that kim jong-un is on board. >> we have developed a pretty good relationship in terms of gettinsothing done. it got done. i think it was a terrific document, it is a starter, but it is a terrific document. there are things you negotiated after that document that are also very important. we are going to get rid of cen llistic ssile sites and various other things. >> the u.s. special counsel has warned that russian intelligence services still have active --rations into american up s. that was by robert mueller. and 13three companies russians charged in the indictment alleging election .odeling by social media

prosecutors uncovered evidence of other individuals and entities continuing to engage in similar activities. ismany's chancellor merkel turning the tables on president trump, saying the u.s. runs a trade surplus with europe when services are included. they rebuffed trumps criticism import auto imports. those tariffs by trump would be ingerm carmakers the hardest. >> trade surpluses today are calculated in an old-fashioned gooed but if you look at services and include them in the trade balance, the u.s. has big surplus with europe. juliet: global news, 24 hours a day, on air and at tic-toc on twitter, powered by more than 2700 journalists in over 120 countries. you can find more stories on the bloomberg at top .

the forecast is certainly often now, and now we are seeing general weakness coming through in asian markets today. yen,o also have of weaker boosting japanese stocks. the nikkei up about points 5%. the wti crude,n and we seeing the weakness coming through in hong kong with large-cap chinese stocks in particular. the has also been an uptick in indian stocks and apple suppliers in taipei today. looking at stocks in detail, zte is very much in focus, resuming trade for the first time since april. , andad fallen about 31% 10% in the daily limit in shenzhen. purchasings reprint $6 billion in its first ever share buyback, after completing that $80 million sale of its memory chip business a few weeks ago.

there was also a big m&a deal happening down under. putting his stamp on the company, hitting 9.8 billion dollars for an australian gas provider, that is valuing the company at 11 aussie dollars a share. you can see, they are trading at $10 in sydney. anna: thank you very much, juliette saly in singapore. bond traders are bracing for large movethf decision.d they are split on what policymakers will signal about the timing and pace of tightening in e second half of the year and beyond. will theomc shed any light on investors?es taking we are joined by the chief economist at jefferies. good morning, david. let us talk about what we learned here. 37 were asked in the bloomberg survey about what they acted. hike,r they expected a that would not be as a prize to

markets. what are you focused on from the fed? david: my colleagues have been looking for for rate raises this year from the fed, and they are not expecting any major changes today. but if that were thappen, that would be a surprise. what they have noted is that people really have been focused the ratesll happen to in the u.s. in 2019. we are in the directional travel where rates in the u.s. carry on up.g at some point, there will be more focus on what the neutral long-term interest rate in the u.s. will be. by 2019, they could be approaching up. intere rate rise?u think lies, especially as growth seems to be topping out here, and deficits are rising as good logh said? david: at the end of the day, somewhere between 3% and 4%

ght se a nl range for a at the moment. we have a situation where even if the u.s. has slowed slightly, you still have robust growth in the u.s.. they think they have gone through the so-called incremental unemployment rate and at that point, they might think that they need to take rates higher. but that is more of a story for 2020. if the u.s. rolls over significantly, then maybe period.w down for a but we are in a period where they are trying to normalize. anna: interesting that you mentioned doing the things every quarter. reporting suggesting that perhaps the fed would like to introduce more press conferences around every meeting. fromurse, that gets away

everybody focusing overly or only on those meetings, but it results in more communication. but the fed a firm he doesn't like to do very much for violence. how do you square that? david: if the market knows it is priced in, -- we're at this. where you have dust we have the bank of japan buying bonds, we have gilt yields anchored at incredibly low levels. at the end of the day, these differentials and rates are getting bigger and bigger. u.s. yields are going higher, it is a debate where they go, but obviously the spread is getting wider. this has an effect on global capital flows and it will be an interesting next 12 months. anna: it wilbe lot to talk about. on the subject of unemployment, do you think they need to revisit the story in the u.s. about what unemployment has kept on falling?

wanted it tohe fed be at them of the year. maybe there needs to be more talk about that. i have a chart here on the is not really it showing wages rising, they are crawling higher as unemployment vi it is a debate we are everywhere. the ecb seems more confident that wages are accelerating, but when you lten to the fed and the bank of england, quite clearly, there seems to be a lot of flex in the labor market. they keep revisiting what is a neutral unemployment rate. forget, if you go back to the 1950's-19 60's, unemployment in these countries was significantlyower. it is on the most recently that we've had higher unemployment. there was also the supply side markets. a big growth in employment of

female workers, older people coming back into the labor market, a lot more part-time working. this is all posts the financial crisis and it rips apart normal models. matt: david, i will go to later this afternoon, latvia for the meetingw. what ithe most important question that i should put to ?ario draghi and co david: are they actually going to give anything in terms of modalities that they will be doing beyond september? they stop that buying bonds altogether say, in december, after the fourth quarter taper? central bank have some more flexibility on what they do more than what we already know? it could be the case that they support italy for example going forth, more than was otherwise suggested. the reinvestment point i think, is important. but i don't think they will give the actual more analysis this week. we will have to wait. it is going to be a fascinating

meeting. matt: all right, david. we will continue talking about that later in the program. david owen, chief economist at jefferies. we have a lot to go through this morning especially concerning central banks. join us later, we will bring you the federal reserve's decision with instant analysis. top guests joining us will be janus capital management fund manager, gross, and former fed vice-chairman and princeton economics. anna: professor, alan blinder coming up on the program, to resume may promises concessions to rebels. but can she come up with a compromise to ease the fears of o-eu lawkers and the european union? shares tookter, zte a dive as the chinese telecom manufaurer agrees to pay $1 billion in penalties and overhaul management. we will bring you the latest. this is bloomberg. ♪

♪ anna: good morning, everybody, this is "bloomberg daybreak: europe it is 6:18 if you are in london, and let us talk about policy.ingdom theresa may has never really escaped of brexit defeat after promising concessions to rebels party.own she reassured pro-eu members of the conservative party that she hearns over the possibility of leaving without a deal. i balance could beat off to strike as the clock ticks toward brexit. joining us with more from london is bloomberg's flavia krause-jackson. glad to have you with us. do we know exactlyhat theresa may said to the prot eu side? love you: a little bit of the last thing you said.

flavia: a -- floo little bit of the last thing he said. we won parliament to be guiding this process. what she essentially said, was trust me, i wille it right. i will agree on a and b, and i will get back to you. there are different clauses and this and that, but the over arching point happening is that it is getting very, very hard for theresa may to manage both sides of her party. the idea that she has conceded to the pro eu side, held for about two minutes. because everybody was screeching at everybody else. you have a government saying they made no concessions. you had the brexiteers saying no, we are happy with everything, she has not given anything away. then you have the program meiners suddenly getting very theresa mayg that

look me in the eye and such a would get everything right. so what it is looking like right now is that theresa may has until friday to come up with this perfect compromise. if not, the remainders, if they feel betrayed, they will go after her. both sides now are getting very, very angry. matt: what the probe made promises she to them, they are putting their trust in her. .hat does this mean for them lavi they want a sensible brexit, they want something smooth, and they want probably meant to be going in the process. brexiteers think that that is just ging away brexit. the direction of travel seems that theresa may does not really have control, she has been

losing control her aggressively. at some point at the end of the line, it will be the parliament does have us they. if theresa may and the talks in brussels reach a impasse, they might be a way to reach reement in november, parliament will essentially take back control. facing the are still same questions, aren't we? about how clean the break should be and who exactly in th system in the united kingdom should be deciding on the break. but none of that involves brusse does this mean for negotiations with brussels? flavia: think what it means is that people in brussels are looking and saying, carry on. commons. scratching their heads, wondering what is going on. most people would be forgiven for thinking and saying it, because it is not any longer looking like it is about brexit or what we will be doing, it is about a prime minister who is living day by day.

there is no week that goes by where there isn't some kind of crisis. it is also very confusing. brexit to a certain extent has been pushed aside, and we're looking at a rather farcical, parliamentary debate and war, where basically the party is tearing itself apart. anna: thank you very much. flavia krause-jackson joining us from london with the latest on the brexit news. atef european coming is jefferies is still here with us jefferiesconomist at is still here with us, david owen. what do you find interesting, where are the crunch points for you, david? david: she was absolutely right, lastnfusion late night about what theresa may promised the rebels. clean brexitlike a is much less likely, and it looks like the government might

have to request an extension of article 50. at the moment, i don't see a scenario where the united kingdom gets erything done and dustedy march 29 of next year. they might have to ask for a time period beyond that. that, to me, was always obvious. theresa may's biggest mistake was triggering article 50 without actually having thought the thing through. then when it came to the transitional phase, not actually asking for article 50 to be extended out. . but they will have to do it i think that is where we are going nothing will get decided ultimately, not at the rate we are going currently. matt: is that as her into holding back the u.k. economy? it seems that we never make any issue, ofn this whether the united kingdom is going to be out or in, as far as the customs union. is that kind of thing holding back business spending decisions from being made? david: the bank of england did a

survey where they asked business is about uncertainty related to brexit. that hasn't picked up sharply, but obviously, the surveys are pretty lacking in terms of being a bit out of date by weeks or months. what we saw recently in the data is that trade flows are beginning to roll over. this is not just trades that the u.k. does with the rest of the eu but with the rest of the world. the point here -- the bank of england was expecting that trade with the united kingdom after brexit, would slow down significantly. that did not happen, maybe because the currency adjusted. now, we are at an area where .rade flows do seem to be slowing there is much more question about fdi flows going forward. in it is having an impact.pact it is much more of a slowing down. it is just resulted in much weaker growth. anna: what about manufacturing?

we have this chart here on manufacturing on the bloomberg. manufacturing numbers came in at the start of this week. we had more data yesterday that seemed more positive on the jobs front. the state of the united kingdom economy, briefly, david? david: again, the bank of england wasesgle searches, and estimates of gdp growth in the first quarter were significantly stronger than the actual gdp. now we have indications for second quarter making manufacturing look except week. we're seeing manufacturing looking weak. matt: david, you will stick with us, we have more interesting things to talk about. chieeuropean economist at jefferies, he will talk with us about more central bank decisions coming up. tesla is cutting then percent of its workforce. though, toe enough fix the company's deepening cash flow problems? we will bring you the latest.

this is bloomberg. ♪

manus: -- anna: it is to: 13 in the afternoon in japan. the dollar against the yen. we have seen some dollar weakening througe asian session. getting away from those haven assets in the wake of what we saw in singapore yesterday. emily joins us. >> let's start in tokyo. it is one of the bright spots in asian trading. we have the china mainland down. australia down as well. central banks are the focus. three press conference is over three days.

let's look at what is going to happen today out of the fed. we are seeing a certain rate hike out of the moc. the debate is whether the path will speak in this year. econom say no. they are still expecting three, not far. check out this chart. if you look at the historical gher gdp, gdp for the united states is doing well. you can see that at the end of the chart. t not as good as it has been. that is why economists are still saying they will see three. let's see what is happening on the oil markets. great bloomberg exclusive story, russia plans to propose a turn toward october 2016 connection levels. look at how much they have taken off of the market. that is ahead of the big opec meeting next week. while more oil production will

hurt prices, jeffrey gundlach saying he is expecting oil to rise to $90 per barrel. matt: thank you very much for that. some of the more interesting stories of the day but you should be focusing on as this kicks off. mark all is turning the dollar against trap. the comments are rebuffed to the presidents sustained criticism of german exports. >> the u.s. has a big surplus with europe when you include services. that was the german

chancellor speaking last night in berlin. david allen -- a is still with us. it's not like that is new. economists have been making since donald trump started bringing the trade deficit forgets. issue. an old economy services are where it sat in the new economy. he is not going to buy it, is he? up a bigy is running surplus with the u.s.. the reason that the german account is running at a percentage points is because the surplus with the u.s. has gotten bigger. what we also know is that the you see this massive flow out of germany into the u.s. fixed income markets.

this has been helping finance on the. actual deficit current account. the eurozone has been much more exposed to the u.s. fixed income market. at the end of the day, germany is r a with e u.s.. she is trying to deflect some presser it -- pressure internally within the eu. the narrative is that the u.s. is putting pressure on the eu. france concerns germany. ofy are saying, you're part the problem, you are running the surplus. i can see, from her perspective, she is under some pressure internally from the eu. anna: i have a chart that illustrates the conation we're having. this is the services side of things. it has been oscillating a little bit. she is right and terms of the full eu picture. it is more complicated when you

get into the german export machine. trump wants to talk to individual compani. he likes to cite german cars. he will have to expect that he -- except that he deals with europe. >> when it comes to how he views angela market-- is the most important of it. you are absolutely rig. imagine that when you look at the standout countries that are running huge current account surpluses, germany is there. there will be a bit of pressure on her. when it comes to resolving all ifthe eurozone issues, germany didn't have surpluses the euro would be stronger. interest rates would be higher within the system. is pressure coming at her from other places as well. i'm going to forecast that

trump won't accept that even if it is the case. he's go t want to have bilateral discussions, especially with angela merkel. take a look at.ar ntgeinto th countries shows which the ecb has been buying of late. you can see the white line spiking up here. that is german dashe yield sank down to 0.24%. italy, which is came tumbling down as their deals popped up above 3% -- yields popped up up above 3%. what you think it t ecb that is not stepping in to help a country like italy? thehe first point is that latest data was down to the point with germany.

that is shown in that chart. italy was not the only country that was not supported in the most recent data. this is across the board. it was all down to reinvestment. i wouldn'lo at that is being a serious issue. moment,say that, at the the ecb is standing back and saying, there are other means to support italy if it needs to be supported. that would include the olt. we have had this commitment from the italian government that they are not keen to leave the euro. italian bond yields have fallen for that reason. the ecb just wants to get the situation resolved. they can't be seen to be supporting one country over another. this reinvestment point is important. they're going to be reinvesting these bonds for several years.

there is more flexibility around this reinvestment than we have seen so far. anna: you mentioned that this was a nice reminder that the ecb does whatever it takes, it is not a blanket guarantee. that is something that we will need to discuss. it has everything to do with the ecb decision tomorrow. thank you. coming up, next wednesday at the ecb forum in centro, after we get the excitement of the rieger meeting tomorrow, president speaks.aghi we will bring you a conversation between all of those great voices moderated by bloomberg's head of economics stephanie flanders. you can watch that live on bloomberg tv and listen to it on radio. bloomberg users can also

interact witthe charts that we use. dtv go into go -- your terminal. charts andwse recent catch up on key analysis. use them in your work if you like. tesla is cutting 9% of its workforce in a bid to restructure and solve the company's cash problems, as we have been reporting. the biggest layoffs in the company's 15 year history as it struggles to get production targets for its model three. elon musk hyped the car as a and itund project, contributes to tesla's deepening cash burn. oliver, why now? wi-fi of these people now? wi-fi are these people fire these people now? he isone realizes that

going to have hit profitability. he has known this for a while. there are a couple of things that are coming up that are making this really dire. tesla has 1.2 billion in convertible bonds that are expiring between now andly 2019. those are numbers that he can't talk his way out of. athatre you look reality, the more you realize that something has to be done. as much as he blustered and was upset at analysts a couple weeks he does realize that this is something he has to think about. he has thought about it and the result is what you saw last night and today. showing that just the cash flow situation at tesla, this is something that has raised eyebrows and caused concern among the shareholder base. is it going to be enough to solve their castro -- cash flow problems? >> it is a good question.

the answer is probably not. analysts have estimated that these cuts could save tesla 80 million a quarter. you have to put that number into perspective and think about the eed tohat tesla might billion dollars of an injection. those numbers are on different magnitudes. it is a step in that direction. there is a big difference between $80 millionnd $2 billion. the ultimate question is how quickly tesla can ra up production to start meeting demand. they aretill in a situation where so many people want these cards and they cannot -- cars and they cannot sell them. people went to get the money and they cannot take it. >> absolutely. that has been at the crux of this. the model three was supposed to

be this big turnaround for the company and they had big targets that they had to revise again and again. if you look at bloomberg's tracker, we have been estimating how many model threes are being produced. 4000 alooking at almost week by the end of the month. those numbers are far below the targets thatuction tesla promised. if you look back at the last couple of months, that is where the crux of this was. they cannot produce enough of these. they're going to have to sit down and say, how we solve this, how do we go from here? matt: thanks very much for joinin oliver sacco from bloomberg news. take aup, dte shares dive as the telecom manufacturer agrees to pay a billion dollars in penalties and overhaul management. turns thela merkel

table on donald trump saying the u.s. runs a trade surplus with europe when services are included. we discuss that and more. this is bloomberg. ♪

anna: good morning everybody. 6:40 here in london. s&p features suggesting we could see an upside at the start of the u.s. trading. there are hours to go before we hit those. bloomberg business flash now. juliet: tnk you. at&t has won approval for an $85 billion pursuit of time warn d said the deal will go through with an week. a media create powerhouse that can go head-to-head with netflix and amazon. the court rejected the justice department's request for a stay, saying the government had failed to make its case that it would mean higher prices for pay-tv

subscribers. >> this transaction is going to 20se no later than june and thee courts order timeline that the parties agreed to. juliet: you can lawmakers are calling for an overhaul of the way bankers bonuses are were awarded to help women to gain greater representation within the industry. canport says the perception deter women from working in financial services. it cls for performance related payoffs. that is your bloomberg business flash. juliette saly there and singapore. shares and chinese telecoms took a divekers zte

after it agreed to pay $1 billion in penalties and overhaul its management. this as part of a settlement that allows it to resume business after two months hiatus. joining is ti corbin in taipei. apart from the billion dollar fine, what are the implications for zte? a billion dollars is them out there he had to pay. that is about equal to a full year of operating income in zte zte -- zte. they have to fire their whole board of directors, all of them have to go, according to the deal that they signed. the need to get rid of all of their senior management. anyone in a senior vposition or higher. any of the staff are executives who were involved in the deals that sold equipment to iran or

north korea, that is what got them in to trouble. we are talking maybe 50 different people could be caught up in that in there for fired from the company. that is quite a lot. that is a lot of management that is decision-making gone from the company in 1000. that would make it very difficult for zte to get running up and quickly. anna: good morning to you. is, bute that this there are negatives here for the united states. is that because of the politics? >> yeah. that, this will be painful for zte. you think about 40 executives who have been in the industry for a long time, they have experience and connections in the industry, their connections to beijing. ey are not going to be going

off and playing golf. they're going to go off and start the run businesses and you will get by other businesses. get hired by other businesses. they're cutting off the head of the snake but it is more like the greek mythologica creature of a hydra. you cut off one head into margaret. this could be is therefore no -- new companies coming out of it. executives with a lot of experience you can raise money and start the run businesses. , but competitors to zte definitely competitors to u.s. technology companies. competitors are going to be starting out as china is starting to be more technology dependent. -- independent. anna: think you very much. tim corbin joining us there with

the latest on the telecom industry. offer visas to-- immigrants looking to start new businesses. this amid reports that they are being derr by brex. issa -- eef half the industry remains concerned about their access to skills post-brexit. joining us now is stephen visser , ceo of eef. let's start with these reports coming out that they're going to promise a new u.k. visa to immigrants starting to start new businesses. they want to continue to attract tech entrepreneurs. i guess he was a that is a good thing. other other parts of industry would like these visas? >> in mentoring -- manufacturing,ha s a

real drying up of the amount of people willing to come to the u.k. with the uncertaintyrobrext other ways of encouraging those people into our sector are very important. anna: give us numbers around that concern. business about access to talents? >> number one on every survey is about skills. we are sure on talent. -- short on talent. plugging the gap, in the middle of that, has been the focus. nationals have been filling that gap for the last 10 or 15 years. to see that flow drying up is concerning to businesses. capacity strength, some of those is driven by the shortages in skilled labor. this withll preface the statement that i think

london is e of the greatest cities in the world. i think british people are very intelligent and well educated. i might or -- i've miredhe itish people's willingness to get paid so little to live in such an expensive economy. i can't imagine that i would start a business now in pre-brexit britain. doesn't make any sense. why honors would anyone want to do that? >> obviously there are a lot of regions -- reasons why does a very good place. innovation is a strong facet of our industrial base. the point is, we do need clarity around brexit. we are two years into this debate. we still don't have a clear view as to the way forward. that is deterring investment. that includes the new start of high-tech businesses. anna: have a break to they want to see? u.k.lot of the

manufacturing base is highly integrated with the rest of europe. 50% of the exports are manufactured products. a lot of this is inseparable in the supply chain from indigenous manufacturing to those europe. what we want to see is as little disruption to that as possible. anna: so is close to the customs union as possible? >> the output of that needs to be very similar to where we set now. otherwise, there will be a completely different approach to investment. anna: is it the tariffs that matter? the common standards? no delays at the border? >> it is all of those things. this is a very complex issue. we are running out of time to get that clarity. cnghenot about government as much of his as we get as much of that detail iron out in the coming weeks as possible. it is very important. matt: are you confident that post-brexit the british people

will be able to regulate themselves better than the eu has done for them of the past 20 years? have had 40 years of integration with the eu. thatev very coverage of systems. a shock to the system would be a sudden dislocation of that framework. the needs to be a very smooth, slow transition away from it. otherwise there will be significant effects. standards,rms of eu reading this week about whether the u.k. will apply to stay in an eu standards regime, which is run independently from the actual eu infrastructure, what would that go down -- would that go embers? with they lose the ability to sell abroad? producttandards, the and safety standards are part of the international system of organizations. our role in that is that we have

national accreditation authority here. they are part of the european standard setting framework. that has been settled down over number of years. the mostcult thing is fo pduce o dierent standards. sticking with the international standards approach is critical going forward. thes good to see that secretary of ste for business has confirmed that we will push ahead and stay within that standards framework. that enables manufacturers to not have the complexity of making different standards. anna: thank you very much. we appreciate it. in the united kingdom. we will met m&a next -- mega m&a next. the pursuit of at&t means for the media industry and what it means for the appetite of the approval for this kind of deal.

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

berlin. i'm matt miller. anna: i'm anna edwards. these are today's top stories. on --..tching the dot -- dot. what will policymakers signal about the path ahead? crisis averted for now. theresa may swerves a brexit she unite the can warring factions between the -- before they bring down the government? media megamerger.

the courts clear the path for at&t to buy time warner. is $85 billion deal the first in the medias brave new world of vertical integration? ♪ good morning. just an hour to go before we see the oproan equity indexes. ke a look at what futures are indicated we will see at the open. a lot of times i have these big decisions you get traders sitting on their hands. it looks like you have that right now. the futures are unchanged. ax futures are up 1/10 of 1%. might notsee it -- see a lot of movement because a

lot of people are waiting for this fed dision, waiting to see the dot plots. take a look at bond futures right now. see where investors are bidding up debt right now. you see bund futur dn. if we see this selloff in the you will see the yields rising in bunds. you will see euro futures coming down. you will see u.s. bond yields going up. on the 10 year, the u.s. yield is rising. that is where we see them holding firmly under the 3% level. when you have on your risk radar? anna: we are in a bit of a holding pattern in terms of the

equity market futures. a slight negative five coming through om the aan equity session. trades down in china, opening up west again in confirmation of that big cash payout in the united states. that is of interest in the asian session. the dollar against the yen, we are weaker on the get -- yen. the friendly relationship with saw being expressed between contentment and the united states team. , a lot of0 year yield focus on in terms of central banks. notait for the fed, necessarily their deliberation a what theyrates,

have to say around unemployment and the growth trajectory for the u.s. economy. all of that will be very topical. upord of what will be coming as we go through the morning. bank of ireland ceo will be joining the team at 7:30 a.m. u.k. time. this will be a very interesting perspective to get on low interest rates in the eurozone and exit from bond buying policies and the rest of it. we will talk to her about at. never first word news update. juliet: even with a rate hike, bond trade is brace for major moves in the aftermath of today's fed decision. investors are fronting in wages and curve plays. that leaves plenty of room for thmarket to move depending on what officials signal in key areas, including the dot plot. join us at 7:00 p.m. u.k. time

for the fed decision. north korean leader has saidth o ft sanctions against his regime when then a in singapore. the claim contrast with the u. pre's rhetoric that the structures will remain. that comes as trump repeated his belief that he can deal with north korea, saying he is certain that kim jong-un is a board. >> we have developed a good relationship in terms of getting something done. i think it is a terrific document. there are things that we have negotiated after that document that are also very important. we are going to get rid of certain ballistic missile sites and various other things. japan's biggest power utility says it is ready to work with rivals to reduce the nation's 47 tons of stockpile

plutonium. the u.s. state department has asked japan to cut its inventory ofar fuel. heays it ia catch-22 situation with no nuclear plants er japan >> [inaudible] it to be used as soon as possible. we do not have any power plants with that here. juliet: global news 20 for hours a day on air and twitter, powered by more than 2700 journalists in more than 120 countries. you can find more stories on top . back tos of singapore

the macro fundamentals. everyone focusing on the fed and ecb. you are seeing general risk off in the region today. the yen also trading lower against the dollar. that has given a boost to japanese stocks. change, exactly what we saw yesterday after the talks between rth korea and the west. we are seeing that energy weakness playing into the australian market. a close lower. let's have a look at stocks, all focused on zte today. they have fallen by as much as 41%, down 40%. less by 10%.also there has been a deal made for us really is apa, philly when the company at 11 aussie dollars a share from the hong kong see the researcher.

nintendo falling in tokyo, disappointing with its lacing games at the electronic entertainment expo. analysts saying all the games, the arty kneabout. sure who was going to be most upset about that. anna: probably matt. matt: juliette saly there in singapore with the rap of your world news and yo mn asia. is turning the tables on donald trump, saying the u.s. runs a tre with europe and services are included in the calculation. her comments are rebuffed of the president sustained criticism of german exports. trade surpluses today are still calculated in a pretty a stormy ond way, goods. if you look at services, if you include those in the trade balance, the u.s. has a big surplus with europe. angela merkel was speaking in berlin.

my producer was there. joining us now is etf investment strategist at bmo. war, start with this trade or these trade tensis. do you think this could start to get out of control? is it getting out of control already with the fights between tariffsd trudeau, the that are supposedly being slapped on china very soon, and the european steel metal tariffs? what we can see is that the aggressivereasingly compared to the other g7 countries. from an economic view, the main risk of rising tariffs is the rising cost of global trade. .till have two main impacts short-term, this will drive more inflation. impede theit can

trend in productivity, which is counterproductive, looking at what most governments are doing on the monetary and fiscal front. how much -- anna: how much concerned do you think will be expressed by the ecb around protectionism? we are getting into, tomorrow we see them eating. we affirm jockey speak out on this topic -- have heard draghi speak out on these topics. does the ecb have to be worried about protectionism? >> i think there will be a timeline between what is happening in the political space materialment and what is in the economy. i would not think it would take the center of the stage tomorrow. will be at the center of the when is to get a clue on

the termination of the qe will take place. investmentsf do think investors should go for to avoid these tensions completely? ? industry etf's or groups that people should be interested in? we can see from an etf flow that most investors have focusing on short term duration bond etf's. with thisng rising rate environment. we are seeing some inflows into high yields in the past three months. when theterms of the, ecb is telling us about italy tomorrow, they tread fine line. they don't want to interfere and

domestic policy but they own a lot of etp's and debt from all over the eurozone. they have an interest in speaking on the subject will be asked about that. when you think the changing politics due to the ecb ecbectory -- do to the trajectory? >> the reinsurance of the commitment to the euro, this is very reassuring for markets and the ecb. political uncertainty is frightening, but to a lesser extent than economic conditions. thecghjust focus oat is happening in the eu.one posi- one positive development we see is that the contingent -- contagion risk has been muted. that is a sign that the eurozone is much more resilient to shock than it was in 2013.

anna: thank you very much. she is staying with us here on the program. it is 7:12 here in london. coming up next wednesday, mario draghi talks alongside his counsel. this is after tomorrow. bloomberg head of economics will moderating the- conversation. you can watch it on bloomberg tv or listen to it on the radio. let's talk m&a. its 85s won approval for billion pursuit of time warner and says the deal will go through with an week. the takeover will create a media powerhouse they can go head-to-head with netflix and amazon. we are joined by alex webb in london. very good to have you with us. why was the deal approved?

why you think they got the ok? >> the onus is on the boj to prove that it is actually competitive. this isn't an really expanding dominance of an individual market, it is expanding into a new market. that is the argument at&t was able to make. a new market of two different markets. mean for, does this not only media consolidation, but m&a in a larger sense in the u.s.? difficult for was the doj to improve these critical mergers. -- vertical mergers. >> the number of deals in the offer, particularly in the insurance and health care, which would seem as though the president would allow the green light be given for those

deals going forward. comcastlso seeing sniffing around fox and trying to disrupt that deal with disney. gain some confidence from this in thinking that it warns them making the effort to make a serious bid there. anna: how much are we seeing new technology players in this market? changing the definition of who does what. we talk about vertical integration in this complex. -- context. netflix and amazon, doing all these parts of the chain. is a big threat to all of these guys. they have a huge market, a classic tv station has to think hard before it drops $50 million on a new tv series. netflix can do it because they know will be into hundred markets from one day to the next. the re skill you can get. at&t is facing other pressures in the form of t-mobile was able

to offer cheaper prices than at&t. a mobile phone contract in the u.s. is significantly more expensive. justify the price by saying, you are also getting hbo and all of these other tv stations. matt: thanks so much for joining us. fascinating story that is going to have implications globally and across other industries as well. bloomberg opinions alex webb talking to us about th. coming up, up, bond traders brace for major moves in the wake of today's fecision. signalll policymakers about the path of industries tomorrow -- interest rates tomorrow? tomorrow weyou -- will bring you the federal reserve decision. this is bloomberg. ♪

anna: good morning everybody. it is 7:20 in london. 9 minutes to go into the start of cash equity market trading here in europe. let's talk about the u.k. politics seen. theresa may has promised concessions to rebels in her own polity -- party. that she hearsd their concerns over the possibility of leaving without a deal. the pallets could be tough to strike as the clock ticks towards brexit. joining us is bloomberg's european news director. good morning to you. what concessions has recenmay made?- theresa may

>> we are used a last-minute compromises in this process. ite is being too. you're getting wildly different accounts of what was offered. up to the vote yesterday afternoon. very dramatic scene in the comments -- comments. end, she brought in the 50 rebels into her office. they say she committed to giving them a new amendment which will go back into the belt before cousins a lot next week will give the commons a veto over no deal. pulling britain back from the brink of the worst possible outcome. the brexit department put out a strong statement rignet up, saying nothing like that was offered. we just agreed to keep on talking. situation, this argument has not been resolved. we will have more drama over the coming days. the bill has come back to the

commons again. looking in the background, you the arch brexiteers, the european respect which -- research group with her threat to destabilize the government or launch a leadership challengif their demands are met. anna: we see what form of words she can come up with by friday. what does that mean for the pro brexit group? theresa may has said there is the possibility of no deal rl's or else she is not on the front foot when she goes to brussels for those negotiations. she is always said that no deal is better than a bad deal. that is what has changed overnight. , itpossibility of no deal means the likelihood of no deal has proceeded. theresa may has said that will tie her hand in negotiations. brussels can offer a bad deal

for britain safe and the knowledge that they are not going to walk out of talks. we have the european council coming u it will be interesting to see what kind of feedback we get from the european side. your will be very happy with this result. and means that this cliff edge scenario, which will be bad for britain and europe, has receded. matt: thank you very much. he is our director of news for em ea talking about the latest developments in brexit. let's get to another one of our top stories. bond traders are bracing for major moves in the aftermath of today's fed decision. markets are pricing in a rate rise. they are split on what policymakers will sink bill -- signal about the second half of the year. fmocbe at the most see -- on puzzle investors on a new and improved dot plot?

etf investment strategist joins . morgana, what do you think the fed is going to all, markets are pricing in interest-rate hike this afternoon. act, that doesn't would be a shock for markets. it is quite unlikely. looking at the two inputs for a fed decision. and inflation figure that has been picking up since the beginning of the year. an unemployment figure that is quite low compared to the structural level of unemployment estimated by the fed. indicators are telling the same story. but a very different magnitude. show a formalates advance of the economic cycle. be fed debate today will

between another meeting economy and keeping the economy running at potential. anna: with that in mind, we will see what they have to say about the neutral rate. the fed is estimating 2.9% in the long run usual rate. neither hurting our stimulative for the u.s. economy. will that be part of the conversation with monetary policy goes from communicative rigtight -- two tight -- to tight? >> we might see a shift in communication from the federal reserve. as they shift from the neutral policy stance, we will probably see a shift away from a preset course of action with forward guidance towards more a case-by-case basis for the next move.

is about whatay pays the fed will hike rates towards this neutr policy stance. on the side, it will have an impact on the yield curve. it will probably take two or three rate hikes to an for the yield curve. looking at past relationships between the fed and the yield curve. market isere the looking at. the time the next recession. matt: thank you very much for joining us. we appreciate your time today. she is the etf investment assetgist at bml global management. in us at 7:00 p.m. u.k. time to bring you the federal reserve decision. we have instant analysis with top guests.

including alan blinder. anna: that is it. much more on the fed next. this is bloomberg. ♪

>> welcome to bloomberg s. this is the european open. i am guy johnson, with matt miller in berlin. t: asian stocks mixed and the dollar flak ahead of decision day at the federal reserve. if the cash trade less than 30 the cash trade less than 30 minutes away. ♪ guy: the central bank bonanza begins.