francine: jay powell strikes an optimistic tone about the u.s. economy, while raising rates for the second time this year and signals more are on the way. , and couldext announce an end state to asset purchasing. but how specific will they be? and comcast gets back in the ring, offering $65 billion for 21 century fox. inwait for disney to respond the fight for rupert murdoch's empire. welcome to bloomberg surveillance.

i am francine lacqua in london. focus yesterday was on the fed. jay powell got through the testimony, the news conference without making waves. i am sure ecb members will want to do the same. for the moment, you can see the stoxx 600 down a half of a percent, crude oil gaining. we did have a tweet from president trump saying opec is not good enough, that oil prices are too high. we go into the opec meeting in vienna next thursday. at 1.1818. this corporate stock is leading links to technology, do not confuse it with the insurance company. talk oil, trump tweets, and later on, our brexit show. andre joined by gina miller

howard john davies, chairman of the royal bank of scotland. let's get straight to bloomberg first word news. francine, comcast has made its long-awaited offered for 21st century fox. they said the offer values the assets at $65 billion. that tops a previous bid from disney, and sets up the bidding war. cash, the bid in represents a 19% premium. has talked to china about trade, as he prepares to follow through on tariffs threat. he told fox news that china could be a little bit upset, while also praising his personal relationship with xi jinping. the administration plans a list of tariff targets tomorrow. italian prime minister may cancel a meeting with france's

emmanuel macron, over a dispute over a migrant rescue ship. pulled outance chief of a meeting with the french counterpart after paris reprimanded rome over its refusal to grant access to the ship that was carrying around 600 people rescued in the mediterranean. they have been scheduled to meet tomorrow. british lawmakers have rejected proposals by pro-eu lawmakers that wanted to lock into the customs union. the house of commons vote is a victory for prime minister theresa may, and largely reverses changes inserted by the upper house. this aircraft had a brief dive above the pacific ocean because of turbulence from another super jumbo play. plane.plain -- [

they were thousands of miles away when they were affected. by hundreds of journalists and more than 120 countries, i am taylor riggs. francine: thanks so much. the fed it raised interest rates for the second time this year, and officials signaled there are more hikes to come. jay powell gave meaningful answers to questions while stressing the health of the u.s. economy. overall, we have a really solid economy on our hands. doing is trying to conduct of monetary policy in a way that will sustain expansion, key player markets -- keep labor markets strong, and inflation around 2%. hope to foster a conversation about what we are doing to maintain a strong economy.

one practical step is to have a press conference after one of our scheduled meetings. we will do that beginning in january. continues to think that we are just about at our 2% goal. we know why the yield curve is flattening, it is because we are raising. it makes sense the short end would come up. the takeaway is that the economy is doing well. most people who wanted jobs are finding them and employment -- unemployment and inflation are low. joining us to talk altering central banks is our guest, from jpmorgan asset management. thanks for joining us, especially on such an important date. jay powell was very careful, we see his thoughts on labor markets. what do you want to hear from him that you did not hear? >> i think we are all waiting

for an expansion in productivity. i think that is what will make the recovery more durable than it has been. by it has been fostered extraordinary policy. by the very interested move to have a press conference so often, that argues he is to up his game on communication, and that they will be tempted to release this data. but i hope that means productivity will improve. one of the things we noticed in markets is that companies propensity to invest only really starts to ratchet up once jobs are scarce. and that is the point we have reached in the u.s. economy. francine: leslie bring you over to this chart, the u.s. yield 2007 -- sincet

2007. be honest, this is not an area i worry about. it haslook at the way developed, they have been flattening consistently well growth has been at varying rates, but always above trend. to think more about the gap between three months and five years, because that maps well onto bank interest margin. you see a modest steepening in that area. it has flattened out a little bit, which is why i think banks have struggled. but i would be far more sensitive to that as an indicator of what would happen to growth. the fed to ecb, mario draghi and his colleagues will hold talks i went to an asset purchase programs. some are split over whether they

are ready to hold a timetable or hold off until july. matt, good morning. june or july? as you said, economists are split as to whether they will do it now or in july area they have to do it soon, because the current program is slated to end in september. this meeting and the july meeting are the last two before september. the other thing is you are starting to see the data pick up. yesterday we had wage data growth in the eu up compared to the same quarter a year ago. and conversions is starting to look better. you are getting similar unemployment, wage growth, and inflation figures out of spain, germany, and the periphery and core across europe. that is one of the things mario draghi wants to see. convergence, confidence, and resilience as far as inflation is concerned.

on the other hand, he wants to keep his options open in case there is a flare up, like with italy. not that the ecb went in and did much, but they want to be able to have the option in case that happens. we will find out at 12:45 p.m. u.k. time. 45 minutes later, we will go in for the press conference, which should be the interesting part with draghi being asked likeions from everything the scandal surrounding the latvian governor to his thoughts on the world cup as well. francine: thank you so much. matt miller, our anchor of the european open covering the ecb meeting in latvia. we will bring you that right here in bloomberg, 1245 u.k. time. and 45 minutes later, we will hear from president mario draghi.

looking at ecb, we are waiting for a signal on when this program will be phased out. will he find out today? i am hoping we will get more details today. if you keep markets hanging, they will start to construct their own a narrative. one of the key skills with central banks is their ability to communicate with market, so they will not want a vacuum. so i think we will get some guidance. if you think about the tone of some of the speeches, there has been a more confident tone about the durability of the recovery the ecb has been underwriting with their qe policy and low rates. more important than the bond buying program is the duration of low rates. remain lowes will until the end of the bond buying program, but people interpret

that as when rates will start to rise. francine: talking about inflation, you can see these measures stuck below 2%. they are creeping up, does it have more to do with field than anything else? stephen: you can see there has been a sharp spike. i think that has a lot to do with it, the price. the euro has been strengthening through much of last year. that is going to mitigate some of the inflationary pressures. the core measure for inflation is not moving, and we will get an update on ecb zone inflation are notons, but they predicting a breach of the 2% threshold within the next three years. so that is a moderate rise. francine: thank you very much, stephen from jpmorgan stays with us. say, mario draghi speaks alongside his counterparts from the fed, boj, and rba, all

moderated by bloomberg's head of economics. watch it live on bloomberg tv, radio, mliv . coming up, we talk opec and trump tweets. that conversation is up next, and this is bloomberg. ♪

francine: economics, finance, politics this is "bloomberg surveillance" francine, comcast has made their long-awaited offered for 21st century fox, the largest u.s. cable divider -- provider. the assets are valued at $65 billion, and tops a previous bid from disney and sets up a bidding war.

, the bidshare represents a 19% premium over the disney offer. volkswagen will pay a one billion euro fine imposed by german prosecutors for cheating diesel emissions regulation. inclusion's one chapter, even as new developments arise. the world's biggest carmaker says the settlement will have a positive impact on other proceedings in europe. volkswagen still faces legal action in more than 50 countries. rolls-royce is said to the cutting 4000 jobs as they tried to simplify their business and boost profit margins. the layoff brings the total jobs eliminated to nearly 10,000 since 2015. rolls-royce says the cuts will deliver annual cost savings of hundreds of million dollars. elon musk's boring company has won a bid to build a high-speed

express train to o'hare international airport. that included the civil engineering firm that designed fundn he wrote, and a backed by former basketball star magic johnson. the result gives that young company a big boost in legitimacy, as they try to get transportation projects underway in los angeles and washington d c. francine: thank you so much, taylor. donald trump has renewed his twitter assault on opec one week before the group meets. high,s oil prices are too opec at it again, not good. that was his tweets. it comes as they release their statistical review, showing a rise in fossil fuel use last year compared to a 17% use in renewable energy.

for more, we are joined with an exclusive interview by the bp group chief economist spencer dale. thanks for joining us. gas is still a big story of the energy space worldwide. use is rising in china and in the power sector. how much more can the gas sector row?th -- growth -- g spencer: it was a bumpy year for natural gas. demand side, much of that growth was led by china. gas consumption in china grew by 15% last year. the big driver was environmental policies, encouraging a switch away from coal into cleaner fuels, particularly natural gas. of push accounted for about a third of the global

expansion in natural gas last year. francine: renewables are clearly rising quickly. understand there may be a price on carbon. does bp advocate for a straight carbon tax? we need to make more progress in terms of reducing carbon emissions if we are going to get on a broken consistent with meeting paris climate goals. economicsom basic that if you don't like something, the most efficient way to ration it is to put a price on it. worlde seen around the and effectiveness of putting a price on carbon. bp has a strong view that part , one of thesition most efficient ways is putting a meaningful price on carbon. the right incentives for everybody to try to

economize on carbon, and bp will continue to push for that policy. worried should we be that carbon emissions rose after three years with a flatlined? -- cold use -- coal use. spencer: two steps forward and one step back. three exceptional years in a no growth in carbon emissions. some of that was driven by long-term structural factors, which are still there. some of it was driven by the short run cyclical factors, which we knew would not persist. some of those unwound last year, and so unsurprisingly, we saw a partial step back from that exceptional performance. it still provides an encouraging story, relative to the past 10 or 15 years, it only a partial step towards what we need to see to get on that road to paris.

francine: the u.s. is clearly becoming a big energy exporter. what is that mean for foreign policy or geopolitics? the american energy system has changed dramatically over the last 5-15 years. it is still a importer of energy. both in current trends and the next few years, the amount of energy it produces could be inconsistent with the amount it consumes. they will still trade substantially, but in terms of net self-sufficiency, within the next five years, you could see that. the change in oil is very dramatic. if you go back 10 years or so, the u.s. is importing 10 million barrels a day. last year, it only imported 4 million barrels, so a substantial change in the nature

of the american energy system. and that has huge implications for the economy, if it does not need to import as much energy as it used to. the exchange rate, it affects the nature of the current account deficit. but also geopolitical aspects if it no longer needs to be importing so much oil from some of those key middle eastern economies. you expecting are from opec at their meeting next week? it seems they are intent on providing production, is that what the world needs? inncer: one of the messages 2017 was those opec plus other countries, led by russia. those cuts have worked. they exceeded their target production cuts, and as a result, stop levels have come back down to normal levels. going into next week's opec

decision, i think there will be two questions on people's minds. one, what will they say about those production cuts. at the moment they are expected to go through to the end of the year. will they say anything about the pace of exit beyond that? , the level ofg cuts are significantly greater than the targeted number. will they say anything about trying to get back to targeted levels of cuts, rather than the overshoot we see. francine: spencer, thanks so much. is bps chief economist spencer dale joining us for an exclusive interview. let's keep the conversation on oil. a lots of what happens on opec will drive prices next week. how does that fit into your models? expectation is that inflation is not running away, and it will have an limited

impact on monetary policy. central banks are keen to avoid overreacting to short-term moves, which can be volatile. also, the narrative does not focus on the role of currencies. typically, when you have a weaker dollar that we have seen, you get a stronger commodity price complex, and that is exactly what we have seen your with the dollar rally -- rallying, it will mean the impact on inflation is less significant. corechart shows that inflation has yet to achieve traction. the price of oil has massive impacts on emerging markets. first they have to contend with a dollar increase, and that countries, but also if they are a consumer of energy, that hurts them even more. seen a: yes, and we have

lot of volatility in emerging-market currencies, with some high-profile examples. but clearly, a stronger dollar is broadly speaking not very helpful. our sense about the future direction of the dollar is that it is still overvalued over a purchasing power parity basis. that is why you get these short-term rallies. we do not see this as an immediate threat to emerging markets. francine: thank you. from oil to football, the world cup kicks off today. we are joined with a little more on both of those. what should we be watching out for? the most-watched sporting event, so all eyes are watching today. it is worth noting that italy and the u.s. did not make it, but panama and iceland are making their first appearance. as you said, the opening matches two of the worst teams in the

rankings, that are also the world's largest exporters. what the market is paying attention to is the sidelines, as president putin and mbs meet. the reason we were able to see that historic opec plus deal. now they need to discuss how much they want to increase, and we could see scenarios of 500,000 or one million barrels. but it is getting political and contentious already. venezuela, iraq, and iran all say they do not want to increase. it will be the most political meeting at opec we have seen in years. match, manyickoff of our viewers will be more focused on what's happening on the sidelines. francine: thanks so much. you still have time to make your own predictions for the world cup by going on to the bloomberg terminal. have you done your brackets or

should we do it right now? stephen: i haven't, but i think you could pick one out germany, france, spain, portugal, brazil. we will get back to that and talk a little bit about football, or soccer if you're watching from the states. there is also a significant point that trading volumes are lower during the matches, so watch out for any economic data coming at the same time. up next, our brexit show and we are joined by gina miller. that conversation is up next, we will talk theresa may, and inflation. this is bloomberg.

♪ francine: this is "bloomberg surveillance" brexit show, but first of all let's check in on what's trending across the bloomberg universe on tictoc.

largest ever best by an automaker on ride-hailing, head to the site to find out more. find out why the world cup is giving a rare win win win. our most read stories over the bloomberg terminal, first, central-bank action. in third place, china shows signs of losing steam after apostles of the fed hike. second place, plain english, how cheering the u.s. economy and china surprises curtail risk appetite. our top read story on the bloomberg terminal. in the meantime, some breaking news out of the u.k.. to sales,n expected so let's have a look at the pound. retail sales rising 1.3%. what economists were forecasting was 0.5% increase.

so it is having an impact. it is interesting to finally have a peace of good economic data after some of the construction and other indicators showed a downturn. time for our weekly brexit show. rejectedawmakers have proposals by pro-eu politicians intended to lock the u.k. into the blocks customs union and single market. is aouse of commons vote victory for theresa may and largely reverses changes inserted by the upper house. so what does this mean for the kind of brexit we will get and the customs union. joining us now is gina miller. stephenl with us is smith. gina, what you make of the week? we have first been trying to parliament has too much power, does theresa may's

leadership come into question? gina: the extraordinary thing is parliament should have the power. at the end of the day, everybody was banging on about parliamentary sovereignty. theresa may'sto position, i think it is more of a threat from within her own party. ironically, there is a civil war in both parties. if we are to believe the rumors that it appears the remainder has won this week. are going toe they trigger a vote of no-confidence next week. if that happens, then she is a very dangerous ground. the problem is it does not matter who is in power. we are actually negotiating with the eu. doing that, we are negotiating within political parties and themselves. it really does not matter who is the leader, because we are not pushing forward on negotiations. and that is really alarming.

we have only got six months left. francine: we don't know that. there could be a parallel where they are investing in brussels. gina: sorry, i have been in brussels day in and day out. back meetings with parliament, with members. there is not much on the table coming from the u.k. side. groups have met and they are all say the same thing, they are not asking for much. that is really concerned. francine: is it in the eu's interest to delay? if you delay and make the u.k. look bad, they can put it in more uncertain terms. gina: don't fall into the trap of thinking we are that important to the eu. they have got so many problems going on, brexit is almost a relief. i have 10 topics, number nine is brexit, they say right, we all agree on that very we need

to stick together. they are dropping off the agenda. they have much more to worry about. what's going on italy, in spain. we are not a priority. francine: there could be a link with italy. do you think brussels will be harder on the u.k.? gina: i don't think there is a link. the block is going to stay together. there are always things member states are not happy about. the conversation they will have is about immigration. there is a reformed, and macron is pushing that. , if theyomes to brexit were going to do anything, they would have done it by now. at the moment, they will stick to the process. they must protect the integrity of the eu and the block. they will stick to this.

i have to say i think it is shameful that we did not go in there from day one and should have been negotiating trade alongside leaving. because there were no rules, we could have set the agenda from day one. that is a lack of leadership. ofncine: there is a line thought that because of italy brussels does not want to give the impression that you can leave the block without consequence. works,: the way the eu it is much more of an intergovernmental level. brussels is not set policy for the eu. it is basically about what macron, merkel, and italy says. francine: they aren't negotiating, the commission is in charge. stephen: true, but only guidelines set by the member states. francine: yes, but this is buying time. or is this just the eu saying let's go to december 31, and now

we need an agreement. gina: the eu or u.k.? if mrs. mae sticks to her word, whatever she promised in that room, is that it is the 30th of november. if no deal by that state, it goes back to parliament and they will decide the next step. it's not the end of the year, it's end of november. ironically, they have to go through ratification, and parliaments of the member states are going to have a say on what happened -- happens. the irony is he will have 30 odd parliaments who have a say but not how about. -- our own. by the end of november, it will be crunched on. francine: what does it mean for economics? i think the bank of england will be very data dependent. would have thought they were

relatively reassured by some of the things going on recently. real incomes are growing and you are starting to see some rest fight on consumer expenditures. we are getting short-term indicators. that has been under a lot of pressure. there is no wage pressure, which is surprising considering where close to full unemployment. so i think the bank of england has the luxury of waiting, rather than acting preemptively. because the economy seems to be doing ok. as we get closer to the deadlines, corporate behaviors might change. francine: but can they afford a rate hike this year? stephen: i don't think they need one. inflation is coming back towards targets. francine: writes, but if they want more tools to deal with the downturn, that they hike now and give themselves more ammunition. interesting,s

because one of the tools available is quantitative easing. it used to be the case that they needed flexibility there. ,hey now have this extra tool and having brought it out once, there will be a great deal of pressure to bring it out again if circumstances start going against where they want them. francine: do you speak to a lot of chief executives and what do they tell you? city,when it comes to the this whole idea that they will plug and play, they have left it late. that theyeady hearing will have to decide what will happen. i think they have been slow in making strategies and waiting to see, and markets have not reflected. if you look at markets, their view is that we aren't going anywhere in five years. so if you go from this week that no deal is off the table, and we do get some sort of deal meeting

we are in transition, that is when we will see movement. francine: thank you for joining us. stay with surveillance, plenty coming up. we will discuss labor's own brexit divisions as a number of mps the five jeremy corbyn. and disney is under pressure to respond after comcast see $5 billion bid. -- $65 billion bid. this is bloomberg.

francine: brexit show, i am francine lacqua.

theresa may is not the only leader with a party divided over your. europe.- over your shifted towards closer ties with the european union. this week's debate saw clashes over concerns of their programs and electorate, and saw members frustrated by corbyn. gina miller is still with us. what do you make of the labour party and what influence they will have. gina: i think the labour party is divided. they are in civil war to. being whipped from one direction. they are going to have to come up with a position. they have just kicked the can down the road. behind the scenes, you have 73% of labor membership to stay in a single market. the different constituencies are saying different things.

they are in a hard place, but will need to come out with a position. apart from the withdrawal, we're coming up to summer where there will be two other bills coming into parliament. billnk the custom unions will be where labor has to come out with a position that is stronger than what they are doing at the moment. francine: given all this, what are the chances of an election? interesting,eally because i think politically labor would love an election and conservatives will do everything to avoid an election. i think if you are a gaming theorist, i think we will end up on ad referendum rather than a general election. francine: but what are the chances? what is the appetite? gina: there is no appetite, but how do you it out of the cul-de-sac they are in. the two parties are divided.

the referendum in 2016 was called to make the divisions in the conservative party. now we have divisions in both political parties. thatreferendum now means you can say that the people, you make up your minds. i think it is the most democratic thing that could happen. you needy to people, to decide now, a clean vote on the options. we did not have that before. francine: because i am looking at, and let's take them with some caution, they don't give an outcome. gina: it depends on the poll. if you look at the yougov poll, it is a must a mirror of the other way. that is not good enough. be all threet will options to bring the country together your not only are parties --.

not only are parties divided, but the country is divided. we need a people's votes on all three options. come back with, the deal we have, and no deal. countryto bring the together and that people can say we have had our say. francine: is there a timeline problem with that? gina: i don't think so. the bill will come back to parliament in september. if there is an amendment and they has to be a vote, then that can be january, february of next year. announcedlection was and seven weeks later we had an election. so you can do it. was and: let's say it of january or february, it gives you like six weeks. remember, it is our timeline. march is our timeline.

you could change the timeline, it's not an eu timeline. we imposed it. francine: isn't it article 50? says yes, but article 50 along the lines of a constitutional requirements of the member states. so if our constitutional requirement is that there needs to be another vote, they would have to consider either stopping the clock and waiting for us to continue, or saint you need to do it within two years, and either one is possible. it is that line in article 50 which is very important. along the lines of constitutional requirements. francine: what do you think will happen? will do not take bets on which way brexit will go? gina: i don't think anybody knows what will happen. what i do know is that both parties do not have a plan. i am certain of that.

they do not know how to get out of this mess. nobody knows what brexit meant. nobody can say they knew what this process meant. now we have the facts, not all of them. i think we need to have a another look at this. francine: would you argue the prime minister's plan is just trying to keep her party together? gina: yes. francine: so that is a plan. gina: giving a party together by saying one thing to one group and then another thing to another group, that is a strange plan. they are going to find out what he said behind closed doors, which is what happened this week. and then you have more divisions. in fact, i think she has created more divisions in her party by trying to appease everyone that by showing strong leadership. francine: gina, thank you so much. up next, your move disney. comcast puts in a bid for fox entertainment assets.

we bring you the latest on the fight for rupert murdoch's empire. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance" i should add to economics and finance maybe football. we are getting the first live pictures out of moscow. if you are a bloomberg user, go and your racket. you can try to win against tom keene and me. you can choose who you think will be the winning team. again, it is important to look at the world cup, not only for gains and gambles, but whether russia can completely secure the safety of everyone. we have talked a lot about the possible risk of trouble from russia's extremists. we understand authorities have come down hard, and even barred some 450 troublemakers from attending. picturesing first live from the game just a couple of hours from now.

let's get some corporate news. the bidding war has begun for fox. it is disney's move after comcast made a $65 billion bid. the same holdings disney had agreed to buy. joining us men are destined joining us now is bloomberg's media and telecom reporter. great to have you, how badly do they want this? >> i think comcast disney both want it pretty badly. the context here is the rise of netflix. disney wants more quality content on their platform, trying to draw those subscribers. issuet faces the same people cutting down their big fat subscriptions in favor of netflix. both needed pretty badly. it murdoch's who

have a big say, is it money? joe: a likely combination of many of those things. price will be a big factor with many significant bits on the table. but yes, the murdochs have an influence here. comcast made an approach to the murdochs late last year, but they rejected that proposal, even though it was at a higher price than disney. but, the fox independent shareholders have a say as well. francine: what does it mean for u.k. assets? joe: the market seems uncertain. some people think that if comcast is going after fox, it gives them less firepower to bid for sky as an asset. disney might also have less appetite for a big big versus sky. it has gone down a bit, but it

is hard to call at this point. francine: what the regulators want? perhapswe have seen, vertical mergers are permissible and in the cards now. that might be why comcast has felt emboldened to come forward with this offer. they sounded pretty confident less night, so hopefully this is good from their perspective. francine: this could last six months? well, the comcast ceo said it could be done within a year. but there are a crucial few weeks and months in terms of who will fox support? and on the sky process, will there be this bidding war between comcast, fox and sky. so crucial few weeks coming up. francine: thanks, joe. in the meantime, we are getting some pictures of davis in parliament, on the back of the avertingister

lawmakers in her party. she seems to have dodged a threat of a major political crisis. ,ow the focus is compliance which is why we are following this very closely. we heard from gina miller that are could be a another revolt brewing. not could be, though confirmation, spearheaded by davis. some conservative lawmakers have been pushing for an amendment that would have given parliament unprecedented power over the premiers brexit strategy. down after may personally promised a compromise. what is unclear is exactly what she has offered them. bloomberg surveillance continues in the next hour, we will continue watching what happens in parliament as the brexit story got a lot more interest. the rbs chairman howard davies.

we talked to him about central-bank policy and banks. we don't know if consolidation is in the cards, but he will have something to say. in the meantime, emerging markets and investors coming to terms with the prospect of faster than expected u.s. interest rate hikes. disappointing data out of china. all about the ecb, and matt miller is on the ground. of course, also world cup day. this is bloomberg. ♪

♪ francine: hawkish fed, jay powell striking optimistic tones

while raising rates for the second time this year. the signals two more are on the way. the ecb next. howral bank and announcing, specific mario draghi will be. ring,t gets back in the operates $65 billion for 21st century fox's entertainment assets. we wait for disney to respond. good morning, this is "bloomberg surveillance," i'm francine lacqua in london and tom keene is in new york. we talk world cup and comcast and world bank. haley, i gotd for my world cup cut out so i can keep up with you and jonathan ferro. the first thing -- francine: did you do your bracket? tom: not yet. what i would notice is russia is the worst ranked team in the tournament. so much for the host.

11 a.m. new york time we get that first game. i'm excited. francine: i'm excited. the u.s. and italy are not playing. we can support another team. let's get straight to the bloomberg first world news. tom: first world news. taylor: thank you. president trump warning he will confront china strongly on trade in coming weeks. the president told foxnews china could be upset by his news. the trump administration plans to announce the final list of tariffs tomorrow. china is likely to respond. the trump administration pushing back north korea's suggestion that sanctions will soon be relaxed. mike pompeo says kim jong-un won't get sanctions really until after he completely gives up nuclear weapons. president trump has been criticized because north korea only pledged to work toward denuclearization of the korean peninsula.

it is a victory for british prime minister theresa may as lawmakers rejected proposals by pro-european union politicians aimed at blocking the u.k. into the customs union and a single market after brexit. the government did have to give into some pro-eu sides on some points. parliament will now get more say on the final deal. the next move is up to disney. the cash offer of $65 billion. disney had agreed to buy the assets for more than $52 billion in stock. the winner will control much of rupert murdoch's empire including the box and movie tv studios and multichannel providers like sky. 4600 jobs inutting the labor restructuring. the ceo warned, this was the biggest set yet, saving more than half $1 billion a year. -- *%ts represent eight

-- 8% of the workforce. journalists and analysts in more than 120 countries. this is bloomberg. -- global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs, this is bloomberg. tom: huge movement yesterday off the initial announcement and during the presser, futures flat, euro advances. oil, loss, curve flattening, 39 basis points is remarkable. i have a chart on that in a moment. next screen please. the big 12.77. 3-'s spread,10's almost near inversion. i want to introduce a number today, jpmorgan emerging market fx index. i usually do not show that but

in 2018 we will be looking at that. 65.81 which is meaningless. all you have to know is em currency is weaker, weaker, weaker. francine: that is really important with more fed hikes. . good job. i will do an index with world cup. risk off today, a lot of investors trying to digest what we heard from the fed. they have come to terms with the prospect of faster than expected u.s. interest rate hikes. disappointing news out of china. another on the ecb, layer of uncertainty. this is about the timing on when they will get rid of extra stimulus. tom: "bloomberg surveillance," we are pros at stealing from our guests. i will steal from scott yesterday, thrilled that he joined us on the fed show, he read emphasized the rapid convexity and dissent of the 10-30's yield curve, this is a

long-term difference between the 10 and the 30 year. this goes back to the 1970's. the rare inversions we see, essentially none for 15 years. we are having their with a vengeance -- we are heading there. we are not there yet but we are getting there rapidly. francine: that is a really good y powelle heard ja talk about. problem withcb's inflation. the line on oil and you'll is dragging inflation higher. mario draghi hurting the first -- mario draghi hearing the first talks today, we don't know when we will find out the one thing traders today want to hear about. raising, the fed interest rates yesterday for the second time this year, signaling

two more hikes in 2018. the chairman jay powell stressed the health of the u.s. economy. >> the main takeaway is the economy is doing well. most people who want to find jobs are finding them. unemployment and inflation are low. interest-rate have been low for some years while the economy has been recovering from the financial crisis. francine: that was the fed chair jay powell. the focus falls on whether the ecb will set out a roadmap for the end of easing today or wait until next month. for the latest, matt miller. june or july? economists are split as to whether they will do it now. they have good wage growth numbers. 1.9% wage inflation in the eu for first quarter compared to last year. that is strong. they are noted, they are seeing convergence. similar data out of peripheral

countries like spain, as germany. we can data as far as things like industrial -- weak data for things like industrial production. if they do not give us that roadmap, you could see euro-dollar start to fall immediately after the statement comes out. tom: you are on the streets of germany. what is the backdrop to the economy of europe as they meet. what is the emotion of the economy right now that mr. draghi faces? reporter: on the one hand you have a strong economy, stable growth and real inflation. in germany, cpi number at 2.2%. for germans, serious inflation. on the other hand, political issues in the eu, whether or not the ecb should be doing things like bailing out italy, when the bond yields start to soar. germans don't want to see that

kind of bail. mario draghi may want to keep that option open for later on down the road. tom: matt miller, i don't care. in mexico take out germany in four days beat them at the world cup? reporter: absolutely not. i don't think germany will win the whole thing but they can definitely beat mexico. at the end, i can think spain can pull it out and win the title. francine: there you go. matt miller. latest on the world cup. miller, throughout the day. ecb policy decision live at 7:40 a.m. in new york. 12:40 p.m. in london. we will hear from president draghi for a five minutes after that. you can -- 45 minutes after that. you can follow our live blog on .he rate decision at tv

the headline event next wednesday sees president draghi speaking with jay powell of the , youtheir counterparts can watch that on bloomberg tv. , joining use now is marilyn watson. we will talk about what central banks can do next and what the main thought lines are in the markets. thank you. the fed was clear. is the challenge for the ecb to be as clear as jay powell was yesterday? marilyn: he went out of his way to say he was being clear, communicating in simple language. four mario draghi and the ecb, it is a much tougher proposition. whether they make more announcements today, weather in july is almost academic. by september, they will have to announce something.

there is so much going on in terms of issues in the eurozone, the data being mixed and murky, in terms of not wanting to frighten investors but also wanting to keep very very clear communication. mario draghi has a difficult job to really explain qe, the tapering, when it will end, will it be a different size? two separate that -- will he announce guidance in terms of normalization? is it a tough one -- it is a tough one. francine: this is the inflation chart. it seems that we see that pick overall hed oil but has not seen wage growth he was expecting. marilyn: he has not. the ecb have stressed, they are not comfortable with inflation profile at the moment. to have to explain why he would

be tapering the program, in a scenario where inflation is not close to the target of below 2% -- it is a very difficult communication. tom: the press conference was fascinating yesterday, starting with the idea of chairman powell standing up. mike mckee was dazzled. he walked outstanding up instead of sitting down. the idea here, through the press conference, was simply a central bank trying to get out in front of the debate. thatblackrock see evidence any central bank including mr. draghi can get out in front of the debate? don't they have to react to data? particulare ecb in are going to have to be data dependent. the end of the qe program is almost a given, by the end of the year they will finish tapering. from there, to get to the stage

of raising interest rates and moving the negative deposit rate, it is going to be difficult. it will be data dependent. the data is murky. the point is excellent. in the u.s., data is much clearer. it is overall a very strong picture. one economy. the labor market is tight. there are more job openings then there are people looking for jobs. when you look at a whole range of different factors, the u.s. economy is doing incredibly well. you also have a fiscal stimulus. eurozone, a mixed picture in terms of a different economies. -- will germany is doing across the board, a mixed picture. data dependent when you have so many different data points to consider is also much harder for the ecb. francine: marilyn watson stays with us. rbsing up, sir howard davies, chairman. that is coming up in 15 minutes. in the meantime, i don't know

whether he will talk about football. tom and i will talk about football. the stage has long been set for the world cup, kicking off in russia later today. what we're try to figure out is whether investors have already factored in potential benefits for brewers, retailers, advertisers. either more opportunities? we look at it from an economic angle. will jonathan ferro beat us in the brackets? my money is on john. this is bloomberg. ♪

♪ everyone.morning francine lacqua in london, i'm tom keene. a lot of comcast on surveillance today. we are thrilled to bring you

brilliant minds on the media transaction. we look at the united states and china and trade. marilyn watson is with us from blackrock. enough has not been said about what happens if you do 6%, 6%, 6% gdp each year versus the larger developed world. when does china catch up with the united states? marilyn: the data out of china was his appointing -- disappointing. that is the backdrop of these tensions, the potential for more tariffs. it is slightly concerning. overall, the chinese economy continues to do well. the point now, we are starting to see a turn. the government is implementing policies to try to ensure it does have this sustained domestic growth. it is trying to ensure that is becoming more sustainable, more

green. these will have an impact in short-term but over the long-term that should also mean you have much more sustainable growth. to drive continuing the global economy along with the u.s., europe as well. we still see china as being a huge force. it is also going to be much more sustainable one. tom: let's look at a chart. the ratio comparing the united states economics to global economics and in red, the chinese economics to global economics and the basic idea is the u.s. vector is constructive. look at the surge in china. you have a cross in the early part of the next decade. explain sustainable and what does that mean for debt markets in asia? the answer is they can become more sophisticated financially? marilyn: china is coming from a different base to the u.s.

the u.s. has been developed for a long time and china is still catching up. it still has a huge amount of the population, that are still becoming more urban, more into the middle class. you still have a huge amount in terms of domestic economics within china that will also continue to be self-sustaining. you still see many parts of the demographics within china to buy more material goods, consumer goods, eating more meat, changing diets. that will continue for some time to come. francine: we are also looking at boj tomorrow. what is your biggest concern for world growth? marilyn: there are a few political risks, that is everything from change in policy with potentially tariffs, protectionism, also uncertainty around brexit, italy, a host of

different things. the geopolitical tensions within the middle east, also issues around production of oil, venezuela. there are a lot of different risks. many are idiosyncratic but they add up to mean it is a huge amount of uncertainty, that is impossible the price for. at the moment we see solid sustainable global growth, driven by the u.s. at the moment. china despite the data continues to do well. the eurozone data has been weaker but it continues to drive. years, next couple three you continue to see sustained mobile growth and hopefully that momentum will continue into e.m. markets and pick up. tom: we continue. ecb forward, then backward. fed backwards. we continue. later on, goldman sachs at 2:00.

stay with us on comcast. this is bloomberg. ♪

♪ is "bloomberg surveillance," we talk comcast -- a bidding war has begun for comcastney's move after made a $65 billion bid. the same holdings disney had agreed to buy. watson joining us.

first of all, what is the best fit? do we look at regulators or price? >> $65 billion comcast put on the table is $5 billion more than people expected. offer,has made a stock that might be more tractive to rupert murdoch. he might not have to go all the way up there because rupert murdoch may value stock market. regulatory, they are trying to position a flip, up until the at&t ruling, there were concerns a comcast bid would get blocked. those concerns have fallen away. comcast has a better chance of regulatory approval. tom: when will disney respond? >> a good question. one or does go weeks. we have added complexity -- 1 or

2 weeks. bid, disney and fox need to figure out whether they will put together they raised offer for sky assets. that is intertwined with this group of fox assets. weeks wematter of should hear something. tom: i wonder. new york times, today talking about the determination of mr. roberts. from your view, the determination of brian roberts to complete the transaction? >> you can see that. the valuations they have put on fox assets and sky, it is a very clear statement of intent. they are matched disney on the breakup fees, they are prepared to pay up to $4 billion if this falls apart. they really want this.

you can understand why. the media landscape is changing globally, this is really a power-play to position for the next 20 years, having a strong base of content and distribution networks and international exposure and create value. francine: thank you so much. coming up next, howard davies, rbs chairman, we talk about banks and consolidation. pressure and brexit as well. this is bloomberg. ♪

♪ is "bloomberg surveillance," tom and francine from london and new york. let's check in on what is the largesttictoc,

that on ride-hailing. head to bloomberg.com, find out why the world cup is giving a win win win in the age of trump. the most read stories on the terminal in the past few hours. central-bank action taking center stage, china losing steam, the fed hike, and the rate hike, number one, chinese data surprises curtail risk appetite. find out more on that. a lot going on. day one of the world cup. tom and i did the brackets. let's get a closer look at the matchup. reporter: the most-watched sports event in the world. if you teams are missing. italy and the usa did not make it. first appearances for panama and iceland.

today, the kick off between teams that ranked low in the standing, saudi arabia and russia. eight days from opec meeting, the market is more interested in the crown prince and vladimir putin meeting on the sidelines. they met face-to-face in 2016. they need to discuss how much they should increase. itn if they agree on amount, is setting the stage for a contentious meeting with venezuela, iran and iraq, all against raising output, energy aspects. it is the most political meeting and a longtime. for this kickoff match, viewers are interested on the sidelines, not the field. francine: there you go. the battle of the chart. do,o wcup, whatever you try and beat tom. for me. you still have time to make your

predictions. tom, i am waiting for your's. the deadline, 11 a.m. eastern time. let's get straight to the first world news. taylor: china, central-bank calling out from immediately raising borrowing costs. that decision came after the release of data showing chinese economy is rising slower. fed policymakers boosted rates for the second time this year. jerome powell said the u.s. economy is in great shape. not long from now, we hear from the ecb. call this the world cup summit. crownir putin and the prince of saudi arabia will discuss how to boost oil production today, while they're watching their country's play each other in opening match of the world cup in moscow. they're trying to work a successful deal to control output. russia wants a larger increase than the saudi's do. allied, scottan

pruitt says he might have to resign. he is under the gun for a number of ethical lapses. the latest was a report he used an aide to help look for a job for his wife. something needs to change and one of the alternatives is for scott pruitt to leave. terrifying moments over the pacific for passengers aboard an airbus. it ran into turbulence from another superjumbo and plunged for 10 seconds. one passenger called it a nosedive. the airplanes have been separated by 20 miles and 1000 feet in altitude. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs, this is bloomberg. thank you so much, taylor. g7 last weekend, the u.s. having trade disagreements with china

and allies in europe on nafta. what is the outlook for global trade and the economy? joining me now is howard davies, chairman of the royal bank of scotland, he previously served as the first chairman of the ffa and director of the london school of economics. thank you so much, you always make us smarter on international things. what do you make of the week that was? the summit? world growth? it feels we are at a turning point and yet markets could be complacent? we have relatively little business in north korea. that one i can leave aside. the fed move has been interesting. particularly what the fed said about trade. that they had not seen an impact yet of the nervousness, which we all feel about the possibility of a trade war.

yet, there is no sign of that appearing in the u.s. numbers, as they say, much more robust. even the news from china doesn't look particularly good, the chinese demand and output is falling. there is a bit of a puzzle. u.s. racing ahead, eurozone getting weaker, u.k. relatively weak, a terrible first quarter, we are desperately waiting for q2 figures, china weakening but the u.s. powering ahead. it is difficult. there is a bit of nervousness. francine: is that as good as it gets for world growth? howard: it looks as though. we were in a sweet spot last year with the eurozone was growing rapidly and the u.s. and most emerging markets, a few black spots like venezuela and argentina but it looks as if we have,, cascading down a bit.

the question is -- is this a -- or are we on the verge? it does not feel to me like a recession is around the corner. there are a few things to worry about. tom: sir howard, good morning from new york. our institutions have been threatened, we mentioned singapore and the ballet of the g7. let's talk about the institution we observe yesterday, the central bank of the united states. boy, are they trying to get out in front of the data, game and gas. within your years of research, can any central-bank do that? howard: we are in an unusual situation. it is difficult to look to the past and find a clear model. they are taking the opportunity to normalize interest rates. personally, that is something i welcome. athink here we have missed

chance to do that. my concern is, when we do next enter a downturn, the central banks don't have a great deal of ammunition. the more hedge room they had to respond if we have a more serious market situation developing, the better. i welcome what the fed is doing. it is clearly risky but as they point out, monetary policy is still quite accommodative at the moment. i'm in favor of what they are doing. tom: my conversation yesterday with vice chairman blinder of princeton, sir howard, in speaking with the vice chairman, we talked about fed independence. are we going to have high rates mario? high rate governor carney? high rate chairman powell, dealing with low rate donald? is the bottom line, the politicians will keep it low and independence is a threat? howard: there is debate at the

moment about central bank independence. a couple of interesting books have been written about it, one of them by paul tucker, writing about the circumstances in which you can nurture the right kind of central bank independence. you have to be careful not to put too much responsibility in weight on the central bank if you want it to remain independent. europe, theis, in bank of england, and the ecb have so many responsibilities, as well as interest rates, that preserving that independence is more difficult. in the u.s., things look pretty good. trump's choice for chairman of the fed was a decent one. i think they are managing to protect their independence and part of the reason they can is issuing broader

commentary on economics. you must be sure not to interfere. francine: who has a tougher time? the ecb will want to be as clear as jay powell was and then boj tomorrow? howard: the ecb has it most difficult. the ecb is in danger of becoming an over mighty citizen, if you like. if you see the way the debate runs in italy -- dangerous ground in telling you about italy but -- the ecb is presented as the bogeyman. across allo be elements of the financial system, regulating italian banks and who are they to do that? interfering in our responsibilities and our institutions -- the ecb has it more difficult. they were given the banking supervision responsibilities in

the eurozone crisis because the leaders cannot produce another treaty, they cannot get agreement. it was loaded on the ecb, which happened to be there. they are in the most difficult position. i talke: tom and everyday about a possible cross-border consolidation in the banking sector. rumors -- never confirmed. is it time that europe consolidates? howard: the ecb has been forthright in saying they think some consolidation is necessary, e oficularly among the tal middle and smaller banks in places like italy. as a general proposition, yeah, the ecb think so and if they are the supervisor, you should listen. on the other hand, every time an individual proposition is put forward it seems difficult. countries do not wish to take on what they might see as a poison pill, where they don't understand what the situation is.

i suspect we will overtime see more consolidation. some of the big deals, are unlikely to come to permission. tom: sir howard davies with us for a good amount of time. i am reading on england and the world cup. a sad state. maybe we will get your view on that when we return. it is painful. i am doing iceland after england. , you have at tv a meeting with sir howard, your knees are shaking, here is how you fix it. , you come up here and you can dazzle sir howard with a 10-30 spread. , if it will add value to your working day. this is bloomberg. ♪

♪ francine: this is "bloomberg surveillance," tom and francine from london and new york. calls for the biggest banks to consolidate have been growing. recently speculation between mergers of deutsche bank and rivals. speaking this week, the chief executive play down the idea of cross-border deals offering the best future for european lenders. sir howard davies still with us. we're talking about consolidation, in theory, practice is quite difficult. is europe overbanked? howard: it is difficult to answer the question in europe as a whole. it depends on which country. the banksou notice

occupy a large piece of the market and the amount of commercial banking in germany is small, which is why concentration is difficult. of smallersee a tale commercial banks, some of them used to be owned by foundations. there is more scope for consolidation in italy than germany. francine: how busier you? -- how busy are you? howard: we are pretty busy. the mortgage market is ok. not racing ahead but ok. consumer lending rising at 8% a year. corporate lending, we're seeing hesitation on investment now, which may or may not be brexit related. we are seeing a pause in the pipeline, hardly showing through in the report but the pipeline looks weaker than it did six months ago. eu banking,ok at

any banking, i don't need to mention individual banks, when bodies walk out the door, whether senior management or the people that speak to you or traders or intellectual content research, when bodies walk out the door, how does the bank you going? -- how does the bank keep going? howard: if everyone walks out they don't. quite likely a present in london -- white lively in london at present. the bank is now seen to be in a much better state than it was before. i don't see overall a big problem. more recent figures suggest banking remains attractive to graduates, surprisingly so you might say but nonetheless, at the moment we find we are able to staff ourselves. tom: within the intellectual content, you have to pay up.

discuss how you have a salary bonus mix within the pressures on compensation within the united kingdom? how are you going to pay quantitative finance phd's and retain those people given the question about underpayment of women versus men? -- the last point is particularly difficult in the investment banking area. it is notable at universities that the proportion of economics graduates and financial mathematics graduates who are women, is relatively small. it is not very small but it is relative to other subjects, it is a bit smaller. there is a problem in terms of the nature of the fish in the pool. that is something banks find

in investment banking you still see a rather unattractive gender balance. all investment banks are trying their best to do something about that, trying to make their jobs more friendly, family-friendly, because they are not especially, people are assumed to work long hours and it is not an attractive place for women to work often. it is a struggle. there is not a single answer. it is top of mind in financial institutions at the moment. francine: regulators are concerned about cyber threats. how robust is u.k. banking systems to deal with them? howard: i think the problem with it is if you say how robust are we at dealing with rational threats, people who are trying to get money, then i think we are not bad. becausetates to say it i could walk back to the office and find out there has been a problem. that is not so difficult to deal with. the more difficult thing is the

disruptive threat. people who simply want to denial attacks that do not have obvious motivation. policey crime like that, find it the most difficult to deal with. the random attack with no motive. i would distinguish between them. haves have shown -- banks shown they are fairly robust to cyber threats targeting actual diversion of funds. complacent about it because the nature of the threat is changing all the time. francine: if you talk about the second threat you are mentioning, banks work together, cross atlantic to find a system or is it each their own? howard: it is competitive and there are a lot of fintech companies that are developing and using ideas. where there is cooperation is through various security agencies. we have good cooperation in the

gchq and the agencies, others, that is pretty good. good information sharing about emerging threats. i would be positive about the way the government agencies work with us. how you respond to those threats -- there is a competitive dimension. it would also be quite dangerous if the banks all had the same defense mechanisms. then the whole system would be vulnerable. tom: a chart, sir howard, saying it all. you provided great global leadership on this distinction. this is normalized back to the financial crisis, the outperformance of american banks. it is the third rail of discourse, a way to bring in continental room to silence. do european banks need to become more anglo-american? nobody wants to talk about it but we will ask you. therd: one part of it is,

american capital markets are much more flexible. bankers, arean constantly present for further progress on capital markets union in europe. one reason why american banks can perform better, the securitization market is much stronger in the u.s. you can take on risks, offload risk, the way in which the market prices that is more efficient than it is in europe. there are certain circumstantial arrangements. the american economy has been growing more rapidly. interest rates are rising. that is very beneficial from a bank point of view. a flat yield curve as far as the eye can see, which is the eurozone is difficult for banks. banks make money by borrowing short lending long. if the curve is flat, the trick does not work. most of the differences are to

do with the economic circumstances or the market circumstances, which is not to say european banks don't have a cost problem. some new. do. we have been straightforward about our issues. a lot of it is to do with the way in which the economy has behaved in a way which markets support the banking system. francine: i need to bring breaking news to regular listeners, from the saudi oil minister, reporters in moscow saying the deal to boost opec output is inevitable. we saw the russian president together with the crown prince discussing how to boost production while maintaining the petrol alliance. if you think of opec plus russia, they are renegotiating to work unprecedented, in how they control oil production but now you have the u.s. sanctions on iran and the collapse of the venezuelan petroleum industry

threatening to send crude prices skyrocketing. you now have both parties trying to figure out how much extra oil to put on the market. tom: maybe it is of value. when is the meeting, next week? francine: next wednesday. the minister start arriving and it is in full force thursday, friday, friday night. tom: let's come back to what we have been talking about within the psychology of the chairman ceo structure. i don't want you to discuss directly deutsche bank. americans are baffled by the management structures of continental europe, which too often do not represent the modern shareholder. do you see a change, not at deutsche bank but do you see a change in that dynamic where we get a lot more assertive representation of shareholders in the boardroom? has been think there

an evolution of corporate governance in continental europe. gradually, toward something more like a u.k. model, than a u.s. model. people talk about anglo-american capitalism but in this case there are radical differences in governance. most u.s. banks have a combined chairman and chief executive, yet invariably in the u.k., the positions are separate. i am an unashamed supporter of the u.k. system. i think it makes sense to have a german focused on the -- to have a chairman focused on the shareholder interest and that is the single best way to get interests represented in the boardroom. most european banks have moved in that direction and away from the notion of there being one spokesman for the whole board, etc. they have this slightly curious structure with an

oversight board and a management board and that confuses the picture of it. ify are gradually evolving, you look at french banks, to a position where the chairman-chief executive relationship looks similar to the u.k.. francine: have you been following the heathrow expansion question? tom: i have. francine: a real saga. do you think that we will have a third runway at heathrow? howard: i am more optimistic about it now that i was 10 days ago. the government has said they will propose a vote in parliament soon. i think, in principle, there is a majority in parliament for this. it depends a bit on how party leadership decide to play their whipping arrangements. i am more optimistic. more and more people are seeing the logic. tom: i am running out of time but i want to have you back just to talk about the taxes due when you fly into heathrow? this is a major source of

cocktail conversation in new york city. we don't have time to do it today and it is unfair to you but you have to come back and tell me about this taxation that we are seeing at heathrow airport. davies,u, howard greatly appreciated. coming up, morgan stanley, we talked to paul sweeney on comcast. comcast, comcast. worldwide, this is bloomberg. ♪

♪ tom: this morning, we will raise interest rates, inflation to come.

curse of the yield curve, will we see in version, retention? toward $65 billion, the known world awaits bob iger's response. the magic kingdom stays the magic kingdom. the president returns and the question is simply, to what? good morning. i am tom keene in london. working on a world cup bracket. francine lacqua, i just read about england and i am depressed. they are not even in the world cup. .e are doing our brackets we are watching the central bank. i wonder how often mario draghi will have to feel the question -- tom: matt miller in a moment.

the real issue is how mario draghi a just and adapts. your morning briefing, your first word news, taylor riggs. trump will confront china strongly on trade in the coming weeks. the president told fox news that china could be a little upset. to announce the final list of tariff targets tomorrow. china is likely to respond. may, a victory for theresa lawmakers rejected proposals by pro-european politicians aimed at blocking the u.k. into the customs union and single market after brexit. mais government did have to give in on one point, parliament will get more say over the final deal. bidding for 21st century fox, $65 billion.

disney had agreed to buy some of those assets for $52 billion in stock. the winner will control much of rupert murdoch's empire including channels like sky. rolls-royce is cutting 1400 jobs. tois the biggest step yet overhaul the british jet engine maker and save $500 million a year. the cuts represent 8% of the workforce. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. tom: thanks so much. data check right now. the curve flattening yesterday. spread 39 basis points. we came in abruptly. some wisdom here in a moment.

loyal churning before that opec meeting next week. at the 10-30 spread, 12 basis points, when will that invert? ift today, but what an ugly set of days for bitcoin. francine: appetite for risk across markets, there is little appetite. investors coming to terms with the prospect for faster than expected interest rates. we had disappointing data out of china. it is all about the ecb. the fed raised rates for the second time this year and signaled to more hikes. chairman powell stressed the economy is healthy. >> the main takeaway is the economy is doing well. most people who want to find jobs, find them, and

unemployment and inflation are low. interest rates have been low while the country has been recovering from the financial crisis. francine: chairman powell there. the question is whether the ecb for the out a roadmap end of quantitative easing today. in frankfurt for the meeting. i don't know whether it is to academic. we talk about june or july. does it make that much of a difference to markets? do they just want to know they have a day by the end of summer? >> it does make a difference to markets. mario draghi has been dovish in the past, choosing optionality over a set end date, even though the hawks on the council have urged him to give them that. you see some strength in the vix into this meeting -- euro into this meeting.

how will this be after the powell press conference yesterday question mark how we you suggest that mario draghi will adapt? he is not going to change much of what he does during press conferences. he has been doing these at every meeting for a long time. it is part of ecb policy. thething he will change is admittance they have a conversation about the end of quantitative easing. previously he said they didn't even discuss it. now they will have to admit they discussed it and they have only two meetings to go before it slated to run out. francine: thank you so much. matt miller in riga, lot fear. we will have the decision of 7:40 a.m. in new york. we will hear from mario draghi

45 minutes later. you can follow all our blogs for the latest news and analysis at . the annual will be moderated by bloomberg head of economics and you can watch that on bloomberg tv, radio, and on the terminal. tom: it made some headlines last year as well. we need to synthesize. we don't look at equities discrete from currency. no one on wall street has them that letter and affected that attitude than our next guest. thank you so much for coming in. what does the yield curve flattening mean to you?

anirman powell representing institution and dancing around it yesterday. what does it mean to see the curve flattening? >> i have been looking at yield curves since the late 1970's. i think the yield curve does not tell us as much as it used to. part of the reason is central banks have been such a large part of the longer end of the yield curve that they have distorted longer-term yields. we will find out more over the next 6-12 months as the fed begins to wind down its balance sheet. the ecb probably does announce they will end asset accumulation, and we will have the markets go back to a more normal structure. tom: when you were taking isnomics, 1948, but the idea through and the way

economics textbook is one chapter on finance. european banks are dealing with negative rates. american banks have to deal with the curve flattening. how does jamie dimon or brian moynihan deal with curve flattening? earlier, thetioned u.s. banks are more diversified in terms of business models and involved in capital markets than european banks, therefore better able to adapt rather than just to the shape of the yield curve. while we make it the ecb and announcing the end of asset purchases, the forward curve and the markets are not expecting interest rates to get positive and tell late 2019, so this is something european banks will struggle with. we see them continue to struggle going forward. loan demand is weak in the eurozone. 2%, growth somewhere in the 3% range, well below nominal gdp growth.

they don't have loan growth or a positive yield curve. it is a difficult environment. francine: robert, should they just consolidate? would it make it easier? or if you put two banks that are not that strong together does it make it worse? >> i will leave that mostly for the bank analysts. the base problem is tom talks a lot about nominal gdp growth, animal spirits. there is not a lot of revenue growth from the interest rate side of the loan growth side in europe. that suggests it will be a difficult environment. because: this is partly may be some of the european banks have given up being investment banks, right? if you don't have that revenue, how do you survive? do you become a utility or something else? , is therestion is

enough business to sustain the size of businesses there are? european businesses are unwilling to reduce workforces, work rules and things like that. this consolidation continues. it has been to gradual and slow. each individual bank, you have seen it in the u.s. come a different banks have taken on different aspects of the market, retail, investment banking, and banksi think the european have tried to remain across all these markets, sort of a jack of all trade, but not necessarily a master of any, so i think there will be a reckoning about what parts of the business they want to be in. tom: we will speak about the ambiguities in dollars right now. a killer chart this morning. coverageget the ecb

across all our platforms. decision.policy then i really important news conference. matt miller has reported that as chairman powell stood up yesterday, mario draghi will sit down this morning. stay with us for that. from london, from new york, this is bloomberg. ♪

francine: this is bloomberg surveillance. >> let's get your bloomberg business flash. carson block betting against a chinese tutoring company. real business, but the profits are fraudulent.

they were down 10% at the close yesterday. calls the allegations erroneous. elon musk new company just got a big boost, the boring company is to build ana bid express train to chicago's o'hare airport. to getpany is trying ambitious transportation projects underway in los angeles and washington. the price of bitcoin recovered fell almostay, but 20% the last four days. that is raising questions about whether bitcoin was manipulated during last year's record search , rowling more than 1400% in 2017, but down 65%. that is your bloomberg business flash. tom: i will put on social today the terrific summary on the disney,ies at comcast,

and fox. here is a chart which shows the relative performance and the under performance of comcast in red, normalized back to september, director theft from paul sweeney's group at bloomberg intelligence. he joins us right now. >> he's going to put on $60 billion of debt. it's going to be a big balance sheet. ,f i am a comcast shareholder i'm not sure i signed on to become this big global media company. theink a lot of shareholders are reticent about the ability to create value. guy i want to go to math and talk about the behavioral construct now. of mr. robertson to get this transaction done. this guy has been underrated forever coming out of the roberts family, all-american squash player, a determination

like nobody else. what is the drive? the why? think he is looking 5-10 years down the road. if anybody wants to compete amazon google, facebook, , you have to be a global integrated media company. you can never have too much content. tom: what is a type one type to that mr. roberts wants to complete the transaction so the other guy does not get it. this may are bob iger, be more strategic for you because you have got the future of your company going direct to the consumer and competing directly against the netflix. you have just launched espn arect and are about to launch disney app to go head-to-head with netflix. even the mighty walt disney needs more content than they already have. francine: what do regulators want? >> the at&t time-warner ruling

for week was a huge win at&t and vertical integration. after that, comcast came out with their bid for 20% true fox. influence to much the murdochs have over who is chosen? murdoch hasupert indicated longer-term he and his family would prefer to own disney paper. i think they believe the pro forma combined companies with disney are a better long-term play, but at the end of the day it will come down to the price and who puts the bigger number on the table. i think we will have a summer of a bidding war between these two media giants. francine: could it take longer? 3-6 months, or before then? be 2-3 roundswill of bidding between these companies.

that is how important fox is for both of these companies. i think it will take place over the summer, but we will have resolution in that timeframe. of the matter is the faith in the comcast cash flow from cable tv, which will support and pay off that debt. let's go to the screen right now. this is buried within the bloomberg. net subscriber additions with a couple of negative signs on the growth and af subscribers remarkable flatness here. what is the fragility of that cash flow given the technology your team studies every day? cash at comcast is very strong. the real business for comcast is the high-speed data. you can see high-speed data subscribers are growing. cash flow from the broadband is growing significantly.

when you look at the cash flow story, the free cash flow story, very strong here that is why the credit markets will support this deal. tom: you mentioned the deal up to this summer. share price on fox, when does he get stupid? are we at stupid now? >> it is not stupid now. comcastill accretive to , assuming $2 billion of synergies. tom: really? >> it gets ugly north of 40. tom: would you like to talk about synergies? do have experience with synergies? >> just a few over the years. tom: that is cost cuts. brilliant, really valuable as well. many more coming in the coming days from bloomberg intelligence as well. we will avoid synergies and talk u.s. dollar.

, mentioned sir howard's davies now i mention with paul sweeney. you are an intern. he does not know who you are. dazzle him this morning by bringing in the tech tantrum chart here. awe of oure in bloomberg interns. gtv . ♪

ecb is a big deal today.

the press conference will be a big deal, right? francine: it will be a big deal. if you look at the three central really needs to give the markets a timetable of when they get rid of this qe. it is not as easy as it sounds. tom: with us is robert. the dollar and what opposes the be suggested would to be fragile emerging-market currencies. the dollar is ours, but it is your problem. how big of a problem is president trump, chairman powell and the dollar for the philippines and poland? >> the question that came up yesterday at the press conference and has been coming up in the markets is whether this is broad-based dollar strength or select weakness in certain currencies. i still think it is the latter.

currenciesntries and does tom: very discreet now. adopted himly prudent policies. maybe you can get away with that one central banks are acquiring assets, but when they stop to do that we find out who is conducting good policy and who isn't. that is what we are finding out now. if you look at the dollar on a broader basis, it is off its bottom, but below where it was late 2016. again, i don't think this is a broad-based dollar recovery yet. we still have euro-dollar close to 120. it does not sound like it is a week euro. we are not on the parity watch. , this is not a macro issue. i think the u.s. economy is benefiting from the weakness of the dollar last year. you look at relative purchasing

managers indexes for the manufacturing sectors, the u.s. has increased, europe has weekend, and part of that is the currency effect from last year. tom: what we are going to do, we have the strategy and we will fold into it the public policy skills of a guest from morgan stanley, one of the oddest thinkers on wall street. he has abilities and finance. the pot lows in your roads coast to coast. stay with us. worldwide, this is bloomberg. ♪

storm from andrews air force base into the white house yesterday.

well deserved rest for the president after canada and singapore and all of the different events. we will touch on that in a moment, particularly trade. it will be an interesting debate in washington. it is below the radar, the culture wars of immigration is front and center for the motion of the capital right now. francine: i think immigration will be the next topic over the coming days. emmanuel macron also meeting the new italian prime minister, and a lot of the talk will be dealing with immigration jointly, not italy alone, but in the context of the eurozone. let's get to first word news with taylor riggs. >> the china central bank held off on raising borrowing costs. that decision came after the release of data that showed the chinese economy is rising at a slow rate. fed policymakers boosted rates by a quarter point.

chairman powell said the u.s. economy is in great shape. not long from now we will hear from the ecb. russia's vladimir putin and mohammad bin salman will discuss how to boost oil production while their countries play each other in moscow in the world cup. the world's largest oil exporter's are trying to work a deal on output. russia wants a larger increase than the saudi's. a key ally of scott pruitt might have to resign. prewitt is under the gun for a number of ethical lapses. he latest was he used an for hishelp find a job wife. some terrifying moments over the pacific for passengers aboard a qantas airbus. it ran into turbulence and

plunged for 10 seconds. one passenger called it a nosedive. the airplanes had been separated by 20 miles and 1000 feet in altitude. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. tom: thanks so much. with this is robert. joining us now is michael zezas of morgan stanley. america, hee of folds it into a public policy in washington. good to have you here for a briefing on what the president has wrought. mathematically rebound out of the midwest across the nation? a good point. investors need to understand whether or not that pain that eul be felt to the extent

responds with tariffs and china responds after the tariffs that look like they will go into place friday, that feedback loop might moderate the u.s., but we would not count on it. we think they have staying power. senator corker is trying to get a bill through to hamper the administration on these aluminum tariffs. they can't get it done because it seems like it is bad politics. farmer concern doesn't have the same agency it would have in previous administrations. tom: another generation ago your grandmother owned bonds, tennessee valley authority. all of that is based on animal spirit. what is the behavioral tone when you overlay tariffs and the news reports of tariffs on the back own of our agricultural system? you put it in the context

with what is happening in the broader economy, it is not coming at a good time. a lot of economists have pointed out that steel and aluminum isolated,e relatively may .1% off of gdp, but it start setting up. negatef these events can .5%. comcast is adding a bunch of leverage to a system that is at historical highs in gross leverage. that is a late cycle vulnerability when you start shaving off gdp, you have to go far before you say this stuff priced in positively in 2017 turns to disappointment in 2018. that is the only reason that u.s. policy is no longer helping markets. it is a headwind now. francine: do you think the tariffs will be extended to

cars? we are hearing noise this is being looked at. if it does, can it only but escalate? >> our view is we will most likely see automobile tariffs. that therprising to us 232 tariffs were extended to the eu and canada and mexico. that creates this unequal game the u.s. has escalated, the eu feels like it has to respond, but the u.s. perception is that it was on an uneven playing field to begin with. we are not sure what the circuit breaker will be to stop that escalation. we think automobiles are next. that is another headwind to gdp for beyondaccount the 232 tariffs. on iine: from that point we talking about trade wars? >> it is unclear what the circuit breaker is precisely, but there are a number of

templates around the globe that suggest you could get to a model of quotas or perhaps all sides will reduce tariffs, existing tariffs, as a circuit breaker. we feel pretty confident this won't be a full-blown trade war, but this does not mean this is good. staying power and it will shave growth. tom: what are we going to see from cbo on the calculus of our new fiscal deficit? what is the rate of change in the second derivative of this growing deficit? interesting the next time the cbo reports. tom: when is that? >> i don't know. cbo came out with a reports a couple of months ago. one of the interesting issues is that receipts are up on the individual side.

withholdings are confusing right now. sot economists rightfully are applying a multiplier and deciding what the growth will be. the expansion might happen less than we expect this year. that suggests the feedback loop from consumer spending my not happen this year because of confusion on withholdings. treasury bonds applied might disappoint to the low side this year. think she will continue to see flat or curved. tom: the keyword is confusion. that is what i see day-to-day about our new tax policy. >> there is not a lot of visibility. workers whose withholding taxes are pretty straightforward and that is the bulk of their income there is some certainty there. i think for those of us who have other forms of income, consulting income and the like, it is a real quandary about what

the tax liability will be when we get to april 2019. think one thing we are seeing is that the economy is outperforming expectations. is toying with a five handle on gdp growth. it is close. so what we are seeing is tax revenues are improving. that is may giving us some short-term benefit, but again, that probably comes at the expense of the medium term, and that is where the real problems are. any benefit we get this year runs the risk of some complacency because coming down the road is some pretty serious impacts from the aging population. when you look at historically this level of the unemployment rate, budget deficits should be going down substantially. are not.they

they are widening over the last couple of years. so what we have got is a very strong cycle and a good employment cycle and low unemployment rate cycle but is probably masking the longer-term problems we will encounter. the question is when did they hit, 2019, 2020? he could be a difficult 2020 in terms of the budget, markets, and the economy going into a presidential election. francine: let me bring you over to a question from a viewer. we got it through twitter. you can also send us questions using gtv . is the flattened yield curve a function of too much liquidity? bankstoo much central creating currency chasing too few fixed income assets? >> it can be in certain markets. has beenhe flatness the central bank accumulation of

assets. part of it is also demographic. an aging population is lowering less, saving more come investing in the longer end of the yield curve because that is where the yield is. part of it is demographic. part of it is tax changes that have encouraged companies to invest in long-term securities against long-term liabilities. i think there are a host of factors. what i look at is the real fed funds rate. track closerrally in movement with the shape of the yield curve. that is not the case in this cycle. the fed funds rate closing in on 2%, core inflation measures are also closing in on 2%, so we still have a zero real fed funds rate, and that probing needs to get in the 1% to 2% range to get some normalcy, so i continue to look at monetary policy through real fed funds rather than the shape of the yield curve. this real fed funds.

we can do this at bloomberg. we just invent the chart which you can see on gtv . we're going to get this out on gtv . have not even burst through the zero level on the real fed funds rate. we will come back. michael zezas is with us for morgan stanley. coming up to further synthesize where we are and the important 7:00eeting, ubs and the hour. that is a good thing. stay with us. this is bloomberg. ♪

i am taylor riggs.

let's get your bloomberg business flash. unilever has given a muted outlook for sales in the first half and said it is unlikely to remain in the ftse 100 index after it consolidates its headquarters in the netherlands. leading the index means it might be less included and fund manager portfolios. apple making the police unhappy with its latest move, closing a technological loophole that let a authorities hack into iphones. police have used it to get information they hoped would help them solve cases. apple said criminals can exploit the same flaws. promising to get back to basics after posting a $1.5 billion loss. will continue to review its

will continue to review its route. that is your bloomberg business flash. francine: thank you. "unbelievable" that opec and its allies would agree to boost output next week, according to the saudi arabia energy minister, this as the president tweeted that oil prices are too high, opec is at it again. not good. joining us now is bloomberg's managing editor for energy and commodities, will kennedy, still with us in new york is bob finch, and michael zezas of morgan stanley. we heard from the saudi energy minister saying something will happen. wherepec plus russia deal they soak successfully took barrels off is now going to reverse. >> that's right. it has been a key relationship for two years.

the saudi minister is talking to his russian counterpart. they have agreed to needs to be more barrels in the market. there was some tension about how fast they should come back and how many. they will produce significantly more, but fade it in gradually over the year. the real problem will be when they take this plan to the board of opec in vietnam. , principallyembers venezuela and iraq, are dead set against an increase and upset about u.s. pressure on opec to help the oil market out because of u.s. sanctions on iran. francine: how acrimonious is this opec meeting going to be? looking pretty difficult. the iranians we spoke with, one of the senior officials in their delegation said quite clearly

america is trying to meddle in our sovereign affairs. opec should not be putting up with this. there is no need for any more oil. we have an agreement to curb production until the end of the year. it will take a lot of wrangling to produce consensus at the end of next week. i don't think it is going to necessarily happen. more barrelsis will come into the market somehow. tom: more barrels will come into the market somehow. tom: let me give you some advice on the world cup game today. saudi arabia's biggest distinction at this world cup is not being the lowest ranked team. russia is the lowest ranked team. it will be a doozy of a game today. the what i have seen in last three weeks is what you and i have lived with for decades, no one can figure out oil demand. supply comes supply, supply, romance of opec, camels across the desert, forget about it. it is about will demand. do your team have a clue about where oil demand is right now?

>> one of the reason opec has been successful to revive prices is we have had three consecutive years of robust growth led by emerging markets, but also the strength of the american economy. that seems to have continued. the key question going into next year is some people have started to markdown oil demand forecasts because of higher prices. there was some weakness from the chinese economy today. inthat were to come through a sustained fashion, that would be a red flag for opec. they are having to judge a number of things going into next year. at the moment balances look tight. you have heard that conversation 57 times in the last three years. how does the dollar fold into this? >> the dollar historically has had an impact on dollar-based

oil prices. i think that has been less robust, a little less robust relationship in the past year or so where the oil market because of strong demand has been more stable despite these movements up and down in the dollar. just an observation that it has become a less tight correlation, and again, a lot of that has to do with the supply and demand dynamics. the bigger issue is that over the last year or so opec has given up market share to the u.s., and u.s. producers are happy for that to happen. of the dynamics and ministries at the vienna meeting this time around. so much.edy, thank you a busy 10 days in london and the vienna. michael zezas and robert finch are with us. we will continue this good discussion as we go for to the ecb meeting. also may some good analysis of comcast.

coming up, merrill lynch again on commodities and oil. this is bloomberg. ♪

tom: good morning.

i am tom keene in new york. the second best chart. the literally call this finch chart. the inflation adjusted short-term target rate. what is stunning about this chart is we have given up a normal real yield. the moving average clearly shows how it is lower and lower and lower. let's review. why did that happen? was it inflation taken out of the system? systemstructure of the that the fed adopted after the atancial crisis, if you look it up to the financial crisis come it average 1.25%. tom: i want to show that. this is so important. that average right before the crisis. >> then we entered a whole different world of a negative real fed funds rate to heart of

what the fed wants to do is normalized. i think normalized gets that rate up to at least 1% with inflation moving around, so it is you another 100 basis points just to get to neutral. the question is will the fed have to do more than neutral towards the end of the cycle. my colleague thinks they will have to go further than just neutral to get the economy back on a stable footing. francine: do you have a better understanding on how the fed sees neutral after yesterday's press conference? >> i think we do. i think chairman powell has indicated -- the sense i got from him is he did not think this was much of a big deal and this is just an ongoing process, get used to it. we are going to continue to do this to more times this year, and a few more times at least next year.

the matter of fact in nature with which he approached this whole process suggests to me that in fact they don't think they have normalized yet. they have a long way to go, and people should stop fretting about every quarter-point move every three months and get on with the broader picture, which suggests that a decade after the financial crisis we should be back to a more normal environment. francine: how do you see, where you satisfied with how chairman powell look at the trade tensions? >> to the extent that one can , it isembed these things fine, which is to say it is hard to game out how these things escalate, but we know we can measure the announced actions and it is probably on their own they are not doing much. in our view considering this against the context of what the fed is doing, the question just post about where is neutral

actually and where does the fed think it is, our economists have said it seems like the fed is .round 2.75% to 3% it is always easier to identify in hindsight, and where we come down on the level of monetary accommodation versus the direction is we have gone directionally in tighter and tighter ways, so i don't know the fed is looking at trade policy in the context of shaving growth ought at a time you are heightening in an accelerated way, which gives us pause. tom: thank you. don't forget our ecb coverage coming up as well, and the mario draghi press conference. worldwide, this is bloomberg. ♪

♪ draghi's tight rope,

the ecb discusses in qe for the first time, while mario draghi has to contain expectations. wild side, on the chairman powell shakes up the fed. no more for guidance and four rate hikes the issue. your move, disney. comcast raises its bid to $65 billion. david: welcome to "bloomberg daybreak." there is a new sheriff in town and jerome powell. , there ist this note a new sheriff in town, walks through the saloon doors -- david: he is different from his predecessors. alix: he felt like a business .uy here i shocker. cut to the chase. get the deal done. the market is