anna: good morning from bloomberg's european headquarters. i'm an edwards and these are today's -- i am anna edwards and these are today's top stories. china vows to retaliate as trump considers $200 billion in goods and additional levies. yen,havens including the old and treasuries all climb. >> the world will have great difficulty in responding economically if there is a downturn. anna: we will have more from larry summers, he joins us for

an exclusive interview from the ecb forum in just a few minutes time. staying in sentra, the ecb president mario draghi delivers his welcome remarks and i'm a quote a.m. u.k. time. we will bring you that live -- at 9:00 a.m. u.k. time. we will bring you that live. ♪ anna: good morning, everybody. this is "bloomberg daybreak: europe." through what we are seeing in the asian session in response to the intensifying trade rhetoric and threats we are seeing. the u.s. administration threatening further tariffs, 10% possibly on $200 billion worth of goods. they say they will no longer be taken advantage of. china talks of blackmail. suggests the u.s. is using its senses. we are seeing equity markets under pressure.

china and hong kong in particular, weaker. i red headlines across the bloomberg tells me the shanghai composite index lost more than 3% today. they're playing catch-up of the after being closed. we are seeing money going into safe havens such as the yen, the gold price. we are also seeing money going out of the us trillion dollar -- australian dollar. .5%.s down again by it moves higher in the u.s. session yesterday. will we see a compromise between the members of opec? live in going to be vienna with lots more to tell you about the oil price as we go through this week. let's take you through to the u.s. futures. they are under pressure with the trade rhetoric very much a part of things. u.s. housing stocks will be out later. futures are all negative.

this is the picture across equity markets. we are expected to be down by more than 1% in the asian session. let's reiterate some of the great interviews we have going through on bloomberg television today. larry summers will be setting the tone for us from sentra. what is he make of the ecb policy? the traits that? -- traded spat? let's see if we can join some of those talks with him. he will join us in just a few minutes. let's go to bloomberg first word news. deborah: china has vowed to retaliate against u.s. companies after donald trump threatened to place tariffs on another $200 billion of chinese imports.

to trump,diate rebuke the ministry of commerce in beijing said it would retaliate with strong countermeasures. earlier, the u.s. secretary of state launched a strongly worded attack on china. >> we're taking a really hard line to foreign practices the harm america, whether that is threatening our technology leadership or forcing technology transfer, we are hard at ensuring that we protect american property. everyone knows that china is the main perpetrator, it is at an unprecedented level of larceny. deborah: u.s. oil has dropped below $66 a barrel. that is as traders look at opec secession -- decision over a compromise. bloomberg understands that an output hike of 300,000-600,000 barrels a day is on the table.

it's an attempt to bridge the gap between russia's push for a insistenced iran's that no change is needed. u.k. prime minister theresa may faces another knife edge vote in a house of commons this week after she was defeated on her key brexit legislation in the house of lords. lawmakers in the unelected upper half back to animate to make sure that a meaningful vote for parliament on any brexit deal agreed with the european union, or on what to do if there is no deal. global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . anna: thank you very much. a bit of breaking news here in europe. it looks as if they already own a part of this business.

they have reached a definitive merger pack. that is the headline this morning. closing transaction looking to take place in the closing of the year. to give you the current shareholding and ownership of this business, you actually see that roche owns a 57% of this business. . inresting to see that deal thedrugthis morning let's get back to what is happening in the asian session. sophie: we do have stocks that sell for a fifth day. retaliateina about to . the hang seng is back below that 30,000 level. volatility is

picking up for the nikkei. sydney is one of the bright spots. the aussie dollar is edging toward 74 and mideast trade concerns. -- amidsthighlight these trade concerns. the u.s. senate voted on a defense bill. the world's largest pork producer gets caught in the crosshairs as china looks to keep tariffs on u.s. goods. a secondis falling for day as it sues xerox for $1.4 billion over its failed to take over. that is her snapshot of the asian markets of our. let's get to the trade

story. china has vowed it to retaliate against u.s. companies after president donald trump threatened to place tariffs on a further $200 billion worth of imports. the nation will take strong if the uniteds states issues a new tariff list. how is china reacting to the latest tariffs from trump? chineseu say, the countered pretty quickly and said they would take strong countermeasures. we don't know the details of the exact measures. what we know is that they cannot match the u.s. tariff for tariff. they cannot go toe to toe because they don't important enough. $150important about billion every year. the u.s. imports about $500 billion worth of chinese goods. what china may do is take some of these unofficial measures. we have been hearing this

morning that some of their members, some u.s. corporate operating in china are already feeling the impact at the extra checks in terms of customs, actual licensing delays, anything that stops the business growing substantially here in china. those measures, china has taken apart from other countries. they may take them with u.s. corporate. we are hearing that they are already strained to make an impact. that is a major concern for u.s. companies operating in china. about -- trumpng is talking about a potential $400 billion worth of tariffs. you're talking about an impact not just on china's export engine, the also countries like taiwan and south korea that send their components for final assembly here in china. for the optimist, there is a window on july 6, when the first

set of $50 billion tariffs going to affect. anna: thank you very much. tom mackenzie there. to follow the latest on the developing u.s. trade story and the market reaction, you can do on bloomberg. let's go to the senior currency strategist from london. what surprises you about the latest in this trade tension? is it the pace with which we are seeing movement on this? >> i think so. we have president trump knowing exactly what he wants to. if you go back, i think the market consensus was that this wouldn't get to or we wouldn't

see a huge escalation. looking at the news flow, not just from the u.s., but also from china, the market is starting to read evaluat -- reevaluate. if that is the case, we have to reevaluate our outlook for world growth. that is from so many different asset classes as well. chart care that shows why china can't go took to toe and match the import tariffs. it simply does not import enough from the united states. this underlines one of the points that trump has been making over the years which is the imbalance in the trading relationship. it doesn't tell us what china might choose to do. tom was talking about it making it difficult for u.s. businesses to operate, weakening the yuan and taking that approach and try to drive their own exports elsewhere in a fashion. is that something you expect? is some speculation they make good on the currency route and do that.

that wouldn't necessarily benefit them, but potential it could happen. if we look at china's fundamentals, what we see is that they are easing policy. they could go down that route. if you imagine that u.s. going higher, it could be quite difficult for china to continue to keep pace with that. another thing they are doing is really hurting the u.s., or hurting the consumer in the u.s. if thef walmart goods, prices of those rise, that is going to affect the u.s. consumer. i think it is going to be the consumer in the u.s., and that is trump's voter. anna: one blog i read was making that point.

i just wanted to bring you some of these comments we are seeing from the china ministry of commerce this morning. some of the language used is quite interesting. if the u.s. loses its senses and publishes such a list, china will have to take comprehensive quantitative and qualitative measures to retaliate forcefully. the trade work waste by the u.s. will counter the market rules. talking about being blackmailed by the united states, this is strong language. jane: it is, but trump uses strong language. we do have the november primary, midterms coming up. that is going to be quite crucial in the republican party. that is hurting the soybeans and primers. -- farmers. quite a bit of headlines in the newspapers about how high the cost could be for u.s. farmers. that is something which hurt. effects.the secondary what australia and countries like that? will have to do some of their

farmers? there is a huge amount of secondary effect going on in the economy. the surrey much depends on how bad this trade spat goes. anna: have you contextualize this? how do you make sense for the yen to be trending this morning. falling below a key support level. we see money coming out of emerging-market equities and some e.m. fx and commodity related effects. the yen continues to be the haven of sorts. jane: the yen is a safe haven of choice in the currency market. if we take a step back and look seeing money are coming out of the e.m. markets since then.

the euro was holding its own ground until then. we have been seeing a trend into the dollar from e.m. for quite a long time. anna: is the dollar positive or negative in the trade spat? jane: this morning it is negative, but it depends what you're looking at. the yen is going to be positive because it is a safe haven. if you think about world growth and if that is going to slow, that is also going to weigh in on e.m.. anna: we will talk more about that shortly. . thank you very much morning.s with us this coming up on the program, we are going to bring you our exclusive conversation with former u.s. treasury secretary larry summers from the forum in sentra. later this morning, ecb president mario draghi delivers a speech in sentra. will we get more hints about the central bank's policy?

he moved markets last week. you can see that live on bloomberg at 9:00 a.m. london time. this is bloomberg. ♪

anna: welcome back everybody, this is "bloomberg daybreak: europe." it is 1:19 in the afternoon in singapore. asia-pacific under pressure. you see the shanghai composite down by 3.1%. this market playing catch-up because they were closed yesterday. the tradefactoring in talk between trump and china. >> teslas elon musk says a disgruntled employee broken to the company's manufacturing operating system and sent highly sensitive data to unknown third parties. in a memo, he says the worker damaging extensive

sabotage. an employee who asked not to be identified claims he got the mount. pick agen the fail to leader for a dowdy unit after a six-hour meeting. it comes after the arrest of longtime ceo rupert stadler. a company spokesman failed to elaborate. his arrest in the scandal is the first among vw group's board members. mercari has a sword on its first day of trading in tokyo. it raised $1.2 billion, japan's biggest for a technology company since lion debuted in 2016. it has become the default market for buying and selling goods on smartphone. downloads of the app has reached 75 million in the five years since its debut. thank you.

monetary tightening will be in focus at the ecb forum in sentra and portugal this week. investors are monitoring closely the event for potential guidance on poetry actions -- monetary actions. you can watch mario draghi at 9:00 a.m. on bloomberg tv. everyone are members the central spike. thent expectations, monetary policy pardon. he kind of did something similar in reverse last week. to know is difficult how much he can add after last week. no interest rate moves until the summer of 2019. what can he add to that? blur.s not much around the edges of that thing with the market will he wants to know is is that something the ecb is going to stick to? guidance? give that

that was quite exceptional. i think there is speculation out there that perhaps he was so forthright with that guidance because i think by next summer there's going to be locked to speculation as to who is going to take over. his job comes to an end october 2019. there will be lots of speculation. with that guidance in place, it's order squeezes out a lot of room for speculation to impact. anna: is that because of the he hassuspects a hawk, set his store by some dovish policy? he gave us this pushed out guidance. jane: that is exactly what he has done. i think if you step back and look at the fundamentals and you look at the inflation, wage inflation, i think the fundamentals are there. there once be an interest rate 2019.ntil september and

in terms of economic fundamentals, we seem to agree with what the ecb is saying, but it is quite unusually he did give that guidance at a time when there is no crisis. anna: the market clearly was guided by the ecb last week. euro-dollar was impacted very much by what he had to say. you think the scene have been set for dollar trends for some time. that the market take into account rate differentials across the atlantic, when they spent a lot of 2017 not really caring about that? e: they didn't. i think the question is why didn't they carried 2017? back, particularly to the dollar in 2017, a lot of political scandals, many of trump's own making in the u.s., i think that really took the markets eye off the ball. 2017 was exceptional in terms of economic growth. we have strong growth in japan, stronger-than-expected in the eurozone and china. the u.s. had a strong appetite for high-yield.

anna: a different year. thank you very much. jane stays with us on the program. now to the ecb's annual forum in sentra. bloomberg senior executive and therefore economics stephanie joins us now. >> they give very much. we have that blockbuster panel tomorrow from all of the central bankers. today, we are going to hear from mario draghi. lastly at the opening dinner, there's a provocation. it was a provocation?

larry: the issue that is preoccupied monetary policy for generations before the financial crisis, the avoidance of inflation is no longer the top issue. the top issue, i believe is the maintenance of sound growth and getting full employment. that is going to be a much more difficult challenge over the next generation, then many suppose because of the very sharp declines we have seen around the world in the neutral real interest rate. declines that have been masked by the very substantial fiscal expansions we have seen. stephanie: you are known for having popularized secular stagnation. some people thought that you walked away from that over the last few years, i felt that you are doubling down on it last night. larry: i think that is exactly right. some people think that while economies are growing, that shows that stagnation was wrong. i'm exactly -- i have exactly

the opposite view. it required a normal fiscal stimulus to get the economies to grow, even reasonably adequately. that demonstrates the ability of the secular stagnation pieces. relative to what happened in 2013 when i first talked about secular stagnation against the far moreates, you have fiscal expansion then we had then. lower long-term interest rates then we had been, prices have increased in an unsustainable way. it's not that the economy has somehow fueled self, it is that the set of development predicted by secular stagnation theory have happened, and yet many make the mistake of condemning those developments as somehow inappropriate as they represent abnormal monetary policies for excessively expansionary fiscal policies. stephanie: many in the u.s.

would say that we are looking at wage growth. we are starting to see some kind of acceleration in wages, we are still very loose monetary policy. you are overstating the problem. larry: those who put it the way you just did, with the lack we have seen in fiscal expansion, and in an honest perspective fiscal expansion, they lack that asset prices have risen creating thatto affect, at a pace asset prices will continue to rise every year, increases in the stock market. it may be that if policy stays on guard with relatively expansionary monetary policies, with fiscal policies that are traditionally regarded as imprudent, then we may keep this going for a while. we are living with a very brutal economy because downturns happen, the odds of the economy moving into a downturn are about

20% each year. when they happen, the normal playbook is to cut interest rates by 500 basis points. there's not want to be that kind of ruling going forward. stephanie: precisely. the world is less prepared economically, socially and politically for a downturn in it has ever been, and yet you are worried that the people don't have that in mind. i think the central bank is pretty determined to avoid next downturn. larry: one hopes that they will be. at the margin, there's a question, are you going to guard against increases in inflation above 2%, or are you going to guard against the possibility of a downturn? seems to bedownturn cataclysmic in the current environment in this economic implications. we will have such difficulty responding. it is political implications given the rises. in populism

it seems to me that we need to be tilted very much against that risk, even at some risk that inflation could rise above 2%. stephanie: your thought of as a pretty strong critic in the trump administration. you were a fierce critic of the tax plan that was passed. you have pointed to fiscal stimulus in support of the economy. something that has offset specular diet -- stagnation, does that mean you support the broad trust in that fiscal policy? larry: no. the primary problem is i is always -- i have always emphasized with -- supply-side primarily focused on reducing profits. corporations that earned from their monopoly power were from their past investment. not on the demand side because

benefits were flowing to those that already most likely had the largest level of resources and were least likely to engage in extra spending. i'm going to be sitting on this panel tomorrow trying to keep in check the four central governments, including the head of the ecb and the feds and the bank of japan. they are all going at different speeds, but very slowly on the way to more normal monetary policy. you would say even the pace we're thinking about now that markets are pacing is too fast, that it runs the risk of all of them living together and bring us back to where we were? larry: they are holding out the prospect of monetary tightening. markets are actually expecting. i think markets are more right. i'm not going to get into the business of predicting what central banks will actually do. the thesis of my remarks is that they need to be prepared to

balance risks very much in favor of avoiding recession. they need to act as if they have at least a dual mandate with the other part of the mandate emphasizing maximizing employment and growth. stephanie: when you listen to them talk, jay powell was how poor the about economy is to have a tight labor market we are having now. you wouldn't say that the communication suggest they do have that? larry: i think you pick up substantial concern in the united states about the phillips curve and inflation as well as picking up concerned about maintaining the momentum of output. shy at certain points about being a sharp critic about central-bank policy. i think the response to

necessity, central banks have tended to move towards a posture of recognizing the secular stagnation threat, and being prepared to keep interest rates low. they just need to be prepared to stick with it and not confuse the results of successful policy with the lack of need for strong policy. stephanie: jay powell said that maybe he was going to deemphasize the unobservable concepts like the not central rate or the natural rate of policy employment. do you think the natural rate has any meaning in the world? ry: jay powell, i think got it just right when he applied that notion to the natural rate of unemployment. it is what i have been saying for several years, that the phillips curve is a highly unpredictable and a regular -- a regular relationship. -- you

regular relationship -- irregulra relationship. i think the neutral real rate is a different concept because that is like where is the beginning of your tape measure? you have to know where you are and making judgments about where you are before you can judge monetary policy. you don't really have the luxury of simply dismissing the concept. to make the better best guess we have been to simply assume as some do, that the natural rate, neutral real constant. stephanie: use of the biggest risk our biggest priority is avoiding the next downturn. most downturns, historically have happened from a policy error. do you think that is more likely this time or if the trade war starting to give you concern?

larry: trade war is not likely to be large enough that it is direct effects damaging the economy. it is profoundly. it's psychological effect increases uncertainty could be very serious. we're certainly getting later in a cycle of escalation. we still have a long way to go before this is some kind of full-fledged trade war and sends the global economy into recession. we have moved down the escort escalatory step. we are now, how does that compare with how far you thought he might go? larry: he has fallen short of even my low expectations. that hes the defense

should be taken seriously, but not literally. increasing evidence both in his acts of, i use this word carefully, hate toward disadvantaged groups in the united states, turning us into a country that imprisons children separately from their parents, and his actions on trade that he doually means and intends to any of the things he talked about his campaign. that has to be something very alarming for anyone who believes in traditional american values. stephanie: larry summers, think you very much for joining us. anna: thank you very much stephanie flanders. wide-ranging conversation.

interesting there, leading the conversation talking about the difference between the direct impact of trade rhetoric and the psychological effect. some of those things might feature into tomorrow's panel that stephanie is going to be moderating. she's going to be hosting this panel with president mario draghi of the ecb alongside his bojterparts from the fed, and rba. the trade rhetoric dominating asian markets. >> a new round of tariff threats from the u.s. and china seem to be hitting asian equities. declining across the region. you can see pretty much a sea of red with china and hong kong leading the loss. they are playing to catch up to a certain extent of those markets were closed yesterday. all of these a-shares bucking a trend in positive territory. let's switch to the next chart

and take a look at the shanghai composite, it has dropped below a key support level. not only that, but it has now hit a 2016 low. some commentary on the bloomberg talking about how the hang seng china enterprises index is at risk of breaking a two-year bull trend. we take a look at the fx space, the aussie dollar is the lowest performing g10 currency against the greenback in this section. it has had a 12 month low. this chart showing the aussie dollar rate falling, but at the same time, we are seeing one month volatility on the rise. on the safe haven side, you're seeing the yen take. along with gold in this session. this chart shows a little bit more of a long-term picture for gold. it is showing that old is actually the longest negative trend since 2016, focusing in on this technical gauge called the

directional movement index. it has been in bearish territory since april. anna: let's get a bloomberg first word update. has vowed to retaliate against u.s. companies after donald trump threatened to place tariffs on another $200 billion of chinese imports. trump,mmediate rebuke to the ministry of commerce in beijing said it would retaliate with strong countermeasures. earlier, the u.s. secretary of state launched a strongly worded attack on china. >> we're taking a really hard line on foreign practices a harm america. whether that is threatening our technology leadership, property theft, we are hard at ensuring that we protect american economy. unprecedented level of

larceny. bra: theresa may faces another knife edge vote in the house of commons. lawmakers in the elected upper house backed an amendment to ensure a meaningful vote for parliament on any brexit deal agreed with the european union or on what to do if there is no deal. u.s. oil has stopped below $66 a barrel. that as traders assess opec's discussions on a compromise over and output increase, as well as escalating trade tensions between the world two biggest economies. bloomberg understands that an output hike of 300,000-600,000 barrels a day is on the table. it's an attempt to bridge the gap between russia's push for a sig rise and iran' insistence that no changes needed. global news 24 hours a day on

air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . anna: thank you very much. joining us now here on set in london is bloomberg's executive editor for economies. what are we expecting? there is talk today of an opec compromise. what would that mean? we were talking yesterday at length about how the saudi's and russians would increase production. stuart: i think what it means is that people who would have originally raised production, are still increasing production. it is an academic question in the sense that there are very few members of opec, even within the group that have any spare capacity. it is a rather odd situation where the people who couldn't are veryraise hikes anna: i suppose they would not benefit from the upside of increasing production.

they wouldn't be able to capture that with high volumes? stuart: exactly. italy just to what are the other , asarios, particularly saudi arabia and russia want to continue some kind of deal going forward. maybe is a from the agreement, maybe it is something more serious. anna: this is russia and saudi arabia trying to forge some kind of longer-term alliance. is this a threat to opec as we know it? uart: i think it really depends on what the details are. do you structure it in the same with the opec, it is one country one vote? that is what to make a huge difference in terms of the impact for the kinds of things do.an there is no doubt in anyone's mind in that rims that the two big players here are saudi arabia and russia. trump does not like opec

much. stuart: i think he comments on most things. nonetheless, it is under pressure. on clearly need the u.s. your side because in your region, it hurts a lot. anna: stuart, they give very much. he and the rest of the team will be all over the details at the opec meeting. we will have it all for you this week. manus is on his way there. us.and to seeh how this impact on commodity fx . --uppose there are a couple there's also the concerns around trade and that leading some money to come out of commodity currency. a double punch. jane: indeed. i think we can certainly see that this morning.

coal.s export a lot of traditionally, it does have a correlation with opec. nevertheless, the reason i am entering that is because where comes in terms of trade, it is copied between china and the u.s. on this traits that because china is its biggest export partner, culturally, it is more turned to the west. it is a difficult situation. we see that currency selling off. no doubt we see the canada dollar coming out on the back of those prices as well. currencypull up the braking function and it shows the canadian dollar at the bottom here. this is one month move for g10 currency against the u.s. dollar. i wanted to pick up briefly on some of the things we heard there from larry summers. his guidance to central bank is that you need to wait to respond when they see the white. he thinks they are moving too

quickly to clamp down on inflation. actually, they should be just thinking about growth and inflation. think his words of advice will be listened to at all by the ecb or fed? jane: i think there is a big counter argument to that. i think if we stand back and we policy, and we look quality, we can see populism, i think we can see the other argument as to why central bankers might move away from those sorts of emergency measures. europe, certainly we see populism. if we look at trump, we certainly see populism there. anna: interesting. "just released on this subject

on an elected power in monetary policy and how we can have more conversations about how that is exercised. think abouthat you in terms of where the stagnation conversation goes, larry summers also pointing out that the trade war in itself, as far as it develops, not big enough in itself to throw or put a span in global growth. psychological effects are there. we talked up as a little bit this morning. it easy to quantify the impact of this trade war's to date, but that is not the extent of the story. jane: markets afraid of what is going to happen in the future. people take positions on fear of what will happen in the future. people have to price and what they think might happen. the abuse its of these have been echoing have been quite common in the markets. this traits that won't go into something bigger.

actually, this morning can we be confident about that? it is certainly bigger than we thought it would be. that is something that could hurt a lot of economies, particularly those in emerging markets. anna: a good time to mention what is going on in his asian markets. just to tell you that the china x, one of the markets over in china, falling by more than 4%. that was the lowest since january 2000. we're more than 2% lower on the shanghai. remember, bloomberg users can interact with the charts, browsers and chart features on bloomberg tv and catch up on all the analysis associated with them. up next, we discussed angela merkel's ongoing migration crisis. live in berlin next. this is bloomberg. ♪

anna: this is "bloomberg daybreak: europe." 1:49 over in new york. u.s. futures down by 1%. we see that across the u.s. futures. we expect to go weaker at the start of u.s. trade. the latest in trade rhetoric between u.s. and china clearly having an impact on the asian session, and now expectations trading for the rest of the day. this is what we are watching out for today. the ecb forum on central banking is getting underway in sintra in portugal. well mario draghi have to say today? 9:00 a.m. today london time he speaks. angela merkel holds a joint cabinet meeting in berlin. can the two come to a common view on migration? that is something she is under pressure in regards to it home. president trump hosts the king and queen of spain as they begin a visit to the united states. president trump has been busy

criticizing the german government run migration, he is the busy around the trade front as well. we are joined by the advisor to the german government. what are you looking for? you are there in sintra to listen to the ecb and others from the world of central banking. what kind of message do you think draghi should be bringing today? >> it will not be a big surprise. the ecb surprised many last thursday when he announced the end of qe and the anchoring of interest rates until september 2019. i think today, mario draghi or p that message and put a bit of additional excavation into it. i don't think there will be any surprises today from this forum. anna: when you think the interest rates are going to go up again? and which one? what are your expectations? : i think the ecb signal

is very clear. to say that the deposit rate would stay where it is through the summer 2019, that is a very clear anchoring. that is still very far away. this is 14 or 15 months ahead of us. it is very hard to make predictions now. this is exactly what the ecb wants. people do not focus on the next move. now, there's a steady expectation environment which will allow the recovery and to gain steam, and we can discuss when the next move will take place. anna: the more hawkish in berlin have been pulling for rates to go up faster. will they be satisfied with this? henrik: i think everyone recognizes that the ecb has done an excellent job announcing the end of qe and at the same time seeing the euro go down. these are very good moves because it shows that there was a lot of trust in the ecbs anchoring of expectations right now. we will have to see how the

recovery continues to unfold. right now, you're just covered on the program, there is much more focus about the migration discussion in germany. let's not forget that there is a draghi secession coming up and 2019 before, in all likelihood, ecb.ext move by the this is now shifting back to politics and perhaps the ecb will not be in the same spotlight as it has been in the past years. succession,g about some people are joining these things together and talking about what we heard last week and saying this is past draghi preparing for the succession. how important is it for government in berlin that a strong german voice is heard on the ecb governing council, perhaps being led by a german? henrik: i think there is a very strong german voice on the ecb governing council.

there are two. they do an excellent job in her presenting their own views. the ecb governing council is not theyrepresenting a nation, are sitting there and do an excellent job. when it comes to the ecb leadership, i think we should not think about nations, we should think about the best person for the job, the best profile. this is one of the toughest jobs out there and also one of the most powerful jobs out there. it is clear that all governments will try to find the right candidate. from my perspective, i think nations should not be one of the first criteria to be looked at when you get the ecb. anna: nationality blind perhaps in that selection process. one the other challenges facing europe? angela merkel clearly under pressure with regard to migration. do think she can try to find a european solution?

can she get to the same place as hungry and austria and italy on the migration crisis? rik: we have seen over the weekend that the small sister party of merkel's bavarian csu is putting a lot of pressure on her saying there needs to be some kind of european solution so that refugees that are already registered in other european countries can be blocked at the border. for is a real provocation eu law and legislation, but also for the way german borders are managed. if you have ever been to the german-austrian border, it is really in a greenland. there's no way to control people there. what merkel needs is to react to the provocation. the csu has put an ultimatum on the table saying within two weeks or need to be a solution. merkel will talk to italy, to austria, to greece and try to find a solution. i think there are bilateral ways sayiscuss possibilities to

if someone is already registered in a certain country, that is a way to check that the board already, or very quickly when a person is in germany and sending that person back as the eu rules require. technical.ng of a i think the bigger battle is really a symbolic and political battle in the background that the bavarian csu is taking regional elections in october and they are very afraid of this far right party in germany. they simply want to mark their territory as a law and order party. i think this is what they have done this weekend. anna: thank you very much for your time. ik, advisor to the german government with us live. we will be live in sintr all throughout the daya. we will continue the conversation around the ecb. belgium central bank governor

joins us for an exquisite interview at noon u.k. time. plenty more conversation around the ucb -- ecb to be had from sintra and portugal. this is bloomberg. ♪ two, down, back up!

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anna: good morning from bloomberg's european headquarters in the city of london. this is "bloomberg daybreak: europe." these are today's top stories. >> u.s. futures are sharply lower, and asian stocks slump. safe havens including the yen climbed. larry summers is a strong warning to central bankers. >> the world will have great difficulty in responding economically if there is a downturn. anna: in an exclusive interview moments ago, he also added that a trade war would not be large

enough to damage the global economy. mario draghintra, delivers his welcome remarks, which we will bring you live on bloomberg television and radio. ♪ good morning, everybody, this is "bloomberg daybreak: europe." 8:00 in paris or berlin. let's check out where the futures are. we see the trade tensions really thee that -- writ large equity session. with arcs expected to be -- we are expected to be down on the german session. the german market and get company, the ftse 100 perhaps a little more resilient, but not much.

let's put out the risk radar. i will show you what has happened in terms of the haven stories. we see the yen getting a bit, the yen -- dollar down versus the japanese currency. with are now down by 1.3% on the msci asia-pacific. the hong kong and chinese markets were closed yesterday, so they are playing catch-up. you see a replica of the rhetoric from both sides. the u.s. talking about $200 million worth of goods that 10%. face a tariff of senses, is losing its some of the language coming from the commerce and -- commerce minister in china. the oil price down by 0.9%. with are working our way toward opec in vienna. could we see some kind of compromise deal? with our down by 9/10 of a

percent -- 0.9%. let's see where we are on the bond markets this morning. money coming out of equities and into bonds is one of the stories, so that is what you see painted for us here in terms of the bund futures. the u.s. bond market futures as well. the risk off atmosphere that we see in markets. certainly the story tonight we will talk about the. underlined u.s. economy. amongst all of that, how is the u.s. economy doing? we will talk about that with ashtead group ceo geoffrey drabble. he is going to give us his first interview of the day coming up at around 7:15 this morning. their numbers just hitting the bloomberg these last few minutes. let's get a bloomberg first word news update with debra mao in hong kong. it tona has about retaliate against u.s. companies after donald trump threatened to

place tariffs on another $200 billion of chinese imports. the ministry of commerce in beijing said it would retaliate with strong countermeasures. earlier, the u.s. secretary of state launched a strongly worded attack on china. u.k. prime minister theresa may faces another knife edge vote in the house comments this week after she was defeated on her key brexit legislation in the house of lords. upperers in the unelected house backed an amendment to ensure a meaningful vote for parliament on any brexit deal agreed with the european union, or what to do if there is no deal. former u.s. treasury secretary larry summers has warned that developed countries are badly equipped for another recession, but economically and politically. speaking at the ecb form, he added that desk forum in -- forum in portugal he said this.

>> then need to be prepared to balance risks very much in favor of avoiding recession, and indeed act as if they have at least abe will mandate with the mandate, with the other part of the mandate bring about maximizing -- and a growth. debra: global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . anna: thank you very much. kong with theong latest on the markets. >> it is a ready day for asia as stocks fell for the fifth today. most major benchmarks are falling more than 1%. the bleeding is being stopped most by chinese stocks. over in tokyo, a firmer yen is

playing on the nikkei 225 -- weighing on the nikkei 225, which is down 2%. shares in manila are headed for bear market territory ahead of the policy rate decision from the philippines. bte is seeking to a july 2016 low and hong kong after the bille voted on a defense that would reimpose penalties on the chinese telco. over in tokyo, -- is falling for the second straight day. anna: thank you. let's talk about trade. china has about it to retaliate against u.s. companies after president donald trump threatened to place tariffs on a further $200 billion of imports.

the nation will take strong countermeasures if the united states in choose -- issues a new tariffs list. emad mostaque from capricorn fund managers. thank you for joining us. the united states saying they no longer want to be taken advantage of. tough language on both sides. does the speed at which this is developing surprise investors? emad: that has been building for the last year. push -- trump is pushing very aggressively for this the three -- this victory. it means that we could be on the edge of something a bit bigger. the market started to pricing in and you are starting to see the first shocks i think. anna: is there any place to hide? up with us -- i pulled up this chart on the bloomberg, which is the russell 2000.

clearly some investors finding some haven amongst those mid-caps, those smaller companies and united states. is at the kind of place that you can hide? or does it come back to those businesses at some point? emad: i think it does come back to those businesses. i think what you see is that at the start of the year it was global synchronized growth, everything was going swimmingly. now we moving to a more competitive, negative sum game, where the euro zone as pressures on the political side -- has pressures on the political side. i think where you will see the positivity is probably on bonds, in terms of actually flightsafety. anna: that is what we seem to be saying this morning -- seeing this morning. dollar weakness has been paired

back a little bit this morning. what is the implication for the dollar? is this a dollar positive? is itollar negative -- dollar negative? i think that if the fed conversation is impacted by this, it will be impacted negatively in terms of the hikes that we expect will be paired back. that means you might have a scenario where yields drop in the u.s. but the dollar appreciates. because the euro will actually come under the most pressure if you look at the german balance of payments -- havens. the dollar has weakened a little bit today because of the yen. i think long-term this is essentially a dollar bullish story. anna: and other bullish story -- a dollar bullish story.

what is different now? you had this cooperative, everybody is going in the same kind of direction, global growth and nice -- synchronized. that has switched to a story where europe is in trouble, you have potential trade wars. where coming off of this very high base. the dollar strength that we see now i believe will be driven by different factors than the ones that have driven in the weakness -- driven the weakness in the euro, and the strength in the dollar. anna: what worries you this year? are you preoccupied by what is going on it german politics, but what is going on in bitcoin? i think trade is first and foremost now. this is an unpredictable scenario where we assume a deal

will be done, but these tit-for-tat tariffs lead to very unstable equilibrium's. the markets shift, and then they shift again very rapidly. side, ion the bitcoin think the market in general, i think there is further to follow. it is not a big structural think, more of a localized asset. anna: thank you so much to emad co-cio at cap are cohn -- capricorn fund managers. we will talk about opec. trump has spent decades speaking about oil and opec. our live coverage from vienna starts tomorrow. will be back and talk about oil, equity markets, which are

considerably weaker in the asian session. futures of suggested that will be the case in europe and the united states as well. this is bloomberg. ♪

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anna: our live coverage from the anna starts tomorrow, ahead of the opec meeting on june the 22nd. of that is aiming of course, for a modest out the kite to overcome -- output hike to overcome iran's dissent. this is a compromise that has been talked about. co-cio at to the capricorn fund managers, emad mostaque. great story on the bloomberg today which talks about the trump administration and suggest that the issue from an open perspective is actually -- opec perspective is actually broader

than trump. trump has been talking about oil for decades. $30 -- once it at $30 -- wants it at $30. emad: oil is one of the things that directs the u.s. consumer most directly because of the gasoline prices. that is directly to the bottom line and their pockets, so he wants the oil level is low as possible. -- as low as possible. anna: what do you expect to see between what all of the countries want? emad: i don't think that the arabians have much shale. i think the market is probably 500,000,n 400,000, maybe 600,000 barrels.

anything lower than that would be a boost to the market and i am a structural bull. they have not done what is needed to maintain --. anna: trump wants to see $30 oil, we are at 65. where do you see them having next -- heading next? emad: i think you will probably headed toward 500,000, 600,000 barrels on the output hikes. if this starts to feed into the markets i think the oil price comes under additional pressure. anna: thank you so much, emad co-cio at capricorn fund managers here to talk with us. let's check out the bond market action. this is what we see in asia. the rhetoric of trade has been ramping up, and that has been having an impact on markets. with our wiki -- we are weaker

across the asian equity market. 5.8%, and by 4.8% -- the china composite down 3.5 6%. the nikkei 225 down by 1.8%, and ospi down another 1.6%. let's look at the futures and what do we expect to see at the start of the european equity session and the u.s. futures? there we are. futures andthe s&p ftse futures suggesting we will be weaker at the start of trade. you see money going into havens. yen is higher, gold is higher, u.s. 10 year treasury yields go down. lasthas the story of the 24 hours when it comes to trade rhetoric and its impact on markets.

that's go to on earnings story which is a little different. earnings released this morning from the company ashtead. was belowebitda estimates. let's talk to geoffrey drabble, ceo of ashtead group, who is here to discuss the company's earnings. you joined the company in 2006 when profits were just 60 million pounds. 12 years later we are looking at -- many were looking at whether we were going to see one billion. when do we get over one billion? geoffrey: this year. we have had a good run. revenue is up 20% this year. we expect similar levels of growth, admitting growth -- mid-teen growth next year. will be talking -- we will be

targeting 15%-to be percent eps 15%-20% eps growth every year. we will get there this year. anna: the stock is up by more than 18% year to date. what allows your company to continue to flourish? as it german by the strength in the domestic economy -- is it driven by the strength in the domestic economy in the united states? -- economyhe growth definitely helps. not only how we grown significantly, we have doubled our market share. i think we will double it again in the next eight years. we have doubled our market share and we only have 8% market share, so it is a lot to go after. people do not want to own things .

that keeps driving the story. the strong economy in north america does not do us any harm either. anna: it does not do any harm, but is it too strong? we heard the head of the -- chair of the federal reserve. there is a lot of fiscal stimulus going into the economy at the moment. you see any overheating in the u.s.? geoffrey: it doesn't look like that. new homes are being built, office blocks are being built. it was predictable given the scale of production back in 2006, 2007. we are still at relatively modest levels historically. there are still issues. labor is very tight and there is going to be inflation. the increasing impact of tariffs , clearly inflation is on the horizon. that will have an impact. also, benefits from things like the tax code have not played

into the economy. anna: i have got a shot that shows the tightness in the labor markets. you have told us in the past that one of your biggest markets was getting hold of the right kind of talent. anna: we are off -- geoffrey: we're operating in eight full employment environment. it is a constant battle. if you are funding 20% volume growth, you need to be able to recruit more people. that is proving to be a problem. it is forcing us to go down solutions that i think are good long-term solutions, and terms of apprenticeships, training our own people. talent availability is an issue. anna: this is an issue for anyone who watches the global economy. how does that impact in business such as yours? fewfrey: there are quite a metrics where what is negative too many people is a positive for us.

we get big economies of scale. and thing makes equipment more expensive makes people more likely to rented than by it. we are one of these strange people who actually likes a little bit of inflation in the criminal purchases -- equipment purchases. our scale gives us advantages. i think it drives the trend. inflation and uncertainty drives the trend to rental. anna: what about acquisitions? you have done smaller deals. what about looking into the future? any others planned? there has been speculation around holdings in the united states. would you be interested in buying them? is that too big for you, those kind of deals? geoffrey: clearly we believe in the consolidation. we have doubled market share and intend to do it again. -- of m&a is that you

can afford it. you can afford it financially and operationally. we have a growth story second to none and we don't want to be disrupted by writing off too much amended -- biting off too much m&a. i think we will probably stick to current plans. anna: the promise of a billion pounds in profit, a share price that -- a u.k. listing despite 90% of the business in the united states. are companies interested in buying you? i have certainly not had any conversations. i would like to think that anybody would want to look and try it, and see what they can either learn from a business as successful as hours, but no, i don't think so. anna: thank you so much for joining us, geoffrey drabble,

ceo of ashtead group. that is it for "bloomberg daybreak: europe." looks markets in europe set for a really tough first half to the trading day. futures of suggesting we will be weaker at the start of the trading day. u.s. futures also weaker, nasdaq futures, dow futures all looking pretty negative. the asian session has been dominated by fears on trade. the rhetoric wrapping up from the trump administration and chinese. gnodde, the co-vice chairman of goldman sachs joins bloomberg. the global strength of the economy no doubt in part of that authorization. our coverage of the ecb forum in sintra continues throughout the day. the headline policy panel is tomorrow. bephanie flanders will

hosting the heads of various central banks globally, including mario draghi and jerome powell. nest tomorrow, but plenty more from -- that is tomorrow, but plenty more from sintra today. this is bloomberg. ♪

guy: welcome to bloomberg markets, this is the european open. we are live from our european headquarters. i am alongside matt miller. matt: preparing for the big panel tomorrow with mario draghi and his big central bank counterparts. he will speak later today. we spoke with larry summers earlier this morning. there is a lot more to come out of portugal. 4 it looks like it