francine: drama in vienna. opec decides to boost products and despite strong opposition from iran. the trump administration is split over whether to restart trade talks with china. and airbus threatens to pull their u.k. investments in the event of a no deal brexit. welcome to "bloomberg surveillance." let's check in on the markets. here is what i am looking at for the stoxx 600.

they are gaining 0.3% at the moment. some breaking news out of euro for the month of june, pmi rising to 55. of this better than we forecast. and if you look at wti, it is on the way up, despite opec deciding to put extra barrels on the market. i guess a lot of it was already priced in. .11648, and dollar we are hearing about the risks in the white house over how to deal with china. we talk global growth with our guests. opec, we get a view on and still to come, the former fed governor talks of the latest on the state of the banking system and deregulation. let's get straight to bloomberg first word news. greases it euro area

creditors struck a landmark deal to ease repayment term. then effort to ease mountain of debt and clear the way for it to exit the lifeline. the compromise comes after months of acrimonious top, just as athens is set to exit their bailout program. the deal has long been seen as a key ingredient of their successful return to economic health and a foray back into markets. opec and their allies have reached a preliminary agreements to boost oil production. although the actual increase will be smaller, as several countries are unable to raise output. in a night of drama, the committee reached an agreement, despite the iranian oil minister walking out of the meeting and predicting they will not reach a final deal. the overwhelming majority recommends a million barrels.

that is a nominal figure. meeting what is actually delivered is going to be a smaller number. the exchequer says he is no enemy of brexit, and slams eu proposal for cross-border. philip hammond also confirms that higher taxes, rather than the so-called exit difference, would be needed to boost funding. he clarified his political future in september. they made a comment in and is listed interview with bloomberg. past, people have asked where and when about elections in thailand. but the important criteria is organic rule. the fact that it is quite right

for elections, so we could hold elections in february next year. global news, 24 hours a day, powered by more than 2700 journalists in more than 120 countries. this is bloomberg. francine: thank you so much. let's kick it off with trade. some white house officials are trying to restart talks with china to avoid a trade war for tariffs take effect on july 6. stafferg has learned that of the economic council have contacted former officials and china experts to gauge the chances of high-level talks in the next two weeks. it sets them up for battle within others who favor a hard line. so what does dissent at the white house mean for trade policy? joining us for more on this is our senior writer stephanie baker, and chief european economist at standard chartered.

stephanie, how do we know about how the trump administration is divided, and what do they do next? we had this great story overnight showing that there was this split and some people who want to see if they can get a deal before the tariffs come into force. this does not give them a lot of time. given the fact that there were talks for a while and did not make any headway. never, but it seems unlikely they would be able to reach a deal. part of thehis is long-standing division within trump's inner circle over how to deal with trade and china. i am reminded of when i interviewed steve bannon a few weeks ago. he is out of the white house, but his views are indicative of the trade talk weighing within trump's inner circle. in aiew is we are already trade war and should be pressing ahead with tariffs. then you have others, like steve mnuchin and larry kudlow who

view this as potentially economically damaging. have the classic view that everyone loses in a trade war. how this plays out remains to be seen. just like migration, we don't know who trump listens to. francine: do we even know if they are talking? either back channels we may not have heard of? stephanie: it looks like they are reaching out to china, perhaps to have the chinese vp come to the u.s. and maybe more discussions behind the scenes we do not know about. is an effortthere by one weighing to come to some sort of resolution. francine: sara, what does this mean for the global economy? we understand that with every 50 billion in next to tariffs, there is 0.1 or 0.2 shaved off chinese gdp. does that peak?

sarah: it is significance, of course. at the moment, the tariffs we are talking about will have an impact of 1/10 of chinese gdp. the worry is that it does not look like it will end here. china has announced retaliation, the u.s. has announced further retaliatory measures. once that happens, we start to get into significant impacts on their economic activity. imports are banned from the u.s. by china, it will have an impact of one of were 2% of gdp, starts become significant. the other impact is on global sentiment. we can see across the global area, german producers, in particular, are worried. francine: can a trade war escalates and plunge the world into a recession? sarah: well, there is a

precedent, of course. we only need to go back to the early parts of the last century, and that is what we saw. a depression which, in large part, was the result of protectionism. at the moment, the world economy is very integrated. trade protectionism does have not gone effects elsewhere -- have effects elsewhere. before the next round of measures kick in, there is space for dialogue and discussion. but we are already seeing some of the impacts on steel and aluminum raising prices in the u.s., causing real concerns for u.s. businesses. that lobbying will carry on through the summer. we talked a lot about these immigration policies implement by the white house, now the reversal saying that families need to stay together.

he also wants to make sure separated families find each other. how will this play out in the midterms? it is hard to tell at this point. those elections are still five months away. these images will still be on people's minds in november. what will happen in the meantime . if it is still an ongoing story, with 2000 children who cannot find their parents, it could be ongoing. but we all have short memories. has not't look like he put measures in place to try and reunite those families, and there are still ongoing them and notr abandoning the zero tolerance policy. he is threatening to put parents, mothers and children, into detention. and there are certain legal questions hovering over that's. -- that.

so the story is not over. francine: thank you so much. stay with surveillance, plenty coming up. including opec divided. oil ministers boosting production despite opposition from iran. and taking flight. plans to pull their investments in the face of a u.k. brexit. we investigated that further. this is bloomberg. ♪

francine: economics, finance, and politics. this is "bloomberg surveillance." straight into the bloomberg business flash. they made:as said

u.k. investments in the quote catastrophic event because he leaves the eu without striking a brexit deal. giant said it theresa may fails to broker a deal, it would lead to severe disruption of production. the company employs 14,000 people in britain, where it manufactures wings. sharp is raising as much as $2 billion. they say the proceeds will be used to purchase preferred stock and on research and development. they are well into a turnaround since fox, but the company and injected money through capital investment. big u.s. banks have cleared the first hurdle of this year's stress test. the fed and found all 35 lenders would survive a severe economic downturn. and year, goldman sachs morgan stanley came closest to the edge, and is the third straight year they exceeded the fence minimal demands, and is a

sign of strength. the trump administration wants congress to remove federal charters, as part of a plan to release the mortgage giants from u.s. control. the two countries have been under u.s. conservatorship and could have their market dominance challenged by new competitors. and rivals would be overseen by government entities with power to approve guarantors changing regulations and ensure participates that participants are adequately capitalized. francine: let's talk oil. trading higher after opec and its allies reached a preliminary agreement. that is despite opposition from iran which could veto the decision, although that would not mean the deal could not go ahead. could the rest of the cartel win iran over and reached unanimous decision. joining us is our executive editor for energy and commodities.

stewart, always great to speak to you. how many outcomes are there, and what they signify for production? likely ones is that they do come to some sort of agreement. that would require iran backing away, but they have left the door open and have hinted at a possibility they might go along with the deal. it does not fundamentally bring the deal -- change the deal, it just brings it back to where it was very --. the other possibility is they just do their own agreement without iran. that is not in anyone's interest because it destroys the image of unanimity. the first option is preferred, but a second one is likely. francine: the second option would be what, a complete collapse of opec?

or that they agree to agree and then sheet? -- sheet -- cheat? there is room for them going their own way for a year or two and then becoming buddies again. cheating, you and i discussed this long and honorable tradition of saying one thing and doing another. it could creep back in if a majority feel it is in their interest. francine: what is pricing in the markets? we are expecting barrels to be added, writes? -- right? no matter what happens, we expect the price to increase. stuart: it is all about expectation. going in, we had russians talking about over a million barrels, the saudi hinting. so this is it at the lower end of those third in terms of actual barrels.

is a below what some people were expecting, hence the higher prices. francine: what does saudi arabia want? are they willing to compromise to get iran on their side? stuart: i think so. while they have quite a few disputes, when it comes to oil, they do have a common interest. that they would rather have control and influence rather than not at all. francine: so how much would they need to say they will increase production by? is there a figure the markets are expecting? right now, they are probably expecting that one million barrels number. higher, even on the best of opec meetings the market is jumpy. francine: opec days, always exciting. sara, had a look at the price of oil and the linkage of that to

central bank or casting world growth? i think the meeting is interesting, following sanctions on iran. potentially losing millions of dollars a day on a really in oil. we have also seen a hit to libyan oil production and storage. that takes out another 500,000 barrels. on top of that, then as is also declining. angola. we are in a situation where they are facing a shortfall in production. it is not clear if they can meet that shortfall. in fact, there are underlying pressures for prices to rise. francine: does it make a difference to market perception whether the increase is done by consensus or whether it is saudi and russia alone? i think you- sarah:

have two factors. the headlines you have today, and it mark -- market expectations are met, the price will not move. but then there is the reality, what are the increases? even if there is not a particularly high increase, we think they will come through, and they may need to come through the two in the year to meet these potential shortfalls. francine: how often to meet? they always have these extraordinary meetings. they can always have extraordinary meetings if today does not have the results they want. stuart: yes, although they do need an agreement to go to the meeting. things have changed a bit. deal, lotsopec plus of countries have become involved. dynamics have changed. you are finding that the saudis and russians are meeting privately, football matches, that sort of thing.

and briefing the media on policy, that is new. used to have to wait a several months and then have these extraordinary meeting, but it is happening more frequently. i think it is about stamping their authority on this market. at the two biggest oil exporters, they think they should determine what happens. francine: thanks so much. we are expecting that opec meeting to finish momentarily. and then we get our reporters in to figure out exactly what they decided on. let's talk emerging markets. thailand's prime minister says his government is committed to holding an election early next year that would end more than four years of military rule. his comments came during our exquisite interview in london and gives us some clarity to the political future. think we have made significant progress regarding the elections, regarding our roadmap. we already passed to organic

laws that will facilitate the election. according to the current situation, i am sure we would be able to hold an election by february. just to clarify, talking about the timeline, i could not clearly say when it should be the election time frame, because we need to wait for the law. we have procedures, legislation. but now we are pretty sure. in the past, people have asked about when our elections, but the important criteria is organic law. ready for elections, so i think we could hold them in february here. -- next year. >> are you considering staying in the government? >> to be honest, i have not made a decision. right now, i'm focusing on two important issues. first is the coronation, and the second is preparation of the election.

i need to make sure the election will be smooth, and after that, it is dependent on the situation. right now, we are a happy --ivity made by politicians already have activity made by politicians. but i am just focusing on two issues. >> can i ask you about trade? thailand has a big exporting economy. are you worried about because in the crosshairs of china and the united states, and what are you doing to protect the economy? >> i think that in order to cope with the trade war situation, balance of trade is important. of course, negotiations between countries is important. you mentioned earlier, i have the opportunity to visit the white house and speak to the president about trade and investment. we had a very fruitful conversation, and we understand the situation both countries confront. negotiation is in order.

i alsorom the u.s., spoke to the leader of china, and of course, we discussed the same thing. in negotiation to find the best practice. to cope with the situation, diversification is very important. we need to make sure we can invest and export our goods to other countries, to all regions. that is why we are here and talking to the u.k.. francine: that was the thai prime minister. meanwhile, malaysia's prime minister has said their fair value is the same as the currency their previous government established, in a controversial move. he also discussed the appointments of their central bank governor. >> for example, when the land ,as bought by the central bank

the central bank does not need the land. what it wanted to do was give money to the government. francine: let's keep the conversation on emerging markets. if you look at emerging markets as a whole, of course, they are impacted by fed, dollar strength, structural reforms. bullish or bearish overall? we are cautiously optimistic, but we recognize that emerging markets have been through a difficult few weeks and months. it is not just about how the fed will raise interest rates, but worries about broader trade dispute and what it means for economies in asia that are heavily reliant upon trade and china. it has been a difficult few weeks. if we step back and look at the fundamentals, they are looking very positive.

-- see stronget growth across asia, africa doing better. and where we see value is in countries like thailand, for example. francine: that he so much. will be -- thank you so much. in the meantime, we are getting breaking news out of opec in vienna. scrum, which is where our reporters run in and chased the ministers to see what they decided upon. the saudi andt iranian oil minister held private talks before the meeting , which could explain the delay we try toum, where figure out from the ministers what they have and have not agreed upon. there are three options on the table for opec. the market expecting them to put extra oil on the table, but to do it consensually. saye iran put something in

they support it as long caps on he does not put too many barrels, or if saudi and russia right away and go at it alone, increasing oil prices. i think those are live pictures, they are live pictures. you can see our report is trying to get ready. next, how a no deal brexit scenario could threaten airbus. we bring you the very latest on that. and the chancellor philip hammond's speech. this is bloomberg. ♪

francine: economics, finance, and politics. this is "bloomberg surveillance." let's check in on what is trending across bloomberg on tictoc.

greases creditors struck a landmark deal to ease repayment terms in an effort to alleviate its mountain of debt. this is to clear the way for the lifeline that has kept it afloat. says they might all their investments in the events the country leave the eu without a brexit deal. the french aerospace giant employs 14,000 people in britain. and are most read stories right here over the past few hours hours. the ex governor resigns halfway through his five-year term. in second place, morgan specks are employing investors -- morgan stanley and goldman sachs are employing new investors. and finally, the white house is split over its response to a trade war. some officials are trying to restart talks with china. our guest is still with us. we are still trying to figure

out what the airbus war on brexit means for other companies. we have trade, and a couple stories on greece and italian debt. what should economists be focusing on? sarah: a lot of interesting developments in europe. this greek debt issue is interesting for those of us who have been following the story for a number of years. i don't think it is a market hasng, but that greece committed to running their primary surplus for the next 40 years. it is quite a struggle for that country over the long-term. central banks, i think, are being really focused at the moment. how quickly the fed will raise rates, how the boe will raise rates, is the ecb going to be as cautious as they laid out last week? francine: in the meantime, let's get straight to bloomberg first word news. >> more on greece for you. struck ao creditors

landmark deal to ease repayment terms in an effort to ease its mountain of debt and clear the way for it to exit the lifeline that has kept it afloat. compromise comes after months of talks as they are set to exit their bailout program. the deal has been seen as a key ingredient for the countries excess will return to financial health. in the u.s., some white house officials are trying to restart talks with china, before tariffs take effect. that somehas learned officials have contacted officials in china and experts on the chances to engage high-level talks. it sets them up for a battle with others in the trump administration who favor a hard line. no uk's exchequer says he is enemy of brexit, as he slams eu proposals for cross border services.

philip hammond also confirmed that higher taxes, rather than the so-called brexit dividend, would be needed to boost funding. day andews 24 hours a more than 120 countries. this is bloomberg. francine: thank you so much. airbus has threatened to pull their u.k. investment. aerospace giant that employs 14,000 people in britain says a failure to strike a brexit deal would be catastrophic. this is the starkest warning from any major company. joining us now is bloomberg's managing editor for global business. benedict: airbus is hugely important for the u.k.. and in the u.k. only. they make wings, and it is a high profile part of the plane, something they have guarded

closely. other sites across europe have been very interested. there are sites in germany, in france, who have said they would like to have a slice of it. it has always remained in the u.k.. there is a whole slew of supplies attached to this. you mentioned airbus has 14,000 employees in the u.k., but there are probably 100,000 additional workers tied to that. that whole host of supply companies attached to this. should airbus move out, it would be catastrophic for the company and country. francine: what other countries have made noise about brexit -- companies have made noise? benedict: this is probably the strongest we have heard. other companies have been hoeing and humming, considering their options. political negotiations get more complicated and acrimonious, we

are seeing this pick up. saw unilever, notably, all out of its u.k. headquarters and now be in the netherlands. we have smaller examples, like clark shoes. we have land rover opening a site in slovakia, pulling out of the u.k.. the question with airbus is is this a moment? will this take us be, it's airbus the first, a catalyst? the government in the u.k. has been very careful and quick to come out and say we think there will be an orderly transition, don't you worry. so they are clearly worried about this rhetoric and it building speed in the corporate world. francine: has airbus made contingency plans? benedict: there have been a couple. about it.s spoke he said they are starting to stockpile some of their

products. a lot of the products crisscrossed the channel many times before the plane is complete. they really cannot afford any kind of break in that supply chain. we are already seeing them start a contingency plan. we are already seeing some prep work going on here. francine: thank you so much. that was bloomberg's managing editor for global business, joining us from berlin. as airbus makes this announcement, how will airbus continue? it feels like an inflection point. we are starting to have airbus come out, saying if there is no deal, we need to look at our options. but it is like a trip feed, it feels like we have been at this point for a long time. sarah: i think this is an important point. we are only nine months away are brexit, and what we seeing increasingly, is

businesses behind the scenes lobbying the government and trying to get clarity on what the post-brexit environment will look like. in frustration, coming out publicly and saying something has to be settled or we will have to consider what we do after march of next year. francine: what does it mean for pound? is this just companies trying to put pressure on the government, or can we expect investments leaving the country? sarah: if there is no deal, all bets are off. as we get to a cliff edge of april, i think governments will do everything to avoid that. it does leave a lot of uncertainty about what happens at the end of the transition. we are not going to get clarity at the end of next week. it will be pushed back to october's council meeting, possibly even december. oninesses cannot make plans

that sort of uncertainty, an investment is already very weak. it is likely to slow further until we get more definite deadlines about the arrangements. francine: thanks so much. debt deal, greece's creditors reach an agreement to ease repayment terms on the countries alone. -- loans. will this pave the way for the return to the markets? we discuss that next, this is bloomberg. ♪

francine: this is "bloomberg surveillance." euro area finance ministers have struck a landmark deal to ease

repayment terms of greece's debt , clearing the way for an exit from the lifeline that has kept the country of float. loat. float -- af imf prepares for a trip to assess italy's economy. christine lagarde has road -- warned that markets could react. is there still a risk in italian markets and is borrowing now sustainable? joining us now is bloomberg's editor in brussels, and our reporter in rome, and our guest is still with me. first of all, what is the latest on greece? yeah, the euro area got this deal yesterday at a meeting in luxembourg. they are hoping it really is going to shut the door on this long episode with greece and the eurozone.

forget, greece almost tumbled out of the eurozone and the euro itself was under pressure a while back. but now they feel they have finally gotten it all together. at the same time, christine lagarde was saying we still have to keep an eye on greece and its debt for years to come. it still has almost 180% debt to gdp ratio, and it is going to take a long time to work that down. theyine: how much are being affected by the u.s. china trade skirmish? jones: the whole world is affected by this. is very much is affecting. it might not be so much in actual terms, but it is more like what is going to happen next. it really feels like we are in a global trade war already. trump has put higher tariffs on

andteel and aluminum, threatened that with eu cars, imports to the u.s.. so the eu is really waiting to see what the next shoe to drop will be. eu leaders are meeting in brussels next week, and this will be one of the things on their agenda. francine: what is the situation in italy? concerns about two appointments that have an influence over the budget and houses that are eurosceptic. john: that's right, that is the concern. these two lawmakers are the mr. no euro. the government has pledged to various times that the euro is not in question, the personal opinions of these two lawmakers are very much against the euro. a newspapersaid in interview says he believes in monetary sovereignty, that would be good for italy to recover

monetary sovereignty, they'll get knowledge it is not government policy. are we going to see a lot more fights over immigration? is there a point where the become so- liga popular they break away from the coalition. john: it is a possibility. according to one of opinion poll, they have taken over the five-star movement. there could be the temptation later this year, or later even further, for the league to break away and for selection. -- force elections. i don't think they know what comes next, they do not have a plan. they do not know how they will push through, nor how they will pay for it. watching, we are just

and every day they target a new policy, whether it is i great -- migration. example, had if you should have his bodyguards taken away. francine: there is a big summit in brussels next week. what will the main points be on? they have so much to discuss. sorry, john. i was asking jones. jones first and then john. the beauty of life tv. [laughter] this affects italy more so than maybe any of the other countries. there is a mini summits in brussels on immigration to prepare for the summits next thursday. they are trying to come up with an eu wide strategy to deal with

what is a researching problem here in the eu, particularly in the mediterranean. they are also talking trade. on theis meant to be agenda, but it looks like we are so making enough progress, with that october deadline going to be they able to do something to get it in time? as you were saying before, the no deal scare keep getting louder and louder. francine: john? john: for italy, the key issue is migration. that could actually block talks for some time and puts massive whosure on angela merkel four, internal political reasons, needs a solution to this. francine: thank you for joining us. so what is the future for europe and what does it mean for

investments and markets? there will be a sigh of relief, at least greece has been dealt with. a lot of commentators think this is a good deal, a preferred deal. but then you have a fault line with immigration and politics in italy. how do you view your -- europe? i think the greece situation is a reminder that europe can put things right. it may take a long time, but though the region went through a double-dip recession indeed, the economy is now growing. the greek story is a positive one. that, we do see there are strains from italy. the issue over immigration and maybe flushed out over the weekend, and maybe a compromise will come out of next friday's

european council meeting. howkey consideration is will the italian budget come out? italy has committed to substantial spending, , theyntial tax cuts actually breakthrough the limits in every respect. that looks like an argument just waiting to happen, come on. -- autumn. francine: is there a concern that the euro is back because of italy? sarah: there is a concern. as the third-largest euro area economy, it is a much more significant deal then greece. but there are tools and measures in place that the ecb can implement to offset the contagion risks that were prevalent at the time of the greek crisis. the fact that you have the

league, which is very anti-euro, anti-eu, gaining in the opinion polls, does make for an uneasy situation. francine: what does it mean for euro? sarah: we think it will hold in their. -- there. there will be periods when it struggles against the politics, particularly if the situation deteriorates. but we think the region is pulling ahead. qe is coming to a head. interest rates are rising. the cycle is not as mature as the u.s. cycle. relative perspective, we think the euro will move stronger over the next 6-12 months. overall, will the ecb hike before the summer of next year or will that be delayed? sarah: i think they have made a commitment not to hike. there looked to be inflation

pressures and place that might require to -- them to act sooner. we think they might rise in september of next year. and, the start, really, of a rate hike cycle. francine: up next, women in the driving seat. could a landmark rollback of saudi's vehicle laws affect the economy as aramco's upcoming ipo. this is bloomberg.

francine: economics, finance, and politics. this is "bloomberg surveillance." item francine lacqua here in london. let's get straight to bloomberg business flash in new york. they willhas said pull their u.k. investments in the catastrophic event the country leaves the eu without striking a brazen deal. says ifs space giant they fail to strike a deal, it would lead to a severe disruption of production. the company employs 14,000 people in written. -- britain.

billions anding has said the proceeds will be used to purchase stock and on research and annulment. into a turnaround after fox, but the company. u.s. banks have cleared the first hurdle of these stress tests. the fed sound all of them could survive a severe economic downturn. this year, goldman sachs and morgan stanley came closest to the edge, and is the third straight year every bank surpassed minimum demands. the trump administration wants congress to remove federal as part of a plan to release these morgan -- mortgage giants from federal control. they could have their market dominance challenged by new competitors under the plan. fannie freddie and rivals would a body interim

regulations and ensuring adequate capitalization. a decree by saudi arabia's king comes into effect on sunday. the historic decision could be as beneficial for the economy at the saudi aramco ipo. >> it is the first for a country known for its conservatism. starting june 24, women will be allowed to drive. the decision represents not just a turning point for women, but that helped transform the economy. the first boon could be to automakers. 3 million women will into the markets within the decade. the benefits do not stop there. more drivers will mean more licenses, more driving schools. and the increase in traffic means more pressure on infrastructure, not to mention more parking, maintenance, and even insurance. bloomberg's

economic insight, the decision could be worth $90 billion to the saudi economy by 20 or a -- 2030. but not everybody is happy with liberalization. so there could be a long way to travel before reaching the vision. francine: of course, that is something we will continue following on bloomberg surveillance, which continues in the next hour. tom keene joins me as we wait for opec. and we will also speak to mr. hansbrough from blackrock. this is bloomberg. ♪

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francine: the ministers are said to hold private talks

before the opec agreement but can they find an agreement? the trump administration is split over whether to restart rade talks with china. and airbus threatens to pull its investments in the event of a no deal brexit. good morning, everyone. this is bloomberg "surveillance." tom keene in new york. we look at trade and brexit and opec as we're expecting the ministers to finish meeting shortly. our reporters to go in the scrum on the latest of what was decided. tom: like a rugby match there seems to be attention there, not the usual meeting. of course in america there's only one topic this morning and that's the nation's debate on immigration. francine: immigration we'll go through significantly and look at the split in the white house with a great bloomberg story on that. also coming up, the chief

investment officer for blackrock and is an expert when it comes to commodities at 5:30 a.m. in new york in 30 minutes from now. let's get straight to the bloomberg news first. sebastian: a split in the trump administration on how to handle the trade fight with china. some white house officials are trying to restart talks with the country before they take effect july 6, setting up a battle with other officials who want to take a harder line. u.s. house republicans account for today's scheduled vote on immigration legislation, trying to put down an inner party fight between moderates and conservatives. the republicans are confronting the furor over president trump's policy of splitting up families caught illegally entering the country. way is cleared for greece to exit the bailout in 2010. the creditors struck a landmark

deal to ease payment terms on the loans, long been seen as a key incombreedyent to financial health and entry back into financial markets. in thailand, the military government is committed to holding an election early next year. power rmy chief seized four years ago in london and discussed a table to end military rule. >> in the past people asked about where and when elections in thailand but the important part is organic laws and the fact they're quite ready for elections and we're sure we could hold elections in february next year. sebastian: the prime minister may clarify his own political future in september. brazil takes on costa rica and it's serbia-switzerland. argentina's chances of making it to the knockout round took a hit. messi and crew lost to croatia

3-0. find everything you need about the tournament by logging on to the terminal. news 24 hours a day on the air, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. francine and tom? tom: i watched the highlights of croatia-argentina. love the way croatia defended against a better team. i was excited and pleased to announce francine has vaulted up our bloomberg world cup rankings, leaving me in last place. you're outdoing me this week. my entire future hinges on iceland-nigeria. pharaoh. g briefed by francine: i don't follow the world cup but the rankings. it's very competitive. it's like a brother-sister act. tom: let's do a data check.

a quiet market out there after the turmoil of three days futures, dow is up 116 and a little bit of a curve steepening. euro stronger and dollar weaker. and in oil, worth watching with the news in vienna. francine? francine: i have oil, european stocks overall are rising and futures are rising and the euro zone's largest economy is beating estimates. oil jumping after opec and its allies reached a preliminary agreement on output. tom: advantage, surveillance. john farrow and tim fox, we do that when we listen to our guests. we had a wonderful perspective yesterday. here's a chart that we'll bring up. this is important, i'll put it out on twitter. this is stronger chinese yuan with managed stability by beijing with a little bit of

deappreciation. weakening chinese yuan over a depreciates and rmpled m-b-. renimbi. ates the francine: several countries are unable to raise output and speculators are net long crude know the bush positioning is shorter. let's kick things off with trade. and some officials are trying to avoid a trade war before tariffs on products take effect on july 6.

u.s. officials and china experts have been contacted to engage high level talks in the next few weeks and sets up a battle with others in the trump administration who favor a harder line. what could it mean for trade policies? let's turn to our guest, brian counton, head of portfolio management in berlin. thank you for joining us. . bosonworth, berlin could suffer the most if these trade tariffs could escalate. what's the chances of the rhetoric going down or up? andrew: if we look at the behavior patterns of the u.s. administration i expect the noise level to remain high going forward. what the final outcome is is very hard to predict but it

would appear there's a reasonable probability the tariffs are expanded to other sectors and from a european perspective we're most concerned about what might happen to the automobile sector here in europe in terms of the u.s. imposing tariffs on imported cars. francine: brian, what do you worry about? brian: i agree. this debate has stepped up a level the past few weeks with the extra $200 billion under focus for china. four fold increase on the amount of imports under scrutiny subject to tariff and the auto investigation, the section 232 led to the steel tariff which is have been put in place now. in terms of the numbers that are being bandied around here in terms of the potential measures, it definitely has ramped up a level in the last five or six weeks. tom: brian, from your company fitch which is sensetive to the

balance sheets, is daimler a one off or will we see a lot more of this? daimler is out front saying it may affect sales, fitch is acute to that. are we going to see more of this? brian: unfortunately, i agree with your other guests, i don't think this is going away any time soon and one of the reasons i say that is the u.s. administration is focused on these bilateral trade balances with these other countries and the problem is those bilateral trade balances are not likely to go down soon and the u.s. is running a macroeconomic policies with very expansive fiscal policy and very strong investment that the macropicture is leading to why the u.s. trade deficit overall and therefore all the individual countries. that's not going away. they put that up there as a box they need to tick to get comfortable. and i don't think they'll tick it any time soon. tom: andrew, the economics and

what it does to dampen g.d.p. do we see evidence of this or did pimco suggest 18 months or two years? andrew: the actual tariffs into the data is not hard evidence yet but with some tariffs that have been put in place, we're on a predistant course for an effect to happen. and at a very high level, that effect will probably be slightly slower economic growth and probably upward pressure on prices as the one off impact of the tariffs is passed through to the end user and maybe domestic consumers switch to domestic production rather than imported goods as a result of the tariffs. placeary but it's

slightly upward pressure on consumer prices. francine: we're expecting a crumb in opec in vienna to start but how do you look at the price of oil? what's your range price to model your economic forecasts on? andrew: we didn't really have any big difference of opinions to what was in the forward. we tended to view the likely outcome of an agreement with opec to put downward pressure on prices but obviously that's contingent on that decision which is about to come out or e confirmed. tom: we look again at the tariffs and trade war and this pops into my mind, does this in any way change opec? we haven't brought it up yet

but over in the goods and services era, we have the war going on and at the same time have tension in vienna as well. does the trait war fall into oil price or are they just discrete and removed? andrew: they are goods traded across border, tom and not subject to barriers in the form of tariffs but obviously the quantity is a political decision on what's going to be produced. the amount that's going to be produced, from that perspective, it's in the same ballpark in terms of the impact of politics on economics here. francine: yep. andrew, sorry, we need to cut you off. we're getting the scrum. we have the opec ministers in the room and our reporters try to go in and get the headlines and spoke to the iran an minister saying he had a good meeting with the iranian minister. we're seeing some of the opec

live stream. don't know if we can get it up for you. we should be able to. i know our reporters are trying to get to some of the members. tom: you're team is there looking into this, the live some are in their seats. describe this for our audience, francine. francine: i've done it many times and is one of the most stressful jobs in the business because aso peck grew you have a number of reporters that grew because you have basically 20 minutes they open the doors and then you have 30-50 reporters and i think this is the news wires and then they let the cameras in so you can see the ministers around the room. it looks like kind of an i.m.f. meeting, but for the radio listeners, it's really impressive because you have to

fight for your life to get the quote to move the price of oil. tom: venezuela hopes to recover lost oil production before year end. there's the drama of what is going on in vienna which is not much drama. this is why you have a bloomberg terminal and top live nd this is a bulldog and the intellectual input and the gossip run of our reporters that goes direct to terminal users as well. this is something fairly new at bloomberg and we're thrilled with this for those big events but the news flow here is so great, the elites and leaders and opec cartel leaders can't control the game anymore, can they? francine: well, they can't control the gang but you have a new alliance and when you look at geopolitics, this is probably the big surprise of 2017 is that the alliance between audi and russia is

holding. what we understand from our people on the ground is that they're hearing a lot of positive vibes from the ministers of venezuela saying there is an opec agreement with all the countries. i think what markets want to know is whether saudi arabia had to compromise the amount of oil they want to put on the market to put iran on side. if you look at what we heard yesterday, it was iran that did not want to put extra barrels of oil on the markets and we'll keep a close eye on the scrum. you if you look at opec, i guess, first of all, the president can tweet any time in the past about opec not doing enough or in the alliance with russia or shale gas. is it more difficult to predict the price of oil than 10 years ago? brian: opec regained some of its traction, and 2014 seemed like they disappeared as a player in the market and shale took them by surprise.

i think they're kind of back because of the compliance with the previous agreement was stronger than anyone expected. they are a player again and i think we do get significant increase in output committed here and that helps put it on a medium term concept bringing prices back below crisis and will be a slow process and don't want it to rise dramatically from here because the shale reaction will be very aggressive. tom: when you look at the linkage here of oil and the price and it does simply come down to global growth. does fitch have a call on global growth right now? brian: global growth is strong talk 3-.3% and we had soft numbers in q-1 and haven't revised it down since the forecast we're making since the beginning of the year. global growth is stronger and the demand price has been part of the overall strength. people have been focusing on

the supply and iran's issue and russia which has gone down. and is one reason the oil price will go back to the equilibrium. tom: one of the mysteries in our weekend reading is whether economic growth and oil demand in europe. where is it? andrew: economic growth maybe has peaked since the end of last year but think it's strong in the euro zone still. francine: andrew? andrew: the potential growth in the euro zone is pretty low but a number of countries it's punching above. and we think we've seen the peak of global growth and is behind us but for right now the momentum is strong, also here in europe. francine: ok. the momentum is strong in europe. what makes you worry about europe when you look at europe and some of the concerns, i

didn't know whether what happens to the euro or whether it's immigration or how you deal with a populist italy. andrew: one of our concern is how will europe respond to the next recession. we're not saying the next recession will necessarily originate in the euro zone but we think is a higher probability of it originating in the u.s. but if and when it does occur, europe will probably have a difficult swathes to -- situation to respond to that because the e.c.b. probably will not have as much ammunition in the tool kit it had last time when it started and fiscal policy, we'll probably have to pick up the burden but there's a very big distribution for the capacity of the euro zone to those cal capacity and that don't need it won't get it

and there's no federal structure to spread it around. we're concerned about how europe behaves and how it responds and how it copes with the next major slowdown. and then you've got all the geopolitics like we're seeing right now on immigration issues and government structured meetings between france and germany ahead of the summit. all those things on top as well. tom: what does it force you to do with bonds and debt in europe, do you ramp in and ring in maturity and duration? brian: when you look at the 19 member states, i think you have to divide that group into -- we call it the periphery. you have to view those states as if they were credit. because as we've seen with the italian situation, those government bonds don't really behave like credit risk-free

instruments and are correlated to domestic, political events and also a very high correlation to the other member states in that group. look at how spain and greece behaved as the italian spreads were blowing out. francine: trying to go bang to the emerging market consumers of oil, how much do they need a low oil price? brian: it's certainly something that's been a factor in the recent emerging market, ethics volatility. i think the oil importers did worse than the others. asia is probably the region it has most oil dependence and the pickup in inflation in india. maybe that's an issue. but what we've found the last few years is the positive benefits on global demand from

higher oil prices are pretty powerful as well in terms of the feed through to investment, not just the u.s. but more prodder. that was a big negative when it fell and got a bit more investment, actually net-net and not sure how oil prices are a negative growth on the demand side. francine: let me recap the head lineups we received from the opec scrum that just started. a opec scrum, those who are not familiar, when the room opens and you have the ministers and reporters who throw themselves in the room and trying to figure out and speak to each of the ministers to see if we have an agreement. i hear from our print reporters on the ground that iran is giving another positive comment. the minister saying there's a likelihood of reaching a deal if we cast ourselves back 24 hours, it was iran the most difficult country and we are

wondering whether saudi arabia and russia would increase production alone. ted: you've got the news ono peck coming up but as brian mentioned you move on to the next meeting. it's clearly an important opec meeting but you move on to the next vienna meeting trying to keep an in tech supply understanding the demand dynamic looks good but then you get in the debate of the two guests how the global g.d.p. relates to demand and there's a huge debate out there right now. francine: tom, you also could argue if you need to move on to the next meeting which is extraordinary because you want to put even more production out there, it may be difficult if you didn't have consensus be and if they decide to put oil out there is dependent on if they reach the agreement and if not, it's interesting to see

how the cartel will play out going forward. andrew, very quickly, when you look at the linkage between emerging markets and oil, is it more just to do with the dollar -- if you figure out what dollar does next have you figured out oil in emerging markets? andrew: there certainly is a linkage along the dollar and the emerging market complex line. i think it gets a little murky when you add oil into there as well within the emerging market complex because there are so many countries that are producers and others like turkey who are large importers so the impact of oil on the emerging market cohort of countries is a very disbursed impact but the common thread, as the dollar and interest rates, the american markets are getting stronger, it tends to suck in capital into that

country and away from the emerging markets and you see the turmoil or volatility in the emerging markets as we've seen in the recent phase of dollar strength. tom: let's look at the chart of oil and adjust it and it's an approximation and the map is squishy but inflation adjusted oil and it takes into account over 70 years the rising income of the world. we are wealthier than we used to be. we go through this and say it with great respect for dr. engineeringen who joined us yesterday, the -- dr. jurgen who joined us yesterday. we go to the first surge in opec and the second surge in opec. and andrew, what is so important is 1996 which is a collective memory of the opec cartel before persian gulf 1 and the china oil boom down to the collapse as well. what permeates the opec

discussion to me is 1986 and that first collapse of post-opec oil. andrew: a lot has been happening since then in terms of the efficiency of economies and their consumption of oil. since then the intensity of the production, the oil intensity of production has dropped substantially since then and we're on a slow path turnl as other alternative energy sources are gradually coming online. it's early to say it's the end of petrol fuel powered cars but look at all the check trick cars driving around our cities already. >> the deal to increase production. >> i'm sorry.

>> we are looking at something new and based on this new is to live the overcompliance from the market. >> how did your discussion with saudi arabia just go? >> good. >> a good discussion. what did iran get, sir? >> have a good discussion and will compromise with each other in this meeting. but they're writing text to finalize the structure. >> what are the numbers? >> no fixture. >> are you looking for any statement regarding the united states pullback in the nuclear deal? >> we won't.

ut i'm not sure that opec will follow it. but in reality we want the support and i hope to receive this in reality. reality means the level of production. reporter: what would you like the statement to say about the united states and a clear deal? >> i don't think that some opec members accept to say anything against the united states. reporter: what are you concerned about from the customer side if tease sanctions come down in november, what's your biggest concern in november, sir? >> november is interesting. from now until november i have a concern about the consumers because this political tension -- the rket politicalization from the u.s.

policy side as publicizing the market and it's not in the interest of the consumers. if after this import sanction they can reduce our production and our export is not good for consumers. the markets should be free for all. should work on supply and demand fundamentals and interference of the political tensions change many things against consumers and producers. reporter: can i ask you when the sanctions hit in november, how much will iran production go down by? started.aven't we are waiting until november.

the united states has started to put pressure and impose sanction against us. reporter: are you seeing customers move away from you? >> some of them. but we tried to preserve our production with many ways to i think y ways but trade cold wash. reporter: minister, you talked to going back to 100% compliance on the overall agreement. is that the basis of the compromise that you have now? >> yes. reporter: can you explain how it will be split up in terms of production? >> we need to finalize the desk. >> but we're looking at opec contribution of 500,000 to 600 million barrels on the market. is that the basis? >> the concept is accurate what you said but the figures is

another thing. reporter: the overall figures. >> yes. reporter: as you sit today, are you comfortable with putting roughly a million barrels a day overall on the market? >> no, i reject it. reporter: what have you agreed to? >> as a resolution. reporter: you rejected that? >> as a resolution. reporter: equally difficult on consumers as well because low prices are not healthy in the global economy as we saw in 2015-2016. so i am confident that everybody wants to preserve the success we have. we may have differences but we are committed to building on the success. and for the next six months which is removing the overcompliance if you want to

call it but also rolling over this agreement into a to a more permanent -- allow 24 countries to act as one in the avoid extreme volatility. francine: that was the saudi oil minister. before that we had the iran oil minister. they are the two players, we're trying to figure out exactly what was agreed or not to let's bring in bloomberg's editor for oil and commodities. i am trying to figure out what

exactly the draft language that oil minister was talking up the it seems they found an agreement between the saudi and irradiance. >> it would seem on the face of it. we have not seen the communique yet. that will matter in terms of the language they use. theseld appear on slightly odd comments that that is the position. we add some barrels to the market. compromiseke some has to be made on the other side as well. iraqve some comments from saying -- >> we have been working since yesterday in some deliberation. the first objective we have is to protect this great agreement we have between opec and

non-opec countries. it will bring stability to the markets. we have expressed our deep concern. iran and venezuela, about the impact of the sanctions on the oil industry. it is a very particular thing of .ur countries these have been direct sanctions aimed to affect the operation of our national oil industry. in this context of opec and non-opec, the most important thing is to maintain stability of the market.

maintain supply for producers and consumers. >> will you ask opec and non-opec to make a statement ith regards to production? [speaking foreign language] >> in this gathering, we have condemned any sanctions, any direct aggressions on the oil market, especially on the

national oil industry. we think that the sanctions are aimed to destroy, to attack the national oil industry. we do not tolerate this type of behavior. however, it is not the agenda to have any kind of declaration regarding this topic. this is a particular position of venezuela, and we have expressed that to our colleagues, and we count on the support of iran. >> thank you for speaking to bloomberg television. francine: a big shout out to all of our team. it is a fun job, but it is quite grueling. we heard from venezuela, iran.

we are trying to get back to the saudi arabia oil minister. when you look at the price of oil. i don't know whether it is in a range or you assume opec starts its out -- sorts it out or whether the group as a whole can hold. >> this is an area where we are stumbling into politics away from supply and demand. we have a strong demand for oil today. we have expectations that there would be an abundance of supply haveive to that, and we seen the price respond. we have this strong seasonal demand that is coming in. opec is trying to work towards something that will prevents price spikes. francine: i think we're just speaking to the saudi oil minister. >> i think countries that have

political complaints will make political statements. they have made it outside the meeting over the last couple of days. they will make it inside of the meeting. supply of petroleum, and that is what we're going to address. [speaking foreign language] francine: this was going to be a pretty messy opec meeting.

we now understand by following our live blog, by having our top executive when it comes to commodities and energy, the body language seems to be much better than when they left last night's gathering. the devil is in the details. how much to increase production by, and whether the shift in this bilateral meeting between the saudi's and iranians is enough to have a long-lasting deal. tom: absolutely. i love how one of the questioners moved it forward to november. we are always moving forward as well. it is a never-ending battle. i like we said there is no politics involved. right. francine: the president wakes up around this time. tom: that is what we need. francine: what do we need? ministersed opec oil tweeting like president trump. that would keep mr. wallace is

team in gear. francine: that would be great. tom: stewart, an important question. it was interesting to see the drama and seriously the tension in the room. the truth is americans could care less. is that because we are destined? -- distant? what is the why that america doesn't care about vienna? is it a cultural thing? what is the distance between the world of opec and the world of america? >> two things to worry about if you are an american citizen, there is a huge disconnect between the price of american group and the international benchmark. they are still linked, and they still influence one another. fundamentally, it will change the price of the gas in your tank. the second thing to worry about, geopolitics. it is about body language, compromise, of course it is

about politics. willynamics of that room determine the position of these countries. it really matters to everyone. light,e: you are to the tom.o polite, something the iranian minister said. we need to focus on oil consumers. are they really focusing on oil consumers? are they worried about the president tweeting? >> i think they are worried about consumers. i think it is about does it drive down oil demand? to $120 a get barrel. there is a huge focus on solar power and wind power. too high a price, and it kills demand. tom: we saw the wealth expansion

of the last 40 years taking the real adjusted oil price back to the 1960's. here is another chart. this is the do inflation of commodities. this is inflation-adjusted decline, long-term decline in commodities. flatness, and then down, down. when do we break this cycle? when do commodities get a bid as a category again? >> i think we are in that situation now. we have this strong global background with regards to growth. we have seen many years of underinvestment with regards to supply. we're seeing that reflected in much better prices. i think we are in that environment today. i think the comment stuart is making is clear on the oil market. you have to take into context the role of the consumer. we are seeing today better prices in the energy market.

we are also seeing a transition through time, probably over the next decade, where demand is likely to go through some kind of change. the old assumptions of annual growth and consumption of oil are going to be challenged. whether that means fundamental difference in prices, time will tell. we are definitely going through the transition in consumption. if we have unsettling moves in prices and price spikes, that will accelerate some of that change. i think some of the debate around supply and changes in production will take these views into account. francine: i was quite taken by that's from. -- that scrum. it created more uncertainty that it provided. you don't know whether they will find a deal. when you look at dollar dynamics. forecast on strength of dollar, weakness of dollar?

that impacts how much oil demand is out there. >> has been a strong historical relationship with dollar and commodity prices. the big influence on the dollar is not the outlook of commodity prices, it is more on interest rates. that is the big driver in the currency markets. i think we are probably in a period of time where fundamental prices willmodities influence the u.s. dollar. francine: when we look at the trade market, how much does that influence u.s. growth and the demand commodities overall? >> when we go back to what was actually lamented so far, tens of billions of dollars. the us economy is $19.5 trillion. the chinese economy is $12.5 trillion. if it stops here, we will not notice it. it is the auto's and the extra

$200 billion on china and their retaliation. if we get back, we will see in fact, but not until 2019 or 2020. it is an 18 month story. tom: if we keep this simple, did iran, venezuela, the other smaller countries lose today? >> i think a little bit in the sense that they did not get everything they wanted. i don't think we are going to get a commendation -- condemnation of the u.s. markets. it will restrict the increase. we have seen the numbers russia and saudi arabia have been producing more barrels and putting them on the market. it has constrained them. the price the other side is saying is unanimity or the illusion of unanimity. tom: this has been wonderful coverage of oil. i want to move on to goal. i think jets -- suggest will

kennedy will get at least two weeks off after that scrum today . i have been stunned by the price action of gold. technician suggesting gold moves south. on gold, your thoughts? >> i think gold has been one of the challenged commodities in recent environments bit we obviously had a good year last year for the price of gold. this year has been more difficult. i think where the dollar is having a relationship right now and expectations around interest rates, they are having a significant impact on the price of gold. what the gold price today is ignoring is the near-term peak in production, which we think will play out in the short term. we have seen this kind of production clip that is now -- cliff that is now starting to

emerge in the markets expectations. we are not seeing this lightning brought on in a planned way. -- on production being brought in a planned way. we are seeing a transition where people have lost patience for their exposure to gold. they have been frustrated that it is not delivering gains to them when their tech exposure has been so strong. we have seen some allocations away, and more than bouncing that, we have seen other investors taking gains in areas that are incredibly strong and buying insurance because of the under performance of this space. we are seeing a play out here. we have seen these kinds of trends emerge just ahead of substantial price most in the past. maybe something is cooking. francine: i scrambled which are

together really quickly for tom keene. let's bring it up. interest, futures contracts on the london metal exchange. this is the biggest daily drop since october because of u.s.-china trade tensions. do people even want to be in copper anymore? if there is a trait concern, it hits china and the u.s. >> you have two main things to consider. you have the very near term, which is the trading, and then you actually have the fundamentals, which play out near-term.ond the this is shifting day by day. traders will be trying to benefit from their short-term price moves. our investment horizon is considerably longer than that. what we see in the stock market today is this strong theme playing out across the commodities space where

companies have been in this hellish time. we are seeing these big gaps emerge between supply and demand. commoditya classic that has been through a strong bear market. we have seen the inventories shrink. markets are back to three dollars per pound. that is a profitable price for producers and that consumers can bear. four nothing like the dollars per pound of all. francine: this is assuming there war, or if there is a trade war that impacts global growth, what would happen? >> you have this battle that has been going on in the markets. these great big headlines have commented some fantastic, surly on where you have the numbers

and scale of global trade, it is unsettling. it damages sentiment. it makes people more cautious investing money. over the medium and long-term, we will see these prices survive. >> something you said made me realize no one would expect global growth to be this strong. a couple of years, everyone thought monetary policy is not going to work we are in a much stronger demand environment. this is not just the commodities markets. growth might actually be constrained by the supply side over the next couple of years. that is a totally different world from anything we have been talking about in the last five or seven years in terms of secular stagnation. firms cannot just find the bodies to hire in the u.s. the number of vacancies is now larger than the number of u.s. unemployed people.

this interest rate adjustment is only going together strike. strength.er >> i remember the start of this year, q4 of last year and the start of this year, there was a shift in expectation from strong growth totes of think about big numbers. as soon as that arise, everyone worries about sustainability rather than the on the ground activity. i think that is driving commodity prices now. tom: what is driving this by within commodity -- the supply within commodity space? copper, metals, even oil, is there a full capacity right now? >> i think it depends what you look at. overall, i would not say there is an enormous massive spare

capacity. that is just a function of we have a lot of minds and refineries built during the super cycle, then the collapse in prices. we are seeing that knock on effects now. if you look at the oil producers and so on, all of them will tell you, and the numbers bear it out, there is not a lot of wiggle room. i was looking at the global gdp estimates. they have not moved in the last couple of months. people are bullish for next year. is,rowth stays where it demand stays where it is for gets a little stronger, we are setting ourselves up for significantly higher prices must something is done in the short term. tom: for example, store, how is brazil -- stewart, how is brazil? the commodity structure of brazil after the carnage of the last 10 years, eight years, how is the state of commodity

brazil? >> i think that is the answer. a few weeks ago, we had this trucker strike. you saw an impact on global markets. i was there last week. i was told about the efforts to open up the north to export terminals. all of that is being held up by the fact they cannot build 100 lawmakers of road. they cannot get the truck there because for some time of the year it is a mud bath. you think about brazil, and they cannot build 100 lawmakers abroad. that is something to be concerned about. tom: i am going to miss the bottom of the commodity recovery. how do you know when you are at the bottom other than technical charts? of 2001 inarch equities, and then there is a point you step in and buy. -- what arethings the things you look or to step in? >> i hate to say it, tom, you

missed the bottom. it was two years ago. tom: this is like the world cup. >> we have been through that rices moment. you did a great job of reporting it. what we saw at that bottom is the thing i have learned from looking at a few of these cycles over time. you go through these conferences. when the conferences are well attended, that is a signal we are near the top. when you see nobody there, and the taxi drivers are telling you to buy gold, those are the things. the fundamental things, when companies are taking big write-downs, significant management change, that being being priceddebt at 100 years, all these things are signals towards the bottom. at blackrock, we produce a series of traffic lights. when we start taking those off

from red to green, that is when we told our clients we need to get involved. does anyone want to take on the risk at that time? no, they are too scared. there is an overwhelming consensus that things will not last because memory is still so fresh of the down leg. we are seeing an incredible value point in the equities right now. they are at fundamental .iscounts that is why it is so exciting. we are expressing that with a high degree of election with gearing up our portfolio right now. francine: this is my favorite western to an economist, what are economists getting wrong about world of? >> economists are right as usual. where the adjustment is coming, and why we are still bullish on the dollar, is the interest rate futures market, the fed is not time to go further from here. -- is not going to go further

here. the fed has 3.5%. that is not yet priced in. that is a concern for the generally fixed income markets, more volatility to come. francine: the dollar higher to what level? >> i cannot put a precise number on it. if you look at the difference between the markets forecast of interest rates in three years time, and utrecht that for the u.s. against the euro zone, the eurozone has gone down from 60 basis points to 20 basis points. 2.2 to. has gone from 2.5 or 2.6. the positive surprises on growth are coming out of the u.s. we think that is going to lead to further upward pressure on the dollar, tighten financial theet conditions, and commodity importing side. tom: i just want to show what

evy was talking about. this is a vanilla chart. boom of the commodities, down we go. the carnage. what is so interesting is the rollover here. loaded where blackrock the boat. this is where francine stepped in. i stepped in here. what a recovery. you are suggesting that this just falls forward. >> i think the chart is the sector. obviously, we need to talk about individual companies. anecdotes around that are true. we have been equity sector that is significantly the rest -- d e-risked from people's expectations. that makes the distribution concerns less likely to play out. on the other side, you have these strong balance sheets,

high levels of free cash flow, and a sector trying to build confidence and trust with its investor base. if they can achieve that, people believe they will destroy less value than they have in the past. they will pay up for the shares. that is the arbitrage opportunity in the market. francine: thank you to everyone on saturday. -- on set today. we going to go back to opec. without a doubt, my headline of the day, the iranian mr. saint pessimistic about the compromise. we are not pessimistic either. he will be back. this is bloomberg. ♪

tom: this morning, there are aboutcting explanations

what central bankers will do as they prepare for rising inflation. it is out there somewhere. there are conflicting explanations about the immigration policy. the house kicks the canon two next week. will be on military bases. greece moves forward, they get a debt delay agreement from their creditors, but no debt reduction. good morning, everyone. this is bloomberg surveillance live from new york. francine is in london. our oil team is in vienna. what did we learn from various people in the spin room in bn it? francine: we didn't learn that much. we learned that they may have a deal, but we don't know how much. this would be to put extra barrels of oil on the market.

iran was pushing back against this. they are not pessimistic about a deal, we don't know the size. we will have to wait for that news conference later on. tom: it will be interesting to see with oil elevated, but not where it was two or three years ago. >> house republicans have canceled the vote on immigration legislation. aey are trying to put down fight between moderate and conservatives. dealing with the canceled policy of splitting up families. the way has been cleared for greece. the creditor struck a deal to ease repayment for some of their loans. that's a key ingredient in their return to financial health. in thailand, the military government is committed to

holding an election. seizedmer army chief power for years ago. he discussed a time table. he --ime minister said charles krauthammer has died. he was a harvard trained psychiatrist who wrote speeches for the democrats before turning to the right. columns won the pulitzer prize. he was 68 years old. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries, this is bloomberg. tom: thank you so much. we are glad you mentioned charles. i can't say enough about george wills essay.

i will region that this morning. george will list important comments on an important conservative. let me go to the data it right now. lift to the market. it's got that friday feeling to it. data futures are up 95 points. the euro is stronger. it is morning in america, francine. francine: it is evening in asia and its midday here in london. european stocks are rising. beatacturing service data analyst estimates. that's lifting the euro after opec and its allies seem to have reached an agreement on output. tom: we need to go to vienna. she is out of the scrum. she is on the street. she is sort of in the concrete bunker as we look for results from opec.

what was the single surprise? be therie: it had to meeting before the scrum this morning. that was a bilateral between saudi arabia and iran. it seemed like they came out of here pretty friendly. it looked like they are more optimistic. we need to know it's happening now. what we are hearing as they are dealing language for a that might include a quota for iran. that is academic because they cannot pump more right now. they could save face and make room for mark production deal that might include a quota for iran. of sanctions were lifted in the future. smalludi arabia, it is a price to pay. francine: how much do we know about how many barrels of oil were put on the market?

anne-marie: i'm sorry? i think they are giving papers right now. francine: they are just releasing the communique, tom. that sets out the speech of the opec president that lays out what they have agreed to. this is what we did not get exactly. tom: we have some technical difficulties in the in a. we are going to rip up the script and do oil right now and then go to kevin cirilli and the festivities in washington. with -- talked to lisa and ian. we will do that on economics. oil in't talked about

ages it seems. it drifted off the map. i want to start with you. is $70 a barrel expensive for oil? i did a chart on inflation adjustment. plate -- pretty rich. lisa: it's rich from where we have been and when we think about inflation. it's not to your point and inflation adjustment. in europe, it's not just oil. this is something americans are clueless about. there is a huge distribution of hydrocarbons in europe, politics on moving asked from russia over to europe as well. the this is about dependence on the russian pipelines. at 138 dollars per

2008, this is not crippling it to anybody. it's a level that suits most countries. you would like to get down to happening.at's not in the u.s., he keeps the show business expanding. we can all live with that. francine: is it an important message for the world economy and opec can get this deal with iran? will economists be more comfortable about where the price of oil goes from here? ian: it matters more to opec then global macro. this is the internal politics of opec. saudi and iran are strategic enemies. on the question of oil, they want to be seen publicly at least in some sort of agreement.

it's a strange situation. i'm not sure much will come out of the meeting. we will find it with the communique says. it's all about appearances and its element opec. tom: we will talk to about the appearances. lisa is with us from morgan stanley. i want to talk about the investment sphere as we come up on it. we will continue here on friday. coming up, this is an important conversation. this is the former governor of the federal reserve and the governor of regulation. he has an important regulatory update. i lean forward when he talks about regulation. we will do that at 7:00. this is bloomberg.

sebastian: there is a warning for the u.k. if the country lanes that you without a brexit deal, it may: british investment. failure to says reach a brexit agreement with be catastrophic. disney is taking extra steps to win approval of its bid to buy my first century fox's entertainment assets. they will generate up to $1 billion in cash, twice what they offered. they are racing to see if comcast is raising its offer. the federals and -- reserve said the two banks have the lowest levels by one key measure in the latest stress test results. they say that may not effective

in stock prices. that is the bloomberg business flash. tom: joining us now is kevin cirilli in washington. i want to go to the morning must-read wide away. here is box with an important essay last night. is wayrized immigration down from historical levels. president obama took a mostly punitive approach to border crossers. president trump took an entirely punitive one, illegal entry and illegal reentry have in the two most commonly prosecuted crimes in federal courts for years. is an exceptionally well-balanced essay within something that has consumed americans. i want to go to the column of the new york times.

peopleo you put 20,000 -- 20,000 people in arkansas and texas? >> that's what they are trying to figure out. the notion that there would be any legislative fix that congress could aid is really just a distant hope at this point. lawmakers have once again, i've lost track of how many times they've postponed this immigration bill. paul ryan is showing how ineffective his leadership has become. he can't get the republican party on board to get a vote. that vote was canceled last night and again for today. and lookedent back at the history of this debate. i think our viewers globally know the history of the debate in america. we are now at a point of emotion and passion, within your reporting, is a humanitarian

crisis or not? kevin absolutely. agree, everyone would when you talk to conservatives on the far right as well as progressives, they don't want to see children being separated from their parents. the question is why is there such an ineffectiveness in ?ongress to get something done there has been a lack of an agreement for years to get comprehensive immigration reform completed. we should note the development of the last 24 hours, the first border.ed to the it sparked controversy for a jacket that she wore. heightened is such a surreal environment over what has become quite candidly the type of backlash we haven't seen since hurricane katrina in the bush administration.

francine: will people remember this in november? question that no the issue of immigration in this moment has mobilized progressives in a way that we haven't seen since the far right was mobilized over the issue of illegal immigration. president trump will meet with the families of survivors of people who have been killed by illegal gangs. the president and first lady will go see the marine corps band. with immigration at the center. shows, andnday talk the republicans get themselves to the sunday talk shows and reinvigorate the span? kevin: the republicans are not fully behind president trump on

this. you have centrist republicans up for reelection in battleground states like iowa, where they are not necessarily fully defending him. we have seen that differentiation when the president has a controversial stance. congress is trying to blame the white house. tom: kevin is our chief washington correspondent. trade is still percolating, news yesterday with mr. manafort. he lost his court cases yesterday as well. we try to get back to the real world. that would be not losing money. ian shepherdson's job is to make sure that they are not losing money.

how to central bankers do yesterday? ian: i think they are at the moment not really focused on a difficult job. i am moremoment nervous about te future. tom: are you nervous right now? i love your notes for morgan stanley. nobody is calm right now, whether it's kevin cirilli in washington or central bankers a year from now. lisa: i'm getting less calm. the reason is because the trade war issue and the escalation of those issues and the tit-for-tat. dialogueany of the coming out of washington is one-dimensional. it's one-dimensional from the perspective of the belief that we are having a bilateral conversation, which dismisses the reality of the last 60 years

of globalization, which was about massively integrated global supply chains. i don't think people in washington at least, wall street has figured this out, i don't think washington has figured it out. many of the tariffs are going to hurt american companies and consumers more than some of our international counterparties. d you think the jump administration will do -- what do you think they will do? will they back away from the trade war? lisa: we have every indication the president has surrounded himself with ideologues on this issue. verynk it is wrapped up in complex geopolitical positions. i don't to them backing away at this point.

i think many of the international counterparties have begun to figured out and are striking back. that's why we see retaliatory action from europe. tom: this is a chart haven't shown in a while. this is what nobody is talking about, growth of exports. this goes back 25 years. there is a trend, you extrapolate the trend. it just rolls over with a little bit of a comeback here recently. the goal is to get exports back. is anything we've done on trade in the last week helping get exports going? the answer is no. ian: it's the opposite. everything that has been talk about with the expansion of tariffs will be met by retaliation, making things more difficult for american companies to sell into china.

we are going backwards. francine: thank you both. we are also looking at a news conference by angela merkel and the lebanese prime minister. talking at oney of the palaces in central beirut. we are expecting the news conference to focus on migrants. she is thousands of kilometers away from home, it's the issues of refugee support that will be at the forefront. shortly.be speaking we will have plenty more on that. this is bloomberg.

tom: we are talking about the important issues of the day in vienna and the immigration debate in america. francine is doing better than me in the world cup poll. the world cup poll. argentina, croatia getting it done with great effort. england stops for this? ian: yes. it's kind of a big deal. tom: are they in the same category as belgium and france?

ian: we should be at the bottom of the list. ian shepherdson is here. our record is atrocious. it's another day. tom: we talked about this yesterday, england is so stupid they don't play wales and scotland. they are stupid because they don't play together. ian: unfortunately, he is welsh. it would be very nice to have him. tom: jump in here. you are doing better than me. only two there are people in newsroom that really know about football. you are not one of them. you in the world cup bracket. that's all i care about. lisa: there is your bracket. francine: that is my victory

lap. come backe going to and talk about the markets and the emotion of an equity market. it's been more than vibrant through the economic and political noise we see. importantion, an guest during the 7:00 hour. this is really timely for global the street as they sort out definition of the volcker rule. least they with us today. we will have updates from vienna on opec and updates on the yankees and red sox. ♪

francine: this is bloomberg surveillance. let's get to the first word news. sebastian: opec is getting close

to agreement to produce oil outputs. that's a reversal from last night. iran does not want to raise production while saudi arabia is leading the increase. a deal could satisfy both. the trump administration is on to privatize sallie mae and freddie mac. they've been under government conservatorship since 2008. they can be challenged by new competitors. the congress would have to approve it. mark carney has unveiled another overhaul. he said the boe needs to adapt to unprecedented changes. they will take on greater risk if necessary. malaysia, the prime minister will try to recoup the money

lost in the troubled investment firm. they were paid to goldman sachs. he spoke. government decided the money was not theirs. we are going to deal with the money. sebastian: global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries, this is bloomberg. francine: thank you so much. now the rebound in growth may have begun after a slow start to the year. output is strengthening. meanwhile, the creditors for greece of used repayment terms to alleviate its debt.

this will clear the way for it to exit what keep it afloat since 2010. for greece?od deal wasn't the only way to do it? ian: it was the only deal they were going to get. substantial debt reduction doesn't fly. we have another kicking the can along way down the road, another 10 years. the position is now a more sustainable for greece. is 178 percent of gdp. that is not sustainable. it was all that was available. i don't think there is any great surprise that was the deal that was struck. in italy, things have gone quiet. it looks like there were some signs the government will be

stable for a while. dropped off the radar screen for markets. everyone is collectively crossing their fingers. francine: we are looking at the terminal. the minister of german finance as it looks good for greece to return to the market. soon, they had to step away. i would think over the next few months we will look at market conditions. it's not a sign that greece is fixed. are wards of the european union under the ecb. looking at a time where there might be a normal economy again is so far into the future it's barely worth thinking about. it's troubles are extremely deep. tom: what i find fascinating,

all of the grizzled pros say you got to do a cram down and a debt reduction. the way i read this, that did not happen. why did that not happen? why can't the adults say to greece with 43% youth unemployment say 10 year delay, 20 year delay, you've got to take some form? ian: the problem was domestic politics. they are saying this can't happen. greece, it'sft on politically unacceptable in germany.

it's the only rational thing to do in the long run. leaderships the before he went to pimco, morgan stanley had a cottage industry that said where is the cram down. it didn't happen. you does that signal to about future debt workouts in europe? that thesignals to us writing is on the wall for further financial integration, ultimately on domestic politics at any given moment. it creates obstacles. the reality is the future viability of the euro, everyone involved, including and most importantly the italians who have made this clear with their current government is there needs to be some accommodation by the germans around the eu. lineine: is the thought

integration? if this keeps getting more votes , it's going to be the greek crisis 2.0 and we are back to square one. lisa: you can never real out a time where the market growth has doubts or there are risk premiums in the market. the point you make about immigration is obviously an important one. again, i do think the european union knows what they need to do, that is come to some consensus on this. it's way too much of a flashpoint. what about you? , they are especially effectively split. there is no majority to leave

the euro or the eu. support is running less than 30%. i don't think we are in imminent danger. this is a reflection of the fact that the eurozone doesn't really work the way european politicians had hoped it would. pop -- bankis a union, european integration is a stalled object. i don't see any fundamental fixes. there is a lot of action in the ecb that has papering over the cracks. flabbergasted, even a token crammed down. we've got to get to that as well. your morning briefing, bloomberg radio coast-to-coast.

that. look for york, on the, new west coast in san francisco on sirius xm, this is bloomberg. ♪

sebastian: it's get the business flash. general motors is ignoring the call for u.s. jobs. they plan to build the suv and mexico. they are criticizing the decision. tariffs onnt may put

imported cars. in the midst of the worst there was anisis, inappropriate workplace relationship. he up and did intel's organization. they may look outside for a successor. so far, viewership on fox and telemundo is 44% off from last year. that is the bloomberg business flash. explain this. what people are doing is they are going to youtube. jonathan ferro told me this. they are watching the highlights. hearway we don't have to half back to the center, center back to the half back.

youtube andng brilliant six minute summaries of iceland and nigeria. lisa is with us from morgan stanley. we are going to dive into it. on emerging markets, this is the lead story. we are going to dive into it. on emerging markets, this is the lead story. dollar ambiguity, currencies are getting crushed. is that a precursor to a 98 like crisis. ian: those countries learned a lesson. the risk now is in place is related learn a lesson. turkey,ng is wrong in the balance of payments is wrong, the politics is wrong. turkey is getting hammered. it will probably spread out. the fed will probably raise by more than markets think.

it's a different bunch of countries, but there will be some pain. tom: can the imf help those countries? ian: it depends on the circumstances. a crisis where we will need in norman's intervention. it's going to stop some of these countries in their tracks for a while. i don't see this being an existential threat, with the exception of turkey were politics are so terrible. investors really don't like it. i would characterize it as stresses and strains. take on: what is your dollar strength? lisa: i think we've seen this narrative already play out. our perspective is the dollar is quite close to peaking. i think that's going to be a

function of the euro getting stronger as the european economy get stronger and rates drift higher. fundamentally, i think you look at the moves that have already occurred, they are pretty profound. our perspective is the dollar is a lot closer to a peak in the current correction. painn't see a lot more u.s. dollar.he ian: depends on where you sit. the market might have more dollar strength. i am slightly nervous about europe and the prospects of the euro. slowing liquidity is and it's not as strong as the first half of the risk people were expecting.

there has been a little bit of a question over europe. it's not about what happening because everyone expected to raise rates. that was priced into the dollar. we are not going to wake up and say we didn't see that happening. right now, everybody is comfortable. where is the short-term dollar momentum? you are expecting the fed to hike? francine: they were expecting the fed it to hike twice. year,two more times this a total of four for the year. i think if you look at the futures curve, we're looking at another to next year. tom: thank you so much for being with us. we greatly appreciate it. this is the most important interview of the day. if you are saying what do we

learn for do that in a bit. tv is out there. it's very successful. you can come over here. you can click over on our world cup analysis with ian shepherdson and alisa, who knows about as much as i do. we will be watching nigeria and iceland. this is bloomberg. ♪

tom: good morning, everyone. it bloomberg surveillance. i am in new york, francine is in london. we are both talking about iceland and nigeria. this is the most important interview of the day. if you're going to recalibrate management, was the number one thing people have done wrong in the last six

months? lisa: exit the market and not really pay attention to the fact that they can earn yield and cash. i think those are two things we talked to our clients about, don't exit too soon. be patient because cash is an asset. this this week, walgreens is going to take out general electric. the 30 members, here they are. this is the failure of general electric from the financial crisis. apple is really outperforming. is there a new value to active management and stock selection? lisa: yes. i think that's one of the other pieces of our advice this year, focus on that stock picking.

what we see as dispersion. the fangs, wek at will see them break apart, where the outlook for a facebook may be very different than apple. amazon it may be different than netflix. tom: stock selection is what not to buy. what do i not want to own right now? lisa: we want to look at some of those technology stocks. the valuation has gotten stretched. i think the question is what are our next -- expectations right now. surprise on the upside? i think some of them can. i think that is one of the key issues.

francine: what is your take on technology overall? lisa: i don't know you can make that case for the entire sector. we like some of these old tech names, they will benefit from capital spending that we anticipate. some of the software and services names, some of the stocks like the semi conductors needed to take a fresh look and see if in fact they could surprise on the upside. it's not entirely clear. francine: are there specific industries that would be hit and fall in the middle of the trade war to stay away from? lisa: that's a great question.

this is where the disconnect is. we've seen a dispersion between the performance of the dow and the nasdaq and the small and mid-cap indices. clear itsntirely sustainable. the integration of these global supply chains, i think it's not just about avoiding some of the materials and the industrials. accelerates, you are going to have lateral damage. that does that the nasdaq. tom: we're going to do this and -- today and get a response. tos is normalized back november. the red line is comcast out of performing. the point here is not for you to

.ell me how to make money the basic idea here is we are the.to 20 times even what does it signal to you that within this transaction we are back to stupid money? is we are it suggests late in the cycle. valuations are rich. there is a lot of competition for deals. it is coming from strategic and private money. we are at the point where as we look forward, it's going to be hard to make money. tom: are we complacent about high-yield and corporate debt that's out there? lisa: absolutely. that's one of the areas where we

have great concern that investors of the way to complacent. overall in terms of the credit market and understanding over the cycle, corporate investment grade credit markets are literally two times the size they were in 2007. more than 50% of that market will be rated triple b. it's a huge market where the risk we believe has gone up. francine: lisa, thank you so much. she is from morgan stanley. we are following opec. we found out that opec is closer to an agreement that would allow a supply increase after we had talked between saudi arabia and iran. we heard from the iranian oil minister. they seem to have found an agreement.

we don't know the details. going into the news conference, i have never seen a scrum so uncertain about how much they agreed on it. we know they want output increased. we need to be sure that iran is behind them and how much they increase. tom: the president tweeted on immigration. he ends up saying we need to elect more republicans. thank you for getting that up so quickly. he started off this morning. this is bloomberg. ♪

♪ alix: do we have a deal? iran and saudi arabia drafting language or a deal to increase

production. a 180 after iran walked out. silver lining for mario draghi. rebounding from a five-month low, pointing to recovery in second quarter. euro find support. i split white house. -- a split white house. trying to restart talks with the chinese, others dig in their heels. david: welcome to "bloomberg daybreak: americas," i'm david westin with alix steel. you know what i got to do yesterday? i watched croatia-argentina. alix: i came back my show and i was like david is not here, something is wrong. david: i had a big lunch, canceled. alix: it was amazing. no one expected it. david: particularly no one expected that messi didn't show up. he was not a big factor. croatia played a big game, 3-0. alix: