>> good morning from london. i'm anna edwards. manus: and i'm manus cranny in dubai. this is "bloomberg daybreak: europe." skepticalers still about trump stance on trade. u.s. futures pulled slightly higher this morning. the international event of the summer, trump and vladimir putin will hold their first bilateral summit over tensions over the u.s. probe in russian meddling in elections. details on where and when later today. eu leaders gather in brussels today.

immigration will be at the top of the agenda. can merkel prevent mutiny within her own government? good morning, everybody. , 9:01 in1 in london dubai. we need to talk about the asian session. we are negative in asia, kind of flat, down 2/10 of 1%. larry kudlowts by yesterday suggesting trump is not trying to take a softer stance with china. that led to selling the eight -- late in the u.s. session. eye on this an report, the dollar against the offshore yuan, 6.6188. a lot of decimal points. .hinese stocks in focus

$2 trillion lost in the value of chinese stocks. we need to remember all the anxiety around trade. 72.53, down 3/10 of 1%, though the trend has been upwards. the stockpile data delivering the biggest drop in two years, and that is a focus for those in the energy markets, but sentiments are so -- are sort of on hold at the moment, manus, as we try to work out the stance of the trump administration towards china. manus: i reflect back on what mark carney said yesterday afternoon. he is morning on the trade wars. the ceo of schneider electric said businesses are worried about their costs as they look down the pipe -- excused upon excusenyder -- --

the pun for schneider. you have a current sentiment index, and you have the future sentiment index. you are seeing here that the future is turning lower. our sentiment indexes are a president indicator of more pain to come. gaphave a flashing light, a between expectations on the top -- the current on the top, and expectation is widening. we have not seen a divergence like this since the crisis in 2008, hence why we have seen moves on the likes of the s&p, down the 13th day in a row, the longest losing streak on record. financials plummeting into the close. the is the day where markets will decide how much the banks can pay out. there is a cauldron of issues to

be gathered up together, china, larry kudlow, like heiser, and trump and the chinese. anna: the weakness we saw late in session yesterday was driven by the kudlow comments. markets are trying to work out the mixed-use. -- mixed views. futures could be higher as we go into trading today, which is worth remembering because there .ould be softness in europe later, things could turn around. also, to tell you what is coming up, michael ross, the german deputy foreign minister, will be joining bloomberg to talk exclusively to us. we will bring you that on tv and bloomberg television. the future of angela merkel and the coalition, what europe can really do about migration, very much the center of the conversation. here's juliette saly in singapore.

european leaders will gather in brussels today to tackle a growing number of challenges facing the government. increasing pressure in angela merkel's german coalition, the issue of migration will be high on the agenda. the two-day summit is also likely to discuss trans-atlantic trade relations and the slow progress of brexit negotiations. the white house is moving ahead with plans to limit chinese investments, but has decided rarely usedking a law resulting in economic emergency. embraced arump scrutiny of intellectual property rights. larry kudlow later said china's responses to u.s. trade demands have so far not been as factory, and that the administration is not retreating on china.

foreign -- a former u.s. court of appeals judge is emerging as a top contender for the u.s. supreme court, according to two sources familiar. justice anthony kennedy announced his retirement yesterday, letting president trump nominate his successor, potentially creating the most conservative court in generations. greek prime minister alexis tsipras has found to speak with the financial commitment he began with european leaders earlier this month. he is determined his country will not go back to the responsible management of public finances seen in the past. translator: what happened in greece in previous years and let us to bankruptcy was a waste of money, corruption, and irresponsibility in the management of public finance. we should not go back to that, and as far as i am concerned, i will do what i can to let greece not go back to that tragic period. juliette: germany has been

knocked out of the world cup. korea, defeat by south the 57th best team, according to fee for -- according to fifa. they havefirst time not made the knockout stage since 1938. for the latest results, head to the bloomberg terminal. global news 24 hours a day in more than 120 countries. you can find more stories on the bloomberg. checking in on markets in asia, we are starting to see a bit of a turnaround. you can see this technical correction come back through. hong kong and china leading the gains. the shanghai composite went to lunch break up a quarter of 1%. after the lunch break, the asi 300 up a 10th of 1%.

you still have a lot of weakness in a number of other markets, and that is sending the regional index down. in terms of stocks we are watching today, samsung electronics one of the biggest laggards, down by 2.5% in seoul. rebound weding the have seen in hong kong, and global brands, also listed in hong kong, rising the most on record, after a $1.4 billion agreement to sell its north american licensing segments. they are trying to stay competitive in that market. anna: thanks, juliette saly in singapore. trump ampligen will hold their first financial summit. the seek to reverse downward spiraling relations that have been exacerbated by findings in russian meddling in u.s. elections. the time and place of the summit will be announced today.

joining us for the latest, daniel ten kate joins us. what will trump and putin talk about? john bolton is sort of playing down any formal agenda commitments, but there is a lot that could be on the agenda. met in, they have not this setting since trump came to office. the meeting itself is very significant. obviously they will discuss things like russia's activity in electionnd syria, but meddling is still high on the agenda, particularly for politics in america. that almost will certainly come out. the vice president mentioned in an interview with bloomberg that it would, and trump will be under pressure to kind of press putin on that. there is lots of talk about the russians saying this is going to

be the event of the summer. the u.s. is kind of downplaying its a bit given the political concerns and the molar investigation -- and mueller investigation. kudlow last afternoon deflated diminution bid. how dysfunctional or strategic business? -- is this? daniel: just trying to figure that out seems a daily question. i think the debate is still playing out on a day-to-day basis. seems to have won the round over chinese investment restrictions. trump chose the less confrontational path on that approach. tariffs are just around the corner. they can still be implemented. there is no real sign that will not happen yet.

you could have a tit-for-tat trade war going forward in the next month. this is one win for mnuchin's camp, but there is a lot to come in terms of the drama. much --m, thank you thank you very much. manus? manus: let's get to thomas stevenson, our investment director guest host from fidelity international. good to see you this morning. i was talking about the current index in the forward-looking. the forward-looking indexes under pressure, and i think for markets this is the most telling chart i have seen in a wild. we are running out of confidence for the back half of the year, and that sets us up for a little bit more rumbling in the markets. absolutely. the first half of 2018 has been

disappointing. it was always going to be a difficult challenge to live up to what we saw in 2017. it was a very benign environment for the markets. whatever you look at, growth, inflation, all the measures which investors were flat -- which investors look at have deteriorated over the first half of 2018. we add onto that the trade were fears, the rising oil price. to peakdo not tend until six or nine months before a recession, and that felt like that was some way off. it feels a lot closer than it did a few months ago. anna: we were talking earlier, the extent to which we understand what the trump administration is trying to do with china, and whether there are different voices speaking. we now know the strike price of a trump put.

on hiss instant feedback policy, and he gets some of that from financial markets. if he does not like what he sees, maybe he changes course. that is the conclusion many have drawn. tom: what we have seen this week is it is two-way traffic. the markets are responding to trump, and trump is responding to the markets, but also what he is hearing from is mrs. -- from businesses. we should not underestimate the impact of the harley davidson move. he was made nervous by the market reaction between monday and wednesday of this week. used to tear up changing his mind, and he did it again. you -- thei ask performance in u.s. equities, dying 16 days in a row. financials getting pummeled, and

people are pulling money out of u.s. financial etf's. big ice probe, the biggest in two years. what you hide in u.s. stocks relative to the west of the world -- to the rest of the world in the event of an escalation of trade wars? tom: that's next really interesting question, because in the event of trade wars, there will be a flight to safety. we are already seeing that in the action of the yen and treasury bonds. is one of.s. market the world's priciest, still, but there is a good reason for that. it is a relatively defensive market in times of geopolitical stress. we are seeing the impacts on emerging markets, markets which are particularly affected by global trade. the european market, japan -- they are extremely vulnerable to trade wars, and i do think there

is an argument for finding shelter, forging the storm in the u.s. markets. anna: something to ask you about when we get to the stock specifics of this -- we have seen daimler warning about the impact this could have on profits -- toyota warning yesterday about the impact this could have on their american business. they have the biggest selling car in america, and they make it in america, and because some of the components are imported, they will face increasing port costs. ofgoes into the complexity the auto industry and the importance of getting the nuts and bolts of every single company that you track as to how this will impact their business. tom: you are right, and that is why the trump view of the world is outdated. it is a mid-20th century view of the world, before supply chains became so complex. say -- it isnnot

not a dittman of situation, which is how he likes to view the world. the unintended consequences of some of his actions on u.s. companies are already being seen. manus: thank you very much. tom stevenson, the director of investment at fidelity. germany's june of discontent is not just football -- germany's june of discontent. it is not just football causing merkel's woes. bea: michael rob will speaking on the first day of the eu summit. we will bring you the rest -- we will bring you the best of that interview. this is bloomberg. ♪

anna: good morning, everybody. 6:19 in london.

1:19 in singapore, where we find juliette saly. disney has won antitrust approval for its purchase of 21st century fox's entertainment assets, raising hurdles for a potential rival bid from comcast. they will sell 22 regional sports networks to resolve the justice department's can turn that the deal will raise prices for sports programming in local markets. apple and samsung have reached a settlement in the u.s. patent battle, putting in end a seven-year-old fight over smartphone designs. the string of lawsuits started in 2011 when apple sued samsung for allegedly copying the design of the iphone. the settlement follows a retrial in may in which a jury awarded apple $439 million in damages.

elon musk is pushing back against the downbeat prediction by goldman sachs. employees, to tesla -- in an email to tesla employees, musk said only 22,012 three's will be delivered. trackerg's model three is currently predicting quarterly production at just over 27,000 units. smiley face emoji. that is your bloomberg business flash. the eu leaders are gathering in brussels today to discuss migration, brexit, and measures to shore up the euro. the somewhat comes as angela merkel tries to persuade european leaders to craft measures to tighten border security at the region's outer borders. joining us from brussels, maria, good to see you. just how crucial is this for

angela merkel to get a deal of migration? -- on migration? >> it is incredibly crucial. the future of the german chancellor has pretty much eclipsed the agenda and brussels. we know she is under enormous pressure. she made a decision to take in more than a million refugees into germany. well, andot gone down she faces this problem, a deal that is tough enough on migration but also appeases the frontier states and the mediterranean, like greece, spain, and so on. we spoke exclusively to alexis tsipras, and he said this is not going to go away quickly. considerr: we need to whether the crisis and any other big crisis will be dealt with in a collective spirit. require challenges european solutions.

that is a problem from glenn merkel -- maria: that is a problem for angela merkel. she has to present something back home that makes her look good, but at brussels we will tell you solidarity is not enough. we need to see more comprehensive immigration reform in europe. allies from the various sides of her party have said they are not interested in making the government fall. they are working on an active solution. we might get more details later. anna: various people making the point in europe that there is a and the germans, political crisis has driven migration onto the agenda. let's talk about trade. what are we likely here -- what are we likely to hear from the

europeans around trade this time. do they want to be confrontational? maria: that's right. we have seen a draft, and we understand that european leaders will say today that wto rules have become obsolete in the wake of protective measures by donald trump. what we saw last night should provide relief, but the mood on the ground is that the european union must be ready for more trader -- for more tariffs and trade restrictions. trumperstand that donald will invite -- to the lighthouse in july, possibly a gesture of goodwill, but the mood in brussels is that we have to prepare for this to get worse before it gets better. manus: maria, thank you very much. steven is still with

us. migration fears are steeper in germany than in france. understandable why this has been pushed to the fold of the summit. it is a test of the balance of powers leading the eurozone, italy, the new government there, versus the under-pressure angela merkel. steven: there is a huge amount of uncertainty at the moment. the italian election was a reminder that the uncertainty, which seems to have got away in 2017 in european politics, was postponed, not sold. that remains unresolved. and of course, angela merkel's problems in germany have emerged more recently than that. you overlay that on top of a slowing in economic growth in there is a much more cautious tone and there was six months ago when europe looked

one of the more attractive markets in the world and violations looked attractive, and they no longer look so. manus: tom, that sort of place to the chart of volatility's in bunds. you saw this rise in yields. we are seeing volatility fall. isthe black swan event angela merkel moving off the political stage, what would that do to bunds? if merkel was a black swan event, when people by bunds? absolutely. we talked about trade favoring the u.s. would seem bunds to make sense in the context of political upheaval. anna: thank you very much. tom stays with us. unwinding easy money, that's

what we are talking about next. we will take a look at what central banks are doing around the world, and what they might do next. don't miss her interview with alexis tsipras on the next. ♪

day atwhat a glorious the emperor's palace. what you see at the bottom of your screen, a different story. risk off, yen rallied, and we are getting a little bit of that back. what will be the next comment to move dollar-yen? mr. trump, steve mnuchin, or xi jinping? morning -- .> good morning, manus and anna the names you have listed are at the top of the agenda. what the markets are focused on his trade.

weakness coming through following the losses we saw yesterday. what is interesting in asia is we have seen much of the downward pressure focus on south korea with the cosby lower than i lower by more than 1%. also, the shanghai composite deepening some of its kick lines -- some of its declines, off by 2/10 of 1%. chinese equities have been in focus with the offshore yuan still under pressure today. if we put this in context, because we keep harking back to the 2015 devaluation, over the past five months, we have seen the shanghai composite lose almost $2 trillion, but go back to 2015 and that was more like $5 trillion. to put that in context, at least in the equity space, it is not quite like 2015. take a look at what is happening in fx. the south korean won is one of

the worst-performing major currencies. the new zealand dollar is the worst-performing out of the g10. this coming after dovish signals from the reserve bank of new zealand, and this chart showing the technicals with tb losses looking to accelerate after support.fter we are trading at 6.75 right now on the kiwi dollar. ising a look at what happening in oil, over the past few days, we have seen w t i -- we have seen wti jump almost 7%. we got data yesterday showing stockpiles falling the most since 2016. august-september spread has surged to its highest since 2015. anna: now in a bloomberg exclusive, alexis tsipras v

owed to speak with a financial commitments made this month. he said there would be no return to the spending habits that triggered one of the most controversial meltdowns in the country's history. translator: the most important thing today is this is the end of uncertainty for greece. greece is coming back. the period ofme, austerity comes to an end in greece. based on the forecast from 2019, 2022, we nownd have fiscal margins above 3.5% of the primary surplus between 2019 and 2022. the important thing about this program is that the greek government commits to these goals and other responsibility comes to the greeks ourselves, or any elected government. >> the other thing that has happened recently is the s&p,

last night they upgraded your debt rating. are you likely to issue more debt, more bonds, because of that, and when would you do with? >> [speaking foreign language] indeed the i believe coming period will be a period of good news for the greek economy. upgraded, you had the showing the positive way in which the euro group decision has been received by the community. i think the biggest success for greece is that it managed to implement so many important structural reforms. and, maybe as a journalist, you would like to approach this discussion on the fiscal reform. this was huge, especially if you imagine we start from a deficit in 2010.

now we have primary surplus above 4%. tell you well at me to that the most important thing about this was the structural reforms. we finally created a pension fund -- a single pension fund when there were many before. we managed to implement reforms regarding the taxation system and the independent auditing mechanisms. we also had a justice reform. greece, for the first time after many years, has forest registers. these were important reforms to become a modern european country, and at the same time, the sacrifices of the greek .eople to be worthwhile therefore, we believe we will not only reach the program goals, but also have the fiscal ability to lighten the burden and also heal some of the wounds that have been caused in the last eight years during this big adventure for greece.

i am optimistic the international investment community will respond positively. we have already seen a downward trend in 10 year bonds. loans will beesf paid back after 2032 gives some stability and certainty to investors to invest in greece. this is what we need now. john: you have this issue in greece, you just lost another mp from your coalition. a lot of people are looking at you and thinking you might try to call an election before october of 2019. how do you see that? [speaking foreign language] translator: we got here having a thin majority, so i assure you we will get to the end. maybe this development could be good for us. all, you have experience

here in britain in the way prime minister theresa may has managed to deal with probably one of the most difficult negotiations in britain after the second world war, brexit, without even having majority in parliament. i have a very thin majority, and i have managed to come here, and i believe we will be able to get to the end of september 2019 without any problems. we will have very important work behind us to be able to present to the greek people, comparing where we were back in the beginning of our term to where we are now and where we will be at the end of our term in 2019. john: you arrived in 2015 as this man who talked about taking greece out of the eurozone, these different things. how have you changed in ?overnment do you see the world in a different light than you did then?

i have to admit that you were wrong and 2015. i was a politician who wanted greece to come out of the eurozone. i thought personally to build a better europe for its citizens, a europe that would not punish its people. a europe with social justice and more democracy. you are seeing that if we have to be afraid of something, it is not political forces that fight for a better europe, but those who are fighting in order to not have a europe, who do not trust europe, and these are the populist, far right forces on the rise. john: so you have become part of the establishment. translator: as you can see, i am not wearing a tie, which means i

will not be part of the establishment. we will become a force in a country that is part of the solution in europe and not part of the problem. manus: great interview buyer editor-in-chief with alexis tsipras, defining what establishment really is. it is not wearing a tie, everybody. unwinding easy money is the next issue. central banks are tightening policy after a decade of injecting stimulus into the global financial system. bloomberg economists took a look at 22 of the top central banks which set policy for almost 90% of the world economy. but what would they do next? that is the question. zoe joins us from switzerland. what is the overall trend we are seeing? there are three major beasts out of the 22, but give us the math. map --if you look at the >> if you look at the areas of

the map that are in red, those that,e central banks through the end of 2019, will be raising rates. in moreook at it detail, a 11 central banks already have raised rates or .ill this year that is half the central banks we looked at, and then almost two thirds will be raising by the end of 2019. not everyone is doing the same thing. you do see white and yellow areas on the maps. those are the central banks that are keeping rates unchanged or are even cutting rates. anna: they are not all on the same path, but there is a large amount of red on the map, isn't there? when will the changes in policy take place? zoe: some of them have taken place already. if you look at the five big ucb,al banks, the fed, the

the bank of japan, the bank of canada, and the bank of england, three of those have already started to raise rates. d to haves expecte two rate increases this year. canada will increase, our forecasts show. ecb, they are not predicted to raise rates until the second half of next year. however, if you hear what they have announced, they are going to be ending quantitative easing in a way that might be as significant as raising rates. finally, not all central banks are turning to more restrictive policies. a number are on my diverging path. back in japan, and the pboc has yet to address the latest move from the federal reserve. zoe: that's right.

the bank of japan is one that stands out. we see no change to their interest rate, and that is actually a negative rate of - 0.1%. that is through the third quarter of 2020. pboc, we seeth the them holding at 4.35%. generally, if you look at how -- it just shows the overall diversions with central banks, and that is something we will be financial markets. anna: thank you. map we just showed shows that there is a lot of red, and those are banks tightening in the near future or are already tightening.

given where we started these conversations, we wonder how much that tightening bias is important. if you look at that map, it is quite a binary picture, red rising, white not rising, but there are nuances within that, because clearly the fed is on a tightening bias. i think much of the rest of the world is on a much slower trajectory than the u.s. is. i think that divergence matters because it argues for a stronger dollar. when you look at places like the u.k., japan, europe, they are going to be tightening at a very slow, almost glacial rate. we live in an environment with lower interest rates, and that is going to continue. manus: we are going to get the pce over the next couple of

days, in the u.s. 2.2%, the strongest since early 2012. what does that do to your view of the fed, but more importantly, what does that do to bond yield? it does argue for a continuation of the fed's trajectory of rising interest rates. need tos point, we factor in what is happening with trade. i think we cannot rely on this continuation of growth. possibly, the trade wars in the short-term will increase the inflation rate in the u.s. but i think further out, if it does lead to a slowdown in activity, it will be the reverse impact eventually. it might result in complicated decision-making from central banks. thank you for your time, tom stephenson, investment director

at fidelity. you can find more of his thoughts at 7:00 a.m. new case on. .- u.k. time remember, you can go to the bloomberg and catch up on anything you have missed. you can also take those charts and use them in your own work. manus? manus: angela merkel's political future. will the german chancellor be able to secure an agreement on migration to stop a rebellion in the ruling coalition? ♪

6:40 eight in london, 1:48 in dubai.ernoon

the shanghai composite now looking a little weaker, down -- of 1%, the cost be cash ospi down by more than 1%. juliette: the white house is moving ahead with limiting chinese investments. trump instead embraces stronger scrutiny of intellectual property rights by the committee on foreign investors in the u.s. larry kudlow later said china's responses to u.s. trade demands have so far not been satisfactory, and the administration is not retreating on china. federal appeals court judge aett kavanaugh is emerging as top contender for the u.s. supreme court, according to two sources familiar with the administration's inking. anthony kennedy announced his

retirement yesterday, letting president donald trump nominate a successor, potentially creating the most conservative court in generations. greek prime minister alexis tsipras is open about his differences with president erdogan, but in an exclusive interview, he described his view of the turkish president. he told bloomberg that erdogan can sometimes be unpredictable, but turkey and greece have good relations with its neighbors. erdogan is president a political personality with a lot of experience, a very important personality, but sometimes unpredictable. in greece, we see this issue with turkey in a very different way to the way you are dealing with it here. we share borders with turkey. therefore, it is important for us to have a good relationship with their neighbors. ukraine is making more money from the uk's offshore

wind industry. the company reported a 32% increase in earnings from the clean energy technology in 2017. the u.k. has more turbines in ,he sea than any other nation and has installed an average of more than one machine every day last year. in total, the crown estate paid 329 million pounds to the u.k. treasury in 2016. global news 24 hours a day and on twitter, powered by more than 2700 journalists and it was more than 120 countries -- in more than 120 countries. this is bloomberg. manus: german chancellor angela merkel is facing an uncertain future. have found to act unilaterally to get tough on migrants trying to enter the country. joining us now in our studio in london is the executive director

.f applied research how much of an underestimation of the critical point is this for europe? are we underestimating the risks for europe? >> yes, certainly. this has been something that has been bothering me for about two was when theythat started to put the ultimatum on angela merkel, but it is the last two days when this has started to get more attention in the headlines. most of the time, the coverage was on inflation, the central banks, the trade war with the u.s. that was kind of a bit of a

sideshow. when there was political risk in europe, it's mainly about italy. germany is actually greater risk of the two. reallyut if they don't want to bring her down, is there such a risk? has this dilemma that he is facing a state , and hisin bavaria party have lost a lot of votes, and they are in danger of losing the absolute majority. that is the timing as for why he is doing this now. it is kind of a dilemma for both of them. i think there is a risk. if it were to come to new elections, i think the risk will increase more than that. , you said ifoph

anything, brexit taught us a few things about leaders reaching out for a unified response from europe. merkel desperately needs it. what is the worst-case scenario for us in europe and markets? what we will definitely see is that the euro is going to that,iate, and with probably equity markets in europe. that is something we have seen over the last 18 months, thatver there was a risk something would happen politically in germany. what we've been tend to see is that the euro gets very correlated with the equity markets. but on the other hand, what we also see is that we get a negative correlation with the bond market as investors move

their money out of riskier assets into the relative safety of government bonds. that is a bit of a silver lining. if you are a european equity investor concerned about the ,isks for the equity market then high-quality government bonds are definitely something you should look at. also, in terms of foreign currencies, the euro is going to depreciate, but that also means that other currencies are going to appreciate. sound veryon't hopeful that they can, on to the same page around migration. it is the focus of the summit this week. isn't the answer a little more burden sharing, finding a way to define that, and refining the doubling convention -- the dublin convention? but hungary,actly,

the czech republic, and slovakia have not attended this presummit on migration. is maybe talking about also closing their borders if germany were to do this. italy is in germany's interest, being diametrically opposed in terms of sharing the burden. germany wants to reduce its burden, and italy wants the others to share more. anna: christophe, good to have your thoughts. setting us up nicely for the german team at this summit for the next couple of days, manus. manus: anna, quick set up to the day ahead. the fed has $170 billion they could pay out. how much will they be able to put on the plate? anna: in johannesburg, the president speaks at the world economic forum meeting.

bollard giveses an address on the economy and monetary policy. chers. all fed wat ♪ ♪

manus: good morning from dubai. this is "bloomberg daybreak europe." anna: these are today's top stories. mixed.asian stocks traders skeptical about trump's stock -- stance on trade. u.s. futures are higher this morning. of theernational event summer, trump and vladimir putin will hold their first bilateral summit amid tensions over the u.s. probe into russian meddling. details on where and when later today. i test of unity. ely -- eu leaders gathered in brussels, immigration will be at

the top of the agenda. can merkel seal a deal to prevent mutiny within her own government? anna: good morning. 7:00 a.m. in london, 10:00 a.m. in dubai. let's talk about breaking news we have here from european core parents, this time from h&m, the retailer in sweden. how much have they been marking down their product, how much can they reduce inventories? that is the question going into these numbers and they look fairly mixed against the estimate. an estimate of 6.28, the number beat the net income. it looks to be in line to slightly under. are giving guidance about how the first quarter has panned

out versus expectations for the future. the first half was going to be tough, clothing inventory level is still too high and they went into the second quarter carrying too much stock area this is the big problem. they are struggling to adapt to the digital world and that is where the big overriding story comes from. beenis where they have caught a little napping. we know the story, inventory levels have been too high and that is something that persists into the second quarter. let's broaden things and look at futures. where carrying across into your with a down day on the war in. we are off 12 hips in london. this comes back on the s&p 500 which dropped for the 13th straight day of losses, financials under pressure and money getting closed at of those markets.

larry kudlow relates the confusion fuse on whether it is a soft white house hard white house in regards to china trade. and the devaluation is the biggest in 2015 -- since 2015. no in your the quantum we saw in 2015. in terms of the rest of the market you will see some data today, personal spending will come out of the u.s. and the fed are going to release their data in terms of whether the dividend, the rig dividend payout the market had been hoping for will be delivered. 170 billion as a result of the trip -- stress test. you have spanish cbi to come out and you are getting italy selling some bonds later in the day. how will that go? it is not going to be any kind of disaster but it is a litmus test. let's have a look at the bond markets.

this is where it gets interesting. issuing some bonds today, what is the premium that you are going to want for italy versus spain question mark that is one of the things. futures prices are lower. the five-year auction came last night, 36 billion dollars in the u.s., the biggest demand since august of last year. out froma big note goldman sachs, they closed their short position on tenure government bonds. they put that on went yields were down. you saw them, the way up. they closed their short position but they maintain you have to see a yield top 23.25 percent. that will be an interesting one. they are coming to the bond market today. the bones are up by 10 pips. up.unds are anna: let's go back to the story

briefly. we have h&m with a correction here to how they perform so not very mixed. looking a little sluggish under the estimates. 6.0 oneame in at billion. so correcting that, that was weaker than the estimate of 6.2 8 billion. you point out interesting stuff in the futures. let's show everybody where we have been in the asian session, down .3 of a percent worsening over the last hour. that has something to do with u.s. futures. they were looking more positive than they are now an hour ago and that has taken the as off -- the edge off equity sessions. the yuan, the offshore rate, 6.6 is where we are. we are down .4 of 1% at the direction of travel has been up

because of the stockpiled data. the biggest job in two years and that took us up to $73 on the price of a barrel of oil. let's get a first word update. sophie kamaruddin is here. creasing pressure within angela merkel's coalition. the two-day summit is also likely to discuss trans-atlantic trade relations beefing up the euro area's bailout fund and the slow progress of brexit negotiations. federal appeals court judge brett kavanaugh is emerging as a top contender for the u.s. supreme court according to two sources familiar with the administration's thinking. anthony kennedy announced his retirement yesterday letting president donald trump nominate a successor. potentially creating the most conservative court in generations. great prime minister alexis

tsipras has vowed to stick with the financial commitment he agreed with european leaders this month. speaking to bloomberg, he told us he is determined his country will not go back to the irresponsible management of public finances seen in the past. >> what happened in greece in previous years and let us to a groep see was a huge waste of money, corruption, and i would say irresponsibility in the management of public finance. we should not go back to that. toill do what i can in order not go back to that tragic time. sophie: raining world champions germany have been knocked out of the world cup. i south korea. the 57th best team. they failed to progress to the next round. it is the first time they have not made the knockout since 1938.

global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. let's check in on how the markets have been faring in asia. the worst quarter since 2015 and greater china markets have been fluctuating this thursday. we saw briefer recovery but not much conviction. shanghai shares could fall for a 44th day and the hang seng losing despite the pickup we were seeing and energy stocks. in southeast asia, we want to highlight indonesian shares which have slipped to a may 2017 low. rupiahake a look at the which is trading at their weakest level since october 2017 which might give the central bank reason to consider a more aggressive rate hike and the reserve bank of india might also be goaded into action after the rupee fell between record low

everywhere oil prices are. capturing market attention, weaker for the sixth session. even after the pboc softened it, macquarrie will pencil and six md a dollar on anticipated policy easing from china. manus: thank you. sophie kamaruddin in hong kong. breaking news from bp. to buy the uk's largest electric vehicle charging company. it is called charge master. they are the largest network of public charging points in the country. they have spoken about renewables, he spoke about the changing world environment and electric cars and basically saying the world is still going to need a heck of a lot of oil-based energy to have us get around and drive. they are buying charge master,

the uk's largest electric vehicle charging company. thank you. let's talk about masters global. holding their first lateral summit. the meeting is seeking to reverse the dollar at spiral in relations that has been exacerbation -- exacerbated by findings that russia meddled in the 2016 a lit -- election. the place will be announced later today. what will trump and put in be talking about? -- and putin be talking about? we know they will talk this summer. daniel: the big announcement will come, russia is playing this up saying it will be the event of the summer. the u.s. is a bit more some given the political concerns over trump meeting with putin. there is a lot on the agenda.

they have not met too often. this will be the first one on one. they have talked by phone and met on the sidelines at various summits. ukraine will be a key item. syria, what is going on there, and the election meddling. trump will be under a lot of pressure to bring that up. manus: where are we, where is the latest interpretation of the conflict, it is around 24 today. expect brown 25 to come up soon -- round 25 to come up soon. trump is easing off a bit on the interpretation of restricting chinese investment in the u.s. that was considered a win for mnuchin. perspective,ese they are saying that it is a good thing, it will hurt the u.s. capital markets and they are saying blocking high technology exports to china will

make the trade deficit worse so it will not accomplish what trump wants to the tariff implantation coming up next week. still a lot to come here. manus: a lot more to come as toyota warns average price of the camry will rise by $1800. latestten kate with the trade eu leaders will meet in brussels, the object -- the agenda immigration. good to see you this morning. how crucial is this for angela merkel to get a deal on migration, our german guest says , davidimes with brexit cameron trying to get an agreement from the whole of europe but they are too inert and too late.

>> it is a crucial settlement for -- summit for angela merkel. the concern for angela merkel is that she is under so much pressure at home, we know she -- decimate the decision to she made the decision to take in one million refugees. we are seeing some of her allies telling her you have to get tougher. especially on asylum-seekers. she has to get something she can present in germany but also show solidarity to frontier states in spain, greece, italy, they are saying solidarity is great but we need a more comprehensive migration reform and that is the tension playing out in brussels, how to combine a tough message and appease europe. anna: what to expect to come out of the summit around brexit? brexit talks may be the main event here. they could get a little squeeze

in amongst anything on the agenda. >> brexit has slipped on the list, when you talk to european officials, they will tell you progress and made the issues are not solved. she is going to present enough eight area details on that we still do not know, that will happen later tonight but interest in, we have seen a draft copy of a document that will be presented by european officials which include gibraltar as the issues that are unsolved. it looks like spain has managed to get in that line and maybe that could be an issue when they have this working dinner. anna: thank you. joining us now, the global on the set manager

with us. thanks for joining us. lots to talk about. we will talk about m&a later in the program. that is one of the things your think about. in terms of these trade concerns, do you still see this as the answer to the deal, things will look calm her or do you sell -- see we are looking into an abyss? guest: we seem to be moving closer toward that point. the markets are grappling at this point with what is the trump administration's stance here. on have got the china hawks one side, you have mnuchin on the other side. adopt a more softer stance toward china. you are fighting those two things and there was a classic example, we had the extent -- the announcement that this would -- that the market took as a softening. later in the day you have the

comments out of larry kudlow saying this is not taking a softer stance. theing cold water on markets optimism. we have conflicting messages coming out of this administration. we need clarity from them on what they want from china. and -- envynot anyone trying to invest with a longer-term perspective. let me have you take a look at this, this is the banks and i would it to you that there is other big forces at play in the u.s. the s&p, the longest losing streak for financials, banks down for the 13th straight day. this worries me perhaps more than the daily machinations of what is going on on trade. this causes me concerned about -- concern about dividends and the yield curve. what does it say to you? is clearlye market taking a risk off stance toward what is going on. that is understandable. the reason there is no -- trade

is such a big deal is it has the potential to derail what is a good story globally in terms of economic growth. the market is concerned and you are seeing a bit of risk coming off the table from that perspective. what i would say long-term is let's not lose sight of the picture which is pretty solid. economy,at the u.s. forecast pointing toward a significant rebound in q2. the backdrop on the earning side we are seeing out of companies remain strong. i point toward consumer confidence, business confidence remains strong. that is not to say the this trade will not have an impact. thee step closer toward abyss as we called it at the beginning, the market will be more concerned and you will see more risk, a more significant selloff coming through equity markets. a measured response from equities but it does have the potential to get worse. anna: this will get stock

specific when we get into the earnings season. we will hear from a raft of companies. i wonder what you are setting yourself up for. we heard from president trump laying into harley davidson on twitter because of decisions they are making when they face increased trading barriers. we have heard from toyota warning about the increased cost of making traders in america because of trade tariffs. how -- where do you expect to see the trade story rear its head? richard: industrials is one key sector, you have seen a bit of a selloff in those names. the issue you have got is you are fighting higher material costs, we are seeing that and higher wage costs and margins are going to come under pressure. how do you position yourself for tariffs and harley davidson looking to shift production out of the u.s. to mitigate this are

probably not what trump wants to see. companies will need to be cognizant and manage these rising cost, these applications from tariffs and having a global reduction based does help to some extent. manus: that is what came through from schneider electric, they joined us and said they were moving from to opec. opec.ex to this is what we have got for you on the show coming up. germany's deputy foreign minister michael roth will be speaking to us exclusively on the first day of the eu summit. we bring you the best of the interview after 11:00 a.m. this is bloomberg. ♪

manus: let's talk m&a. disney has one antitrust approval for $71 billion surchase of 21st century fox'

entertainment assets. charge master, an undisclosed sum. i want to get to the comcast-disney story to dig the braun the debt story. they're going to have to go heavy to the debt market. who is going to be able to carry the biggest swag of debt to win this deal? richard: you hit the nail on the head. this is all about leverage and the ability to leverage a balance sheet to get the deal done. disney is sitting in a better position. the market is worried about comcast stretching themselves from that perspective to acquire fox. it is an interesting point. not just with this transaction

but in others. we talked about conagra, pinnacle, conagra taking the balance sheet to get this deal through. ability to observe this issue and they are comfortable with companies stretching their balance sheet. you see the reaction in cannes -- conagra's share prices. the market is sensitive about companies taking on additional leverage to get deals done. anna: it is starting to be a u.s. phenomenon. ma .ing at we are down 29% in europe you're on your. -- year on year. week found that was

being driven on that. where do you get excited about the m&a story, where is too much risk? richard: the u.s. is the place to be. one is the economic back drop remain solid. you have companies with repatriation, they can bring cash at gone sure. have balance sheets in good , helping from that perspective. the u.s. is the place to be an you will see the transaction happening. my point about leverage is important from an investor perspective. you need to be careful with companies stretching themselves too far. you see companies bidding up especially in areas of package goods. kraft heinz looking to do a deal and general mills doing a deal. areas where you are under threat topline and you need to get growth, is where you are going to see the m&a happening. new function. a

of money and developed markets. u.s., japan, south korea. are you seeing anything as we go to the halfway mark of the year on flow? u.s. againthink going back to the point, it is a must viewed as the safe haven for equities. that is the place where you have got stable macro backdrop. the market is a must willing to accept a higher valuation on u.s. equities for the safety you are getting and that is what you are seeing going on from a political perspective. it is not helping sentiment toward european equities. that could change in q3 at some point. that will help markets. european equities is an interesting place. you need to be patient. anna: thank you. that is it for this week. manus: it is.

i do not think i will necessarily hit the beach on this thursday afternoon. stocks are set for a slightly lower open. i will see you on monday. that is it for this edition of "daybreak europe."

guy: you are watching bloomberg markets, this is the european open. where live from our european headquarters. i am gas -- i am guy johnson. cash trade less than 30 minutes away. around 30 minutes ago we wrote a -- were not down that much. they started to fall, down by .6 of 1%. at the moment and i suspect european investors are paying