victory as the next presidential -- mexican president and bringing with him alike the majority in congress. angela merkel continues to coalitionwith her partners. trey get serious. until now, it has been mostly talk. are a looming friday deadline for tariffs. escalating retaliation is threatening. welcome to bloomberg daybreak. i'm david western. alex field is off today. >> let's take a look at the open. it's lower. down by 0.8%.

it was a huge week for trade. we shift from a technical definition of a trade skirmish as we see retaliate three efforts. a weaker asia session. the chinese markets closing shop. down 2.5%.rket's angela merkel in focus as well. we would talk about coalition talks in more detail. suggesting that she will survive. the dow off by some .6%. crude at $74 a barrel. tweeted that he had an agreement with the saudi's. 2 million barrel increase. david: not so much. there are plenty for investors to pay attention to.

durable goods and factory numbers tomorrow. thursday, the fed releases minutes. friday is the big one. it's job stay with expectations mayhe u.s. added jobs in and the u.s. is scheduled to enforce tariffs on additional $24 billion of chinese imports. mexico, the big election overnight. let's take a look at the peso. it's sort of interesting what happened. initially, it strengthened, and then, it weakened again. >> we got a little relief in the and as part of broad dollars -- dollar strength, it took off. i'm kind of wondering if this is in andof trends coming

it looks like the coalition might have control of both the lower and upper house so if he wants to and has the room to, there's no real check on him if the party's aligned together and behind that. was a prettyt strong signal as far as the polls. to wait and see with the results say about just how much power he is going to have when we find out what he has in the house. this have been weighing on the markets for months. the markets will have to wait and see. already, he has been quite conciliatory about the central bank's independence. shenanigans never far away in europe. migrationant deal on

in europe last week. it's still creating problems for her coalition. >> no surprise that angela merkel has been searching for a european solution and people in her coalition have been looking for a more german solution. i'm struck by how the polls seem to suggest she has the upper hand even in bavaria and a lot of this might be her coalition pull peopleing to to the right. that's more of what i'm getting. it's happening. she's having 11 our negotiations on a time. would be the consequences for the economies of europe? she keeps surviving these crises in one of the reasons this is significant, she's a

symbol of the eu. you're seeing it play out in the euro. it's in many ways in the medical they brought her union. >> she needs the csu to remain in the coalition to remain a governing majority. we will to -- we will turn to our third story now, trade. gmrting last friday when filed their comments. they said increased import tariffs could lead to a smaller gm, a reduced presence at home, and more u.s. jobs. it wasn't very long before peter navarro put out saying this, gm likes to ship jobs offshore. smoke and mirrors with gm and others. peter navarro having none of it.

companieseing u.s. coming forward and saying, wait a second, this is going to hurt us. some have been very shy about criticizing the tro missed ration. she was on it a lot longer than others. seeing gm, bmw, hyundai, all come out in unison and criticize the president. we are seeing the potential for auto tariffs era is the big nuclear option. investors sent friday feels like a pivotal day in terms of what we get. if we are looking for another reason for perceived weakness, this is something here. about how 40%king of the cars at sells are imported from other countries,

80 or 85% of that is from nafta, this is becoming a mexico nafta issue. u.s. automakers probably see better prospects overseas and this is not something the prospect of retaliatory tariffs plus higher prices coming in, it's not something any way shape or form was help u.s. automakers at home or above -- or abroad. david: are we seeing it in pmi's? seeing automakers say the prices will go up. we haven't yet seen a trickle through the pretty much in unison, economists are out there saying it's going to hit every country and many companies and the question is who loses the most. you are a ceo, are you going to buy a big new plant right now?

many thanks to carolyn gage and luke hour. -- and luke. talk with the asset managers senior economist. this is bloomberg. ♪

>> this is bloomberg daybreak. the world's largest private technology company plans to trade publicly again. it's a cash and share swap a $22 at almost to million. at almost $222 million.

elon musk says tesla has become a real car company. tesla bills more than 5000 of the sedans in the quarter. they had hoped to reach that goal at the end of last year. supermarket changed -- chains have agreed to a purchasing agreement. the biggest deal in europe since 2006. a joint venture deal that took more than a year to agree on. our guests join us now. great to have you with us. you must be pleased about the outcome of this deal. some believe that thyssenkrupp

got the hard end of this deal. how can you convince them otherwise? >> i think it's a good deal for both parties. it creates a strong european steel company with strong synergy of 5 billion euros. -- of 500 million euros. us while bein to worth more than the two companies separately. is it about efficiencies? there is definitely a very strong focus on efficiencies. it's a very strong r&d spend that can happen with both companies.

we will be able to come out with products that are worth more the terms of range that it can support for our customers. wonderful things. julia: i apologize for interrupting. the ipo seems to be the real concession. can you give us any sense of timing our price? i think -- >> i think the immediate focus should be to get the approval so company andform the gain some credibility before we take it to ipo. our partner has the rights to the timing of the ipo.

david: we have steel worldwide, it's generally understood there is overcapacity over wide -- worldwide. the trump administration really taking action on tariffs. fitdoes this joint venture into a world with there's too much steel being produced? i think that is why consolidation becomes important so we can be more competitive. individually we cannot achieve the kind of competitiveness that we can achieve together. what impact of you seen so far from the u.s. impose tariffs? -- impact have you seen so far on the u.s. impose did tariffs? tariffs?ed

at actionsre looking to prevent dumping. front? you think on this are you worried about the same for europe? >> the european market is a very large market. we need to see how much is the total capacity that will be filling in the u.s.. these are things that have to play out. it's too early to say. if you take a longer view from your point of view, is the trump administration doing you a favor? their movement forward on

--iffs may be due trickle trigger a global approach on capacity? long-term increase the value of your company and this joint venture? >> i think the way to look at it , we have two platforms. one is the european platform. we want to grow in the india platform on one hand because there is a huge market in india. we want to double that capacity. we are already going in that direction. in order to do that, we have to provide a strong platform in the euro. possiblenot have been without the combined entity.

i think we have two platforms which are going to be both strong. we have efficiencies that we have already identified. the india platform is going to have growth opportunity. a steel point of view, i think we will create a lot of value. david: thank you for joining us today. of thel world impact trade war, let's talk about autos. gm warned that the presidents tariffs could affect jobs. the trouble missed ration was quick to hit back with peter navarro saying gm likes to ship our jobs offshore.

a lot of smoke and mirror with gm and others. bloomberg'sis international economics and policy correspondent. hearing a lot of talk. is it showing up in the real world? are we seeing it in economic and trade did a? and trade data? michael: this might be the week we start to see it. we are getting a lot of anecdotes. most major news organizations have reports of smaller companies laying off workers but jobsmay not show up in the data. big week of data in the u.s.. be lookinggoing to at new export orders and new orders in general to see if there has been any kind of pull back. in the jobs report, we will see in some of the key categories,

whether we lost in the jobs are not. david: we may see some numbers? it may be too early because if you have five or six people laid off, given the rise of the labor force, that may not show up. we haven't had any major layoff announcements yet. david: thanks so much. welcome now, alex dryden. and stephen friedman. let me start with you stephen. are we starting to see a slowdown in capital investment and trade? or is it a matter of weathering it? we are hearing about in the anecdotal data but in the hard numbers it's hard to see an impact. we do have the tariffs

against china, if there's a retaliation and the rhetoric continues, then i think we will see it show up. possibly in the hiring data as possibly in the hiring data as well. julia: it's been very difficult, there has been a lot of rhetoric. possibly in the hiring data as well. julia: it's been very difficult, there has been a lot of rhetoric. do you think this week, will we start to see a real step up in terms of actual action? i think the difficulty from investment point of view is trying to work out where in you these tariffs might afford. we have very little detail. in terms of individual sectors, it's difficult. the analysis we've done on the tariffs we have available seems to us that particularly between china and the u.s., technology and industrials, they are the two sectors that stand out as

being in the crosshairs. that comes with a big copy out of we don't know the ones coming down the pipe. a chart that compares msci of u.s. versus china. the china market has dropped off as the u.s. has stayed up. is this a result of tariffs or something else? the selloff only really began in the last month or two. there is some concern with on shore chinese investors about the strength of the chinese economy. you are seeing the central bank of china making some changes which is suggesting there is some underlying weakness. i believe that's beginning to filter through. julia: we know they have been restricting credit to some of the larger funds. but we've also seen them cut the reserves requirement.

seems they are getting nervous. we are little bit softer here. this in terms of growth impact for the united states? we are talking about 0.2% of gdp, it's nothing. it's hard to see with the macro impact is at this stage. i agree that the first order impact is relatively small. the problem is it'll extrapolate late to what's going to have with others and that's where the concern comes in. we could have an issue with monetary policy. they say they will continue to put another chart. it shows the yield curve. david: the white is inverted with weight hikes -- with rate hikes.

once the likeliness that the fed may say, i'm nervous about trade, we may slow down rate hikes? the party heard the concerns there. there's a chance you get the september meeting. perhaps you see some slowing and jobs growth in manufacturing and they might have more pause. the problem is, once you pause, wendy start again? do you start again? markets might extrapolate a long pause. julia: despite everyone else thinking their little more hawkish with their projections as far as rates, if you bake in the fiscal stimulus, they are dovish. could you argue that they have price this in already? -- priced in this already? steven: it is possible that

trade -- julia: can we get back to the fundamentals? alex: that's a second half of the year story. at a tough first for sentiment has been battered. oil prices have been moving higher. i think the second half of the year, markets will focus on the fundamentals. you have potentially 30% earnings growth coming through. and an economy that may be growing by as much as 5% by some measures. that's a huge amount of growth. get back to those fundamentals and i think investors look happier. david: those are u.s. fundamentals. when you are u.s. investor looking at the u.s. -- international opportunities, the

question is what happens to the u.s. dollar? that is been hurting emerging markets and hurting overseas investments. we believe the dollars potentially in a 10 or 15 year bear market decline over the next decade or so. that's a big move. the recent spike has been coming through from widening interest rate differentials. the u.s. has a big trade deficit in a big budget deficit. they are big anchors. the dollar will continue to strengthen even the short term. i don't understand how suddenly fundamentals will kick back and when there is no sign that he the straight headlines are going away. what tips the balance here? does it matter more than noise? do we start to see when

we get to the fallen impact of terror showing up? is tok a big part of this receive funds start to pull back. one of the great stories of the last 18 months is been the increase in. x. the increase in cap guests staying with us. seeing red across the board with merkel's coalition on the edge. this is bloomberg. ♪

thank you. this is daybreak, i'm julia boston ey, alex is in ahead of the boston pop part rks spectacular, as of the july 4th celebration,

and on bloomberg tv, radio bloomberg.com. 8:00p.m. eastern on wednesday. wait. avid: how do you celebrate july 4th. julia: i think we have done well since the separation. the fireworks and the music. a great experience. julia: i'm here, sideline the issue and what it represents. you didn't want the colonies. julia: what empire. european markets. how appropriate. weaker as a result of the handover of the asia session. we are off and slightly stronger in the last 30 minutes or so. the underperformer, the italian market. the footsy happening when we see the er weakness across european market. down by a per cent. the german markets out. focussing on the german market and the euro cross rate

n like of angela merkel's battles with the cfu, her sister party in the coalition pushing for a unilateral move on migration or it political game playing, we discuss in a few moments. i want to show you in right of mentioned the week of p.m.i. numbers on the private china.ficial numbers from look at the 10 day correlation euro stocks and the chang high government. hitting at the highest level april. as china goes, it seems, so does now.pe for david: what is going on outside the business world. with the news. >> there's a break in chine owe global automaters. beijing cut tariffs on imported half, 15%. repreviouses for cars in the us china d this week when imposes a 25% duty in

retaliation for tariffs is ident donald trump slapping on $34 billion worth of chinese products. president donald trump's weekend of oil diplomacy offered mixed messages. prices fell after a trump tweet would pum arabia 200,000 more barrels a day. saudis say that both talked neither stated a target. in decades t time mexico lected a left-wing dealt a , obrador defeat to the business friendly for who ran the county decades. he won easily, taking 53% of the promised to address respect the ty and autonomy and will not raise taxes. emma, this is bloomberg.

mexican re on the the peso reversing reversing an advance. joining us for more is eric martin. covering mexico's economy. bloomberg's michael mckee. unexpected. what do we know so far about the strength of the victory we are as ing about, particularly you look at the house and the critical for how he rules going forward. >> absolutely. the probably going to take rest of the today. monday in mexicotoday. onday in mexico how much political capital amlo will have, we have 40% of the in. the early exit polls indicate hat he probably has a majority in the lower house and may be one n shouting distance of

in the senate. it makes a difference with how pursue his he can agenda and how much of a mandate he can pursue. julia: how aggressive do we expect him to be? looking at the comments in light of comments that he made. mark. med to placate the following the rule of law in the particular.or in eric: there were two speeches, one at the hilton hotel. other in the zokolo or the main square of the nation, a away from the first location. but the first speech really felt it was aimed at bank executives, porate and really to assuage some of the concern, and the second speech was a bit more of the tone he struck on the campaign trail for the masses poor and the working class. and those who have supported him country, so they

are making an effort to try to alm some of the concerns that markets and investors have had, and talking broad and sweeping he's going to t do about corruption, about contracts some of the and things where he expects that there were graphs or suite hart deals under the previous administration. promising some really bold things in terms of ending orruption and restoring security, a lot to deliver for an incoming president. the intereststing will be fascinating to start. for the in, thank you update. david: angela merkel, hanging r, her fate is in the balance. who nterior minister horst heads the bavaria christian nion hope offered to resign, but pulled back for the sake of the country he said. merkel's leadership.

we turn to chad thomas, thank us. for being with it took him a long time to get the coalition together for begin with, taking months. why hadn't they worked through immigration. it was an issue pending in the election. it's a question that any here in germany are asking themselves. one. issues is bavaria is ruled by union. istian social the party is on the present in that one state in germany. elections coming up in october. of as the party's positions in the part slid, and slid in because of a far right party. in the party in germany, the afd. concerned that the immigration is a huge topic, a harderneeded to take line stance. with horts coming in. power to shape that

policy, and decided that he come up with a master plan to deal with immigration. is that the him chancellor disagreement with a is what set d that off the what set ff the between the chancellor's party in the regional party led bavaria led by interior minister horst seehofer. david: thank you chad thomas. still, jp morgan asset alex dryden, and steve friedman from bnp paribas. have the possibility of angela merkel stepping down. numbers reflect concern about europe holding

together. >> i don't think they do. a weakness that we see. the p.m.i. data, it's to tie it to the political uncertainty. germany for the moment. >> not so much from a political point of view. concern goes when we look at germany that the dax its revenues e of from china than france. stock markets are dominated in the megacaps, the struggling which are because the e.c.b. are not emoving support and the big exporters, dinged up if trade escalate. o crux of the the european exit market. the big stocks have been struggling so far. we talk about the nuclear options in terms of auto. of any is at the hearts that. david: is there a chance that

europe dan benefit between ruptures between china us. china will deal with other partners if they can't deal with states.ted steve: that's an interesting question and one that the --ourm administration is not president donald trump administration is not thinking about. if the us is a difficult trade see the trade partners look elsewhere. says no one navarro will retail yacht. they have retaliated. that was the plan. made the point that what we have seen from investors, they the international markets and em. you are saying don't do that. at the merging market evaluation. alex: the same level it was in 2016. of so you are right back to the start before the amazing rally 2017 in emerging markets. attractive. s are sentiment is watched out.

earnings is coming through. emerging markets. whilst there has been challenges in unique cases, argentina, and brazil. he broader european content is solid. julia: what about europe. epicentre. the what about the other markets in europe. >> the european market doesn't match up. competition iset so heavily into financials, it's boolish on italy and spain, while the yield is flat. away the e.c.b. takes support, that's when profit margins may pick up. consolidation in the banking sector, helping that. european ncials, and stocks, something to look at from 2019 to 2018. taking a longer point of view - germany had basic reforms feed the any. macron in france is undertaking

reforms. as you look broadly at europe. apart from trade and heading in, are they a positive direction for the term?r steve: i think so, since 2011 ll the crisis that europe went through led to more integration. i expect that to continue. n the short term there are political bumps along the way. over the long term. be further. julia: alex dryden from jp morgan, and steve friedman from bnp paribas. largest , the world's private technology firm steps into the market. next.cuss dell david: and turn on the radio and from 7-9 tom and john and tim fox joins tom. new berg surveillance in york, boston, the bay, washington d scr. and across the states. live from new york, this is it bloomberg.

♪ julia: this is berks rrs. jay g up in the next hour, pelosky, tpw investment management and c i.s. david turning to wall street beat. this is three things that wall street is buzzing about. green lights red quarter, the first half of the year was a for hedge funds. red half. green light capital and triant loses.d dell's public return. the world's largest technology a return to public

market and lebron james million deal. we take our eyes off the world cup for a moment. leaves the cleveland cavaliers for a los million deal with the angeles lakers. executive for global television. happy monday. for mr ianhold. sell netflixing to it amazon you have to time right. jason: it's value versus growth. back. ome it's a growth story, it is story, it's owth easy for me to sit and say that, apparent. the numbers in the first half miserable.etty to say the least. ulia: he said in april we are sticking with the trade, we still believe in it.

yes. alone. hey weren't a lot waited and said it was ime to come back, it doesn't happen. sooner or later they'll be right. sooner or later. how much blood will be in the streets. nelson pelts ting go down. active has been an rear, no pun intended. nd this was on g.e. proctor & gamble. g.e. had a nice little mini run last couple of weeks. after a dismal down run. david: he knew there were with g.e. i don't think he knew how were. nd they jason: it will be interesting and if he rides that they moved. seems like so long ago. we'll see. was the boldest thing yet to get out of the things that

have been associated with. keep in mind. go out. saw them amazing. second story, dell. they are back in the news. when they went private emphasise huge deal. and you said i don't want to be reporting in the street. but now, i guess there's more interest in it. is. e ultimately recollects this was a private equity deal. of the deal. certainly the biggest since the financial crisis, there's a few rivalled it, silver lake being the partner that jumped in. michael dell said "i don't want it scrutiny." part of the reason is there was needed to be done to that company. >> has he got it done, is that what this said. i don't have that scrutiny i can do the tough things and it value, is it ore declaring victory and saying it's fixed.

wayt feels that it's on the to being fixed. a question here is what relationship the be. >> there was speculation earlier n the year saying they may put the companies together. sounds like, depending on who you listen to. much reporting over the weekend na that may happen. for the moment they say it's not going to. the details of this i will not try to get into. enough to make ein an investment. >> high water. there's a private equity with silver lake. history of accepting deal making. it is a classic example. a good point. silver lake gets a lot of kudos for the deal. obviously they are in a position to make a lot of money if it michael n the way that bell wants it. julia: football, soccer. mean.: i know what you julia: thank you. david: i watched it.

ulia: there were incredible games. david: france-argentina great match. they are in. jason: cristiano ronaldo and messi out. said that they'd be out and russia in, what? julia: i know. if there's a shootout after two overtimes, they played their , the whole max on end of the pitch. jason: they did, the first time years, i believe that there was - it went to penalty a ks in both of the games on single day. all penalty kicks. exciting. jason: amazing saves, russian saves unbelievable. nearly as exciting as lebron james playing for the cleveland board, back to cleveland and now to l.a. la land. it ain't show friends, show home and the lakers - this is a huge move and shows -

talked about this offset on the desk. it is during. the brass ring to own a basketball team or a know a sports team, you lot of guys that do. it's tough. dan gil bert. a tough day for dan gilbert eveners,other teams and including the 76ers made a run at lebron james over the weekend. with him.g david: you take lebron james in l.a. apart from new york. like he could be a superstar. cleveland.r in jason: you think of the idea you are at your house, ding dong, johnson turns up. david: they have a manager just lebron james. jason: he shows up as a tiny ernalty that they are in. still magic johnson can deliver. talk about a closure.

speak up, more companies out against president donald trump's trade war. g.m. says jobs could be work. a bloomberg an terminal check us out online, and an check the graphs go tocs and chat with us, tv go on your firm nal. this he place to be, and is bloomberg. ♪ ♪

♪ >> g.m. warned that president tariffs could affect quotes. sullivan who writes in her own piece: that's a little cold, brook. have you here.

>> thank you. david: take us into this back between the white house and mary borough. they were best of friends for a while. >> they were and the president as happy to tout g.m. on twitter when they announced jobs, albeit jobs that would be in some cases they were jobs that were maintained. necessarily new additions. the tide is turning. and you are seeing the ex-boyfriend type of reaction from the president saying i gave you so much. tax cut and now ou are announcing the move in production. david: it was also fuel efficiency. can help general motors, because they can sell more s.u.v.s.and >> they were corporation and looking out what is best for the company. the tax cut was great. fuel efficiency, but the trade bad for the bottom line.

that's the in the one interest. piece, a lot of times shareholders drive the making. julia: profit maximisers the be nesses, and they have to vit m. it's surprising the fact that they came out. a p.r. element to it. harley davidson was the same way. lobbying behind the scene. vocal are having to be and upfront. companies figured out that jobs manufacturing is a key trigger point for the president. nd this worked in the perverse a year ago when they announced and investments. they figured out the way to president.he julia: they tweet less. you point this out as well in article. point is yes. stephen said e

seems to be having less of an impact. we see more of this, off the in a passing hit as a company. raising taxes and specifically going after taxes and a lot of times it doesn't materialize. it's not necessarily packing the same punch that it did. david: makes sense. the boy who cried wolf a little bit. bloomberg van opinion. global ore, the week on trade jay pelosky, cio, tpw investment management. plenty more from us to come. from new york. this is bloomberg. what's a gig of data?

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others warning that tariffs will lead to job looming here's a deadline for tariffs on a billion for imports. germany stand off. german chancellor angela merkel with partners as they threaten to close the border, with the leadership of the at stake. mexican history, andres manuel lopez obrador swept to victory the next mexican president. earning a majority of the vote, likely majority in congress. welcome to "bloomberg daybreak:americas." i'm david western with julia chatterley. welcome. off. steel is it may be holiday week, it's busy, that's lot going on. going on. ave a lot is this the week with a trade trade war.rns into a european markets foster. top 600 off .6.

can we condition to see a bounce. we european auto sector, talk about this as the nuclear ption as far as tariffs are concerned. we have valuations hitting a two year low. see the do you futures taking their key. softer p.m.i.s in china. snp giving the story. 1%.red by 0.5 by 2.83%. david: time for the briefing. it's a busy week. we have durable goods and fact tomorrow. thursday the fed released his focussed with everyone on trade concerns, friday it is and ig day, jobs day, expectations adding 200,000 jobs. and on friday. scheduled states is to impose tariffs on 34 billion

imports. julia: friday is the day. impact of the trade war. tariffs go effect jobs, g.m. saying: the trump administration hit white house trade advisor peter navarro saying: joining us now is jay pelosky, tpw investment management and cio and michael ande, bloomberg's economic, policy correspondent. the morning, mike, i made quip is this when we go from a war, the irmish to a tariffs hitting. ike: it may be the week we go

from anecdotal data to impact. e may see something in the p.m.i. numbers, if we see a drop orders in or new general, companying may pull back, that's the biggest threat. he folks at bloomberg intelligence clunched the numbers. if there's a trade war, there's scenarios, there's a 0.2 hit to china based on the and the us less. it may not show it. see it in microindustries. at bloomberg bma utting together a list of the tariffs that were under. there's 21 billion in tariffs, canadians imposing heirs yesterday and we saw the tariffs on friday. >> when we had the tax cut we stimuli. scal it will be all growth. companies will invest. it's not huge tariffs,

will it cause them to hesitate investing in plants and equipment. >> that is something we are cfo ng at closely, confidence. c.e.o. confidence, and you have that en a sign of declining at the moment. not far in the data. the nk that's an issue, consumer in the us is effectively - doesn't have a lot upside. real wages, flat. where you need to see the economy to drive the higher is in the capex side. you u are not sure where can produce and what price you can produce and where you can sell. problematic.e it see theit make sense to flight to safety, assume the that plays to r, dollar strength in particular. sense, see that making carrying on throughout the second half of the year. question. big

it's a situation where the markets are taking on the trade in a real way, through the earnings channel. the small hit to g.d.p. he us in china, big hits on earnings in a market fully valued and where investors are earnings to drive the stock prices higher. earning is where the markets stop. >> in this situation, it's full of uncertainty. know what will happen when. hings change on a dime or tweet. that's problematic for markets. > how does the fed feel about it. we get the minutes coming out. how much do they trade. decision.ffect the we'll put up a chart showing the curve showing d how rapidly it's doing, it inverted the white line. rapidly. ening do we think the fed will be and ease up on the

tightening. >> it's possible. enough data. e and they operate on data. month. all it last operating in europe where he said we'll be data driven in the future. to look at the impact in the real world at the real time. seen that. they will discuss it. what e a discussion about could happen if the numbers turn bad. >> there's something that may be different. want to put out a quote from larry. basically he said my hope it that the fed understands that in faster working economic growth do not cause nflation, my hope is they understand that and will move slowly. i wonder if this is on behalf of trump, trying ld to jaw bone the fence. behalf of larrie kid low. it's a little out of lone with past. s been done in the

and the fed will look past the tatement saying we don't care what you think will happen, happen. t on what will if we see inflation rise, it this year.s on track if inflation holds off, we'll question fore real the fed is watching oil prices. headline to the numbers. with oil prices up. oil gops goes up. core.e in effect on julia: ambitious to suggest a coordination. does the ately strength of global growth outweigh the concerns we are ooking at here as far as tariffs and trade tensions are concerned. julia, you must have read my most recent piece. and center question no.1, that is can global growth the three "t"s, trump,

trade, tariff. t's an open question the the economy seems to be doing fine, risk assets not fine. it goes back to the earning channel. affected, stocks in particular. ulia: it's interesting the diverge australians, mike and jay, thank you for that. us.ing with german chancellor angela merkel's make or break week. german chancellor is facing her ruling coalition, political risks in europe. next from new york. this is it bloomberg. bloomber

the world's largest private trading again. dell in a deal worth million. to mirror the value of vm ware. will be mmon stock listed on the new york stock exchange. elon musk says tesla has become real car company, finally exceeding a production dark for model three. more than 5,000 said jans in the last week of the third quarter. that goal to reach the end of last year. >> two of europe's biggest purchasing rm a to cut costs. is your bloomberg business

wrap. julia: german chancellor angela merkel's fate hangs in the bans come to turns with her partner. horst seehofer offered to esign, from the bavaria party but pulled back homing to reach understanding for the sake of company. our correspondent joins us. how much to this about break post evering cal ahead of elections? >> i think the risk of coalition breaking down has somewhat diminished. because what they did was offered his post. if he would step probably the union was not going to break down, that was the biggest rick.

steps away and the coalition is united. fine. let's take the worst case cenario and the csu steps aside. how does merkel rule? > there are different options to what she could do. the most likely is that she in a minority government. probably with toll ration of the would stay then she in government. obviously there's the possibility of new elections, things there's a really very limited appetite to go into elections, so the likely is more that she would stay. mind i do think that we are far away from that scenario, all parties hat involved are very well aware that they have to get their hats and also the csu, the hat of the bavaria state. he said that really, he has no this ion to bring down

government. >> that's what investors are thinking. for that. i'm on team merkel she decision around. david: joining us from london, simon kennedy. tpw ay pelosky from investment management is here with us in new york. let me start with you, we france, netherlands, ermany, italy, germany - with geopolitical risk. has it shown up on the economic is it curtailing growth in the eurozone. not at the headline level. the biggest topics mentioned in data, wees saw it throughout the world, it's a trade war and concern about the outlook for global trade. the margins there's concern about instability, it's worth been with that has

us for most of the past decade. affect from pple the financial crisis leading to a lot of what we are seeing, and if you are wanting to invest in a country, do you a time when the newspaper headlines suggest the wobbly.l leader is pick, you can take your not mentioning brexit. jay, how do you look at europe. about a great investment opportunity, last year, and now we've gone cold on it. jay: it's emblematic on what we are talking about, angela merkel losing her government over immigration, which was an issue several years ago, and it reverberating today and not governments to folk on economic integration, i have europe in my ence thighs sis, and europe needs to and getond the politics

into the economics to have success. second big question we talked about, the first growth versus tariffs. the second is a vibe between the europe. if you think about economic, politics, policy and market. the divergence is wide. us growth strong. european week. fed raising two more times, e.c.b. not doing nothing for a year. trade policy, problematic, and markets. is does k the question that divergence widen or narrow in the second half of the year. we bet it narrows, looking at the economic surprise index as a eading indicator, and europe's economic surprise tariff fell off a cliff is and coming back, turned down. there's an opportunity in the second half of the year, if we the trade and immigration issues, if we move and rd europe looks good

earnings in europe - the euro disturbance from a headwind to a trade wind. the dollar from a tail wind to a headwind. and as we talked about earlier, surprises up and down will drive the markets in the second half. is it to spirit economics and politics, aren't economics?s driving a lot of populism, a lot of workers don't feel there's enough for them, there's not the growth. austerity in 2018. are there moves. italy looks looks they'll write check. is there moves to free i'm more an countries to do basic reform. austerity is beingeesed. talking about not raising interest rates until political there's the weight of the uncertainty. they put out

local fires, the less time they brussels and re imagine the euro area future. pointing out that it was a that angela merkel and macron from france found a for the future of the european project. that's early days, we are far from finding an agreement among all the members about how last.uild a yoouro to julia: -- euro to last. julie: absolutely. understand ms duress, we don't have it tlangs -- thanks to mario droggi. suggesting that the euro us dollar. jay: we are watching it closely, the italian s when government resurfaced at 115 to 125.

the bottom. over the last couple of weeks it's holding in there. is that europe stabilizes, rises somewhat. rise as people are less concerned about the economy and politics, and d you have the potential for the bank stops in europe that have to rise.ered the third biggest issue for is the divide between growth stock and techs in the us and everything else. and you tocks work, pointed out the flattening yield. that is keeping bank stocks down. europe, it's the uncertainty, in ou can get a stable rise euro, rates that back up, and people pricing in solid economy the second half of the year, you'll have a good stock market. simon kennedy bloomberg economics, and jay pelosky of jay pelosky of

test receiver will stay with us. oming up tesla hits a motel 3 production. elon musk proves naysayers wrong. they are in for a rude awakening. bloomberg.t, this is awakening. that is ne bloomberg.t, this is ♪ elon musk

♪ david: elon musk says tesla real company - to use are up s - tesla shares and the car finally hit production targets for model three. joining us is craig, leading the overage for bloomberg news in

detroit. finally he got there. elon musk overpromises but or later he delivers. . maybe. tesla was expecting to get to the target by the end of last year. should keep in mind that he's roughly six months late. being charitable. about two years ago, roughly. was talking about doing 100,000 to 200,000 model 3s by end of 2017. clearly this is a lower bar you know, was what musk was setting, leading up to model coming out. it is an important milestone for them to hit. important for them to do this on a routine basis, and for a push at more than the end of a quarter or that they can sustain. david: can they sustain it. had to build they

a big tent. hey replaced the robots with people. can they sustain - can they it? d to sustain >> it will be interesting whps tent. e it was a hail mary, a strange move. think we had a story about manufacturing efforts saying . ying that you see elon musk talking to staff about hitting the referencing all they had to do to get to this point. they had to pull out all the it probably was expensive. and it was an open question as to whether this is something sustained, because, after all, they had a lot of you and go and a lot of, know, positives in production, in the last quarter, and last where they had to stop the line and, you know,

update quipment and their automation systems. o this is still - you know, sort of a going concern for the company. can er or not they actually, you know, mass manufacture cars. hether or not this is sustainable. we see analysts talking about bales. julia: you can go gangbusters keepcing the cars, can you it going, elon musk said we'll have 6,000 next month. when do gross margins become relevant? when he's talking about the now real car company? when will we look at the ability on the car able particularly when you do loop theing, hoop jumping to get numbers up? >> yes, it's important. that is something that analysts are looking at. have thrown out an idea that they could have a 25% gross margin on the model 3. overlooked entially

element of the last report, that they put out - pushed out the which they feel they can get to the 25% margin, important that they do get to that, or close to it in the near future. have talked about this fact 3 a tting to 5,000 model week, and that being a factor, money and no longer burning cash to the extent they have. craig trudell thank you for the update. the mexican besso sliding, after the left wing win election, we discussion the details, this is bloomberg. retail.

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

near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. julia: this is bloomberg daybreak. as partel as in boston of the nations july 4 celebration.

it will be carried live on bloomberg tv starting at 8:00 p.m. david: the boston pops on july 4. we would watch this back in michigan. this is a big tradition. pops, they play more popular music. kid i'vence i was a been watching the boston pops. our own alix steel will be there this time. julia: we do not cover it in the u.k. on principle. david: i understand you have hamilton -- you're getting over it. slowly. let's get an update on what is making headlines outside the business world. trump's long-term lawyer michael cohen is suggesting he may cooperate with

the special counsel's russia investigation. he says he puts family and country first rather than the president. yes it says he will not be a punching bag as part of defense strategy. his activities being investigated. president trump's weekend of oil diplomacy offered mixed messages. oil prices sell -- fell after a trump tweet. follow-up statements from both the white house and the saudi's were more ambiguous. he says that two sides have talked but neither stated a specific target. the first time in decades, mexico has elected a left wing president. obradoranuel lopez delivered a crushing defeat. he has almost two address mexico's poverty -- yet promised to address mexico's poverty. global news 24 hours a day powered by more than 2700 journalists and analysts in more

than 120 countries. this is bloomberg. the mexican peso taking a hit after the sweeping victory with investigators calling into question the future of the country's economy. just lay it out, what are we talking about now in terms of the scale of this victory as anticipated as it was? >> good morning. thank you for having me. in thetill very early next day after his victory. we are waiting to see what his plans are going to be. we have heard many things over the course of the campaign. yesterday wase that mexico's maine chamber came out at 9:00 to say they were

congratulating obrador and that they were planning to work with him to create an agenda of stability and trust. that was a good sign. as i said, we still have to see exactly what his policies will be and how they will affect business in mexico. julia: absolutely. thanks so much. joining us today from mexico city. david: still with us is j polaski. where are you on mexico and latin america? cup andu look at world today is a big day for mexico, the world cup is going to be in north america. that is the best sign of america's integration we have had. otherwise, it seems like we are going in separate directions. the u.s. is talking about bilateral deals with you -- with mexico and canada. no talk about expanding it

southward to the people in south america south of mexico. that try polar worldview is still robust in asia. it is trying to make its way in europe. and the americas, we are not seeing it. david: it is not just divergence in terms of trade with mexico, you look at these two regimes. donald trump pursuing anti-regulation and pro-tax and progrowth. we do not know what he is going to pursue. it seems like you will not be in line with president donald trump's approach. >> there is a prospect that he will be similar to trump and focusing on domestic opportunities. being more nationalistic and perhaps other politicians would have been. there is real opportunities in mexico. you look at the pace of the day. i do not think that is a particularly bad result. emerging-market assets and the peso is the most liquid

currency. it has been under pressure for the last several months. a fair bit is in the price. latin america has been the worst performing region of the world equity wise. a fair bit is in the price. when you think about mexico versus brazil, one of the things we have learned is to stay away from things that are upcoming. maybe the opportunity is to look into mexico. ash some reasonable policies he announces his program, i think mexican assets might be able to do pretty well. julia: he has talked about following the rule of law as far as the energy sector is concerned. that is where i want to focus next. particularly oil after the news flow. sliding today after the lows of the session. the pressure mounts to saudi arabia. london with the latest is julian lee, bloomberg oil strategist. great to have you with us. some incredible work over the

weekend saying he would reach some kind of agreement with the saudi's. the noises of the chins dropping over other opec members deafening. >> and then we got this walked thatfrom the white house said, there was a telephone conversation, but maybe actually there was not an agreement. volume tied to that agreement. this really does seem to be perhaps another example of the president going somewhat further in his tweets then he actually went in reality. julia: what we have found since the opec meeting is increased shortages. we bring and the canadian situation and obviously been as well and libya. the potential problems keep adding up. >> they do. as we look forward and we start to see the impact of sanctions

snapping back on iran, i think markets are going to look particularly tight. we are already seeing the first signs of saudi arabia starting to increase its output. all that is doing is offsetting declines outside of iran. you mentioned some of the most important once. we have venezuela where output is still sliding. there is no sign of that coming to an end. outage ofat's -- this the upgrader in canada. that looks like being out for the whole of july. we have lost roughly half of libyan production. if the situation does not improve, we could well lose more because they cannot export it because all the ports are closed. we are seeing nigeria and angola still not recovering from some of the problems that have beset them.

you start to look around and have to question how much their capacity there is to offset what the president wants. an almost complete halt of iranian export. julia: the market does not seem to be doing that. david: julian lee, thank you so much. jay, let me ask you two questions. what are you projecting in terms of oil over the next two months? how does that affect your investment approach? >> at the margin, let's start with where we have been. commodities have been the best-performing asset led by oil, which is up by 25% to date. money is in to make the energy sector. forward, the margin error is to the upside for oil prices as we just talked about. we went back, talking about

global growth, if global growth sustains and you have these shortages, the pressure for oil prices is probably higher. i like the energy sector. we like global oil spots. they offer a pretty high-yield. earnings growth is going to be robust. i think there continues to be outside their. energy for the second half of the year is one of our top sector pace. julia: final thoughts. it has been a tough half of the year to make money. how bastia make money in the second half -- how best do you make money in the second half? >> one has to pick their spots. i think europe could be interesting if we get through this next. of uncertainty -- this next period of uncertainty. i think there may be opportunities in the emerging-market debt sector. outflows have been dramatic. spreads have now widened.

positioning is a little bit better. we are going to have to get through the chop and you have to be selective in your spots. if you're looking over the next months, there are some opportunities in those spots as well. david: always good to have you with us. julia: let's give you a market check. we are 20 minutes out on that 9:00 a.m. check. lower fora percent the stoxx 600. we have been talking about the pressures in germany. the handover of asia. we have 13 month lows in china. you can take your pick in terms of liquidity withdraw and tightening over there. the tariffs of course. a huge week for tariffs. never mind the fourth of july holiday. cents ofower by seven 1%. s&p futures lower by 6/10 of 1% as well.

the dollar-yen relatively unchanged. there.s the level we are now dipping below $74 a barrel. just wanted to give you a sense of where we are as far as gold futures. $1250 an ounce. david: coming up, the business of leisure. travel and tourism is a key economic driver around the world. we kick up our first day of a week long series. bloombergork, this is -- live from new york, this is bloomberg. bloomberg surveillance can be heard in new york, boston, the bay area, and across united states on sirius radio. this is bloomberg. ♪

>> this is bloomberg daybreak. coming up later today, the president of conservative clinical advocacy group. to your bloomberg business flash, activist investor download is piling pressure on nestle. split into three divisions and take a hard look at the structure. no response yet from nestle. a $3.5 billion stake in nestle last year. ubs has shaken up leadership in its european investment bank. bloomberg has learned the lender is naming a new chief to its financial institutions covers.

ubs has put more focus on wealth management. that is left the investment bank with a smaller share of total revenue. but software micro focus has agreed to sell a german subsidiary for $2.5 billion in cash. the buyer is eq t partners. it specializes in linux products. its revenue decline would be greater than expected. that is your bloomberg business flash. david: it is summer. that means we are thinking about taking some time off. like the rest of the business world, travel and hospitality have entered a new era of growth and transformation. we have decided to spend this week looking at business and leisure. the industry is estimated to have grown 5% in 2017. it is projected to grow another 9% in 2018. we are going to focus on resorts and cruise lines. gamingome the senior

analyst as well as james hardiman the manager of equity research and wedbush -- from wedbush. where is the growth coming from? his domestic or international? >> i think it is some of both. i think the travel industry benefits from demographic trends. we have an increasing number of baby boomers that are retiring. when you retire and you have more time, you're more likely to travel. the travel industry also benefits from a growing millennial population. i think we all understand that millennials put more utility value, more doing things versus owning face. travel -- versus owning things. you have these big lumps in the population working towards you that are really helping drive numbers consistently higher. julia: come in here, bryant. .

n. toking at opportunities travel, china is clearly popping into one's mind. >> particularly important in china. 60% of the outbound travelers in china. that number is growing 89% a year. that is a big part of the chinese travel story. david: i think we have a chart, actually. i we can show how dramatically -- we joke dramatically how -- we can show outbound travel. is that around the world? how much is the united states specifically? >> a good chunk is the united states. there are other destinations including japan and south korea. the crew story is fascinating. there were 11 million cruisers out of 80 million outbound travelers. in china, 3 million cruisers.

china is way underpenetrated. julia: james, come in here on the underperformance of cruises as a tourism option. there is clearly a currency component. >> i think both of those things are true. typically, fuel prices and currency movements tend to be a natural hedge towards one another. what we have seen as of late is in addition to fuel prices going up, currency has moved against us. the dollar has strengthened. i think that has impacted the cruise lines to a degree. the bigger issue, the bigger barricade here is twofold. both related to supply. in the third quarter, caribbean supply is going to accelerate meaningfully. as we look to 2019, global capacity is going to accelerate meaningfully. the fear is that as more and more ships, online, pricing is going to deteriorate.

they will ultimately returned -- i think that is overstated to a degree. that is what people are concerned with. david: it is a very good point. a lot of us are looking at number of passengers as opposed to revenue much less profitability. we are seeing online come into this area with a vengeance in terms of looking things. and amazon, we have seen a deflationary effect. are we seeing that in the travel and leisure industry? >> less so. i think the role that amazon plays with respect to brick and mortar retailers, google plays that role as the major bogeyman to a lot of these travel companies. we have seen google encroach on their businesses to a degree. it is very much early days at this point. it is an issue that people are concerned with from a long-term perspective. i think the online travel guides

are healthy. julia: who benefits most from the growth we are seeing here whether it is having these kind of relationships particularly if we are looking at europe from the united states. and a booking.com is when you're focused on. >> looking is our favorite. their heritage is europe. it was a company that started in europe. they have a significant advantage there. a dynamic that is important to keep in mind is that domestically, it is a very consolidated market. you have hotel companies that wield a great amount of power. whereas in europe, it is much more fragmented. it is a much more favorable place for the online travel guide. david: finally, are we seeing consolidation in this industry? thehe most notable one is 2016 acquisition of star word by marriott.

going on 30% of hotel reservations are done online but to the company's on channels and the third-party agencies. julia: great the czechia. -- great to chat to you. thank you so much for that update. coming up, president trump begins the july fourth holiday week to choose his supreme court nominee i july not. -- by july 9. you can interact. . go. our chart with gtv you can also save charts for future reference. the european stocks increasingly leveraged. taking cues from the deceleration in china. the divergence between the chinese market and the u.s. markets too. we are red across the board as

we head towards the open. this is bloomberg. ♪ .

julia: welcome back to bloomberg daybreak. a short week. the july 4 holiday breaking up the week. it is jampacked with data. andriday, we have u.s. jobs the symposium. goodss on the quantity of , get to be technically correct. david: well done. it is a busy, big week. always long, president trump is going to be interviewing candidates. he is going to have a decision a week from today. if he wants to get him or her in place for the october term. julia: we heard from susan collins as well.

says a candidate for this important decision who would overturn roe v. wade would not be acceptable to me because that would indicate an activist agenda. they will never ask the candidates are you going to vote this way are not. there -- they will not tell them either. julia: i was like well, so that is one senator out. you were like no, they are going to be careful. david: the fact that they will not say it does not mean they will not do it. i spoke over the weekend with some people who know about these things. they say the administration is more focused on cutting back regulation. there is a movement afoot to say, it is unconstitutional to delegate that much power. they are more focused on that even when it comes to the supreme court. julia: taking back some of the powers ultimately in d.c. david: any of those regulations

should be directly political are responsible, so the president can say we're not doing it anymore. we shall see. coming up on bloomberg markets, chris harvey needs -- julia: as we head towards close,, the open sorry. let's give you the snapshot. euro-dollar also under pressure which in and against in germany -- with shenanigans in germany. from new york, this is bloomberg. the opening us next. -- the open is next. ♪

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jonathan: from new york city, i am jonathan ferro. 30 minutes until the start of trading. this is the countdown to the open. ♪

jonathan: coming up, global equities kicking off q3 lower. looking ahead to a big week in the u.s.-china standoff. mexico is getting a new president, much further left, fueling market uncertainty. this monday morning features -16 points on the s&p. pointslower by two basis on the 10-year. a stronger dollar story. the third quarter kicking off with fundamentals looking fairly solid with fears over growth gripping investor sentiment. >> i think the equity rally has run out of steam.