francine: trade disputes in china. is this the latest move in the trade war? b yuan extends gains after the comments on the currency, a different story for stocks which continued to slide. -- movers middle east merger ubers merger. re-resolvedled the -- the result -- the rivalry be resolved?

welcome to bloomberg. these are your markets. reminder that u.s. equities and bonds markets are closed for the fourth of july holiday, so all of you american viewers, happy fourth of july. this is what the stocks are doing, down a few percent. yuan, after they talked about the currency, it is extending its rebound, however still under pressure. i will get a two day chart shortly. you can see the dollar remaining under pressure. , 55 .2, a little better than the preliminary reading. coming up, we talk markets and the yuan. a little later, we get the latest on angela merkel and the migration deal.

that is with the former deputy leader of germany's cdu. next, we talk the business of copy -- copy and wimbledon. theresa may is set to be facing a fresh showdown with her over lands u.k. closely tied to the eu trading rules. they want her to explain more clearly how a new proposal will work. some programs that ministers are concerned the plans to keep the country in the eu tariff regime indefinitely. according to a member of the ecb's supervisory board, the central bank has talked with 50 financial companies about retaining the passport that grant them access to one of the world's largest economies.

but the deadline -- there is a deadline they need to meet. the former malaysian prime minister has pleaded not guilty to corruption charges in connection with a multibillion-dollar scandal surrounding state funds. appearing in the high courts, he was granted bail of one billion, and he could be jailed for up to 20 years. he denies wrongdoing and is seeking a trial. h and a group has said their cochairman has done, following an accident on tuesday in france. he was 57. the chinese conglomerate said he had a fall during a business trip. seekingian president is closer ties with switzerland and calling on europe to deliver its promise on shoring up the you -- nuclear deal. they say they will resume a nuclear activities unless european countries guarantee

trade. president trump will begin imposing sanctions from next month. the two countries agreed that the nuclear deal is an important achievement of the political level, the fruit of long and difficult negotiation and is in the interest of every country that this agreement is preserved and maintained. and after going out of six major tournaments through penalty shootouts, italy has finally progress in a world cup by penalties. nailbiting two hours, columbia and england were level at one game apiece when england one with a 4-3 score. they now face sweden in the quarterfinals very it is july the fourth, so the u.s. markets are closed, but watch some of our fun tonight. that is at 1 a.m. london time.

global news, 24 hours a day on air in the tictoc, powered by 2700 journalists and analysts in more than 120 countries, this is bloomberg. francine: thanks. i am really looking forward to the boston event actually, quite a lot going on. let's talk about the latest salvo in the trade war. a chinese court has temporarily banned chip sales by america's technology, cutting it off from the largest semi conductor market. that is according to a taiwanese rival. from legalems action. for more, our china correspondent joins us from beijing. great to have you on the program. is this simply collateral damage in the trade war between u.s. and china? hard not to speculate

that is the case, giving the timing of this. of course, it is not independent of the state. this is a court ruling that has micron fromon -- selling into the market. it made up over 50% of its revenues from the chinese market. this is an absolutely crucial geography for that come to me the irony is it was initially this company that were taken to court in the u.s. over accusations of property that. now they have flipped the tables and taken them to court in china over alleged payment violations. that is the background in story. certainly, investors in the u.s. were disappointed, you can see that in the share price, and it is hard not to conclude it is

part of the broader trade tensions. of course, intellectual property technology is really at the heart of this debate. nowcine: tom, can zte resume operations? they have been giving something of a reprieve. this is the second-largest telecom maker in china. then initially by the u.s. for seven years from buying u.s. components, they are now saying they can return to business until august the first. has changed its board, agreed to a $1.4 billion is an expectation they will be able to operate in some capacity after that date as well. a company that has become caught up in this trade war. would ensure the business is actually able to operate as a favor to the president.

the share price this morning ticked up as a result, but now, last time i looked at it was down marginally. so potentially concerns around the cost. it has lost around $3 billion as a result of this van in the u.s.. interestingly, it lost out on an italian deal worth about $700 million. so lawmakers in the u.s. are still working out how they want to treat his company going forward. very much a concern that there are increased restrictions as a company that americans see as a national security risk. francine: thank you so much, our china correspondent tom mackenzie. so what does it mean for markets and investments? joining us for the hour is peter dixon and grace peters. thank you both for joining us. peter, let me start off at you. view that it broad

will go back to being ok or that will turn ugly? peter: both. [laughter] ugly.ld turn it depends on if either side misstep in. that is how trade war's start. you get into a situation where one side will do this, then you get retaliation. it depends on escalation thereafter. the trump administration has given the impression they are willing to scale dramatically, so that causes me to be concerned. markets seem to be shorting off. there might come a point where sentiment flips. we are not there yet. the risk is out there. grace, does it mean you have to take a position in certain industry groups that could be hit? you certainly have to be selective when looking across the board. you may be correct points that

markets have digested this well, because the economic impacts as we know it are reasonably small at the moment. so yes, you have to look at areas of structural growth. for us, the u.s. market is preferred because we think trade issues are not going to disappear overnight. president trump's approval ratings have been rising into the midterms, and he is incentivized to keep on with his agenda which does cap equity valuations. francine: let me bring you to this chart. happy fourth of july to all of the americans, not only our viewers. this is a valuation. looking at chinese stocks, if you look at the rate of hope that has emerged from the life,e shares, after this their benchmark equity index is trading around the valuation level that proceeded rallies bear market in 2015 and 2000 --

2016. never discount the past, but in this instance, things are different. as grace said, we're looking at markets other than china. if you are concerned about trade issues, you're probably not wanting to be too exposed to china for this simple reason. that the government might do something which suddenly means you can't get your money out. so you may not want to look at the chinese market in valuation terms, you want to look at political risk. francine: in china, we have seen a volatile currency putting the spotlight on their buffers. do worry about them as an economy. away from the trade war's, about what comes next. grace: china has been one of our preferred areas. we like emerging markets abruptly, specifically asia, and within that china. that is because they have been

going through a successful deleveraging process towards a consumer driven economy. and the chinese government has various tools at their disposal to be able to steady the ship. china, but that chart is telling us and investors are anticipating a rollover in corporate profits. butave not seen that yet, whether that is a side effect of deleveraging, investors are anticipating profits rolling over. we remain constructive, but with a cautious stance, for the reason trade will weigh on sentiment. francine: we are getting hits from officials that they are worried about the multiple risks. so debt policy could be softening. pboc hassically, the the power to make the situation better or worse. over the past few days, they have allowed the yuan to depreciate, sending a warning signal that we are still big

players, still have tools at our disposal. having said that, they know that the spirits of 2015 is if they allowed the situation to get out of control, the stoxx ripple out across the world. at the moment, they will play good cop, rather than backup, and contained the situation. francine: thanks for joining us, peter dixon and grace peters both stay with us. up next, speculation at ecb. a twist is turning the french yield curve on his head. we talk europe and ecb next. and a reminder, it is july the fourth, so u.s. bond markets are chris -- closed. you can watch some of the celebration tonight with our exclusive live coverage of the boston pops fireworks spectacular. london, 8 p.m.m. new york. this is bloomberg.

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francine: economics, finance, and politics. this is "bloomberg surveillance." i am francine lacqua in london. let's get straight to the bloomberg business flash. bank's estonian operations may have been used to launder as much as $8.3 billion. the figure is more than double previous estimates, and the bank expects to release the findings of an internal investigation by september and said they cannot comment until the results of the probe are ready. comparable retail sales rose 2% in the 16 week. , meeting average analyst estimates.

that was the lowest estimate. according to ceo, the meager growth reflects price reductions increased -- in key areas. u.k. markets have been struggling to grow amidst competition from discounts and expanding online seals. the uae is in talks to come by these competing ride-hailing services. declined tofor uber comment. the ecb economist says he sees interest rates making a comeback as a policy tool. this comes 10 years after an attempt to reverse course after the global financial crisis. the frenchyields on 30 year bonds dropped their lowest levels on speculation the ecb will reinvest into longer

date securities. joining us now is our european economy editor. you on theve program, nice to see you on air. is there a reason the ecb is being particularly careful? well, they announced they would announce asset purchases at the end of the year and naturally, rates will move back into focus. yes, they will remain very careful it not repeating what some people say it was a mistake in 2008 and 2011 of raising interest rates at a time when the economy cannot withstand it and when there were not enough risks to put it back into crisis. they will be careful this time around in arranging their exit. first of all, i guess

the difference is markets are aware. we are in a different situation now. overall, how does the ecb look at the current economic situation? they are very concerned about growth risks, risks to growth that come from external factors. trade in particular. they revised the down their forecasts for growth this year last month. the same time, they are not quite sure how any of those risks will actually affect inflation. that is their primary mandate. at the moment, they are very watchful and continue to say the domestic economy, private consumption, domestic investment is strong. beis going to continue to strong, but they are concerned about those external risks and are monitoring them carefully. francine: what are we expecting

from the ecb over the summer? jana: it seems to be relatively quiet. they have put forward their strategy. shiftsse, now attention to a few events. to say how they plan to design its reinvestment tragedy, particularly after the end of the year went that asset purchases a run out. that is a discussion they have some time to have. summer, the fall, and i believe what they are ready to announce, they will. but i would not expect anything for the july meeting. wonderful, our european economy editor joining us from frankfurt. still with us is peter dixon and grace peters. looking at european stocks and a big concern what ecb does and whether there is, kind of, a policy mistake

growing -- brewing? grace: there is, and it really resonates with investors. growth is scarce, and when trying to select equities, you have to go for the parts of the markets when you have growth as certain as it can be. europe, while growth is scarce, value is plentiful. andcannot just go broadly by value, you have to be selective, and we focus on restructuring companies, really focusing on core competency. francine: but how do you view the trade war? companies could be affected quite significantly by trade war is impacting the supply chain. it is true, but smaller companies typically are in a sweeter spot. these are businesses that are innovating in a world where innovation is tougher to combine.

smaller cats can be less sensitive to macroeconomics. of course, if there is a big shock event, they will not be immune and can fall more severely. but the bounceback tends to be faster, and they only pullback in that severe scenario. as long as growth is above trend, they outperform. francine: what is your take on europe? peter: not as bad as people make it out to be. let us not forget that last year it matched expectations. is probably in 1.5%, that we are in that ballpark, fine. we can live with that. let's not get fixated on the idea of changing policy. monetary conditions are set accordingly to what is expected to happen. we are way beyond that. andeconomy has normalized, we often be talking about a normalization of policy,

whatever the new normal is. francine: what is your take on ecb? we are trying to figure out what the main fault line is for the ecb. you could argue that because we are in a different cycle, the normalizing, a recession hits, ecb is behind the curve. writes, that is the problem they have had for a long time. let's not forget they were late to the qe party when other banks stopped doing it. perhaps, they should have exited the policy earlier. that is too bad, we are where we are. but certainly, there is the risk of the synchronization. not think a slowdown in the european economy necessarily prevents tightening policy. francine: so what is preventing them? a looming trade war, bad figures from germany? peter: simple caution.

banks have been loath to raise interest rates because they are concerned that even the smallest interest rates will cause the economy to slow down. i think they are being overly cautious. i simply think the central bank has gone into a mindset which says we have to wait and see. we are looking for that green light, you will not get it. francine: do you agree with that? grace: i think they are trying to walk a tight tight rope. it justifies why they would be tapering and raising rates early in the second half of next year. but as bp's earlier showed, there are lessons to be learned, which is holding them back. francine: what happens to the euro in all of this? dollar story or euro story? peter: i think it is a dollar story. environment, in

the course of next year, it is likely that if policy stops of normalizing you might see impetus behind the euro. all abouthink it is the trade war and how investors will do, the u.s. as a so-called safe haven in an increasingly unsafe world. francine: how do you divide europe? countries, industries? guide, aam a country's macro man. i look for countries with strong economies. peripheral europe, there is value to be had, quite clearly. but there is increasing political risk. thatroblem europe has is the glue which has held it together is perhaps becoming unglued, as it were. circumstances, i am tempted to trade countries rather than across european sectors. francine: thank you for joining

us. peter and grace of both stay with us. up next, we get u.k. services pmi data. we look at the pound, brexit. that's coming up next, and this is what european stocks are doing. -- are slipping a touch, even as is the yuan extended its rebound. they dollar remaining under pressure-based the holiday. oils and metals climbing. here in europe, travel and technology companies are the biggest losers in the stoxx 600. 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. francine: economics, finance, and politics. this is "bloomberg surveillance." i'm francine lacqua in london. let's check in on what's trending across bloomberg.

go crazy, women are more likely to keep their cool, according to a study which said men are four times more likely to withdraw from investments during turbulent periods. u.s. stocks are catching with the u.s. -- u.k. stocks are catching with the u.s.. ,nd are most read stories danske bank has been used to launder $8.3 billion. place, but he chinese court is set to have temporarily banned the sale of micron chips. let's get back to u.k. data. for is a crucial week theresa may, showing up in her cabinets at exchequer's to make sure they can fall into line. this is what i am looking at for the services pmi. this is for the month of june.

1.3196.see the pound at here is sebastian salek, first word news. is facing a fresh showdown over plans to keep the u.k. closely tied to eu rules. sources, her senior programs at colleagues want her to explain how a new proposal for their customs regime will work. it couldsters worry keep them change to the eu tariff regime. 20 banks have applied for a license to operate in the eu union before brexit. of the ecbo a member supervisory board, the central bank has topped with 50 financial companies about retaining the passport that grant them access to the world's -- one of the world's largest economies. june,ey have to submit by a deadline they said they need to meet to ensure they process before brexit.

haspeople's bank of china vowed to keep the yuan stable and not deploy it as a weapon in this trade conflict. the governor says it will be kept and what he calls "reasonable and balanced levels." they say they will try to avoid a one-size-fits-all policy as they try to contain swelling debt. statement, they say regulators will focus on structural deleveraging in the future and avoid overusing sweeping measures in cutting debt. after going out of six major tournaments through penalty shootouts, england has finally progressed through penalties in the first time ever. a two hours of nailbiting play, columbia and england were tied, before england finally one in a shootout. they now face sweden in the quarterfinals. it is july the fourth, so u.s. markets are closed. the fundstch some of

in i-12 our exclusive coverage of the boston pops fireworks spectacular at 1 a.m. london time here on bloomberg tv and under bloomberg terminal. global news, 24 hours a day in more than 120 countries. i'm sebastian salek, and this is bloomberg. kareem areber and set to be in talks to combine their services. they say they hope to resolve their costly rivalry as they prepare for public offerings. joining us now is the anchor of bloomberg markets middle east. yousef, what do we know about the deals at this point? yousef: a couple scenarios are being drawn out. uber has declined to comment, but i'm speaking to their sources and one sees them taking a majority stake, the other scenario would be an outright purchase of the whole company.

they are less inclined to take a minority stake, so that is what we know at the moment. an interesting time for both companies. , the middle east is a party for them. and for kareem, they are potentially valued at $1.5 billion, and are trying to get an ipo through. that could happen as soon as january. francine. francine: what do we know about kareem, how much could they grow in the region? yousef: they are quite popular in this part of the world. if you look at what countries they operate in, 70 cities across 10 countries. in most of these markets, careem is actually ahead of uber. market inbiggest saudi arabia, and they are now encouraging women to sign up. stakeholders that

we need to bear in mind as this deal progresses from this point onward. you got saudi funds, a large investor in uber. theon the other side, prince, through his investment vehicle of kingdom holding have a stake in careem. overall, i don't know whether a lot of the things we use a day-to-day like whatsapp or other social media will be challenged in the middle east. if you are an investor, is this what you are looking at? tech in the middle east are new players? yousef: absolutely, it has been a new trend. a lot of these markets have been, not undiscovered, but not fully tapped. think of what happened with amazon, going in aggressively with a similar thing to over, and you mentioned whatsapp and other services.

nooned.comm -- bunch of other pockets, where more investors are keen to go in with a lots of capital. not an easy markets to crack, there is a lot of regulatory red tape. they are not as unified as they would be across europe or north america. francine: thank you so much, our bloomberg markets middle east anchor joining us from dubai. still with us, peter dixon and grace peters. peter, when you look at tech stocks, deese you stay away from big evaluations in the u.s., focusing more on regional players? or is it still the winner takes all, big companies that take it all? peter: it is winner take all, at the moment. it does feel like that.

the trouble is you are in an environment where the valuations of somebody copies look stretched in my view. that at some point you might see something like a regulatory impact upon the sector, which will perhaps hammer the big boys more than you expect. --might be the capitalist catalyst which caused the flight out of these stocks. invest, but i think you need to be near the door in case something goes wrong. francine: grace? grace: i agree there is a first mover advantage when it comes to being a tech company. i pushed back on the valuation front. certainly, they are elevated, but you have to be aware the sector is mark cash generative than ever before. when you start taking that into consideration, valuations come down.

still a premium, but i would say it is deserved. as we go through the cycle and towards the later phases, we want structural growth. that fits a lot within technology and tech enabled businesses. and i think tech, overall, is broadening out. technology is everywhere across every sector, trying to sort the winners and losers as we think about more broadly. francine: how difficult is that? executiveslot of coming on the show saying "i am a tech company." everything has technology in the backbone. have you pick the winners are the ones that will disrupt the future of tomorrow. looking at driverless cars, right, who wins at that? when it comes to ceos who say they are tech companies, you have to take that with a large pinch of salt. what these guys are doing is

they are buying services from the big players. focus on what companies say they are doing, focus on service providers. looking at the likes of alphabets, which is increasingly widening their offerings, they are bringing companies into their orbits, making them dependent on their services. and they are the companies which are arguably more interesting. they are offering the platform of the future. things like driverless cars, yet it's a great idea, but we are realizingng way from those technologies. do youe: how much time spend thinking about the disruptors of tomorrow? the driverless cars, ai and robotics. grace: a lot of time, but it ofds to come, there the risk

top-down is those themes of could be a long way from fruition when it comes to profit and cash flows and the market can get overexcited, which means you could end up losing money in a company that ultimately is a player, but some way out. so bottom-up analysis, looking for who is doing what now and be able to map those profits is -- spend we do a lots a lot of time doing. francine: let's look at my charts. bubble, does this correct? peter: that is a chart we look at and say "that's." -- "yikes." there are some genuine revolutions going. we have a lot more revolution -- momentum than we did. of a bubble, a bit but not a bubble i would want to short because i think it has

quite a run, potentially. and you could argue a bubble across any point on that chart. for me, that is because of the secular angle. you cannot get to teens organic growth from any other sector across the s&p or elsewhere, really. for me, it is a reason to stay invested in technology. thanks, grace and peter both stay with us. is july ther, it fourth, so u.s. bond and stock markets are closed. but watch some celebrations tonight with bloombergtv. our exclusive live coverage of the boston pops fireworks spectacular on bloomberg tv and tv , from 1 a.m. london time. this is bloomberg. ♪

francine: you are watching "bloomberg surveillance. oh let's talk financials. japan's biggest brokerage has often struggled to make money overseas. last month, we reported that new cut divisions in the u.s.. 20 banks have apply for licenses to operate in the eu in time for brexit, according to a member of the ecb supervisory board. have spoken with 50 financial companies out about maintaining a passport that grant them access to the you. -- e.u

but most had not submitted by june, a deadline the -- they needed to meet. what does this mean for the financial sector? still with us is peter dixon and grace peters. there are a million questions. peter, i don't know want to talk about financials, these passporting issues. for brexit, do you assume the worst and hope for the best? peter: banks of themselves have to work on that basis. most banks or institutions remain hopeful some kind of deal will finally be reached allowing them to continue business as something approximating what we have, there is no guarantee. the consequence, we have to proceed cautiously. i am surprised only 20 banks signed up for a license from the ecb. perspective,tment

it does make life difficult. banks, appear those which are perhaps more heavily the oneso the eu, are that will suffer in the event they not get a deal. but they will also be the ones that might outperform, given they are exposed to the larger , unless they have a particular focus on the u.k. domestic markets. francine: grace, financial stocks? i love financial stocks. i would love the opportunity to broaden the conversation. it is difficult to invest in the u.k., but therein is the opportunity. when you look below the surface, exports have really outperformed because of the weaker sterling. overlooked that the u.k. is really good at innovation. , which got this market sponsors innovation and gives young business access to

capital. therefore, we have grown a lot of interesting online platforms. there is a niche property to invest in. consumer trends trading down, but it means it is a bit of a dream stock. francine: but, for example, how do you model visas? not just this, it is also foreigners coming in to try and support it. is there a worried that the brain drain actually impact your investment? grace: that is a risk, and something difficult to model. to have any edge over bridges, the ultimate shape is something that is difficult. we do not profess we have the magic answer, but the point is to look below the surface, at companies that are in the sweet spot of growth, and we see plenty in the u.k. market. francine: thank you for joining us. grace peters from jpmorgan and peter dixon from commerzbank.

up next, italy has the distinction of having the worst loan ratio. so what can they do to turn around india's debt problem? we discuss that next, this is bloomberg. ♪

francine: economics, finance, and politics. this is "bloomberg surveillance." i'm francine lacqua here in london. india is closing in on italy for the biggest the sanction of having the biggest of bad loan ratio of the world's biggest economies. this as their biggest bank forecasts worsening debt problems. for the latest, our south asia editor joins us from mumbai. thank you for joining us, will italy's that loan ratio top italy to become the worst in the world? yeah, obviously, they don't want that to be the distinction. but looking at the numbers, 14.4% bad loans, india is at 11.6. they expect that next year, it will be a long 12.2.

far a said that, so lovely bad loans have been from the steel industry, and our reporting shows us there is going to be a next wave of bad loans hitting indian banks. that will be from the power banks,according to losses are expected from this particular industry. the worst is yet to come for banks before they can recover. r.b.i.e: what does the -- first of all, does it see the problem and have any tools to temper the issue? arijit: yes. the bank has taken a number of measures. been asking banks to make sure they recognize the problems and not try to brush them under the carpet, and recognize them and provision for it. it has also sanctioned a lot of the state run banks, and curbed

lending further. the central bank came out with a new circular which removed other measures to stop these bad loans, and instead, focus banks to go towards the bankruptcy code. banks have been using that and aher measures, according to lot of analysts and investors we have spoken to, saying this is what would really help solve this problem we are having. francine: thank you so much, our south asia managing editor. let's keep an eye on emerging markets. still with us, peter dixon and grace peters. when you look at india, is there any value. anything that looks attractive? peter: i think you buy-in for long-term growth. i'm not a specialist in that particular economy, but looking

on a country basis, that is what i am buying. i still prefer it to the likes of china. it longer-term growth prospects are not that much stronger, but of course, it has a major bad debt problem. , i don't thinkay is as bad on an aggregate basis. as the bank of china which has a huge debt build. potential,ia offers it is one of my favorite emerging markets, as it were but has made policy mistakes along the way. suggest that the policy can, or perhaps has not been playing to india's strength i think we have reason to be concerned about the debt problem . is it a good

opportunity to buy, for example, india. as we heard, there is more pain to come. as the dollar continues to move around, personally, i think there is a lot of uncertainty with regards to what is happening. we are starting to see capital flows switching a little bit heard. it might go into india, it might go elsewhere. at the moment, the environment is uncertain. the likes of india, their big economies, but they certainly have problems. francine: grace? grace: we broadly agree. the you look at the rise of middle class, india is an area that stands out as somewhere with long-term potential. but it is long-term potential, shorter term, we focus on asia and china. francine: thank you both for joining us today, on the fourth of july, too bad we don't have any american. equities at global

commerzbank and grace peterson, equity strategist at jpmorgan. plenty more coming up, we focus on migration. we have michael coming up, a big wake in angela merkel's party, so he knows them. a guest from berlin, talk about europe. coming up, we speak about the migration commissioner, focusing a little bit on what brussels want with these brexit negotiations. , ofwe look onto china course, the yuan on the move. this is bloomberg. ♪

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francine: china temporarily bans sales from u.s. chip maker micron. is this latest news in the trade books? turnaround for china currency. it is a different story for stocks which continue to slide. making progress. germany's social democrats say they are moving towards backing the chancellor's migration deal. good morning, everyone. it is bloomberg "surveillance". to our american viewers, happy fourth of july. i'm francine lacqua. tom keene is off for independence day. u.s. stocks and stock markets are closed today. futures are trading but it is also a boston pops day. you can tune in to look at our boston extravaganza.

>> the trump administration will allow chinese telecom equipment maker to resumesoever business activity. that wasn't enough to keep it from losing a contract in italy. president trump has fought to ease restrictions after it violated a sanction agreement. pled not guilty in corruption charges. he denies wrong doing and says he will fight the charges. in the u.k., prime minister showdownay faces a new over brexit. some fear that it will keep the country chained to the e.u. forever.

in thailand all 12 boys and their soccer coach who are trapped are healthy. authorities say they may have to dive to get out of the cave but that would not happen until the boys and their coach is trained. beat world cup, england colombia 4-3 on penalty kicks. next up, sweden on saturday. global news 24 hours a day, on air, twitter powered by more than 2700 journal estes and analysts. this is bloomberg. francine: thank you so much. this is what your stocks and markets are doing on the fourth of july. european stocks struggling for direction. they were down. they were up. now they are moving sideways. u.s. futures moving a touch.

asian shares slipping. a little bit of a rebound. the dollar recooping some of the earlier losses. we're spending a lot of time today looking at china. this is not only on the back of pboc comments but on the back of what we saw with china and the trade war tensions between china and the u.s. this is a chart to me that matters. thank you very much to hillary clark for bringing it to my attention this morning. a thin ray of hope has emerged from some of the beaten down chinese shares. trading at the evaluation level that proceeded rallies from bear arkets in 2015 and 2016. it is a pretty good chart looking at whether investors should get into chinese equity

markets or not. let's talk about the latest salvo in a trade war. chinese court has banned micron technology. u.m.c. taking legal action against the company in january. joining us is bloomberg's executive for greater china. first of all, good morning to you. how much does this have to do with the u.s.-china trade tension. is this collateral damage or an independent court making that decision? john: it has a lot to do and very little to do in the sense this is a patent case between two courts but in this climate, this case, which revolves around patent infrin i think management. -- infringement.

francine: what happens next for micron in china? john: micron has been cut off from its biggest market. it gets 50% of its revenue from china. the biggest question, does this open the door, does it make it more likely there is a deal between micron and u.m.c. or does it drag out further? francine: give me a sense of how he micro snnch related to what is happening? is there a link? john: there is a link in they both show how interconnected the u.s. and china are. you have all of these u.s. companies that rely on the chinese market. you can really see how both countries would be hurt in a trade war.

in another sense, being two separate companies in very different situations that don't have anything to do with one another, in general everybody sees the outcome of tensions between the u.s. and china playing greatly into how micron is resolved. francine: we have spent a lot of time looking at it from the u.s. side. asking the panies trump administration to go easy on china. does the same thing happen in china? are chinese companies going to the authorities saying our impact will be this much or is it just not the done thing? john: it does happen. it happens differently, much more quietly in china. companies are much more shy about coming forth with things that are critical about government policy. we have already started to sees that. a story about a government think tank that put out a report that

talked about how the trade tensions were maybe going to cause financial pan nick china. there are people questioning whether china is doing the right thing. francine: thank you so much. our bloomberg executive editor for greater china. scroing us now is a chief investment officer for the u.k. john and his team do amazing work trying to bring us up to date on what wr china is next. i have a story on pboc. where do you see the main fault lines? >> we can separate the currency plate. yesterday just following there is the message there is no rationale. at the same time there wasn't any sign that -- from the stock

market's poifer if you look at credit growth and reliance on cheap money and going against the market that is a sign of weakness. that doesn't seem to -- might not be intensifying. francine: we don't have the capital that we have seen in the past. why? >> china is better prepared this time around. francine: at control it? -- controlling its? in 2015 they were playing catch up. this time around i would not exactly say -- if you look at last year, you have restrictions on how much money chinese tourists can withdraw and buy handbags in italy. things like that. his was done months ago. francine: what do you do with the debt?

pboc much smarter in how they deal with debt? >> the broader deleveraging case, what surprised internal and external observers that there is no let-up now if you look at the comments from the regulators. the pboc have the instruments to offset some damage but i think the messaging again is very, very clear. they are going to see it through. francine: a difficult question but a simple question. at this point in time do you think the authorities can stem a pan nick the market? >> absolutely yes. i don't think there is any reason to worry about a debt crisis or anything like that. currency reserves are well stocked. i think that is a gradual control. francine: later today on chancellor , german

angela frankel averted a crisis. we speak with the e.u. migration commissioner. don't miss that interview. this is bloomberg. ♪

>> this is bloomberg "surveillance." let's get the bloomberg business flash. the co-chairman of hma group that is died. he died from a fall while on a business trip in france. he was 57. they are trying to recover from soaring borrowing costs after years of expansion. they sold more than $15 billion in assets this year. a money laundering case that ocked denmark.

they may have laundered $8.3 million. illicit funds came from russia and they are conducting an internal investigation. why it is so eager to lead the push for consolidation. the chain's comparable sales rose at the slowest rate since 2016. they expect regulators to rule on their $10 billion acquisition next year. that is the bloomberg business flash. francine: thank you so much, sebastian. sees interest rates making a omeback. meanwhile the third year bond

dropped on speculation that the e.c.b. will reinvest proceeds from ma churing bonds. joining us, the chief investment ficer for the u.k., u.b.s. bank is still with us. thank you both for joining us. this is the fourth of july. thank you for coming on. how much would they be thinking of the trichet -- >> a lot. i was there 10 years ago when hey made that fateful decision and there were plenty of people telling them not to at the time. they have to do it eventually. right? it has been a long time since interest rates have been the main policy tour and there had been cause to consider when they might raise rates. it will be very interesting to get the timing just right.

francine: i guess the question is are they being too careful or is it the economy that is pushing them to be careful? >> it is a good question. i don't know exactly. they don't knee either is the thing. t is a tough call to make. i think they are probably eager to be able to use interest rates again as a tool they know how to use. i would count on them deliberating very tough and long and going slowly when they do. francine: jeffrey, how do you see that? what are the economic standpoints or how is the e.c.b. looking at it? >> i think it is waiting for the data to pick up rather than hoping for data to pick up. i think the consensus now is seeing a speed bump or something like that. secondly going to the monetary

operation side. they keep reinvesting for the time being, making sure that the stock effect seeps into the monetary operation. clearly communicate the balance sheet. when you stop reinvesting, you're starting to target the size of the balance sheet. hiking interest rates requires careful calibration. francine: what are we expecting them to do over the summer? anything in june? june is past. july. >> july looks less eventful. they may give more guidance about reinvestments. that is next big step as geoffrey was talking about. the investment policy with the securities that are coming to maturity. maybe they will give us more clues in july. francine: if you look at central banks around the world. something our team has been focusing on, because of the

cycles where europe is compared to the u.s. the fed raises rates and then in 18 months there could be a recession and or a downturn and the e.c.b. hasn't normalized yet. >> you want to hike rates so you have something to cut later on. i have never really believed in that. your starting point needs to be in a more comfortable place. francine: when is the next recession coming? >> we're not even talking about late cycle. the u.s. will be leading the way. it has been close to 10 years the. who is to say it can't be longer. it is one of those we will know when we find out. make sure your starting point is the best one. francine: do you think the e.c.b. worries about the cycle or the german economy because of trade wars or are they looking at inflation? >> what they look at is much broader than it was 10 years

ago. they are much more concerned about financial stability and have much better incorporation of financial stability and how they view the world and how they calibrate policy. they are worried about everything, now more so than 10 years ago for sure. francine: are they right to worry about everything or is there a danger they worry about what they should have worried about 10 years ago? >> it is a risk. they know it. there are plenty of people on the e.c.b. council that are going to be making the for getting back to normal spifment francine: thank you very much. bloomberg's editor for western europe. geoffrey stays with us. a reminder that u.s. bonds and stock markets are closed for independence day celebration. you can watch tonight we'll have exclusive coverage of the boston pops fireworks extraver ganza.

some very famous names performing for us. that's at 1:00 a.m. london time on bloomberg tv, on tv go, on your bloomberg terminal as well. this is bloomberg. ♪

francine: this is bloomberg "surveillance." i'm francine lacqua in london. tom keene of course barbecuing for the day. it is after all independence day. has pledged not guilty in

charges to corruption in connection with a multibillion dollar scandal. the latest is our guest. great to have you on the program. what are the charges najib is facing? stunning been quite a ownfall. he is facing a criminal breach of trust and corruption. that could mean 20 years in jail. francine: what exactly do we know about where this goes next? is it impossible to know how big this will become? >> yes.

it will probably go to trial sometime next year. we're looking at 19 days of trial. there will be case management next month. they are still looking at what else could come. francine: what has been the market response so far and is there a danger that it accelerates? >> we have had about $18 billion wiped off the stock market. credit default swaps have been rising in malaysia. we had benchmark index down at a six-month low. investors are unsure about what's happening in malaysia now. what the policy changes to the government means. they are not thage any chances. francine: thank you so much. for talking to us about the very

latest. i want to ask about the scandal. i want to ask you about emerging marks in general. the fed normalizing interest rates has an impact because of dollar strength. where do you expect the dollar to go? >> we have a consensus -- the dollar against most currencies. we liked e.m. currencies at the beginning of the year. we are starting to maybe run out of marginal political risks, pricing in e.m. have the elections out of the way. turkey out of the way. no deterioration in sentiment. maybe a few more multilateral issues to deal with further down the line. absolutely focused on the dollar side of it. in terms of relative value, there may be opportunities in

e.m. we like the credit risk now. francine: we'll be back with geoffrey of u.b.s. private bank. and michael is in berlin for the day. we're going the talk to him about migration and probably brexit as well. when we talk about e.c.b., it is all about german strength or weakness. we'll talk to michael about that next. this is bloomberg. ♪ ♪

francine: this is bloomberg "surveillance." i'm francine lacqua in london. tom keene barbecuing. day off for independence day.

let's look at what is trending across the bloomberg universe. when markets are going crazy, apparently women are more likely to keep their cool. men are four types more likely to withdraw from investments. ne big reason is that most investors that favor mill lethal weapon a l yell type stocks listed on wall street. -- the chinese court is said to have temporarily banned the sale of micron chips. here is sebastian. >> british police say two people are in critical condition after being exposed to an unknown

agent. it took place eight miles from where a former russian spy and his daughter were poisoned. the senate committee is supporting a finding by u.s. spy agencies that putin meddled in the u.s. 2016 campaign. they had a clear preference for donald trutch. last week the president tweeted they didn't interfere. denouncing the trump stiffings' lan on affirmative action. china will have a 12-hour head start on the u.s. when it comes to the next active trade war. it is set to take effect midnight on friday. u.s. tariffs on chinese good are

imposed. lobal news 24 hours a day. powered by more than 2700 journalists and analysts in more than 120 countries. francine: thank you so much. germany's social democrats say they are moving to a deal with merkel on migration. differences remained over her and her sister party and presented the update in refugee licy to her social democrats and junior partner in berlin. joining us now is michael fuchs. a close ally of german chancellor merkel. great to have you back on air. thank you so much for speaking with bloomberg tv. one simple question. does merkel survive this or does she survive it but become

ignificantly weakened? michael: you can be very sure she is going to survive. not only survive but she is going to stay as chancellor until the end of the term which is another three years, a little bit more than three years. and i'm quite sure she is going to do it in a great way. she has managed this difficult situation in a i think rather -- way and we found solutions. it is a big problem we have in germany with all of the refugees. we have 1.4 million refugees in the last three years. we have to find solutions. i think she has found a solution with the bavarian minister. francine: this fight over migration was ugly. what is the next domestic conflict looming for angela

merkel? michael: the migration problem has to be solved in a way that we will of course still give people asylum if necessary but there are many, many people coming and asking for asylum which already having asylum or asking for asylum in other countries. that has to be stopped. i think we found a solution yesterday that we can manage the situation. but there are still other problems because we have to now after the c.d.u. found a solution, we have to find now a way that the social democrats are going along because it is not yet finalized. i hope they will agree with the new solution we have. francine: where do you see the breaking point for this coalition? michael: well, i don't think there is a break point. at the moment the situation was very difficult and dangerous, yes. but the solution is there.

i think at the moment everything goes on and it is necessary because we have so many problems in the world to handle starting with all the problems as far as foreign trade is concerned. we do know what trump is coming -- don't know what trump is coming with next. not only for germany but for europe. but it is necessary we as europeans are staying together not only as far as micron problem is concerned but all the trade policies is concerned. it is absolutely necessary that europe is more united than ever before. francine: do you think europe will be united? you have the italian populists and president trump showing up next week. what does that mean for how merkel can deal with trump? michael: actually of course, only united we can handle the situation with trump and with the other countries, china.

i think there are so many things we to v to do together. europe united is strong. as an individual country, we are weak. we are not relevant as individual countries. we have to stick together and make things together and come up with european situations and the populists have to know it is not so easy just as a sungle country to survive in this very difficult world. francine: how much do you worry about a trade war and a trade war between the u.s. and china escalating and hurting the german economy. s that it for the german economy? has it peaked? >> at the moment it is very strong. it is still very creative. could be more growth rate at the moment and we have an unemployment rate that is thrower than never before.

it is pretty good. the people are happy with the situation. it is not yet -- but i have -- i'm afraid if the trade war is going on and trump is coming up with more taxes and tariffs then it could be harming not only germany but of course if germany is suffering, the whole of europe is going to suffer. that is the reason we have to stick together and tell him listen, you have not germany or not france or not italy, you have not the u.k. you have all of europe against you. that is important. francine: does europe stick together or does it get pulled apart because of this migration concern? if you don't have it being respected, what does that mean for the future of europe? >> i think it is a very necessary instrument we have because only looking at how many

countries do have -- let me put it this way. many, many companies in europe, they have not only one source but they are buying from all european areas. and if they are not in power anymore, that means they have to clear customs maybe twice or three times and it costs a lot of money and time and it is very bad for the european economy. from a business standpoint, you really need to have him in power and i hope we will not destroy it. we have to control the people who are traveling around and this is possible without imposing new borders. o much, as always, michael fuchs. now let's get back to geoffrey of u.b.s. banking. the e.c.b. needs to watch and

react. how do you view the migration crisis which has largely been ignore bid the market s but it could be a breaking point. >> is there an earlier than expected end date for merkel? chancellor merkel and mario draghi are the two individuals who really have helped hold europe together, the monetary union and the political union. they are essential to this. it doesn't mean they are irreplaceable. no one is. everyone has followed that way. the people have really started to contemplate what is the alternative? at this point, i think that political -- is actually gently being pushed in. think it is a good example.

if it does start to break down, there are many economies that can't rely on the -- across border trade and if that gets derailed to some extent like what we're doing between ireland and the u.k., that will undermine the economy. francine: is it -- the greek crisis 2.0 or something different? >> i don't think it is that. that was an outright credit issue. stopping credit risks. holdingmore going to be the eurozone together. he monetary union. francine: geoffrey, thank you so much. geoffrey of u.b.s. private banking stays with us. coffee at a low.

should you expect a cheaper cup? that's next. this is bloomberg. ♪

francine: this is bloomberg "surveillance". i'm francine lacqua in london. tom keene off for independence day. happy fourth of july to everyone watching us. as the brazilian football team awaits a quarterfinal with belgium this friday of course commodities tion's is sliding. how is the future looking for one of the world's top coffee brands since beginning life 120

years ago. they have embarked on a global expansion. they have six manufacturing plants from france to india and brazil. according to the company, 27 billion cup of its coffee are drunk annually. that is around 25,000 in the time it is taking me to introduce our guest. think about that for a second. joining me now is the vice chairman and geoffrey is still with us on the set from u.b.s. you a sponsor of wimbledon. better sponsor of wimbledon than the world cup given where italy is this year. how big is the u.k. market? >> the u.k. market is important for us. last year we reached a total evenue of 65 million pounds.

rowth year by year is 10%. we are continuing to -- with business as usual. the different thing, we have been affected by the devaluation of the pound. consumption is very high in this country. for the british population. francine: it is amazing. the last 20 years the ago. 20 years ago it was almost impossible to find a good cup of coffee in london. now they are everywhere. why the coffee craze? >> coffee is a very gentle product. with the quality, able to sneak it into the life of people, finding a lot of pleasure. that happened in the u.k. as well. the market is really changing year by year, even in u.k. and

many other countries in the world. most are looking for premium products and a different kind of experience. customizeation of its own product. coffee more and more is a product that people like to say -- this is part of the new experience. francine: what is your biggest risk or concern? i don't know whether it is the price of a coffee bean or trade concerns. how you get your coffee to and or if it is like retail space? you have a diverse number of things you have to worry about. what do you worry about most? >> climate change. the coffee production in the main coffee producing countries. the good news is that in the future we have seen an increase in the coffee consumption globally. e will need for 2030 around 20

ore million coffee bags. we need more coffee. we need quality coffee. we need the coffee producing country to continue producing good coffee and and more coffee. francine: i know you drink coffee. we sometimes have espresso shots. do you follow? as a commodity? >> actually yes. we do look at soft commodities sometimes. we put commodities in general -- gold, precious metals. we will often make the case something that reflects a long-term trend. coffee consumption is going to be a long-term trend we would tie the companies that would be servicing these markets. it is interesting you make that point about climate change.

sustainable investment. that is an issue for our bank now. something clients are passionate about. francine: where do you see the biggest growth? is there a market where they are not doing that much coffee at the moment where the consumption will increase? >> there are two big trends. the market so far -- a very important part of the business, especially i'm talking about u.s., france, germany, italy. and then you have other countries where coffee consumption is growing. they are mainly coffee producing countries, indonesia. brazil. the problem is that in those nd countries, the value from this kind of business is still pretty small. they needed to create a better platform. it will take time for the onsumer to look for better

products with better quality and added value. francine: thank you so much. both will be staying with us. we'll get tips on how to make the perfect espresso and send a tape to tom keene who is barbecuing today so he can make perfect espresso for his family. go to our terminal. g tv go. there is no battle with tom keene. i win. happy fourth of july. you can still use the charts at your morning meeting. this is bloomberg. ♪

>> this is bloomberg "surveillance." let's get the bloomberg business flash. uber wants to resolve a costly rivalry in the east. uber is seeking a majority stake. they have been raise money at a $1.5 billion rate.

pilgrim's prid involved in a lawsuit for inflating prices. tyson's said the suit is unfounded. the owner of spint has ties to a telecom company which is brand bid the u.s. as a national security threat. that is the bloomberg business flash. francine? francine: thank you so much, sebastian. consumers have been opening their wallets and investment spending has been picking up but political uncertainty could continue to constrain growth. hat is the environment like? first of all, i need to ask you

how many espressos a day you have. on the business side, is there some downturn? do people drink more or less coffee? is it the first thing that people cut out? >> no. when we have an expanding conomy, coffee expand too. it is connecting in a positive way to economical expansion. francine: how much of your growth is coming from italy? how would you view the economic threth mow? >> our target for 2021 is to have revenues coming from international business around 70%. now we have 63%. italy is 36% of our total usiness.

the i tal van environment is complicated. not so easy to understand. i can say over the last three, four years, the economy has grown with a positive rate. this is very good. we of course need to introduce much more reforms to have a mind bit of push towards set, more toward business and the good news is now that we ve a government in place and people have the chance to vote and now we're a government. i think this kind of government is stable. it is not an unstable one. my vision is this government can last for a long time. francine: i was going to ask geoffrey about italian economics. how many coffees a day?

>> three or four. francine: what about you? what does the king of espresso have? > eight. i can say four. francine: this is what people remember you for. how many coffees a day you have a day and stagger them out. thank you for coming on. geoffrey yu, the chief investment officer at u.b.s. german chancellor angela merkel diverted a collision crisis with the migration deal. we'll talk about europe. this is bloomberg. ♪ what's a gig of data?

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icron cut off, the latest moves in the trade for. turnaround for china's currency. , germany'sress social democrats moving to back the migration deal. we will speak to the migration commissioner. good morning. this is "bloomberg surveillance." his familyff for barbecue. i can see him flipping the burgers. reminder, it is the fourth of july. thank you for watching us. stock markets are closed today, but futures are trading. let's get straight to bloomberg

first word news. administration will allow zte to resume some business activities. the company lost a deal and italy because it could not by u.s. technology. president trump has sought to ease restrictions. ministernajib has pled not guilty to corruption charges. he denies wrongdoing and says he will fight the charges. faced a ister showdown over brexit. fear it would change the tariff regime forever. trapped in a flooded

cave are healthy. a team including a doctor is looking after them. they may have to dive to get out of the cave. , england hascup shaken off its shootout curse and advanced to the semi finals. lost major tournaments. next up, sweden on saturday. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. francine: this washer what your markets are doing right now. some jitters when it comes to european stocks. they are now moving sideways. the yuan recovering. the dollar steady. limited trading volumes

because of the u.s. holiday. rebound,extending some the dollar recouping ivory recouping earlier losses. been talking about chinese assets and equities. this is my favorite chart of the week. it is a thin ray of hope when you look at down shares. -- at beaten-down shares. after the slide this year, the benchmark index is around the thigh you asian level that inceded values from markets 2015-2016. we will push it out on social media. it is a simple graph charting the shanghai composite and

looking at which point it reached bottom. let's talk the latest salvo in a trade war. a court has banned micron technologies. this stems from a patent case back in january. emma o'briena joins us now. is this damage in the trade war? patents, but you have to think about the timing. sides, tariffs on both so the timing is curious. chipmakers at the center of a trade war that is becoming about technology and the fight for it.

is a big importer of semiconductors and wants to build its own sector, so this action around micron could be related to the wider picture in the trade war. francine: what happens next? zte looks to have gotten a reprieve from the u.s. come the stock steadily climbing and looks as though it is having that ban lifted. being soand italy not successful and benefiting from that. does seem as though technology is becoming a big focus of the back and forth between these two countries, a fight that begin about the trade thatit, zeroing down to

tech sector and china's ambitions to down nominate -- to dominate when it comes to high-tech. francine: when does it go back to normal, two weeks, three weeks, six months? micron that is the ultimate question. -- >> that is the ultimate question. right now we are looking at escalation. those tariffs likely to come and place as there are no sign of last-minute talks that will avert 25% tariffs on more than from bothn of goods sides coming into force. china's will come first, thereed the u.s., unless is an 11th-hour agreement to back down. francine: thank you so much. emma o'brien in beijing.

let's continue the conversation with our guest. when you look at china, is it where the main risks are coming from? >> possibly. more so than elsewhere, but bigger risks going forward are to what happens in the u.s. the rest of the year, whether we see growth coming off their. .- there francine: how much does the trade war escalate? do you assume the global economy won't be hurt too much? current running assumption. we can't be complacent around this. this has escalated clearly. china is retaliating to

president trump's threats, so it is a growing risk. the tariffs are affecting a small share of goods, and even if cars were included, that is not massive in terms of overall exports. car parts andve there could be massive disruptions and we could see bigger of facts. francine: is it germany that will be hit the most? slovakia.rmany and the exports of cars are key. direct impact of tariffs on car exports for the german gdp is unlikely to be massive, something like 0.5% if trump went ahead with the tariffs he has threatened. in the restll over of the economy, so it could start to be much more damaging. bmw does a lot of production in

be ofs., so there could layoffs there. it is a lose-lose situation. francine: i had someone from ubs talking about the dynamics in boc -- thethat the po , that the risks in china have decreased? >> i am not an expert on that. i can't say. francine: thank you very much. this is bloomberg. we will talk immigration after angela merkel averted a collision over the migration deal. that is coming up on bloomberg tv and 20 minutes. don't miss that interview. this is bloomberg. ♪

>> this is "bloomberg surveillance." let's get the bloomberg business flash. &a died whilen ofh in france. is trying to recover after expansion. it sold more than $14 billion in assets this year. estonian operations of the bank may have been used to launder 8.3 day in dollars -- $8.3 billion. illicit funds came from

russia, moldova, and azerbaijan. a british chains sales rose in and cutent quarter prices to compete with rivals like tesco. a court is expected to rule on its $10 billion acquisition next year. francine: the ecb chief economist sees interest rates making a comeback as a policy .ool it comes 10 years after the central formic raise rates, then had to reverse course. nds yield on 30 year bod dropped to a low after speculation it will reinvest proceeds. joining us now is our guest.

brian come when you look at what much isdoes next, how the ecb thinking we don't want that policy mistake where we hiked, then had to reverse course? >> they have been thinking about that a lot. it has been embarrassing. there are people who also feel interest rates oare the main tool. -- are the main tool. francine: what are they looking at when it comes to actual economy? >> the european economy seems to be in good shape. things seem to be more or less ok. what is swirling in the

background is the noise of possible trade war, global slowdown, all the things that could go wrong. that must be weighing on the minds as they are making these decisions. francine: jennifer, do i have to look at cycles and see that the u.s. could enter a recession because they have not hiked enough? core inflation, the economy, and growth aside from that. butaw a slow down in q1, surveys are pointing to a pickup in q2, now consistent with growth of 0.5% on the quarter. it should stoke some inflationary pressure. it will encourage the ecb that normalization is appropriate. will it come before next year? >> no.

francine: interest rate hikes? >> no. there is a possibility it could be later than september, but by the end of the summer, it should be clear that core inflation is still not at target. september seems about right. francine: what are you expecting from the ecb this summer? >> clues about the reinvestment program. that is the topic right now. they are talking about tweaking the rules, by more short-term, long-term. there seems to be a debate now. the hawks may push for more short-term and a faster exit. i have the feeling this is a live debate the ecb is having

now. francine: is that the live debate they are having? >> it is one of them. they have given clear indications they will continue to reinvest, and invest in a wide range of maturities. it may be at times the investment is more long-term, short-term, and markets move around that, but the bigger picture will be that asset holdings are broad. i don't see them reducing up for a long time. i think interest rate hikes will come way before that. they will want to start this process of normalization for they consider reducing holdings. ,rancine: what about the euro and is it a dollar or euro story. >> it is more of a dollar story. we see the federal reserve cutting rates in 2020.

it is likely to appreciate during next year as it becomes clear that is on the cards. francine: thank you so much. of the funch some tonight with our exclusive coverage of the boston pops fireworks spectacular. that extravaganza starts with a live orchestra, all fronted by our team at 1:00 a.m. london time. you can catch it live on on yourg tv and tv bloomberg terminal. this is bloomberg. ♪ berg. ♪

francine: this is "bloomberg surveillance." tom keene is all for the fourth of july. for twoary talks ride-hailing giants. it comes as uber is preparing for a public offering last year. thank you for coming in. sense? actually makes >> absolutely. acquisition is where

they can cut costs massively. they can then push prices higher. francine: is this other markets, or only for the middle east? >> it is something we have seen them do already. there was one move along these lines under travis kalanick. china. out in has pushed this as a way of identifying where the markets are, where they can it will dominate, and where has arrival, it doesn't warned the investment. francine: what happened in china with uber? >> they were throwing huge amounts of money to battle with

didi. ed kensignton alibaba. they sold out to didi. that is the model we have seen mimicked in southeast asia. saudi arabia is one of the biggest investors in softbank's vision fun and has invested directly into uber, so one might imagine there are efforts to reconcile investors and make sure they are not losing money. francine: how much do you focus on tech in the middle east? there is a possible rival to whatsapp for the region. is it a place where we will see more disruptors of the disruptors we use? >> on the west coast, you see a lot of people coming out of the

to encourage people to found startups in that part of the world. as we have seen, they want a tech backbone. universities that promise this kind of thing. fun, the softbank vision $40 billion, coming from the saudi sovereign wealth fund. they get insight into the things which softbank invests in, which can be used to address efforts to bolster tech innovation. francine: thank you very much. we are getting breaking news from the chinese ministry of finance. this is on tariffs.

they are saying china will not implement tariff measures. usually on a friday afternoon come the u.s. imposes measures and china retaliates. now they are confirming china will not implement tariff measures ahead of the u.s. pboc giving strong assurances to the market that the renminbi will not be weaponized. trade restrictions and interventions remain de-themes, but the pboc will not use the yuan in this trade war. we are seeing 10 firearms because of the fourth of july. this is bloomberg. ♪ this is bloomberg. ♪

francine: this is "bloomberg surveillance." let's get straight to the first word news. raise themerkel

specter of of financial crisis. europeantariffs on cars will be more serious than steel and aluminum. two people in critical condition after being exposed to an .nknown agent placeshave cordoned off the two visited before falling ill. a panel says intelligence that vladimir putin and the russian government had a clear preference for donald trump. china will have a 12-our head start on the u.s. when it comes to the trade war. billion will take

affect midnight friday. u.s. tariffs on chinese goods will be imposed 12 hours later. navy divers say all 12 voice trapped in thailand are healthy. the team includes a doctor looking after them. they may have to dive to get out of the cave, but that would not happen until the boys and their coach were trained. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. thank you. shift on migration is helping the german chancellor keeper coalition together, but it is not a done deal yet. outside of germany, europe is preoccupied by migration. last week, an agreement in brussels raised more questions and answers.

the eu commissioner in charge of migration joins us now for an exclusive interview from strasburg. thank you for making your time available to bloomberg tv. do you believe the shenzhen border controls now here are here to stay? all, we are not in a migration crisis. we are in a political crisis. the first priority is how to edit manage orders. it is what the european commission has been doing the last three years. still it remains an issue. spirit of the week to movest forward a more comprehensive

policy on migration. a political is crisis has to do with the fact that during the last two years, populous are gaining ground in europe. they have articulated their own political narrative and have become very influential. side, we will continue working on the agenda as we have adopted it three years ago when you're was under huge pressure. europe was taken by surprise three years ago, especially frontline member states like italy and greece. more than 1.2 million refugees and migrants managed to cross european borders, but now the situation is that are managed. i understand the pressure within some member states. we are not here to dictate.

we keep having an open dialogue with them. first borders, second migration, -- by the way, we are doing everything to manage the situation. francine: i will ask about these disembarking platforms, centers, the council agreed to put on new grounds. are the border controls on shenzhen here to stay? cannot haveid we permanently internal border controls. i understand the reasons of some of the states, especially security.

we have made great progress. further examine these camps. i cannot name any country willing to host these kinds of camps within or without europe. it has to be studied and we can come back up we have something more concrete. some countries come including as you mentioned, within germany. francine: is it thanks to germany? it is almost thanks to germany is nowgration concerns top of agenda. is that a good thing? you in thed beginning, it has become a huge political issue. i want to be frank with you.

germany from the beginning adopted a clear stance on that. i would like to praise what chancellor merkel did. it was a strong signal and a paradigm for the rest of the europeans. fire,s. merkel is under reasont will prevail his and a common, national, and european approach to manage this difficult situation, but it has become an issue within germany. the social democrats do not alliance hasat the decided so far. we are ready to provide germany with support and help the other italy,states, including

where there are some questions. we don't know the outcome of internal discussions on what are the political positions of italy. francine: commissioner, the eu council has agreed to develop these control centers on you grounds, but also look at these disembarking platforms outside the block the process migrants. you have spoken out against these platforms outside eu countries, linking them to qualcomm obey your have you --nged your mind about that oh --g them to one ton of one ton obey >> we are not here to dictate. we keep working with these countries, tunisia, malley,

butr, to find a solution, so far no country in the region has shown willingness. we have to support these countries in terms of development. the eu is a main donor to syria. the root causes are not only what is in the middle east, poverty, climate change, so we have two co-with all these issues. concretedon't have any information that one of these countries would be willing to host a disembarkation camp. how quickly do you think these platforms can be put in place? on the outcome of

internal discussions. have aek, we've will council at the ministerial level. the upcoming presidency is the austrian one. completeclear and agenda on migration, which is on top of their priorities. it will be an issue to discuss among ministers. i will be in a position to tell you more next week. francine: you will have to come back on bloomberg tv. when you come to risks surrounding europe, the most fundamental problem is migration , and is a solvable? frank,nt to be clear and everybody believed to years ago it would be the economic crisis

putting in danger the european project. why? it had a direct impact on the basic values and principles on which the european project is tilt, mainly solidarity and responsibility. if this is what the eu and european commission has been advocating for when confronted with this unprecedented situation. i was the first commissioner of home affairs and migration, and when we started, we started from scratch, but now we are confronted with a deep political crisis that has to do with political attitudes. some leaders in europe want to lead your to its dark hast. they have forgotten what europe was like 60 years ago. was a big historical

decision to create a new europe, the marc veasey, freedom, stability, and had been enjoying guess the last 60 years, but some in europe have taken these important achievements for granted. we have to uphold and defend these values. itt's why i told you before has to do with the code of values of the european union. we are determined to fight in order to keep the european dream alive. francine: thank you. the european commissioner for migration. us ishere and london with our guest. when you look at the economic models, i don't know how you do with migration, border controls in an area that should be 100% showing get, but possible political steps being taken. >> that's right. it is a difficult one.

immigration is primarily a social issue, but looking forward for most european countries, more immigration would be a good thing. they will face a huge demographic challenge as populations are aging and put strains on finances. high birth rates would be good for the economics of these countries, but the short-term social strain is causing instability. one associated factor is none of that arees -- parties anti-immigration are gaining skeptic.and also euro that has massive implications. there are fears that countries like italy currently the eurozone. there yet.e are not at the moment they are focusing on immigration. >> that's right. we are not there yet, but there is a euro skeptic undertone in italy now.

it is possible that if italy continues to grow slowly, then there could be a growing public uncertainty about membership in the eurozone and support for the eurozone starts to fade, and in places a government that would jump on that. francine: thank you very much. crabtree next, james from the school of public policy. we will talk trade war and technology stocks and what that means for some of the emerging-market economies. this is bloomberg. ♪ this is bloomberg. ♪

>> let's get the bloomberg business flash. m in talks toe combine ride-hailing services. uber is seeking a majority stake. supermarket and restaurant chains in the u.s. are suing poultry producers. tighten food and pilgrim's pride are among those named. say the companies conspired to limit supplies of chicken and inflate prices. arguing. lawmakers are the t-mobile purchase of sprint poses a threat to national security. they want regulators to scrutinize the deal.

that is the bloomberg business flash. francine: thank you, sebastian. the dubious distinction of loan ratioworst among countries. joining us now is james crabtree, professor at the school of public policy in singapore. onnk you for joining us bloomberg surveillance on the fourth of july. india has advantages and disadvantages. what are its disadvantages? >> corporate debt is a big problem. they have the twin balance sheet problem. many tycoons spent a lot of money and brought from the public sector banks, leaving the banks with $150 billion in bad loans, so some of the

balance sheets of the largest companies and banks have big problems. it is difficult to fix this. francine: is there anything the rbi can do. >> the outgoing chief economic advisor has suggested a rescue in which the rbi uses its own balance sheet. there are radical ideas, but they tend to be difficult, people don't like to be seen helping india's tycoons, and this is what you would have to do, so the politicians kick this down the road. francine: is there any way around that without helping the tycoons? >> not really. you have to bail out the banks and either take their businesses off of these guys or help them get back on their feet, and both of those things are. steley difficult -- are

difficult. you have 16t, percent to 18% value of nonperforming assets of almost any country in asia, so a real problem as it tries to make good on its growth promise. francine: how is modi doing? take is doing ok, if you to decide this a demonetization, but now he is going into election mode. the 10 year bond in india has spiked this morning because subsidies to farmers have not gone up as feared. you are now entering a time when investors are worried about a swing towards populism with an election looming. francine: what is the relationship between india and china. the relationship geopolitical he has been quite graham recently. im recently.

they have patched things up a little bit, but relations are pretty frosty at the moment. the question is will mr. trump's trade war have an aftershock that will affect india. att is what we are looking the moment, how india will play in this trade war story. francine: thank you very much. in the meantime log on to tv . tom keene is not here, so you can ask crazy questions on his behalf. you can ask a james and other guests questions. just click under the video stream to ask a guest a question. this is bloomberg. ♪ ♪

francine: good morning. this is "bloomberg surveillance." tom keene has the day off. let's continue our discussion on india and other emerging markets. with us is james crabtree. book.e author of this new

congratulations. we are talking about india, the banks, and debt. how does india compare with other emerging markets? we talk about the prism of central banks, dollar strength. is india more dependent on fuel prices than it is on the dollar? those froms a big cheap oil prices over the last couple of years. stock index is up over the past year, but now pretty expensive. india come and, long-term growth markets, so much comes down to politics, this interplay between the government and the big and dust risk are trying to do.

at the moment, that is a messy story. francine: india is complex in terms of status, power in the provinces that people have. is there a new political class emerging that will understand the needs of the indian economy? there is a super wealthy business elite who are becoming more powerful. the question is are they now going to start investing again? the big problem india has had over the last couple of years, the economy has grown well due to public spending, propping up the economy using state spending , but now we wait for the private sector to invest. to do that, you have to solve the problem of bad debt and bad balance sheets. at the moment, that is not happening. francine: thank you very much. you can watch the fun tonight with our exclusive live coverage fireworks, song,

music, dance at 1:00 a.m. london time and on tv on your terminal. european stocks higher, u.s. futures advancing a little bit, but it is holiday trading, which means we are not seeing volume. we are seeing a downbeat mood in asia being shrugged off here in europe, and a thin ray of hope has emerged from beaten-down chinese shares. this is my terminal of the day. benchmark equity and dekes at the rally that preceded bear markets. this is bloomberg. ♪ this is bloomberg. ♪ retail.

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near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. ♪ >> from london, i am guy johnson. welcome to bloomberg markets.

guy: getting chippy, china banning sales from micron, cutting off the world's biggest market as trade tensions intensified. seeking a second day of gains as pboc ledges to keep the currency stable. burnished bonds, speculation the french 30 yeare bond at 2016 lows. good morning. good afternoon. good evening. with the fourth of july underway, low volume in europe. asian markets negative overnight.