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.

this is the picture in europe this morning. trading on half the normal volume. these indices drifting sideways. technology stocks taking a hit. micron story out of asia. drift0 is up, you get the . not a lot happening there. -dollar, 1.16, pmi data out of your positive, pointing to better growth. survey data, some don't take too much store by the pmi. cny continues to be a beacon of stability for the last two days. we have seen the asian markets under pressure.

bond, .3.year notes, the french bond market affected by the twist story. the bid continues on what is happening in the oil market. we are seeing the back gap closing with rent over the last couple of days. that is a roundup of where we are now. dominate story will over the next few trading sessions, particularly with the u.s. close today. onwill return with payrolls friday. let's check in with bloomberg first word news. >> angela merkel has raised the specter of a global financial crisis to address a burgeoning trade war. she says the global response to the market meltdown decades ago

shows cooperation works better than one-sided methods. she said tariffs on european cars would be much more serious than those on steel and aluminum. the trump administration will allow zte to resume some business activities, but not keep them from losing contracts in italy because it is barred from buying u.s. technology. president trump has sought to ease restrictions imposed on zte after it violated a sanctions agreement. in the u k, prime minister may faces a new showdown with her cap it over brexit. senior colleagues wanted to explain plans to keep the u.k. tied to european rules for trading, some fearing the proposal would keep them tied to the eu tariff regime forever. navy divers in thailand say 12 soccer coach are all

healthy. a team including a doctor is looking after them. they may have to dive after the that can't happen until the boys and their coach have been trained to. 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. guy: thank you very much indeed. -- back to that technology story. i chinese court has banned micron chip sales, cutting it all from the largest semiconductor market. it stems from a patent case. ,oining us now is alex webb bloomberg tech columnist. it feels like it fits into the trade narrative, a tit-for-tat

story with companies band in the banned in the -- united states. >> there is a broader trade competition, in terms of how much technology is located in china and how much expertise they are able to build up. we have seen a tit-for-tat blockence where the u.s. something here, and they block something on the other hand. the memory chip business is controlled by very few companies, toshiba, micron, samsung. place ins not have any that, but they are trying to. there was a good story in the new york times where they talked about that as the contest. different from the broader beijing level decisions, they

have said you can't build these products in china for now. go? where does this what is this mean for micron? the right they have to appeal and work around the story, but in the meantime, they are cut off. has seen the court decision. they don't know exactly what they are not allowed to sell or where they are not allowed to sell it to micron is down 8% right now. beare seeing it is going to the thing that affects an increasingly number of american companies. chips are not easy to innovate, it is the start of something

which is going to carry forward. not knowing where you stand means you have nothing to fight. tois hard to fight a shadow if you pen something down, then there is something you can argue and shout about. this shadow boxing makes it hard for companies to act, react, and adapt accordingly. guy: this could apply to other businesses. >> the car industry is instructive. to have a factory in china, you need to have it 50% owned by a local player. we have seen cars appeared in china, made by chinese manufacturers, strikingly similar to bmw. there is nothing you can do. it is the biggest growth market in the past decade, but you realize there might be technology theft. guy: great stuff.

thank you very much indeed. talk about the broader story out of china. the yuan stabilizing. , but ild say climbing would argue stabilizing over the last couple of days. pboc officials, there were so many statements yesterday painting a picture that the chinese authorities wanted a break on what was happening. the delta needed to slow down, the chinese currency moving aggressively. we have some stability coming through now. chinese equities fell overnight, maybe a worrying sign. where joined now by our guest. good afternoon. broadtalk about china in terms, then dig into the details.

chinese authorities came out yesterday to do what? stabilize the currency or reverse an aggressive move against the currency? was aterday's move stabilization move as opposed to a reversal move you'd much of the weakness in the yuan has come at dollar strength. i think it is just market moves ahead of further negotiations. what if it was deliberate? >> guy: let's talk about sentiment. what we are hearing is that onshore investors are free out and this is like 2015, those islly aggressive moves, it

beginning to become a reality once again. is that over emphasizing the point here? >> liquidity conditions in china and social financing, liquidity has been removed by the pboc and government from the market. by uh and's are back near lows for a lot of these companies. are back near lows for a lot of these companies. we are finding a little stability now. , and we small position have been increasing slightly. it probably has a little way to go. guy: it is retail investors feeling the most nervous. we are in a situation where valuations have come down a long way. is now an entry point? >> if you look at things like the xiaomi ipo, it seems to

have pause for now and it seems to me we have sentiment a little further to go before region ideal point. guy: stick around. plenty more to discuss. coming up, chancellor merkel on the warnings possibility of a global financial crisis over this trade war. that is next. this is bloomberg. ♪ ♪

guy: i am guy johnson. this is "bloomberg daybreak: americas." pmi expanding at the fastest pace in june. driving a pickup in growth.

trade tensions are not far away. merkel sendingor crisis-esabout a que situation. let's deal with the pmi data. probably positive. i guess my take away is we are in the mid 50's. >> not bad, no. in the second quarter is the market extrapolation from the data. that is pretty strong. is the first growth is slowing down at a rapid deceleration.

the fact it is showing strength will be good news and a positive sign for the economy. guy: what to make about this story about the ecb? a lot of attention on bunds. it will be curious to see how this process starts. we have a twist style operation that favors longer duration bonds in europe. how will that work? that the ecb holds start to mature, and they concentrate the money on the back in the of the yield curve between 10 years and 30 years, which would have an effective flattening of the yield curve, which is stimulative for the economy, adding an extra imprint from the qe longer-term. reacting,e market is

it has started to price it in. french 30 bonds, most yields in 19 months this week, so markets getting excited about that. ecb isas a hint the already doing it, although it is too early to read too much into it. guy: what would be the advantage for europe? is there a capital concern? europe is different in the mechanics of the way it works. could change the rules slightly would be to get around this idea they have to the economy and their contributions to the running of the ecb. ways distortome the market, but the ecb can get around that if it changes the rules. investing in the longer into the yield curve polls down the whole yield curve and is more

stimulative. moree can borrow with confidence, which should prompt more cash into the economy. they can put it into stocks, go think new factories and getting the economy going. guy: heaven for bed. the latest on the bond markets. not just the ecb and focus this week, it has also the fed. we will get insights on central bank thinking on the other side of the atlantic, the minutes from the fed june meeting will be released. there has been a lot of chat from the fed about the flattening of the yield curve. points to-tens yesterday. we have a chart.

a couple of touches below 30 basis points. we have not seen those level since 2007. win does the curve fully flattened? >> it is approaching. you have so many competing factors on u.s. interest rates. the fed is committed to tightening. on the other side, you have the political action, including u.s. , tax incentives, inflation, jobs being strong. you could see a yield inversion in the next couple of months, then interesting things start to happen. guy: the yield curve has a good track record. do think it will have one this time? >> i think the base u.s. economy is strong. with the tax cuts coming through and potential fiscal stimulus if trump wins the midterm elections

, the u.s. becomes a leader in terms of synchronized growth. pmi's are ok, asian pmi's are coming down, but it seems the u.s. is taking the lead. away,k we are 1-2 years we have enough runway and firepower, but the key will come when you get this tension between u.s. fiscal stimulus and the fed hiking. that is adding an extra $200 billion to u.s. interest payments. , we have notdlow seen this since the nixon era, larry coghlan providing suggestions to the fomc in terms of its rating profile. what does that tell you about how this will roll out? we have the sugar high from the tax cuts, but now the white

house is trying to put pressure on the fomc. if you are the central bank, do you not listen to that? is that how the fomc will approach the kudlow comments? isin many ways, the u.s. similar to an emerging market. it is heading in that direction. again, it is the tension between the fiscal stimulus, the tax cuts, and the interest pathways. i think there will be increasing pressure on the fomc to make the discretionary choice. increase rates because you are approaching that inflation level.

next year, you have a choice as to whether you will hike aggressively. if the u.s. says this will interfere with the economy, that will impact sentiment. get that is when you happening, and that is negative for the dollar. guy: thank you very much indeed. you will stick around. still ahead, european automakers on the move. looking for a deal globally to reduce tariffs. the president of the u.s. has made it clear he likes bilateral transactions rather than multilateral transactions. join bloomberg television, coveraged tictoc for of the boston pops fireworks spectacular 8:00 p.m. eastern time on bloomberg. this is bloomberg. ♪ s bloomberg. ♪

the hour.nutes past

this is "bloomberg daybreak: americas." automakers on the move following a report the european union is considering talks on tariffs, cutting deals between the world's take car exporters. -- big car exporters. oliver?d this work, cap would eu globally coordination tariffs when it comes to the auto sector? >> it is a complicated question. the automakers have told us very little on this. you would need a coordinated thatt across industries basically work globally. a lot of these automakers reduce in the u.s., are based in europe, and they would have to get together all the parts of their business and get the

european lawmakers together. machine and you would need all the parts together to work. we have very little idea of how that would go. the question is how will that happen. absolutely. guy: it is unlikely to happen given the complexity. that is the utopian dream we would have, all these tariffs being coordinated. how worried are these automakers that they think they will be targeted by the trump administration? >> they are super worried. if you look at the comments on the proposal by the u.s. government, you can go online and check out the proposal. it is open for public comments. every single one of the

automakers have set this will hurt their business, their industry, and everybody. this is not just european automakers. this is u.s. automakers and auto suppliers. guy: thank you very much indeed. some pretty big numbers downside . ahead, oil higher following a drop in inventories. we will talk crude next food that is coming up. this is bloomberg. ♪

to be honest i would not take too many cues from what we

are getting in europe today. i'm not sure they changed that much over the last half hour. if you go to the function on your bloomberg you will find there really isn't much volume today with u.s. closed it is unsurprising. across assets let's show you what's going on. a bit of movement elsewhere. a focus on what's happening with chinese currency which is stabilizing. down by 2/10 of 1%. adds are trading if you decimal points. not by much but a little bit. those are your markets. let's check in with bloomberg first alert news. emma: british people say two people are in critical condition after being exposed to what's being called an unknown agent. it took place eight miles from where a former russian spy and his daughter were poisoned with a nerve agent. antiterrorism police have joined

the investigation. a former malaysian prime minister has pleaded not guilty to corruption charges. a multibillion-dollar scandal bd.lving state-funded one m the senate intelligence committee in the u.s. is now supporting the finding by u.s. askedencies that russia vladimir putin meddled in the 2016 presidential campaign. the panel says there's intelligence that put in the russian government developed a preference for donald trump. the president tweeted that russia said it did not interfere. there's a report that epa administrator scott pruitt asked president trump to fire jeff sessions so he can take his job. cnn says trump advisors shot down the idea. it came at a time when the president was frustrated with sessions and considered replacing him.

global news 24 hours a day on air and on tic toc at twitter powered by more than 2700 journalists and analysts in more than 120 countries. guy: thank you very much. wti with the u.s. lady joining us, julianne to give us an idea of what's going on. do the saudi's have extra capacity? julian: we will find an answer to that question. what do you think the answer is? julian: we are moving into uncharted territory. saudi arabia has never produced more than 10.6, 10.7 million barrels a day on a consistent basis. it peaks above that for a few days but on a monthly average basis that is about the maximum they have ever done. if we lose even one million barrels a day of iranian crude over the next six to nine months

it's going to have to go well beyond that. we saw in june, according to bloomberg figures saudi output but total opec output did not change at all. all of that ought set -- offset declines that did not come from iran, the came from venezuela, angola and from a couple of other places. the loss ofjust iranian oil for sanctions we're worried about. there are places where production is sliding. guy: american authorities know .omething the rest of us don't in terms of how this would actually work, the sustainability of the. they've done it for a few days here, done for a few days there. the engineering complexity of

doing these extra barrels. the saudi's themselves say they can boost production to about 11 million barrels a day. in a few days. that is basically turning on taps, running some of the fields that are operating at the low capacity. putting a bit more crude through the various processes. stabilization and pumping it to export terminals. it can do that fairly easily. saudi aramco has said that to get from 11 to 12 that is the second of those 2 million barrels, is going to take it months. and this is going to require some drilling of wells. equipment put in place but not used. it's going to require, as far as

we know, every bit the saudi's have put in place to extract oil and move it to the coast to work at capacity with no downtime. guy: you are a seller, why? julian: i think the market has become overwrought. if you look at the market structure, wti has been catching with brent. we can bring up the print curve. we knowh versus now, what your sort of talking about. talk us through that. julian: the orange line, that is oil today. the left side is delivery and you got to the backend. levelbackwardation that and steepness of that curve is the highest i think it's been in the last 30 years.

which is incentivizing oil to come out of storage. the last five years have been a bit weird the markets moved like this. anticipates supply disruptions. see is the oil market tends to focus on different things. shale production is the key thing. libya is the key thing. i think we are a long way away from spare capacity being the key focus and that is what is going to come in to play longer term when you consider things like the one month 45 day oil. issuesu talk about the facing the united states right now. how quickly do they roll off? we have pipeline issues, a multitude of factors that have come into play but will disappear relatively quickly. how quickly does the market just

around that? julian: the market is incentivizing to be resolved as quickly as possible from wherever possible. what you see in the last year is the back end of that curve has moved up because you have a structural deficit in the market because investment did not occur. they say the u.s. won't bring -- ion -- we have got believe the front and comes down especially with positioning kept back up. not many shorts in this market. guy: is that? just a wti story or is that a brent phenomenon as well emad: i think brent has the same extremity. brent has moved up in iranian distrust -- disruption. the whole -- we have seen this story before. the pitch changes dramatically when iranian oil enters the market. are infalls rapidly, we

for a 5% to 10% fall. i think brent has no choice but to follow. julian: i think so. i am less convinced we're going to see a big shift in flows if we lose iranian oil. it does look like really the only place that alternatives can come from is saudi arabia. they are next to each other. we will see flows coming out of the persian gulf, we may see a little more russian. i don't think we're going to see big shifts in flows geographically the biggest shift related to venezuela i do think you're absolutely right. we are seeing this incentive to solve problems. getting more oil to market quickly. coming from this steep curve. it is telling that for the last three weeks we have seen the u.s. recount falling slightly. this is a clear indication that

there are serious bottlenecks in the permian basin in texas to getting more u.s. shale output to market. that is starting to hamper growth in u.s. supply that's been predicted through the second half of the year. that i think -- guy: you talk about the engineering incentive. julian: i think even with the price incentive you got to build the pipelines to move that oil either to refineries or the gulf coast. that's not going to happen overnight or you and we are looking at some time probably around the first half, the middle of 2019 until that gets solved in a big way. you have the capacity to move that oil. prior to that you are looking at morbid on rail. i think you are starting to see limits to that. guy: if i'm investing in this where do i get the maximum bang for my buck? looking at integrated oil majors

around the world, to the companies solving these engineering problems and actually trying to take advantage of the current structure of the moment there was a long period of time during the super cycle phase when you did not want to buy the integrated. -- is there pricing power returning to the supply chain within the oil market? emad: given sheer distortions in the curve right now playing the curve is the best play. the international majors have not actually moved up to reflect current prices in the oil market. i think the pricing power is returning. there is a delay factor. like most commodities people think is this real. i came on last october and said the oil price would average $70 for 2018 and everyone gasped. now everyone is like the oil price is going 8090. -- 80 to 90.

guy: it's going to be interesting. i understand the sense the market wants to see what's going on before it starts making investments. coming up, lobsters caught in cross hairs. a look at how seafood is trapped in this trade war. this is bloomberg. ♪

guy: this is bloomberg markets. spat isn -- the trade threatening layoffs for some very u.s. businesses. new england lobster industry is no exception. tom maroney has the details. tom: as talk of trade wars heat up, doing once most valued see product is in hot water. >> real negative effect on lobstermen in massachusetts. tom: lobster is one of nearly 700 american exports china is targeting for new tariffs of 25%. scheduled to take effect july 6 the levees are beijing's response to president trump's tariffs on $34 billion of imports from china.

lobstermen billy mahoney says he's being paid $.50 lighter -- $.50 less on the pound on the news. >> all hell is going to break loose as far as the price. tom: new england landed $700 million worth of lobster last year. 94% of the nation's total. exports to china increased more than 30% year-over-year. >> hopefully domestic market can pick up the slack. i'm not very hopeful. we have become dependent on the chinese markets. tom: lobster traps are also caught in the tariff crossfire. manufacturer riverdale mills in northridge massachusetts supplies 85% of the north american market for lobster traps. >> some of it comes from canada. some of it comes from the u.s.. the price of the product has

nearly doubled. >> it puts handcuffs on us because we are unable to buy raw materials at a competitive price. tom: he may have to raise his prices 15% in sourcing american-made steel is not a solution. >> they're not quite sure whether they will be able to get the products. tom: president trump wants to level the playing field for american companies and the global economy. some worry it will have the opposite effect. thee pulled back a lot of -- this'll give them an opportunity to take them back from us. china is going to go chase down the canadian lobsters and the u.s. is going to be hurt. i think this could affect people going out of business. tom: tom maroni, bloomberg

boston. guy: it looks nice. second annual coverage for the boston pops fireworks. i can assure you of that it is a spectacular sight. it :00 p.m. eastern only on bloomberg. let's look at how we think about the trade story. they said everybody loses but it has to be a relative lost story. does the u.s. lose the least in all of this? emad: the u.s. is the biggest player in the game. they have the biggest consumption so you trade with the biggest consumer in the world. the biggest loser is probably going to be europe. you look at the german deficit to the u.s., oh wait that is where the deficit is located.

iss is why angela merkel issuing dire warnings at this point. she can see where it is coming. guy: if the u.s. delivers on the threats and the auto sector is targeted next how bad is it for germany? how bad is it for germany and europe? emad: supply chains go everywhere. in any kind of tariff normalization is difficult. tariffs are about 10% or so. given the importance of the car manufacturing sector to germany this will not be a case like china where you are implementing tariffs right now. i think this will be a first major move as trump always does in terms of let's come up with a pathway to some sort of normalization overtime. we need to do that. these tariffs are one directional. there needs to be some normalization. the key message of the americans

at the moment. guy: thank you very much for coming to see us. a pleasure to see you at bloomberg. mostaque. this is bloomberg. ♪

guy: 7:51 in new york. i'm live from london. bloomberg markets. a look at some of the biggest business stories in the news right now. here are the details. emma chandra. emma: it's become clear why -- the push for consolidation in the british supermarket industry. comparable sales rose in the latest quarter at the slowest rate since 2016. the company expects regulators to rule on its proposed $10 billion acquisition of assets

next year. -- uber and kareem networks are in talks to combine their ride healing services in the region. uber is seeking a majority stake. .areem has been raising money some u.s. lawmakers arguing that t-mobile's planned purchase of to americanthreat security. they want government regulators to scrutinize the deal. that is your business flash. guy: thank you very much. chinese authorities announcing last month they would add restrictions on solar installations leading to a contraction in the solar market for the first time.

why are we going to get a contraction? you talking through details of why we would get a contraction? what do the forecasts say? >> we're getting a contraction because china last month implemented restriction on a new bill for solar project. that will affect the global market. there is an element of uncertainty whether there will be contraction or not. according to our most pessimistic scenario there will be a 3% decline compared to 2017. outside of china there are big markets but we are not expecting for them to make up for the down in china. -- it is not as if there not trying to target clean energy. why are the chinese incrementing

this? >> the chinese government is trying to keep under control its budgetary spending to subsidy pbn win projects. to $8.5 billion annually. the way subsidies work, the spending is guaranteed for 20 years. seen from two different angles. bad news for module equipment .anufacturers it has an impact on prices. iner demand will translate steeper price decline for solar equipment. on the other side it's going to be good news for project developers. we're seeing globally new markets popping up which are keen on installing solar capacity which is affordable.

--ch is relatively guy: the capacity that's not being used in china as a result of what the authorities are doing will end up on the global stage at a lower price? that could cause issues. that is true for 2019 and 2020. for this year we don't expect markets to make up for that. reduced demand. be -- the mostto efficient ones will be enjoying positive growth margins. some of these will suffer negative net margins. guy: we will leave it there. they give her a much. -- thank you very much. ,n a quick programming note

join bloomberg on television, radio and tick-tock on twitter for the second annual coverage of the fourth of july boston pops fireworks spectacular. it :00 p.m. eastern tonight -- 8:00 p.m. eastern tonight. my normal code presenter matt miller will be down there looking to see the coverage tomorrow morning. 20 to come on bloomberg. we carry on tracking these markets. u.s. markets closed for the fourth of july. in europe the volumes, the euro stoxx 50, half its normal volume on a daily basis. ily basis. what's a gig of data?

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and with millions of wifi hotspots included, you'll pay less for data. it's a new kind of network designed to save you money. click, call or visit a store today. guy: 8:00 a.m. in new york. i'm guy johnson joining from london. look at the bloomberg markets.

getting chippy. china banning sales from u.s. chipmaker micron cutting off the world's biggest semiconductor market as trade tensions intensify. gains to keep the currency stable. asian stocks over not not looking -- overnight not looking inspired. an operation twist. france's 30 year bond to 2016 loans. global markets come with a caveat today. they are not global. that basically takes a huge chunk of volume out. what is going on is -- these

european markets, they are incredibly mixed. is they are telling you holding pattern and we will wait to see what happens tomorrow. betters probably a indication of what global sentiment is like or at least what sentiment is like. the shanghai markets coming under more pressure. yuanid see the stabilize. i think that is what the chinese authorities are after now. the latest blow to chipmakers in the world's biggest markets. china banning micron chip sales as trade tensions intensified. what's going on? alex: two things happening in the chip space. a certain amount of tension because of tariffs and blockages in the u.s.

when you step back, china is the biggest buyer of chips. makes bones, using them clearly but it does not make any of its own. , theyear we saw micron sued a taiwanese company accusing it of stealing technology and in return they said your stealing power technology. this regional court in china has said you cannot sell these chips provisionally. guy: why is a regional court ruling on this? alex: it's hard to tell frankly there remains a certain amount of cash it was the company that was suing -- we've heard nothing from the court nothing from micron itself. thatnk it would seem to me is with a sued them to begin with. probably where they are selling .he chips primarily

a lot of manufacturing capacity for things like cell phones. guy: it is nice and vague. alex: suitably so. that is convenient for a lot of people but makes it hard to gauge what is going on. micron gets 50% of its sales from china. down some percent or 8%. there is a certain amount of hesitance really trying to work out what is going on here. guy: let's bring another voice into the conversation. mentel.us, lothar to give us his take on what is happening. lothar: good morning. guy: good afternoon. muscle memory on my part. i usually do this in the morning. me a quick take on all of this. technology is down in europe. one of the big out in many people's portfolios. you have a long history of tracking it. we are starting to see potentially these telecoms companies, these technology companies suck into the trade

story. how do i treat this as an investor? to lothar: look at the valuations but in this particular instance i think it is one of the skirmishes we will see in this trade war. the chinese struck me as not dealing as bluntly as trump is. they will have little pins and needles and they can do lots of things that can hurt american companies without actually imposing anything major whatsoever. just making it more difficult for u.s. companies to trade three at a couple years ago they had a spat with the japanese they kicked off a public opinion thing about all of a sudden japanese products plummeting and sales in china. that hurt a lot more. particularlyt's this one particularly interesting fact anything about the repercussions of this, the fact that his memory chips is significant for someone like apple. if you buy an iphone the base

$999 might cost you 900 -- for the iphone 10, the moment you start adding memory, that is a huge markup. the chips themselves are quite cheap. whoever controls the pricing for those chips has a huge amount of control over the amount of profit someone like apple is able to generate from any given smart phone. guy: you want to make life difficult as the chinese authorities for a u.s. company, as you have such a huge level of control that reaches down -- that is course going to be enough isn't it to cause problems? alex: the complexity of these supply chains is vast. the ability to put little .ressure point here and there it really holds the cogs of the trade very easily. destroying the amount of clarity

is a certain sort of not to what trump is doing and his lack of understanding perhaps of that. u.s.r: going back to the to manufacturing and selling of the iphone's and so most as if they wanted to teach trump how interconnected the global economy is. it's not just we serve you this, you buy this, it is all going around. guy: where the value is in that chain is critically important. we can sort of massage that and that will have a meaningful effect into the u.s. economy. alex: the argument has always been the value for a safe smart phone is an intellectual property and marketing. the chips themselves, the actual manufacturing -- if you look at foxconn they have not made much of an increase in profit since it had apple fortunately. disproportionately. -- proportionately.

argument over intellectual property, that is what is at play here. guy: out where the us from bloomberg opinion. lothar mentel is going to stay with us. emma: germany's chancellor angela merkel has raised a sector of the global financial crisis to address a burgeoning trade war. merkel says the global response to the market meltdown shows cooperation works better than one-sided measures. merkel warned the german --liament tariffs on jerk the tropic ministration will allowed the te to resume some business activities. that will not be soon enough to keep zte from losing a contract in italy. president trump has thought to ease restrictions in posed onzte after it violated a sanctions agreement. prime minister theresa may faces a showdown with her cabinet over brexit.

it colleaguess want her to explain plans to keep -- some of them fear the proposal would keep the country changed to the eu cost terror regime forever. all 12 boys and that soccer coach trapped in a flooded cave in thailand are healthy. the doctor is looking after them. authorities say they may have to dive to get out of the cave but that cannot happen until the boys in the coach have been trained. global news 24 hours a day on air and on tic toc at twitter powered by more than 2700 journalists and analysts in more than 120 countries. i'm emma chandra. guy: thank you very much. the fed releasing minutes of its june meeting tomorrow and the ecb contemplating operation twist. we will talk monetary policy next, coming up. ♪

guy: 8:11 a.m. in new york. fourth of july. it is early. i'm sure it will burn off later on. the big apple is closed for business today. you are seeing light volumes in terms of the way european markets are trading. better sentiment tomorrow. some action to -- the eurozone

regaining some momentum in june. us, lothar mentel. european growth, let's talk about where we are. there was a fear that we were slowing down. thatre, but whether or not was a temporary phenomenon or whether that was going to be sustained was the big question. we see data today that is -- we slow down a little bit but now we will see a degree of stabilization. lothar: we have stabilized at a high and healthy level. we always thought the slowdown was driven by the strength of the euro. the dollar has strengthened so that has helped the euro so that has come back. things are going quite nicely for the moment. obviously there's trade wars on the horizon. that is the big possible upset. guy: it is a: 12 in new york.

i have a day off on thinking of how i will run my portfolio for the second half of the year. i was positive on europe and i got a decent return. what am i thinking europe looks like as an investment case in the second half of this year? lothar: the way you need to look at europe is not just a whole by the index. you need to look a little bit further down and realize there's demand.re domestic in the u.s. or u.k. when consumers are stretched in terms of credit. there is a big domestic story going on in europe. people across europe have not had that great a time over the last 10 years and now it's getting better and they are not really too worried about the global trade perspective. that has been where we have positioned themselves. more domestic plays.

guy: let's talk about how the currency is going to affect all of this. -- i a big factor in how have dollar base here. looking at the european markets. if i look at the dax, i marty down 7% this year in dollar terms. if i'm looking at a bunch of 5.5% year to date. that is a big difference. how much of a u.s. investor the numbers hurt by on the right-hand side of the screen? lothar: that is why we are seeing so much dollar repatriating from the flow side back into the u.s. and pushing things there. , thatk going forward

upward pressure on the dollar is probably going to be easy. -- be easing. that may be a good entry point. guy: how big a boost our european companies want to get? .hey're all wincing about 120, 125, that they were getting hurt. a big factor in terms of every statement we got out from a eurozone come. in 116 now, that should turn around. a tailwind rather than a headwind. lothar: that is a real problem now that things are getting better. let's not forget china as well. china also had an impact on europe. china is still slowing on the construction side. also stabilizing. things could look up more on that side for europe. guy: the dollar has strengthened. china, much more

stable. the european companies have an advantage if they look east ravens in west in terms -- rather than west in terms of stability stories. >> probably less risky but with china going through cycles up and down on the demand side and that is what hurt europe it was not the currency. it was china's slowing. a double whammy with the dollar strength initially weakening which hurt the companies. now those things are moving away. guy: does the ecb remain as a significant provider of stimulus across the horizon? tighteningy are of a but they will still be providing liquidity. globallying down and we are entering tightening. taking into the equation. that has been a big team so far this year that the tightening of

dollar liquidity has caused upset around the world. guy: we're going to get fed minutes tomorrow. thinking about the ecb. the u.s. economy is benefiting from the sugar high generated by the tax story. it's probably going to elongate the cycle. let's say the cycle rolls over back end of 2019 into 2020. that is the point the ecb is probably going to be hiking rates or at least thinking about hiking rates. it will be some of the else's problem. that is probably what's going to be happening. how does the ecb stop at that stage. the euro going through the roof? lothar: it would be an issue. we will get a message tomorrow that the ecb, while being easy on the monetary side at the moment, is also on the path of tightening because they do want to get a little bit back under their belt.

guy: how much can they do before the u.s. rolls over? lothar: it's going to come to the cycle at some point. but cycles do not die of old age. and of 2019, who knows. trump could kill it prematurely as well. this could carry on for quite a while. it's a bit uncomfortable for the ecb because they could not defend so well against a downturn across europe or the world. guy: how worried do you think mario draghi is about this trade story? if the u.s. turned around and goes we're slapping huge tariffs on german cars that is a big blow to europe. lothar: generally across everywhere the impression that i get is that everyone is saying we know there is only losers and even trump knows there's only losers if we really get into a proper trade war.

therefore, it will not happen. guy: that is logic. the politics says he's approaching the midterms and wants to appeal his base. lothar: yes. so that is where it will get more fears over the summer. the last thing he wants is putting any hurt or damage on to the u.s. economy at a trade war, even though as we heard from the previous guest might not hurt as much, it would hurt the u.s.. guy: denmark's biggest bank in the spotlight. latest allegations facing danske bank. bloombergjoin television, bloomberg radio and tick-tock on twitter for second annual coverage of the july 4 boston pops fireworks spectacular. all starts off tonight. it :00 p.m. eastern tonight. only on bloomberg. ♪

guy: i'm guy johnson in london this is bloomberg marketsguy:. let's get a business flash, a look at some of the biggest business stories in the news. of h and a group has died. he died after falling from a 50 foot cliff while on a business trip. he was 57. h and a is trying to recover from soaring cost after years of expansion. the company has sold more than $14 billion in assets this year. the clock is ticking. bloomberg learned two automakers have given themselves two years to decide on possible merger. they will look for an

alternative mechanism to enhance the partnership. supermarket and restaurant chains in the u.s. are suing the poultry producers for allegedly fixing prices. tyson foods and pilgrim's pride are among those named in the suit. grocery change such as public -- tyson says the lawsuit is unfounded. bankshares in danske calling by the most since 2016. the base lender faces money-laundering allegations. -- let's talk a little about this story. it's been kicking around for a while. so what is new? the ceo has already apologized.

>> it has been kicked around for a while. , one of the biggest newspapers here had a story that a $.3ount of money was -- billion. more than twice what was originally thought to be announced. it has triggered a huge reaction. politicians announced falling over themselves reacting to say they want to do something. saying what we have done so far is not enough. guy: what kinds of repercussions could it be. branch: the problem is a estonia where money-laundering is alleged to have taken place. the issue is the authorities in denmark say there are limits to how far they can take case. the other issue is there is a statute of limitations.

happening during a time when eu regulations on money-laundering left several gaps so the shenanigans could take place without necessarily ending up with one clear authority. specifically tightening legislation around money-laundering. the minister in charge has me clear it difficult if not impossible to me any of that retroactive. guy: who is damaged in all of this? credibility, where does the blame actually ? it's a good question. it gets to the heart of the sense of indignation. that tim scott is just going to get away with it. ke isof what -- that dans

going to get away with it. with ganske, the ceo has said he discussed with the court whether he should step down. the board agreed he did not because he is the best man for the job. its is thischanged minister. the minister in charge of financial legislation. guy: thank you very much, tas neem. we will take you to abu dhabi. that is next. 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. guy: i'm guy johnson and this is bloomberg marketsguy:. but stick a look at where indexes are trading in europe. you lost a huge chunk of volume

if you have been watching over the last couple of hours you will notice these really have not moved great deal. the reason for that is with the incredibly light volumes. tech stocks are under pressure in europe. the result of the micron story. there's no real narrative coming out of the european space. overnight.softer that was the real story. much't know that there is you can hang your hat on in terms of taking the narrative way. volumes are light. stocks 50 getting habits normal volume. across asset walk you around the world give you an idea. this is the picture. 141.dollar trading 116 stabilization within the chinese currency. the we continue to see weakness in chinese equities. people are talking on shore in china consulate in 2015.

that was a tough period. unds -- brent is trading 78.10. whether or not saudi can actually deliver the action pass of a. emma: british police say two people are in critical condition . it's a place in amesbury eight miles from where a former russians by and his daughter was with a nerve agent. counterterrorism police have joined the investigation. najid was arrested -- he denies wrongdoing and says he will fight the charges. in the u.s. senate intelligence committee is supporting the findings by u.s. spy agencies

that vladimir putin meddled in the 2016 presidential campaign. the panel says putin and the russian government developed a preference for donald trump. the president tweeted that russia said it did not interfere . there's a report that epa administrator scott pruitt asked president trump the fire attorney general jeff sessions so he could take his job. trump advisors shut down the idea. global news 24 hours a day on air and on tic toc at twitter powered by more than 2700 journalists and analysts in more guy: thankuntries. you very much indeed. backling plans to scale the carriers global ambitions. generated by his predecessor. cranny. to manus

point in aunctuation broader transformation program. we have a wide range of businesses. we've got interest in our travel management business. interest in etihad engineering. a,have partners such as jet waze, virgin australia. seychelles. in the past, we had the complete management structure that set over the top of that and pete has done an incredible job of leading them through a fascinating time of growth. we have a group structure that set over top of that. what we're doing at this point in time is rationalizing, taking layers out. simplifying it.

making it more fit for purpose and taking over head out. >> draws me straight to the question either going to be job are you going to make cuts to achieve the vision that you want? . >> there been a number of thousands of employees that have repeatedly had to leave because we have started to right size to adopt a posture that is more fit for the business we are today. the reorganization from a management point of view that we've announced today is another part of that but it is not aimed specifically at taking yet more numbers out. inevitably it will do. ,his is about being more agile having greater clarity. being simpler in the way we --rate and actually reducing

it is important that i had it is not just around the top table. it is about how stands in layers get reduced across the whole organization. manus: you mentioned equity partners, something which i want to get a feel for. you?mportant are those to where do they fit in the vision? huge importance. we have significant investments in all of the lines you just mentioned and we are very passionate and the way in which we continue to develop those relationships but it's important to come back to the business that we are. 90% of our revenues come soetihad is the core line where we put a disproportionate amount of our assets.

of abu dhabi to the world. remarkable rant that stands on its own legs anywhere on the face of this planet. so this is the focus of encore. making clear that the other fall of our businesses are important to bank. from: will you move away hub to point to point. ? >> delighted to be back in abu dhabi. even more special when one sees the way team abu dhabi plays together. so at the moment we're working closely with the tourism and cultural authority and with the airport company as team abu dhabi and it's encouraged through the wisdom of the leadership part of the tourism had to is working witheti

attract more point-to-point traffic to our dobby in order to take advantage of the destination experiences that have been invested here in in years. later on this month, the world biggest indoor theme park at warner bros. world. what we are doing is trying to have a possible tribute to the change and shift from transfer to point-to-point. manus: what the marketplace is going to want to know, do you plan to take -- where is the equilibrium for you. --? ? >> networks need to be reanalyzed. years ago it would have been quarterly. today i would question it needs to be minute by minute. you will have seen in recent

past routes that were profitable for us. we're not shy and taking them so regrettably, san francisco, edinburgh did not work for us. we could not see a way that they would be economically sustainable. the flipside is where we see greater opportunity emerging such as stock press. we put barcelona on. to make sure that we are more agile and nimble in the way in which we adjust where the market actually is. that is the heart of a modern agile flexible airline. guy: that was tim douglas, the new ceo at etihad. his predecessor put etihad into a lot of different businesses. unwound and a focus on core business.

let's talk about how the trade story is going to ripple around the world. we are still trying to understand the unintended consequences of what we will see here. how much clarity do investors have? technologyney into stocks. the technology stocks get sucked back in. how much visibility? i'm making investments in the moment. that is lothar: exactly the problem that the investment managers have and how do we steer around that. focusing a little more on the domestic place. in europe, those companies that are less focused on global trade, more dependent on domestic consumer spending because europeans still have deep pockets. they have leveraged themselves -- they have not leveraged themselves quite as much as the

anglo-saxon world. the collateral damage is not clear and it is not clear how far trump will go. does he understand when things are starting to hurt? guy: do i pick small caps over big caps? lothar: that is what we have done so far. we've gone more for small caps in the u.s. and fared well with them. we are worried about where the tech stocks has taken the u.s. market. feels exposed. so we're staying clear of the tech stocks. you pick a domestic stock and think i'm safe there. but how much visibility -- the supply chain story. you can look at a company can understand its supply chain a little more. how much understanding do you interconnected --

lothar: we don't like to be equity on the way. this is unnerving at the moment. not -- theyhave not don't price it in. they seem to think it's not going to happen.

guy:guy: 44 minutes past the hour. this is bloomberg markets. guy johnson in london. u.s. markets closed for the holiday. not much action in terms of the numbers we are seeing in europe. where we are seeing some interest is what is happening in the crude market. a bunch of factors coming into play. you've got the question as to whether or not we are going to be seeing saudi arabia able to generate the capacity up lift being suggested at the moment. can it compensate for iran.

the bottlenecks generated in the united states. pi and grant have close up. technology has been an area -- the markets have become increasingly narrowly focused. wholeas done well but the story has generated a right spot for equity markets. .e see oil prices coming up integrators taking advantage of that. most people tell me that is reflected in the price. how much more upside is there if i am investor for the oil stocks? doing want the integrated or down the supply chain? lothar: there's probably upside in oil stocks. not sure about the oil price. there is currently in a location that oil prices my all -- might fall. we have this high level that brings on further supplies a good expected to go down. pressures andn

the global economy doing quite well. that increases the demand side as well. i would not expect the oil price to go down much from here. welltocks could do quite in that environment. i think theo biggest bang for my buck is? the biggest problem dealing with the supply constraints in the united states. you need to build more pipes. a look at what's happening in howi arabia, you figure at to get more capacity out. even russia is spending a lot of money in terms of capacity. does the biggest value lie in the supply chain story? lothar: you just answered the question. because we have that demand the supply is getting a lot of investment. there is more significant, more interesting upside created.

with the pipeline concerns in the u.s. it might just be rail, trucks. guy: simple as that. the stocks kicked out decent dividends? lothar: you can look at -- there are tech stocks that kick out a dividend. barbell one side the tech sector and the oil industry which kicks out a decent dividend. that is not a bad place to be at the moment. lothar: you can play that and those are the diversified plays in a multi-asset portfolio that is what we like to do. that is how you get to decent returns over the course of the year. guy: in terms of what you are expecting for the second half what you looking at? lothar: we are looking for a slightly better second-half the first. a lot of things we were fearing the secondhappen in half they happened in the first and things are stabilizing. currencies have stabilized. unless donald really throws that

trade bomb, things should look up. with earnings not so much under pressure anymore as they were before. quite stable in the outlook. equity markets have outside -- have upside. guy: can i just go out and buy xp indices at this point? reallyket has gone focused on a few key sectors particularly in the states. thewondering how much risk market is carrying from a structural point of view with that highness we've seen. lothar: we had been underway with the neutral weight more recently. py. u.s. feels top behaps you don't want to overexposed to the u.s..

there's better value to be had in europe and potentially japan. guy: lothar mentel of tatton investment management. it is the battle of the sexes. a study revealing which gender stays calm under stress. ♪

guy: 51 minutes past of the hour. this is bloomberg markets. a time for a bloomberg business flash. some of the biggest stories in the news. emma: uber wants to resolve a costly rivalry in the middle east with a deal. are ind kareem networks talks to combine their ride hailing services. uber is seeking a majority stake . kareem has been raising money at 1.5 billion dollars valuation. it's become clear why saying

chain's comparable sales rose at the slowest rate since 2016. regulators expects -- u.s. television ratings for the world cup have plunged from four years ago. the u.s. team did not qualify for the tournament this time. nielsen says the ratings on fox and its sister sports channel are down. a different story in the u.k.. that is your bloomberg business flash. guy: i was just discussing that lack of audience for the world cup. i'm surprised. fantastic tournament. plenty of volatility. let's talk about volatility from a different angle. it volatility is the new norm,

women are more likely to keep their cool. a study from nutmeg saving and investment. sammy burger joints me with more. -- joins me with more. >> this is surprising. among at i'm not an anthropologist, but not make, the u.k. base robo advisor of their 50,000 consumers on their platform women were four times less likely to sell during a market panic. think brags it, ash think brexit, women staying put. guy: does being called translate returnsdani it is interesting that nutmeg did this study. it: you will be saving for the long-term. you would be hard-pressed to find any sort of investment professional who would tell you trade in and out of the market as a long-term investor. city for retirement, it makes sense. guy: these are long-term

investors. dani: this is not fun money to play around with. you should stick in the market and not trade back and forth. studys one morningstar does every year. only 10% of the money management industry are women. the only amount that runs mutual funds. is it because of some performance issue? it is not. especially with income fund and active mutual funds, women do a lot better. a lot of it has to do with what not make observed. tend to have women high convictions which leads to good results. guy: if you take a step back at what this is, where this is taking us towards, the industry is keen to bring more women in for investments. what is that long-term going to mean in terms of investment performance of the wider markets? dani: this is why people keep

bringing up the studies especially when we think about the market environment we're in. where it seems that short-term crashes, these monitored -- these momentary blowups are the norm. perhaps we are more easily to navigate that with more it women in the industry. it is still very low numbers. performance not contributing to that so something is going to need to change. lothar: the numbers speak for themselves am not entirely convinced. that study is about down markets. what about up markets? i just wonder whether women, particularly the longer term investors are slightly less inclined to take a bit of a gamble and risk for that matter than men. and then therefore get it wrong more often. on the retail side -- is: what i've always learned to protect the downside in the upside will protect itself. i'm saying females on

the retail investment side are a bit more passive, not as active as men. that's not a trading platform. if this study came from one of ,he spread betting setups different story. these are sort of longtime -- us. matters usually to we say the biggest risk to private clients long-term return outcomes is usually the investor themselves. guy: thank you very much for your time this morning. dani burger., this is bloomberg. ♪

♪ guy: 9:00 a.m. in new yorkguy:, 2:00 p.m. in london. i am guy johnson. this is bloomberg markets.

coming up, china temporarily fanning sales from icon, -- macron as trade tensions and testify that intensify. asian stocks overnight looking a little sad. the ecb will introduce an operation twist setting the yield on france's twenty-year bonds to twenty-year lows. let's talk about european equities and how they are trading right now. actually, let's not, because not a lot is happening. the u.s. is on holiday. i do not think the board has changed a great deal. volume is down sharply. everyone is thinking about the world cup.

let's talk about what we are looking at cross asset. this is the picture we are focusing on across the world. they are managing to stabilize the chinese currency. pboc behind all this and stabilizing at. the chinese equity market is starting to fall. the 30 year bond in germany is trading .29. i do not think you will see much movement until the states rejoins tomorrow. joining us now to discuss all of this and the football is kit juckes, from socgen. england can now win on penalties. , butthe law of averages yes, i suspect they practiced which they did not used to do. guy: maybe the psychology is

working as well. the swedish krona is big. does that have any concerns around the game? kit: i nearly wrote about it. is theombian peso strongest currency in this half but settling back a little bit today. the swedish krona looks fine on him multitude of dust on a multitude of fronts. -- on a multitude of fronts. guy: let's talk about the stabilization of the chinese currency over the last 24 to 48 hours. the delta that the chinese were worried about, what was the rate of change concerning them? kit: you could take this two ways. you could probably get 10 people like me on here who will say they really want to have a weaker currency. they tried this in 2016 and 2017. it caused mayhem on their balance of payments. they took a view they would

rather have stability. once you start with that, you say what are they doing? the answer is it is hard not to conclude to some extent that if the currency started to weaken, we are not going to intervene to stop this thing weakening against the u.s. dollar. when the cause of the volatility is them attacking us on trade, so let's let it go. if you start from that perspective, yesterday was saying, enough. we are not trying to go out into a full currency war, but if we do nothing this will happen. guy: i think there was a double message here, which is basically, we will slow it down for now. you have now seen what can happen. that narrative is the more important one here. there is a passive threat here. kit: i come back to my first point, if your principal concern

is to maintain control and have stability over capital flows as you manage this economy with its large foreign currency denominated debt levels, with its large shadow banking sector, with the issues of an economy that is slowing, all the things we know they are trying to do, actually letting the currency get out of control seems like a bad idea. how far they would be willing to go from their own perspective, who knows? interesty there is no in the chinese having a significantly weaker currency, if you put a chart up at any time of the dollar index against the chinese yuan, they are much more highly correlated than they used to be. if the dollar goes up, the one will weaken against the dollar and if they australian dollar weakens -- they have no interest in seeing their currency strengthen across the asian

continent. guy: it was interesting they talked about this fact that they are not weaponize in their currency and the fact that they say they are not doing it means they could be hanging it out as a possibility. retail investors are talking about 2015. how big a worry is that for the chinese economy? kit: i would not be surprised if we got a policy response to manage the slowdown in the domestic economy, manage the weakness in the domestic equity market between now and the end of the summer. that is much more part of their control, we know the economy needs to grow but if we slow that too much, we will start to ease monetary policy. if the s&p falls too much, i am sure the fed will stop talking so aggressively. guy: maybe the president well as well. we will watch. the chinese, when they look at

what is in front of them, they know on friday they have a bunch of tariffs coming on. how much of that has been front run by the market? , in termswe priced in of the trade story thus far? -- theree is a pricing is an awareness that the tariffs are coming on, that there is some residual will donald trump wake up and say, no, we are not doing this, between now and friday. i think the market expects something, has been told the chinese will not front run. they will react but they will not move before. i do think it will be helpful for the currency necessarily, but if we see an impact it will be much more in the equity market than the fx market. guy: the person that seems most freaked out by all of this is angela merkel, now that she

stabilized her government. i just wonder whether or not -- i'm curious to get your take on how to take this priced into the euro. in theory, the germans could be the big loser. kit: we saw weaker chinese data at the beginning of this year and a translated into weaker german data pretty quickly. as the chinese data appeared to have stabilized, so has the german data. it is an important trading arrangement. yuan, iteaponize the is a big part of a trade weighted europe now in a trade weighted german euro right now. the german economy is pretty tied in and they have to make up their mind, are we going to join more with china in a joined up response to u.s. trade aggression, or how does this play out?

angela merkel does not need the european economy to start slowing any more than it already has. it looks very much as if we are stabilizing. we have had a soft patch and we are coming out of it, the sun is shining. guy: you saw the pmi data that came out earlier. i want to get your take on what would happen in europe if we see the auto sector dragged into the story, because that would be a big shift and that is what merkel was referencing. kit juckes will stay with us. let's check the bloomberg first word news. emma: china says it will not fire the first shot in a trade war. there were reports because of the time difference, china would impose tariffs while it is still friday in the u.s., before the u.s. has put tariffs on chinese goods. china announce those tariffs are in retaliation.

angela merkel has raised the specter of the global financial crisis in addressing the burgeoning trade war. she says the global response to the market down a decade ago shows that cooperation worked better than one-sided messages. in the u k, prime minister theresa may faces a new showdown with her cabinet ever brexit. brexit learned her senior pro-brexit colleague wanted her to explain plans to keep the the more tightly close to euro area trading. in thailand, navy divers say all 12 boys and their coach trapped in a cave are healthy. authorities say they may have to , butto get out to the cave that cannot happen until the boys and their coach have been trained. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries.

i am emma chandra. this is bloomberg. guy: thank you very much. the fed releasing minutes of its june meeting today. the ecb contemplating and operation twist. let's focus on what is coming up later today in the united states, in boston specifically. television,rg on radio, and on twitter for the boston pops fireworks spectacular. starts tonight at 8:00 p.m. eastern time, only on bloomberg. ♪

♪ live from london, i am guy

johnson. the ecb's rate debate back on. 10 years since raising rates and some are saying it could wait too long to tighten once again. joining us from frankford is the bloomberg ecb reporter. year, got the french 30 yields coming down because there is talks of maybe the ecb introducing some form of operation twist. walk me through how that could work mechanically. >> i think these changes are a bit premature, because we still do not know to be honest. peter price, the ecb chief economist has flagged the issue that as time goes by, the average maturity of the bonds in the ecb's portfolio will decline , and even as much as they

invest, it will probably not be enough to restore the duration to the portfolio. whether they will try to counter knowis something we do not and has not been discussed, and probably will not be discussed until autumn. guy: this is having a market effect. how would it work from a p point of view? -- capital key point of view? kit: italian -- alesandro: italian maturing government bonds, the capital will have to be reinvested in an italian government bond. whether it will be the same majority or what kind of bond, this is unclear. we expect in the next couple of months some guidelines or clarity on how they will reinvest and what kinds they will invest in.

one of the things people are looking for from the fed tomorrow is to give us an idea of how the fed feels about the trade story and how it will ultimately impact the u.s. economy. what hints are we getting at of the ecb? angela merkel was at the bundestag earlier making some warnings about how this trade story could end up affecting europe. alesandro: there is widespread concern in europe and the ecb and central banks, about what the impact of their protectionist idea would be. the effects are small, and there are risks on confidence and investment from gloom in decline in the outlook. pmi is going out because domestic demand in the euro area is solid, and it is the main driver of the recovery of

growth. it may be a bit lower than what we saw at the end of last year, because it was a small export down which is this a -- boom, which is dissipating. guy: great stuff. thank you very much indeed. joining us out of frankfurt. still with us, kit juckes of socgen. why is the fed talking so much about the flat curve? kit: i wish they wouldn't. people like me have an expectation of where fed funds are going that is driven 90% by what the fed is telling us. amount ofdone a huge work rebasing our expectations about where neutral policy is, and getting us used to the idea that just under 1% is where neutral would be in real terms. ,e price one year rates

five-year, 10 year rates just above three, but we assume the fed is on a journey to a 3% fed funds peak. that is what they have taught us to do. -- told us to do. as we get closer to the top of their level, we will have a flat curve, and if they have to say because of inflation and trade war we may have to get above neutral and have tight policy, presumably i am supposed to have the one year and one year higher in five years. we should expect flatter yield curves where if we got lower neutral real rates, we should expect flatter yield curves. if we have more guidance from central bankers, and if i were the central bank i might be telling people this does not mean every inverted curve is followed by a recession. a very clearly believes

flat or inverted yield curve is dangerous. beats me, frankly. i could listen to shows on bloomberg where it is very clear that there is a consensus among a lot of people. guy: you have clearly spent a lot of time listening to bloomberg, and people talk about recessions a great deal. what you told me when he said down is when you go talk to people in the, that is not the message you are getting. kit: not from american corporate. big american companies hereby might do business with my employer, and hedge funds and institutional money managers, they are pretty optimistic about life in corporate america at this point in time. it is going well. their concerns are about how expensive it is to hedge their earnings in argentina for turkey on what is happening in china, will they let the yuan weaken? but business is good. say, thisn around and

is an economic cycle that did not need the adrenaline rush of the last fiscal ease, given it is a pretty middle-aged cycle, they turn around and say, surely it could go on for a while. guy: is that 18 months, 20 months? kit: there is no reason why an economic cycle should rollover unless there is a catalyst. becauseet into trouble there is some wage pressures in a tight labor market that forces companies to raise prices and that makes central banks raise rates. the cycle does not have to end. what is happening at the moment, late cycle fiscal easing makes an earlier end to the cycle, but at the moment it looks fine. guy: kit juckes joining us from socgen. join bloomberg television later andand also on the radio twitter for the second annual

coverage of the boston pops fireworks. matt miller is there. it starts at 8:00 p.m. eastern tonight, only on bloomberg. ♪

♪ guy: 22 minutes past the hour, this is bloomberg markets. i am guy johnson joining you from london. time for the bloomberg business flash. emma: the cochairman of struggling chinese combat out -- conglomerate hna has died after cliff. off a 50 foot he was 57. hna is trying to recover from soaring borrowing costs. they sold more than 14 billion dollars in assets this year. it is a money laundering case denmark, the

estonian operation of danske bank may have been used to launder as $8.3 billion. they do not know who is behind the transactions, but previously showed funds came from russia, although the, and azerbaijan. bloomberg learned the two automakers have given themselves two years to decide of a merger or they will look for an alternative membership. that is your bloomberg business flash. guy: thank you very much. uber is in talks apparently for a majority stake in its middle east driver kareem. the companies have discussed the number of potential deal structures. joining us from dubai is matthew martin. how advanced is this? matthew: i think at the moment, talks are still at a preliminary stage.

there is a number of different deal structures under consideration, ranging from either over completely taking to just taking a 51% stake in some sort of merged entity, which could spell into both of the brands operating even though they would be owned by essentially the same company. it is clear both companies are quite keen to stop the cash burn they are going through in competing in this market. guy: i am presuming this is in advance of coming to market. how competitive is it? matthew: it is very competitive. users of both services in the region will now, you are constantly inundated with emails and offers from both companies trying to attract your business. in places like saudi arabia, where intel recently women were

unable to drive -- until recently women were unable to drive, kareem and uber have been resources. this is a region that is very car dependent. there is very little public transport in the middle east, so these ride-hailing services have filled the gap where public transport exists in other cities. guy: has this competitive landscape been putting investors off? kareem has been talking to banks about putting more money in were taking the next step. are investors concerned about the cash burn and how competitive the market is? matthew: i think so. as much as the middle east are still growing economy, they are coming under some strain. the oil prices are impacting valuations. as a result of the impact it has on consumer sentiment, and

careem's last disclosed financing valued the company at $1 billion, making it one of the few to have reached that sort of valuation. talked ton trying and investors about new fundraising that could value the company up $1.5 billion, potentially an ipo. those talks have been going on a long time and it has not been as easy to sell this time as previously. guy: matthew martin joining us, thank you. we will discuss what is going on in the crude market, coming up next. this is bloomberg. ♪

♪ live from london, i am guy johnson. this is bloomberg markets. let's look at where equities are trading now. we do not have a lot of volume

so there is not a lot of movement. .e are seeing very low volume everyone has their feet on their desk as a result of the u.s. not being bayer. we will probably -- not being fair bank. beinghere. asian markets and chinese market sold aggressively overnight. let's take a look at the cross assets. we will be talking about the oil price in a minute. 74.75.rading at that's 77.75. a .29 handle is worth paying attention to. euro-dollar, 1.1641. the dollar is weakening up a little bit. let's get a bloomberg first word news update with emma chandra.

emma: british police say two people are in critical condition after being exposed to an unknown agent. just eight miles were a former russian spy and his daughter were poisoned with a nerve agent. howard terrorism police joined the investigation. najib was arrested in an investigation involving 1mdb. he says he will fight the charges. in the u.s., the senate intelligence committee is supporting the idea that metalir putin modeled -- in the 20 election and developed a clear preference for donald trump. there is a report that epa administrator scott pruitt directly asked president trump to fire jeff sessions so he could take his job.

trump advisors immediately shot down the idea. at a time when the president was frustrated with sessions and considering replacing him. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. chandra. this is bloomberg. guy: thank you very much indeed. brent absolutely flat as we speak. julian lee joining me now to discuss what is going on. massive -- massive questions being left unanswered at the moment. we do not know how much the saudi's have got and how much the u.s. can get its capacity to the market and to refineries. we do not know how the trade story will affect all of this. a bunch of factors are affecting the oil market and the shape of the wti curve is weird at the moment.

let's segment it a bit. what is likely to keep prices where they are now? julian: what is keeping prices elevated is this huge uncertainty building over the pace at which iranian exports will fall as a result of sanctions. how effectively saudi arabia and russia and anybody else with any spare capacity will be able to offset that decline. just how many other countries inside and outside opec will continue to see falling output? i think are keeping support on the prices. you add to the fact the spectacular growth we have seen in u.s. oil production, particularly from the permian basin, is starting to run into roadblocks. there is simply not the capacity to get much more oil out of the permian basin in the short term and may not in another 12

months. curvehe shape of the wti is really steep at the front and kind of shallows out. i do not think either one is particularly wrong. they are reflecting different views about the short-term and longer-term. if you look longer-term, there are growing concerns about the strength of oil demand going forward, particularly if the trade war heats up. that could have a negative impact on demand. high prices could have a negative impact on demand. once you look past the second half of 2019, you see a lot of the take bottlenecks from the permian easing as new type lines are built. -- pipelines are built. what the front is reflecting is the short-term concerns about

the disruption coming to iran, the disruption we are seeing in libya, the collapse of venezuelan production, all of those things plus u.s. inventories coming down. last week, according to data from the american petroleum institute, that is feeding into this front and strength. guy: what impact does this have into the foreign exchange world? there is a number of easy examples, turkey for instance. this hurts turkey in a meaningful way. if oil prices stay elevated as they are now, where does the maximum pain felt? more,rom people who pay because this has not fit with the narrative of stable prices which we have had around the market. the big killer is what happens if you start seeing higher inflation but not higher growth.

you stop worrying about the fed normalizing policy and start talking about, they will have to go beyond where they wanted to go because they are worried that --ally we are seeing some that is a worry across the emerging-market, or anybody who is u.s. interest rate sensitive. traditionally, if oil prices spike, japan is a loser and a lot of asia is a loser. turkey is the big emerging-market loser. all of that is probably smaller than what happens if you start sending 10 year note yields on the other side of 3% at the same time as people worry about the growth outlook. aside, let'san talk about petrodollars, the availability of dollars outside the united states and if you are

in the gcc, how this works. the oil price has come back up and you and i were discussing, domestic demand is greater. how does this affect the dollar moving around the world? kit: it starts boosting the dollars moving around the world when they start filling their coffers in foreign exchanges or sovereign wealth funds. large energy companies are raising money to bring in an boost a lot of investment, a lot of planning for life after oil. what can we do more from refining and petrochemical's to get more dollars internal a from each barrel of oil boosting domestic employment? that is easing into the overall balance of payments picture. odthink you need a long peri of $70 or $80 oil before you

talk about the middle east as a spare investor. people wanted to get investment in. guy: there was this kind of story floated around for a while that one of the factors that the saudis are thinking about is the aramco ipo. that seems to be pushed back further and further. does that mean i can extend the saudisat which 70s -- want to extend the oil prices? .ulian: i think so there has been a narrative that saudi arabia needs a price around $80 a barrel for aramco. if you are looking to invest in aramco, you are probably looking much beyond the current price and what is more important is the price of oil five to 10 years out rather than the price of oil immediately. we are back to the shape of that curve. there are other challenges as well.

the very fact of this tweet from president trump's over the weekend saying, i have told the king of saudi arabia he needs to produce another 2 billion barrels of oil and he agreed. what does that do for corporate governance, for aramco? that is where it would come from his saudi arabia were to boost production by 2 million euros a day. now we have the u.s. president dictating corporate policy for a listed saudi aramco, how does that work for an ipo? guy: you have to join a lot of dots. somethingricans know that we don't about the available capacity the saudis have? the mechanics of getting the saudis to do with the president would like is always the engineering challenge. julian: according to saudi aramco, the process of getting from where they are now, a bit

above 10 million barrels a day to 11 is relatively straightforward. they can do that relatively quickly. , runningning valves their dewatering plants, their gas-oil separation plants harder. to theumping more stuff export terminals on the persian gulf and the red sea. once you go beyond that 11 billion -- 11 million barrels a day, it gets more complicated. it will take six to nine months to get their and that will take thrilling wells, linking some of the fields that have been partially developed and not fully developed into the structure, pipelines, plants. that will take longer. saudi arabia has never produced more than 10.6 million barrels a day of oil for any length of time. anything beyond that is uncharted territory. guy: bloomberg's julian lee,

thank you for updating us. thanks to kit juckes as well joining us from socgen. you will stick with us. head ofhear from the one of the largest bourbon distillers in the united states. matt miller i am sure will be paying attention to that. bloomberg television and radio along with twitter for the boston pops fireworks show tonight at 8:00 p.m. only on bloomberg. ♪

♪

guy: live from london, i am guy johnson. one of the products targeted by tariffs, julie's hyman sat down to find out how his business is reacting. >> for us, the effect will be minimal. an odd thing happened when bourbon took off in the united states. we in essence he laid all of our plans to develop the international marketplace in order that we could continue to supply the u.s. market. it did not seem appropriate to us to be shipping whiskey out of the country if we had not taking care of demand in the u.s. business we do

outside the united states is minimal at this precise moment in time. does that give you any kind of competitive advantage as well? >> know, i think the whole the whole subject of tariffs is familiar for our industry. we deal with high tariff barriers and nontariff barriers and a lot of countries, so globalization for us has been an important ongoing project. we are anxious to see trade barriers and tariff barriers come down, and for us that is a long-term project. the current situation to us is it is hard to tell whether this ora one-week tariff -- tiff a one-month spat or part of a large deglobalization initiative. we are making whiskey today for

2025, so we were thinking about that, we could have gone through two changes in administration by the time the whiskey is ready to sell. about $1.2sting billion expanding our capacity and our storage for barrels. if we can be ready in 2025, 2026 to start expanding globally, so the current tariff war to us seems to be rather a small affair in the larger scheme of globalization. julie: you are looking further out. on that point, it used to be that scott outsold burden worldwide by a 4-1 ratio and bourbon is catching up. billion in sales for scott to last year, $5 billion in bourbon. it sounds like you think the trajectory will keep going. >> we are excited about the global whiskey market.

out of 3 billion cases of distilled spirits sold around the world, whiskey in general is about 20% of that. it is the universally accepted premium spirit category. at around 475 million cases. is 27., by comparison, whiskey is an exciting category and scotch has had a tremendous lead on bourbon. now it has become very andetitive with americans other players, irish, japanese, canadians. we are all vying for a share of the expansion and the current share of the marketplace. it will be a lively next 25, 30 years. you aboutave to ask an unfortunate incident at one of your warehouses recently, that was much commented upon. heldf your warehouses that

thousands of barrels of bourbon collapsed, so you lost a lot of product. there are questions about bourbon getting into the local string. we have's -- stream. we have some pictures of that. talk about how it happened and what are the repercussions for the company. >> these warehouses are built very sturdily. surprisedve been less if the distillery was struck by a meteorite. we do a lot of work on those warehouses on an ongoing basis and they typically do not collapse. it is like going home and your house immediately collapses. it does not happen very often in the industry. .uy: pretty amazing pictures that was julie hyman speaking to mark brown. the issue of trade, obviously a big factor, but not for him

right now although he likes the global market. still with us, kit juckes of socgen. i want to come back to that story and the story we were talking about earlier, what is happening with oil. julian lee was talking about the fact that the issue of getting oil as the permian is they need to build new pipelines. the steel that is used in building those pipelines is no longer domestically made in the united states because the market is too small, and the trump administration has slapped tariffs on steel. that is an unacquainted desperate intended consequence of the trade story. how easy is it to map out the implications? you see that wto is not the world's best organization on trade, does not tackle intellectual property rights well and so on, if you see that what it was was a debating chamber for give or take on trade so americans could

have higher import tariffs on suvs and europeans could have low ones, it leads to specialization. european car manufacturers made their suvs in america, they their high-quality steel somewhere else, and everybody trades. we allgo tit for tat have to produce within our country all the things we use. actually, americans want suvs in america. i think you will see the story across a lot of industries. if you make trade tit for tat away from wto, in the goods industries what it has allowed everybody is to specialize more. guy: thoughts on saturday? kit: more hopeful than anything else. i am sure we will be fine. guy: we have a history with sweden. kit: the big history maker is

not around. guy: we will do quite well without him. 3:00 p.m. kickoff. kit juckes of socgen, thank you for joining us. could relief be emerging from turkish assets? we will be debating a potential turning point for turkey's market. this is bloomberg. ♪

♪ this is bloomberg markets. i am guy johnson from monday. -- london. beenting in turkey has not -- marcus ashworth writing, there is a case to be made for giving turkish investments a very careful look because now you are getting paid for the risk. let's talk about this.

this has been a difficult place for investors. you cannot head your investments when it comes to currency anymore. are there is here investments to make out there than turkish assets? marcus: almost certainly. the has always been a difficult place to invest, has always had high inflation, volatile interest rates, and a volatile currency. that is why people invest in it. domestic money has been fleeing offshore, scared about what erdogan may be or the results of the elections. if that much money was coming onshore back into turkey, which could switch around because erdogan comes out, july 8, he gets inaugurated, rebels his cabinet and his elect -- his plan -- reveals his cabinet and

his plan. for the markets, that is the one key thing. if he outlines a more independent or somewhat robust form of independence from the central bank, the lira may turn. he was sitting about a meter and a half over there about four weeks ago and he said with a presidency that we are starting to establish, i need control of interest rates and he said interest rates are going down. why would he do the opposite? has saidecause he exactly the opposite and several times reversed round. this is not a long-term trade. obviously, we have to watch and wait over many months and years on what his vastly increased powers transpired to be. here at the start, i think he lays out a much more

conventional, orthodox policy of central bank independence. guy: does he believe it? marcus: it does not matter if he goes through the motions. the market may not have a turn. guy: marcus ashworth joining us from bloomberg opinion. ,oin bloomberg television radio, and tictoc on twitter for the annual coverage of the boston pops fireworks spectacular. it all kicks off at 8:00 p.m. eastern tonight. it is going to be absolutely fantastic. happy fourth of july. this is bloomberg. ♪ what's a gig of data?

well, it's a whole day's worth of love songs. 300 minutes of baby videos. or, it's a million chat messages. a gig goes a long way. that's why xfinity mobile lets you pay for data one gig at a time.

and with millions of wifi hotspots included, you'll pay less for data. it's a new kind of network designed to save you money. click, call or visit a store today. ♪ mark: it is 3:00 in london, 10:00 in new york and 10:00 p.m. in hong kong. i am mark barton. welcome to bloomberg markets.

here are the top stories coming from the bloomberg and around the world. the fresh brexit show down from prime minister theresa may, her plan to keep the u.k. tied close to the u.k. -- to the e.u. strayed role. estonian operations of denmark's biggest bank may have been used to launder as $8.3 billion. china's central bank pledges to keep the yuan stable, but asian stocks not looking particularly inspired today. there is a holiday today in the united states. volumes are down in europe. a wonderful function on the bloomberg tells us volume

compared to the 100 day average, down by roughly 35%. london is down. france is barely changed. germany is a little bit lower. chipmakers are the worst performing group. they are falling after micron technology said it's chip's had fromtemporarily banned sale in china in a patent case. concerns about a growing trade war. interestingly, the tech sector within the stoxx 600 has sunk by 8% since closing at a 17 year high yesterday. you heard that right, a 17 year high on june 14. that is the wonderful w m function. european stocks cannot match the performance of the united states. most of investors favor

millennial tech stocks listed on the s&p 500. and the stoxx2% 600 is down more than 2%. that is the blue line, the s&p and the stoxx 600 is the white line. strip out technology, which is the lower chart, yellow line. i.t.e line s&p excluding and telecommunications, the u.s. gauge is down by 2.6%. even though tech stocks are one of the big performers, their share in the stoxx 600 is a mere 4.7% compared with 26% for the s&p 500. the uk's dominant services sector growing at the fastest pace in eight months, driving a bounce back in the economy, boosting the case for a bank of

england rate increase in august. ihs markets climbing to 55.1 last month. the report follows surveys on manufacturing and construction, showing stronger growth in the nation's manufacturing and construction industries. that suggests the economy doubled in the second quarter -- tofrom a lackluster lackluster .2%. estonian operations may have been used to launder as much as $8.3 billion according to a report. kronehan 25 billion initially estimated, 53 billion is the new figure. the bank expects the findings of in internal investigation

september. byske bank was reprimanded copenhagen in order to to hold an additional 5 billion krone in regulatory capital, among other disciplinary measures. shares are down 2.3% -- 2.4%. ailey: china says it will not fire the first shot in a trade war. there were reports they were begin this would begin imposing tariffs while it is still friday in the u.s. and before the u.s. does to chinese goods. china announced it would impose tariffs in retaliation. raised's chancellor has the specter of the global financial crisis to address the burgeoning trade war. the global response to the market meltdown a decade ago shows that cooperation works better than one-sided measures,

and warned that terrorists on european cars would be much more serious than duties on steel and aluminum. theresa may faces a new showdown with her cabinet over brexit. a senior pro-brexit colleague wants her to explain plans to keep the u.k. more tied to the e.u. world of trading. thailand, navy divers say all 12 boys and their soccer coach trapped in a flooded cave are healthy. a doctor is looking after them. they may have to dive to get out of the cave, but that cannot happen until they have been trained. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am kailey leinz. this is bloomberg. mark: thank you very much.

prime minister theresa may facing a fresh showdown over brexit. cabinetpro-brexit members are seeking answers on how the customs regime will work. us for more, and the ross thomas, bloomberg's brexit editor. where are we? emma: in waiting mode. what may is proposing, according to reports and what we have shened, it looks as though is proposing something that ties the u.k. closely to the e.u., particularly in the trade of goods. six to nine months ago it would've led to a huge uproar from the brexit backing faction. michael gove, who was one of the lead campaigners was on the radio saying he does not think there will be cabinet resignations. that is a big deal when you think about just how closely to the e.u. this plan would tie the

u.k. we shall see. noisecould be a lot of and there could be resignations. mark: can our body backstory imply that the loss of jobs would come from the prime minister side? they are not like, she will lose her job but she will force senators out. is she in control or are they in control? is it listen to me or lose your job or we will walk out? emma: it seems to be very much, you sign up to this where you quit. i have been talking to someone who said it would be rather good if one of her ministers quit, it would be good for may these of the her european colleagues. heard --v vie

s-a-vis her european colleagues. there are no serious rumblings of resignations but it is interesting to see how far we have, in just nine months. maytheme seems to be that wants to get the whole conservative party behind a plan . she will not rely on the labour party to help get this thing through. she needs to get something that her whole body can get behind. mark: what about the services side? emma: what they are talking about is mutual recognition and no to mutualsaid recognition, whether that is financial services or other services. they talk about post state rules which means the e.u. or member states would decide. it is a recognition from the e.u. point of view that it is rather dead. opinions vary as to whether the e.u. could accept this proposal.

depending on who you talk to, they might say no, but. there is something we can work with here. it will be interesting to see how they respond. mark: why aren't the brexiteers up in arms? why is all,? ?- calm> emma: they can count and they know the parliamentary arithmetic would be the same. while they may have enough numbers to trigger a challenge, they do not necessarily have one to win a challenge. may has made it clear that she would fight a leadership challenge, so having enough numbers is important. she would not just walk away if a challenge was triggered. there is this idea that if the brexiteers unsettle things, and there were a crisis and there were a general election, then

you end up with a corbyn government potentially who would negotiate a much softer brexit. mark: anything but corban? emma: the brexiteers' strategy seems to be keeping theresa may there as long as possible. mark: i like the corbyn may story that they are almost theirg into one person, views on brexit are sort of converging in the middle ground from where they started. emma: they are both moving toward a softer brexit. did end up with a corporate governance, you would see some of their similar dynamics. what we saw in corban yesterday at the conference, with thought we would get a breakthrough moment where uniting the biggest union would push jeremy corbyn to lobby for a second referendum , and what we saw was a compromise of fudge to avoid

what would have been an embarrassing position for corban. he has kind of been a bit vague and says he does not advocate a second referendum. mark: an election. emma: and for the labor government to negotiate. october, the deadline of all deadlines now -- is october the deadline of all deadlines now? emma: i do not think it is. mark: what is the nearest big deadline? emma: there is a growing sense that october is not really feasible. if you think about it, even way settingthe beginning, october as the deadline left an awful lot of time before march for both parliaments to ratify this deal. perhaps when they settled, they were allowed some slippage. talking to colleagues in is that, the feeling

october is not going to be the deadline. it is very striking, isn't it? and the summit last week we were still talking about the fallout from the euro crisis all those years ago. the e.u. does move incredibly slowly. there is not a huge amount that will get done in august. 16 weeks basically until october. mark: we will be here covering all of them. still ahead, a growing scandal at danske bank. the latest on the money laundering allegations. join bloomberg on television, radio, and tictoc for its second annual coverage of the july 4 boston pops fireworks spectacular tonight at is -- 8:00 eastern, only on bloomberg. ♪

♪ live from london, i am mark barton. this is bloomberg markets. shares of danske bank are lowering today. them under a test money laundering scandal is surrounding the bank. laundered as much as $8.3 billion. is, howus question could this have happened? how is it allowed to happen? >> that is a good question. has at has made a -- danske made a point that it was an estonian branch for nonresident accounts. they have acknowledged they should have acted sooner, and that is what is being looked into at the moment. mark: what happens next? are we looking at fines?

what are the repercussions of today's news? >> that is the big question. backroblem is this dates quite a few years so there are statutes of limitations. the e.u. money laundering rules have been patchy from cross border cases and have been hard to prosecute. nationally in denmark, there has been a reaction of indignation among politicians and the public in general so they are looking the economic legislation, but they cannot make that retroactive. there are probes going on and the financial supervisory authority said they are willing to go back and see whether prosecution might be necessary based on further evidence. the government seemingly does not have too much face in

the internal probe, and there are external probes as well? danske has been consistent in saying they would not give many comments on this case because of their internal probe. because of last night's revelations, they came out and spoke today. the government has said that their internal probe is by no and the public prosecutor is looking into the case in denmark, as are the estonian prosecutors. mark: before today, the stock move was fairly muted on this ongoing story. investors why have suddenly woken up to this news? i think the main reason is just the figure is so much bigger, more than twice the amount initially reported. -- $53 billion.

until now, politicians have said, there is not a lot we can do. the legislation does not allow us to do more. today they are saying, we need to look at this and see what we can do. mark: what is the reputational damage to danske and denmark as a whole is a place to do business, as a place where corruption has been deemed to be very low if at all present? the government and central bank publicly said that danske bank case right now is tainting the reputation of denmark. we have been in touch with transparency international and they concentrate on public offices. because it is a private corporation, they are not factoring it into their rankings. the extent to which the authorities acted appropriately

or the extent to which there was some sort of confusion may yet become a story in itself. it is by no means finished at this point. mark: great job, thank you for joining us in copenhagen. you can catch all our interviews on the bloomberg with our wonderful function, tv . you can find breaking news, charts, related functionality discussed on the program. this is bloomberg. ♪

♪ mark: this is bloomberg markets. time for the bloomberg business flash, look at some of the biggest business stories in the news now. here is kailey leinz. kailey: the cochairman of hna group has died. the lease say he died after falling from a 50 foot cliff while on a business trip.

he was 57. they are trying to recover from after yearsng costs of expansion and they have sold more than $14 billion in assets this year. and bridge capital is selling its canadian natural gas business. the unit includes 19 gas processing plants and liquid handling facilities. amazon is starting to look like a traditional retailer. the world's largest online seller will try to win the business up for grabs by toys "r" us. a holiday toy catalog will be sent to millions of homes and handed out at stores. that is your bloomberg business flash. mark: the banks are stalling when it comes to post-brexit plans. of the 50 banks who discussed licenses allowing them continued access to the u.k., only 20 of them have applied.

is it a surprise that so few banks have applied? nicolas: i was stunned. the ecb has been saying, this is june, or we, end of cannot guarantee it will be processed by the brexit date. that thethat so few paperwork in on time is surprising, i find. mark: why is that? why are banks seemingly holding back? nicholas: there is a couple of possible reasons. on the one hand, setting up a unit in europe is expensive. you have to have compliance people and back office people. banks may be watching to see, will we get a transition period? will the deal we end up with main we continue operating from

the u.k.? will that save us the cost to do so? some are saying, i do not think i need to be in the european union so i'm going to scale back my operations. there is several possible reasons why. i think it is probably toward the cost question that will be driving several firms. mark: is there any notion which banks are looking like they will make the deadline or miss the deadline? that 20 did know apply on time, and in that group , he would have to have a crystal ball to assume that the real big banks would be looking at getting -- being short and have applied on time. a unit inf setting up frankfurt or dublin or wherever is minimal compared to the loss

of having a discontinuation of business with clients in europe and ireland. for them, it is a simple math question. where are you may have more banks who are more on the fence are the smaller guys, in terms of can they afford it and can -- do they need it? that is the differentiation we should be looking at. mark: are there risks to the banking industry and the broader economic picture from this? nicholas: when you ask the ecb about this point, they are very careful to say they do not see any kind of serious disruption to financial stability in the euro area. cross-border lending is not as big as you think. for me, i think that is their perspective and may be in the big picture that is the case, but individual companies will shortly be worried about loss of

access to central markets through the u.k., because it is not necessarily just the money in london you want to access. it is the global capital markets where the tap, so to speak, is based in london. as to if banks don't make the deadline and somehow get left to hang out to dry, a small problem can become a big problem pretty quickly so i am not so sure. mark: bloomberg's nicholas comfort, thank you. china central bank is caught in a bind. how the pboc is trying to tighten policy in some places but loosen it in others. ♪

mark: live from bloomberg headquarters in london, i am mark barton. this is bloomberg markets. china will try to avoid a one-size-fits-all policy when it

comes to managing their debt. the bank of china says regulators will focus more on structural deleveraging and avoid overusing sweeping measures. furthermore, let's bring in leonard newman in new york. -- lenanh. yuan's plunges complicating matters very much for chinese authorities. the plunge has basically gone down 3.6% since mid-june, so traders have been reassured by theverbal intervention of -- but that is a big complication because obviously, the following yuan has been criticized as a tool in the trade war by the u.s. administration. mark: the big event we are

awaiting is the announcement that the tariffs on chinese goods will go ahead on friday. what are the implications of that for the people's bank of china? lananh: i think it makes things turkey for the pboc because -- tricky for the pboc because they have set their sights on china and have escalated the trade war rhetoric. when you have a currency plunging, like the chinese currency, the optics look bad for the pboc. china has made an effort to try and stabilize that currency, but it is another area in which the u.s. administration might be able to escalate that war of words. mark: the big drive when it comes to china is curbing indebtedness to state firms and local governments.that seems to be a policy priority, or is it ? is edifice cracking when it

comes that priority? lananh: i think the problem is that there are multiple key priorities. china is trying to flesh out bad debt, but it also has to worry about that plunge in the shanghai composite index, the weakness in the stock markets and currency. the pboc is trying to balance multiple priorities. they are trying to tighten in one area while loosen policy in others at the same time. mark: on the shanghai, said, how would do -- shanghai compass it, how would you describe investor sentiment towards chinese assets? we had the shanghai compass it rise yesterday but -- compasite rise yesterday, but what is the investor sentiment toward china right now? lananh: it is very cautious and nervous. the shanghai comp has fallen on 11% the last month and the currency has dropped more than 3%.

obviously, it does not look good, with the chinese authorities are well aware of markets trying to calm to leave a stable impression that they are going to step in when needed. mark: what targeted tools could we see from the pboc going forward? lananh: i think we saw a sign of what they think they can do this week when the three pboc officials essentially came out and talked about the currency. the currency is a mechanism whereby they can sort of established policy multiple markets, so little bit of verbal intervention, calming markets and noises to help stabilize sentiment in that create a panic. mark: what is the assessment of the pboc's new governor? how is he doing? as you say, he is new to the job and caught in this big blind. it is quite a big task. lananh: it is huge, and he has a

huge economy to navigate. it is a little too early to tell but we can be sure that chinese policymakers have learned a lesson from 2015 and that the yuan devaluation really spooked markets and caused a lot of turmoil in markets. i'm sure they are cognizant of that and hoping to avoid any kind of big move. they're trying to keep things controlled and calm. nguyen,rg's lananh thank you. european carmaker shares rattling right now. joins us now.n what is the ambition with this merger? caroline: it is about the legacy because this alliance between

nissan and mitsubishi can only survive under the personality of his mandate as chairman of the byiance and it will expire 2022. he has always said he wanted to make the alliance irreversible and indestructible, so they are looking into ways of making this sustainable when he goes to retire, so we already have the scoop from bloomberg news about three months ago in march saying nd nissanult adn could merge, and we have seen the information that this could happen within the next two years. ghosn inoken to carlos the past and he has said it does not mean that nissan or mitsubishi will become

subsidiaries of were not, -- of renault, so we will have to see what merger they are talking about. avoidingosn has been the term merger since the beginning, but we also know that nissan has clearly ruled out a simple takeover. what we can say is that renault nissan3% of nissan, and holds 15% of renault voting rights, so we will have to see what this means for the future possible company under one umbrella. renaultld this help for the paris electric car market? caroline: definitely helps because the nissan is the best

selling car, electric car in the world, even though it has been losing some market shares to tesla recently. car that isone leading electric car sales in europe and clearly, the leader in france. this will help. we have this electric car sharing system in france since huge and there have been financial losses, so it will expire at the end of july. renault will be among those trying to replace this system with a free-floating scheme that will be unveiled in september, but it will be fierce competition in paris because also wants to unveil its own electric car

sharing scheme for paris. mark: thank you, caroline connan, in paris. let's check in with kailey leinz in new york. 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 with an average and. counters and police have joined the investigation. former malaysian prime minister has pleaded guilty to corruption charges. he was arrested and the investigation into the multibillion-dollar scandal. he denies wrongdoing and table fight the charges. in the u.s., the senate intelligence community is -- committee is supporting the idea that vladimir putin meddled in the 2016 campaign. they say there is reference is did he did medal -- that he

-- scott pruitt directly asked president trump to fire jeff sessions, so he could take his place. cnn says trump advisors shot down the idea. it came at a time when the president was yesterday with sessions and considered replacing him. i am kailey leinz. this is bloomberg. thanks, a programming notes, join bloomberg on television, radio, tictoc for our second annual coverage of the boston pops fireworks spectacular at 8:00 tonight eastern. this is bloomberg. ♪

is bloomberg markets.

i am mark barton in london. investors are closely watching the escalating conflict, the trade conflict with tariffs on billions of dollars of chinese goods. joining us to discuss the market is germany's chief economist for ing. angela merkel raising the specter of the financial crisis when she spoke to the german lower house of parliament today. how bad could this get if china retaliates, the u.s. retaliates gets it has retaliated, and this turns into a tit-for-tat fight? tit-for-tat,this which also would involve the eu, it could get nasty. just looking at the facts right now, i think the overall impact, especially on the eurozone and germany, should still be limited.

we would have the sentiment impact, and that would be the worst case scenario but we are far from being there yet. mark: what about the potential tariffs on the german car industry? it is so vital to the economy. if we get 20% tariffs slapped on german imports, what impact will that have on the economy? carsten: i do not know if you watched brazilian against mexico soccer match, but there is a moment when one player rolled on the ground and got up quickly after to score a goal. the alarm though always rings when we hear car tariffs, but in institute made an analysis showing that if you look at 25% cars, tariffs on european this would have a negative gdpct of 0.15% of german .

so i think really, here, we will stick to the facts and the direct impact to trade should be limited. i love that what measure are you looking at question. you mentioned the business climate index that is important. what pages are you looking at to tell us -- what gauges are you looking at to tell us that we are on something serious when it comes to trade on a global basis? atsten: i would have to look frates, transportation, shipping, really having to dig individualo look at companies, shipping companies, to see what is going on because the overall sentiment indicated is probably the only react with a small look at what is really

happening with the trade affect. when you look at the tariffs, which have not been imposed so far, it is limited, and overall impact should be limited. mark: china is clearly front and center given what has been happening with its currency, within its markets, such as the shanghai, visit -- shanghai composite, are you drawing similarities between now and 2015? carsten: no. and it is too early and the chinese economy has become much more of a domestically driven , so stock market corrections are part of the game, and if you look at the real economic impact, i think the chinese economy should benefit from the fact that it is much stronger to have moved up away from being an export driven

economy. mark: what about currencies affected by the weak yuan? china is deemed an anchor when it comes to currency stability in the region. when you look at other asian economies, do you worry about the recent declines in the yuan and impact on competitiveness? carsten: obviously, this will have an impact on all the small economies linked to the chinese economy to the yuan, and i think it also touches upon a broader topic in french markets now, which is emerging markets in general, which has been hit or hurt by the good performance of the u.s. economy and the rate increases by the fed. mark: we will talk more about that, next. , speaking with us from london, thank you. this is bloomberg. ♪

. this is bloomberg. ♪

mark: live from london, i am mark barton. time for the bloomberg business flash. this is bloomberg markets. he was kailey leinz. in france say they are not treating the death of the chairman as suspicious. they say he fell from a 50 foot cliff all having his photo taken. he was 57. the conglomerate that has been selling billions of dollars in assets this year is coping with foreign borrowing costs. volkswagen is getting into the car sharing business. they will roll out their electrical new service next year in germany before the global pushing to major cities.that could help boost demand for their lineup of electric vehicles. ratings forision the world cup as plunged from

four years ago. the u.s. team did not qualify for the tournament this time. the ratings on fox and the sister sports channel are down from the world cup on espn and abc. mark: thank you. euro area services expanding faster than expected, driving a pickup in growth amid the background of trade tensions, german chancellor angela merkel sending the latest today. let's get back to the chief economist carsten brzeski. what do you make of this operation twist speculation we are hearing with the ecb and how they might invest maturing bond proceeds into the long end of the curve, benefiting countries like france and peripheral nations? do you buy into this or not? carsten: honestly, no. it is premature. the ecb on the announced they it.icipate

it is optional, and we know there will be re-investments afterwards. i think it is premature, and i do not think the ecb is looking into this right now. that is something for later this year at the earliest. mark: where do you see the ecb when it comes to the first rate hike? is not, publicly, it before the summer of next year. what about the divisions within the ecb? some would have wanted a rate hike sooner, how do you see the camps forming and their views being taken on by the whole? moreen: i think there is incentive right now than previously. with this announcement to stop qe, the hawks have been set aside. they can do much better with interest rates on hold and only hiking interest rates in the

fall of 2019 and then markets might anticipated right now. i do not think there will be a big disagreement through the summer 2019. the first rate hike -- we will get at least one rate hike under draghi's presidency and he will have two options to do that, early september 2019, or the late october 2019 meeting. it is either these meetings. mark: do think it is important for draghi to get the tightening process and rate hiking process underway before he leaves? honestly, i do not think he has needed to call for that. i do not think he wants to go into history books that he could hike rates. a few releasee core inflation going up, moving closer to percent, then draghi will hike

interest rates before he leaves office. if the economic situation is in a much worse situation and we do not see this pickup, i think he will have no problem to keep interest rates low or at their current level for longer and then handed it over to his successor. mark: do think he has been forecasted by the mistakes that the ecb has made in the past? yesterday was the 10 year anniversary of that 2008 rate hike, which was unwound only a few months later. made theas we know, same mistake in 2011 and draghi was on the governing council and 2008 and 2011. do think his viewpoint dan stance as president has been influenced by this offense? carsten: definitely. not only draghi. i think these two mistakes have really been imprinted in all ecb it is part ofies,

the institutional memory of the ecb right now, which explains why they would rather keep interest rates too low for slightly too long within starting a rate hike far too early because they do not want to repeat the 2008 102011 mistake. mark: could we see the ecb wellening policy may be the fed, if it is the back end of next year coming to the end or has ended its tightening policy, how unusual that the? carsten: at least -- how unusual would that be? in six: i would say months to nine months, it would not be uncommon. if the u.s. really was to slow down and stop the tightening cycle, we would get a discussion on decoupling of the eurozone from the u.s.. normally, six months to nine

months it be the window of opportunity when they could hike interest rates, and then we will realize the eurozone could not decouple from the u.s. and the ecb will stop the hiking cycle. that is for sure the cycle of the ecb would stop much earlier and at the lower rate level than the fed cycle. mark: great to see you, carsten brzeski, chief economist of ing in germany. we are less than 35 minutes away from the end of the wednesday session. it is a funny day-to-day. it is a holiday, independence day, and that is influencing volumes here. trade, aolume of function in the bloomberg tells you how volumes are. we are about 35% below the 100 day average. ftse, dax, cac lower. have a peek at the currency boards. it is a quiet day.

not on the data friends, we have had pmi data out of the u.k., stronger than expected, and robust data out of the eurozone, consequently sterling is up by 1/5 of 1% by the u.s. dollar. the euro is down by one third of 1% against the pound. market,g in the bond the 10 year yield up by four basis points in the u.k., and a one basis moving germany and italy. the closest 30 minutes away. this is bloomberg. ♪

london, 11:00. in a.m. in new york, 30 minutes left in the trading day. i am mark barton.

here other top stories from the bloomberg, trade tensions. german chancellor is or doing global financial crisis as a side effect of the potential trade war. turkey's policy bankers is warning of mass the creation and the key inflation gauge, sparking terror in turkish assets. the details of an exclusive bloomberg reporting is right ahead. a look at european equities and trading, it is a next day. we are down for the second day and volume is