up, 34down, the yuan billion dollars of chinese imports and the likelihood of retaliation. worried that the market misunderstood mario draghi. how tight can it get? with unemployment as low as it has been in 17 years, tomorrow's willarms payroll report show 195,000 jobs added. the question is will wages pick up as well. steel is off today. it was quite a show yesterday. i won't swear a state of the whole time, but look at this. this is amazing. it was spectacular. julia: i watched it this morning.

the beauty of bloomberg is you can go back and watch it. david: that is terrific. it is not the only spectacular thing that happened. you were skeptical about your own country. julia: i know. david: they beat columbia. julia: i changed my mind. david: theresa may is boycotting it. of all the ones to boycott. julia: do we get to the finals? i am still cautious. more optimistic than i was earlier this week. let's look at the european markets. we have the auto sector outperforming. we had reports the u.s. and europe are discussing the possibility of a sero-tariff regime for imports. that dialogue is a good thing. european markets higher. for s&p futures, .6% higher after the selloff,

tech under pressure with that micron chip van. -dollar higher. ecb,berg reporting the some members of the governing board concerned about market pricing. we have seen that pricing come forward a bit, lifting euro -dollar. leveraged. overnight. the futures in singapore at the lowest level since april. goldman sachs to the rescue, saying it is all over done in terms of the fears and commodities are a buy. david: we have some news crossing the bloomberg, boeing and embraer.

reached a possible deal. there is such a big ownership interest by brazil. they have gotten permission to go ahead with the joint venture. julia: there was concern about the defense contracts. if we can separate the commercial from defense, that protects the sovereign interests of brazil. is important for boeing strategic. this expands them into that area. the premarket flat, down just a hair on the news. we will continue to follow this. it appears they have reached an agreement on a joint venture. it is time now for the morning brief. we get weekly jobless claims in advance of jobs tomorrow. at 9:45. pmi's

the department of energy releases numbers for crude oil and gasoline. at 2:00, the minutes of the fed policy meeting. julia: right now, were joined by gina martin adams. news globalmberg macro reporter. happy post-july 4. talk to me about the price action in china. i have a chart that shows the levels now. some tough price action overnight. i spy, then a selloff. then a- a spike, selloff. >> we have the tariffs dropping tomorrow, $34 billion, being applied to chinese goods. 12:00, it happens at after midnight tonight, or tomorrow, who knows? climb down,raculous

it will happen. the price action and chinese equities has been lousy for several weeks. year., all that has gone hand in hand with price action in the currency. that turned around a little last night. rumors of its non-death are somewhat exaggerated. china has moved away from targeting the dollar to a broader basket of currencies. yes, that rebounded for the first time in two and a half weeks last night. it is a little premature to say that the yuan is screaming higher. the pboc said a couple of days ago that enough is enough, so i think from here stability will be the watchword for the currency. david: what about u.s. markets? priced inny hope

that they will not go ahead? >> it is tough to say. industrial scum of for example, the price action has been incredibly negative -- industrials, for example, the price action has been incredibly negative. industrials will experience strong sales and earnings growth over the year. one area still at risk might be tech. we saw that over the last week as tech shares came under fire. this is the sector the trump administration is targeting to improve intellectual property rights. that is an area of some degree of risk in the u.s. economy, but frankly it is tough to price this in when you have yet to see the tariffs happen. it will happen, then we can price in the earnings. that is an issue for the upcoming earnings season. optimism still generally reigns. david: let's turn to the second

story involving europe. over the weekend, reports the , the markets don't appreciate when they might raise rates. this chart shows the markets think it will be just under 18 months, through to the end of 2019. reports were the ecb was saying we will get through the summer him a but we did not mean december. it could be september. >> the story is some, not all, some governing council members are an easy with the notion the market for not price a tightening until september. beforeraghi's term ends the october meeting. histiming of the rate hike probably going to be driven by who the replacement is. that is also the scale of the rate hike. beerman candidate thought to

a hawk is going to lend to earlier and more. meanne else, that does not there should be an adjustment and market price. julia: what kind of crystal ball do you need? interesting isgs the diversions and monetary policy between the fed and ecb. that is the case with markets, the fed will raise rates before the ecb if and get started. >> i think we will not see a lot of change from the fed. markets are on guard for any signs of trade risks evolving in the u.s. there was a reaction when chairman powell mentioned company investment prospects

might be diminished as a result of uncertainty as a result of tariffs and trade policy come a so the markets are quite sensitive to this issue. the other issue is wage pressures. we have been waiting for wage pressure to emerge. will it emerge and force the hand of the fed? it is something everyone wants to know. that is secondary to the trade issue, but frankly it is more of the same, growth quite strong relative to expectations, inflation pressures budding, but still contained. anything that could shift that scenario is a risk. julia: the perfect tease, david. david: she took us right to it, our third story, jobs numbers tomorrow. we will be looking not only at how many jobs, but earnings. the expectation is for 195,000 jobs added, less than last month, but still robust.

unemployment expected to stay a 3.8%. how important will it be in terms of what we see for wages? >> that is the question. the thinking is that when wages increase, you will see more sustained upward moves in inflation pressure, which would then justify relatively tighter monetary policy. until then, wage growth is permanently cap at a relatively low level, that would play into this idea that the neutral rate of interest in the united states is much lower than it has been historically. going back to the fed, one other thing to look for is any guidance on forward guidance. that they change the language in the statement in june to remove the comment that rates are likely to be below the levels prevailing in the longer run for some time come a so does that mean they think rates will go

higher, or do they want to get out of the ford guidance business? that could put pressure on interest rates. does data matter less than headlines on trade? and when does that change? because itters more tries the earnings outlook for the s&p 500, which is a clear driver of prices over time. data is meaningful, particularly closer to earnings season. we have been in an air pocket. .e are vulnerable on the index once you enter earnings season, the market traits closer with actual earnings. julia: great to have you with us. gina martin adams, you are sticking with his. you can find all the charts we use by running gtv on your

terminal. you can even save our charts. gtv . and -- fire you wish chinese valuations, whatever you want, you can find it. anticipationer on of tightening by the ecb. we will dig down into the details and prospects of ecb policy. this is bloomberg. ♪ ♪

julia: this is "bloomberg daybreak: americas." >> this is your bloomberg business flash. raer haved embe

reached an agreement. an american company has agreed to sell european assets to japan for $5.9 billion. xair is trying to sooth antitrust concerns. a move that may reassure investors after the world's largest commodity trader said it was being investigated by the u.s. justice department. the justice department have demanded documents from glencore related to money laundering and corruption. david: the global economy is led by u.s. growth. concerns over trade wars in the background. today, mark carney said these

concerns are starting to show up in the data. >> the tariffs announced thus far, if implemented, will probably double the average bilateral rates, and could raise u.s. tariffs to rates not seen in over half a century. earlyere are some tentative signs that this environment may be dampening activity. the chief u.s.me economist for -- >we talk about whether a trade war has come are not come is a trade war inevitable? this chart shows the u.s. and china. came into effect, you can see the sense that china is overtaking the united states. thucydides trap.

could we have a trade war? >> we are going down that path. any one of these couldn't break that trend if they wanted to. the question is what causes that. trump mindset that this is the time to push. it goes back to his belief how reagan handled the ussr and departmentefense that wound up bankrupting the ussr. given the instability and weaknesses in china, china's desire to slow down its growth, trump feels this is the last time to push and get anywhere successfully. that is why he's going to do it. it will be interesting to see how these two tightens of craziness, which one blinks first. some point, someone

has to address this, and trump finally is. >> i don't think they are crazy in what they are doing. i think they are crazy and the way they are going about it. what we say is different from what we do. that is the problem with both these individuals. its waycess will work out, but markets are under anticipating how likely it is we will go further down this path before someone links. david: is there a short-term or long-term issue here? everyone knows that china has taken full advantage of wto, subsidies, state owned enterprises. in the long run, if we could reform that, would the world economy be better, even though we have to go through issues along the way? >> fair and freer trade is the ultimate goal. in the short run, it seems we

are going in the opposite direction. do we work out to the point where we have fair and freer fore, which reduces costs everyone globally and results in the competitive nature of markets taking shape and driving outcomes? or do we go in the opposite direction? it is a combination of does short-term pain result in long-term gain? julia: for all the pricing of mentionedn, you industrials, look at the action in european autos. the prospect of dialogue and zero tariffs going forward, the optimists, the moment we get a , what is the risk we could push this too far? >> this is a final last-ditch effort to push. trump is early enough that he has a lot rolling on this. hase are the areas where we

-- he has complete control. markets have this assumption that this is a zero-sum game. everyone loses. the reality is the slow down in global growth could outweigh the impact on inflation from tariffs . this thing could go on longer than people think of for consumers are impacted. is corporate america and corporate china that suffers more than individuals. david: gina makes a terrific point about the european automakers. it looks like the markets are hoping for any positive sign. they will really respond. tariffs, ifimpose they didn't, imagine what would happen a markets. >> this depends on your perspective. at the initial stages of the trade rhetoric in spring, you saw the markets interpret it as inflationary, higher commodity

prices. it was viewed as something that , but not the zero-sum game i would argue the markets have become more discerning. what you see, especially stock price action, is markets are interpreting these trade wars as deflationary and impacting global trade. u.s. stocks are struggling, but less than the globe. that is a signal of risk tolerance coming off the table. these positive potential nuggets of news are impacting hasn't simply because of the short-term price action, which has been take all risk off. .his is a deflationary outcome we will start to price in news in increments, if it does occur. julia: thank you. plenty more to calm. minister, u.k. prime theresa may has a plan for a

post-brexit trade you with the eu that she hopes will satisfy all sides. more on that next. this is bloomberg. ♪

julia: theresa may looking for compromise. a british official saying she will propose a trade deal with the european union that she hopes will keep her cap together and unblock stalled talks in brussels. our guest is with us now. great to have you with us, david. she has her own brexit minister going, this does not work. the optimists says this is a strategy and what we get announced tomorrow will please everybody. >> i think she has been saying that whatever deal we will get will not please everybody. everybody will compromise.

there will be concessions on both sides. she has made it clear the next proposal is not going to work. david davisgh for to walk out of the cabinet? seen this a fall, theresa may has been putting her cabinet on a softer brexit approach. that means moving toward a closer relationship with europe. important to think about what the europeans are going to say about this proposal. of these details have been rejected by them. afternoon, theresa may sit down with chancellor merkel, trying to get a compromise out of her. if she can come back to london with encouragement from the germans, maybe she can bring her cap over to her site at this crucial meeting at her country

retreat tomorrow. julia: what next, david? very quickly. their hope is there is some degree of cohesion. >> that's right. so far, she has have these meetings and the cabinet has pulled together and put aside extreme views on this question and got behind her proposal. the question is what does europe do? do they reject it outright, or does it form the basis of negotiations over the summer? time is running out. we need negotiations to start soon. julia: i will give you one guess on that. thank you for that. coming up, the view on the markets. this is bloomberg. ♪ ♪

julia: this is "bloomberg daybreak." i am julia chatterley. gains for the auto sector. high hopes that some kind of agreement can be reached between

and united states, at least dialogue taking place. gains over the last 30 minutes or so for the s&p futures, more than retracing the losses we saw tuesday. the tech sector under pressure in line with the decision and ruling of macron to ban chip sales in china. dell features similar, higher by .7% -- dow futures similar. david: let's look us at the business world with emma chandra and first word news. emma: shares of european automakers are having their best day in two years. the u.s. ambassador to germany for did a proposal to eliminate car import tariffs on both sides of the atlantic. meeting withr was german automakers, and they're

concerned about the 20% tariffs on imported vehicles i president trump. president trump up the heat on opec, tweeting that they are doing little to reduce gasoline costs and driving prices higher. oil prices are getting their two-year high spirit in the u.k., police say it is a second poisoning by a military grade known agent and two months. sameeople exposed to the nerve agent used to poison a former russian spy and his debtor. it happened eight miles away from the site of the first incident. they do not know the couple was targeted or if the poisoning was accidental. global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am emma chandra. this is bloomberg. david: tomorrow we get the u.s. nonfarm payroll report for may.

the economy added 195,000 jobs and the unemployment level remained at 2.8%, but right now, challenger, ray & christmas is releasing a report showing 104,000 cuts in the second quarter, down from the 140000 and the first quarter, well below the average cuts since 1993. we welcome ceo john challenger on the telephone from chicago. thank you so much for joining us. monthly,ck up to the but what patterns do you see in the quarterly numbers two and they are well below the average going back to 1993. >> layoffs are very light, no question. super low unemployment. companies are holding onto workers right now because the job market is so tight. david: when you look at the job cuts, they look

disproportionately related to retail. >> retail for the year is up 22% for the last year. , a we see only 16,540 in q2 total of 73,000 for the year. cut way back for the second quarter. but we saw consumer products up about 18,000 for the year. consumer products companies are really cutting costs in this zero pace budget world. david pop duo you have insight into the rest of the year, particularly retail as we get ready for the holiday season? >> it will be interesting to see. inl's made a preannouncement summer, which those usually occur in the fall getting ready for the holiday in back-to-school season, so we will see. looks like retailers do not want to get caught without people in their stores to capture this

strong economy and strong consumer confidence. basis, wea quarterly talked about that, but on a monthly basis, we saw an 18% increase in job cuts. are we seeing a sense of nervousness about the trade concerns, particularly do two things at the tech 6 -- tech sector and the semiconductors? >> i think we are him and i think that is a big issue for the job market right now. electronics cuts for the year are up by 195%. semiconductor kinds of concerns, and that is only likely to get worse as we move forward. we saw interesting cuts during june. one that was talked about a lot was from tesla, 9% of their ,alary workforce and elon musk and there are barnacles upon barnacles in the supply chain.

and they were mostly salary workers they were letting go. julia: want to ask about the gains,ector and job which was talked about with a raised eyebrow. >> there are cuts coming. missouri a company in that makes nails, and they cut a big chunk of their work first because the price of steel was going up for them and the price of imported finished nails was not affected. there was a harley davidson supplier company that saw the same thing due to these tariffs. cuts cuts due to steel tariffs is what you all concluded. comparing that to the 37,000 less than expected,

it is pretty small stuff so far. >> so far, and a question. it is just -- so far, no question. we will see what the long-term impact will be. those manufacturers are waiting to see, like everybody else, if they make it exceptions, exclusions that might allow them to hold onto the jobs they get affected because they are hit by tariffs. julia: we get payroll data tomorrow. give us your expectations and how we can continue to see such strong gains even the level of the lack of unemployment at this moment. >> i do not see that we are going to be able to continue these kinds of games. 3.8% unemployment and 200,000 jobs each month, at some point we will hit the wall. there are just not going to be any more skilled workers out there. the goals announcement with those semiskilled workers, low

skilled workers, it is already impacting that part of the job market, as well. my guess is we will see another strong report, but 2019, somewhere we will see this "done. this slowwe will see down. david: people were saying two years ago that it has got to slow down. what didn't we understand about the job market? certainlyompanies have the ability to continue to automate and to growth. workersows them to hire but also continue productivity gains the technology investment. we are also seeing layoffs occur. they continue to occur, so companies, when they are not doing so well, they will take the layoffs and those people go

back into the job market and get hired by companies that need workers. actuallyt the layoffs keep this economy moving. we are also seeing people come off the sidelines who were not counted as unemployed, were not looking because the job market is so hot. to buy so much for joining us. still with us is steve or should of. -- steve ricchiuto. see the blue line here, the conference board and labor differential in white. a strong market, clearly. >> strong market for hiring their people being pulled off the sides. but when you synthesize everything said this morning is the fact that prices are not going up rapidly. so we cannot raise wages

rapidly. so we're finding other ways to bring people and off the labor force. unemployment, we do not ration and wage -- how?: >> a lot of people left the labor market and then began to run out of alternatives and need to come back. your house prices are there. the market is somewhat spotty. it is not easy for people to buy homes or to get credit. prices may be high, but you cannot realize those prices. you are pushed back into the labor market, and people are coming into jobs they would not have come in for before. david: why do we not have inflation pressure? >> global excess supply in technology. they work together, globalization and technology, to creategether

global excess supply of tradable goods and commodities to a certain extent. that is why you are stuck on the pricing site, which is why you are stuck on the income side, which is why you are able to get lower unemployment rates. it is a simple dynamic but one people do not want to think israel. is real. because then suddenly the financial side of a lot of macroeconomy breaks down. power is the real pricing actually with share prices, essentially through buybacks? again, you gave a huge tax cut. before, they were borrowing a heck of a lot of money to do that. and they have been leveraging their balance sheets. that is a short-term fix, not a long-term solution to the problem. they have been running down the path of that short-term fix for a very long time, and this is why the equity market is getting less and less credibility over

time. david: steve ricchiuto of mizuho, thank you. coming up, the sudden death of a cochairman. we will discuss that in the wall street beat. listen to tom keene from 7:00 to 9:00 and then pimm fox with tom at 9:00. live from new york, this is bloomberg. ♪

julia: -- emma: this is "bloomberg daybreak." emmanuel. julian this is bloomberg.

businessur bloomberg flash. goldman sachs is forget about a trade war, now is the time to buy commodities. they say economic impacts and sections between the u.s. and china is flawed, forecasting a 10% return on commodities into the next year. and $13 billion worth of shares and samsung electronics, lawmakers and regulators are trying to the exist overl business empires. passed, oneon is family could have less control over something. a stock that is not officially start trading until monday in hong kong. some investors say gray market bids for shares of the phone maker were at times more than 9% below the issue price. investors have been abandoning hong kong equities due to concerns over the u.s.-china trade war. julia: thank you very much.

now to the wall street beat, three things wall street is buzzing about. a tragic, unexpected death of hna's cochairman, and then the with hpsc,it crunch and deutsche bank maybe let go of one of europe's benchmark indices. david: joining us is jason. this is a sad and perplexing story. hna is a huge company, and the cochair was supposed to be a business and the south of france and fell. >> a tragic death, raising questions for investors around the world as to this company and its future. he was cochairman. he had taken a much more prominent role publicly, especially as hna has been trying to work through some very public problems. they were a bit higher for a

long time, especially in the u.s. in europe, we will put more about deutsche bank later, big shareholder of deutsche bank. david: and a lot on the balance sheet because acquisitions. essentially, feels like too far, toof fast. they have been successful in selling a lot of assets. >> they have. the general consensus is restructuring is moving at a pretty good pace. what happens now remains to be seen in terms of who steps up. julia: $14 billion worth of divestments this year alone. or atng of deleveraging least curtailing some of the credit out there, steven major saying we are a slow-motion credit crunch. >> this was not a happy story from steven major.

if you want markets to keep going up, certainly. one of the most important voices in fixed income. interesting because this came up and a different context. is goinghinking this to happen or this is going to happen, but it does not seem to be. one of the arguments that major seems to be making is forget -- a bigck catalyst catalyst, forget about cycles as we know them, we are already living in the midst of a much slower motion credit crunch. one of the things he and others point to is this idea of, as you look at what has happened so far in 2018, rising u.s. rates, the end of e-money as it were, and also trade. david: it makes people nervous because there is so much leverage on balance sheets, particularly a lot of growth in china and other places. bbb and below.

if you start having rates go up and there is a credit crunch, a lot of people will be pretty exposed. >> right. ae question then becomes, credit crunch is probably better than a credit crisis, which is what we were staring down the barrel of around 10 years ago. we saw that quite literally sees the market-- seize spirit this is different. david: will deutsche bank go the way of ge, so to speak? deal.ne, it is a big one, that really does not bode well for how things are going and speaks to have far deutsche bank has fallen. they would need to recover 40% of their stock price in order to stay in.

david: they have already lost 40% this year. they were not in great shape going into the year. julia: and they are number 61 on the list of reviews here. >> it has got a ways to go. this is a meaningful move in the sense that, because a lot of etf's are tracked to this index, , a lotese funds reindex of money will come out of this stock. david: that is a great point. that will exacerbate the problem. >> exactly. julia: that is the point about it being so low on the list. it would need a monster rally to bring this back from the brink. petrobras -- big headline, no games and the world cup today.

rinaldo is no longer playing. but he still is getting headlines. entus.l be moving to juv david: and italian soccer club. euro a year, still doing ok, ronaldo, even though a disappointing world cup. bad news for the business of soccer when both ronaldo and me ssi went up, but england still very much in it. julia: i could barely watch the last one, a nailbiter. especially so late. david: the english goalie that blocked that one kick, unbelievable. julia: it was a miracle. david: pretty great. >> we will be talking more soccer next week, i am sure. david: many thanks to jason kelly.

coming up, boeing wretches up its rivalry with airbus. it has a deal with brazil's in embraer. brazil's julia: you can watch us online on tv . you can send us a question. we would love to hear from you. twitter,each us on julia chatterley or david westin. plenty more to come from us. from new york, this is bloomberg. ♪

david: boeing and brazilian embraer have reached a preliminary agreement for a joint venture. let's welcome back our bloomberg esteemed columnist. remind us with this deal is, brooke sutherland.

embraer is viewed as this brazilian champion, so the government did have a say and how this still turned out. they have come up with a joint venture for the commercial aviation part of embraer. the company will continue to have a defense operation and executive aviation. but the commercial part is what boeing really wanted. that is what they are getting out of this. the transaction valued at this part of embraer at about $4.75 billion, a significant premium and you consider the whole company is valued at less than that right now. controlled boeing the venture? brooke: they will own 80%. fillare really looking to regionalor these small planes. the existence of this became apparent when we saw the tie up between airbus and by barnier --

bombardier. boeing said it was questionable but are mimicking it on a much grander scale. with airbus, that came about because of boeing's trade spat with bombardier. boeing never had the plane that competed with bombardier, and we're seeing evidence of that right now with the embraer deal. julia: speaking of trade spats, talk about what differs a vacation this provides for boeing. surely that is an angle, as well. brooke: you see extension of the airbus-knowing duopoly. it could be small planes like those that embraer makes her the big plans of boeing and airbus. we are starting to see competition out of china. that is a ways off but is

becoming more of a thing, especially as we see the escalation of trade tensions and a potential diversion of more resources in china. i think this is clearly an effort by boeing and airbus to maintain a hold on the market. julie: thank you so much. coming up, julian emmanuelle, btig chief equity and derivatives strategist, how to play a future potential trade war. from new york, this is the bird. ♪

david: race for effect, chinese stocks move down, the yuan moves

up, as markets it ready for tariffs on chinese imports and the likely would've immediate retaliation. fighting complacency, ecb officials apparently worried that the markets misunderstood mario draghi and he said rates would not move until after the summer of 2019. in building a nest egg, nine years into a bull market, have americans taken advantage in the run-up to get the savings in order? we look at the savings of americans. welcome to "bloomberg daybreak." westin with julia chatterley. alix steel is off today, hope recovering from the fireworks spectacular. looked like great weather. the fireworks went off in the orchestra was playing. did an amazing job. i loved it, and fantastic music, as well.

one day i will get there and watch it. i am determined. david: advance of jobs day tomorrow, we get weekly jobless claims, followed by market services and composite pmi. of11:00 on that to permit energy releases weekly inventory numbers for crude and gasoline. 2:00 eastern, the minutes of the federal reserve policy meeting last month. julia: let's look at markets. gains for the european markets, .9%. sector outperforming on hopes discussions between the u.s. ambassador to germany and the german automakers looking at tariffs.bility of zero good news if we can do so. euro-dollar. also higher. the ecb is usually to move markets, get investors ready. the potential for rate hikes

earlier has allowed for a rally. dow jones continues to climb as we head towards the market open. more than taking back the losses from tuesday's session if we see followthrough. s&p futures .8% higher. i want to point out crude oil prices. the war of words over oil prices continues. look at nymex crude. we saw the iranian opec governor sent directly to the president, please stop your tweets because it is affecting oil prices. on president tweeting wednesday that opec is doing little to help as far as oil prices are concerned. and i should briefly mentioned commander of the revolutionary guard saying any attempt to thwart oil exports will result in the closure of

the world's biggest concentration of tankers. david: that is pretty serious business. and a lot of people have suggested president trump maybe should not tweet. julia: we will wait on that one. get an update on what is making headlines outside the business world. emma: shares of european automakers are having their best today in two years. bloomberg learned that the u.s. ambassador to germany floated a proposal to eliminate car import tariffs on both sides of the atlantic. ambassador is meeting with german automakers, and they're concerned about president trump 's threats to impose a 20% tariff on imported vehicles. less than a day before a trade conflict between the u.s. and china is expected to get worse. the trump administration plans to begin imposing tariffs on chinese products tomorrow. the u.s. says it is responding

to the theft of american intellectual property. to retaliate immediately. in the u.k., police say it is a second poisoning by a nerve agent and four months to two people are in critical condition after being exposed to the same nerve agent used to poison a russian spy. it took place in southern england, not far from the site of the first poisoning. authorities do not know the couple was targeted or if the poisoning was accidental. global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am emma chandra. this is bloomberg. david: headlines coming right now about angela merkel, the german chancellor. she is speaking in berlin and says she does not want what she calls a fortress europe on migration issues. she has talked about migration and the coalition, but she is also meeting with theresa may. i believe they will give a news conference after.

that is theresa may right now, meeting with angela merkel. we will bring you any news that comes out of that. the global economy continues to be strong with u.s. growth moving up as we head into the second half of the year. but there is much talk about trade wars. earlier today, bank of england governor mark carney warned that trade concerns may be bleeding economic performance. >> the tariffs that have been announced this far will broadly double the average bilateral terror freight, and it -- tariff rate, and it could raise u.s. tariffs, which is at the heart of the issue, to rates not seen in over half a century. signsare early tentative of this more hostile environment deafening activity. julian emanuel, btig chief equity and derivatives strategist, joins us. hasn't it started to affect the performance of companies and markets and work you can see and

judge has it started to affect it? at all the look conversations, it is clear that we are at the cusp of that point happening. whether you are an automobile executive, a soybean or a hog farmer, we are right at that point. i think that is why, not just powell but you heard jay a couple weeks ago mention that this is a possibility. we're getting to the point where it will begin. julia: how important is the announcement friday and the response from china as far as equity valuations and investor perceptions are concerned? >> as you can see by the stream today, and a good news at all is pushing stocks higher. no question about the fact that the strength we see this morning is very much due to this discussion between germany and the u.s. about eliminating or reducing automobile tariffs. in that respect, we kind of

puts itst the u.s. tariffs on, china retaliates, and then everyone looks at each other and perhaps says, you know, maybe we should start talking. and the markets are trying to clearlyt, but it has been difficult. a veep up and president trump has already initiated the auto proceedings, the 301. you say we had a european uptick in european auto stocks, but there is pressure on wilbur ross to bring it up before midterms. >> the dialogue is, let's say, complex, to say the least. there are some in the nuances that it really is going to be something that is going to play out over weeks and months, rather than just tomorrow and the response on monday. julia: you have a bullish call on the s&p 500 by year-end, but you predicate that on the necessity for ongoing dialogue.

so even just the prospect of discussions continuing on tit-for-tat tariffs and us to lead this market higher. how important is earnings season? >> probably not terribly important. it was not that important less quarter, and we saw, to put it bluntly, blah reactions from stocks through earnings season. subsequently, another move higher. what is really important, youuse if you are a ceo, are going to handle questions about the potential for trade tariffs, but you cannot really plan for them. it is a scenario as opposed to a baseline. david: what sectors do you favor in this uncertain environment? >> we continue to think that the energy story has got quarters, if not years. david: we will learn more about that in a few minutes.

>> absolutely. and financials, as beleaguered as they have been, in fact, if you look at it this way, mario draghi is helping our yield curve. we have long been of the view that part of the reason that the yield curve is as flat as it is in the u.s. is because rates are so low in europe and there is only so much of a spread that you can have. clearly, that message is attempting to be reformulated. julia: you say if yields rise in europe, that gives investors an option of going over there and perhaps selling treasuries and pushing the curve higher in the u.s., as well? what wen the context of continue to see as economic strength, clearly with the potential for being challenged by a continuation of trade rhetoric, but the economy is strong. the jobs market is strong. confidence is almost incredibly strong, given the rhetoric that is going on.

that is a situation where if yields rise, we think that is part of the bull market story for stocks. julia: we have seen that play out in parts of the forecast. julian emanuel of btig stays with us. we will get his call on small caps. why he says we are due for a pause and the uptrend. that is coming up, and this is bloomberg. ♪

julia: -- emma: this is "bloomberg daybreak." plane makerrazilian embraer have agreed to form a joint venture for commercial jets. boeing went -- would own 80% of the market. embraer will remain an independent company that makes military and private planes.

praxair is taking another step in wrigley to approval to crit the world's largest industrial gas supplier tiered the american company has agreed to sell european assets to a japan company for $5.9 billion praxair is looking at antitrust concerns over the proposed takeover of a german company. and glencore will buy up to $1 which may its shares, reassure investors who heard the u.s. justice department is investigating the world's largest commodity trader. possible money-laundering and corruption. that is your bloomberg business flash. david: thank you. trade tensions this weekend comedies a focus on domestic business have benefited. this chart shows the russell 2000 outperforming international companies on the s&p 500, a sign investors are looking to domestic stocks as a haven from trade uncertainty. julian emanuel from btig is with

us. small caps versus large caps, thus far, small caps, you are protected. is that going to continue? >> we think that is going to pause. you have gotten to a valuation differential that is reasonably stretched by historical standards. if you think about how all of this is a focus going back to the trade issue, our base case is that there is going to be the beginning of talks, referencing this morning, there is certainly positive for martin's address for markets. if that is sought the case, we think the idea of small-cap as a place to hide probably becomes issuef less of a relevant simply because when you look at it, what is likely to happen is that business confidence will slip if we have a continued summer of trade tensions. again, our base case is to the

upside that we do make progress. in that regard, it has been more a story about large caps being held back, and we think they will play catch up relative to small caps. julia max it is not just about a perceived safe haven trade. it is about dollar strength and benefits of the tax overhaul. we have some adp data. david: the adp research institute says the u.s. added about 177,000 jobs in june, a precursor to the nonfarm payrolls tomorrow. it is not always perfectly reliable. julia: a touch softer than anticipated, 190,000. it has been caps, about dollar strength in the relative benefits of the tax overhaul, so how relevant is historical valuations when you put it in the perspective of other things that have contributed to the rally? >> to be clear, the dollar really has been a very driving

force in this whole thing. we were pretty early, end of february, beginning of march, in looking for the reasons for the dollar rally, which materialized. but as we look at it here, we have had a massive move in the dollar. we do not think dollar strength is a theme that is likely to continue playing out. , we have a chart of the europeans a price index, and it has been dropping the entire time during the dollar's rally and has begun to climb once again. that plays back into the commentary from the ecb this morning. so we do not think the dollar is going to be a dragging force. going back to tax differences, that story is largely played out. david: if the dollar weakens, how does that square with your

3000 call on s&p? a stronger dollar, how does that work? >> if you look at the last several months, the dollar has been a pressure point in international markets. it caused turbulence in argentina, in turkey, clearly in china. within a context of moderation of the dollar rally, we would expect less volatility internationally, and that will support u.s. julia: speaking of low beneficiary if you hedgeo take a position, your positions, or even on some of the beaten up stocks, get some upside potential to what do you think of that? >> we have strong components of that. risk, potentially unlimited reward profile, of owning options when the vix is really below 20 is very

the potentialen for what we think is ultimately going to be positive surprise to reconciliation of trade tensions in the second half. in fact, and some of the sectors where we think investors are andrexposed, financials continuously energy, that is where you can have really explosive moves and options will be a beneficiary. david: julian emanuel of btig is staying with us. oil, next, prices hovering near three have in your highs. president trump for recent highs and telling him to stop the tweeting already. julia: $10 worth. david: all of that is coming up next. this is bloomberg. ♪

julia: president trump turning up the heat on opec, tweeting

the opec monopoly must remember that gas prices are up and they are doing little to help. if anything, they are driving prices higher as the u.s. defense many of its members for very little dollars you'd this must be a two-weight street, reduce pricing now. tining us is tamara asner essner, nasdaqar and lows, and julian emanuel is still with us. president trump, has he had that much impact on prices? >> the iranians are doing the part this morning with comments that they might close the straits of her rose, an -- straits of hormuz. what we have seen is that opec has been extremely effective in providing a floor a prices. now that we are in a precarious

state of global supply around the world, the question is, can they provide a ceiling on prices? they are just as much concern with prices rising too far, too fast, as they are one prices are too low. julia: he even points to the saudi's, saying you need to do double what was agreed at opec. that is more than the saudi's capacity.. it limits addressing other shocks the market faces. he is raising concerns about a valid problem here. >> now we are starting to see been successful in upending the pricing dynamics of oil around the world, but it look has to be -- when we at u.s. consumer prices at the pump, those still have to be a factor in understanding deal politics of u.s. foreign-policy. we're starting to see that saudi arabia is at the limits of what they can do. they're having these well-timed

statements that they will do whatever it takes to manage the market. at the same time, we do not think that have the ability to add 2 billion barrels a day in terms of their capacity and getting that up and a sustainable and quick way. david: is the president right in this point, concerned about gasoline prices? he is looking at a midterm election coming up and does not want them too high. gasoline actually has not gone up. it has not skyrocketed this far. so is it really as big an issue for us as the president seems to think it is? >> it certainly is in terms of perception. no question about the fact that when you are the leader of the party with the majority in the house and senate, you want gas prices to be as low as they can possibly be. i think the president wants to be seen as throwing his weight around to try to achieve that end. as you are right in pointing out, the refining margins have slipped a little bit. so you are not seeing that

translate to the pump. but when you are at three dollars a gallon, that is a psychological number. julia: you were just saying that stocks. energy the have clearly lagged the oil price moves. do you worry about whether it is a supply-led rally versus a demand-led rally in the underlying price? >> in large part, it has now become the perfect storm. 2017 and the end of early 2018, we said this was a global, secret iced growth, demand-led process are now you have a supply-driven aspect, as well. , when you look at energy stocks, representing 6.5% of the weight in the s&p 500 versus a historic average closer to 10% with a crude oil futures curve that has been heavily backdated

that showson end, you that this is something that has staying power, regardless if the supply conditions ease. the case for energy stocks is very clear. run-uphow much of this in the price of oil is because of sanctions on iran? part of the huge state department has been clear that they were going to try to get zero exports out of iran. if you notice, the state department in recent days has sort of walked that back and said we will make some waivers, potential exceptions for countries that reduce but not fully eliminate imports of iranian oil. we also had unanticipated outages in nigeria and libya that spooked investors in terms of concerns about scarcity. julia: and there is canada, as well. do you think opec is frustrated with president trump? iran andn sections,

the change, and now he is telling them off. difficult in a situation because they're having to account for supply outages that are unexpected and running the limits of their own spare capacity. it is walking a fine line. south korea better wants to make it clear -- saudi arabia once to make it clear there answering demands, and it is not just the u.s. a lot of consumers are complaining, and the want to be responsive to try to manage the market so we do not go too much towards -- julia: cruising control here. are staying with us. plenty more to come. this is bloomberg. ♪ retail.

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near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. ♪ julia: this is bloomberg daybreak. i'm julia chatterley. we are waiting initial claims data, but let's take a look at equity markets in europe, 8/10 of 1% high.

with hopes of a dialogue between the euted states and on trade, particularly auto trades. bringt the markets to forth the prospect of rate hikes, and we also have the futures, the be futures and the dow, 8/10 of 1% higher, more than taking out the losses we saw in the session, and we have some data. david: initial jobless claims are up to 231,000. the survey was 225,000. last month was a slight revision, so continuing claims, 1739, which is more than the 1718 in the survey of what people with think -- think it was coming in at. julia: let's get reaction to those numbers.

jobs, jobs, jobs. karl: this will be the focus, and this is a very light appetizer ahead of tomorrow's jobs report. is thisimportant here is one of the last clean readings you will be getting on jobless claims, because as the july 4 holiday, we see a lot of volatility and claims, a lot of spikes, and it is not a good predictive tool for july payrolls. reminder, tomorrow our june payrolls, but we will be losing the indicator for the next couple weeks. david: and what about wage increases? carl: i think they will move kind of sideways in tomorrow's report, which i know has been an ongoing story. if we zoom back and torture the out,and really smooth it we can see there is a positive slope to the wage pressure indicators, whether that is the implement cost index, average hourly earnings in the jobs report. is no't say there

way to pressure out there, there is wage pressure but it is very modest pressure. david: -- julia: it is very slight. david: as we talk about wage growth, let's talk about what that means across the country. wage growth is sluggish, and if you are a saver across the 75% of thosee are without a plan who say that less than $1000. nearly half of americans have less than $10,000 saved up for retirement. joining us now from phoenix, arizona is tom zehner. julian emanuel is still with us as well. tom, welcome. a picture of the average american situation with respect to savings for retirement? tom: sure. good morning. really think about two sets of phases of our life, we have our

active work life and we have the time when we took down our tools or profession or whatever it is and we might end up living for 20 or 30 years afterwards. so a long time ago, the band fleetwood mac had a song, "don't stop thinking about tomorrow." in might be hard to stop thinking about tomorrow when we can't think about a significant city's. our basic necessities. when you couple that with the fact that americans only receive income from their jobs, meaning they do not have passable -- passive or residual income, it is difficult to think we live 15, 20, 30 years out and we are talking about wages perhaps going sideways, how do you find the extra dollars to put them away? we will have to. we only have to look to our grandparents and parents to see how long they are living and we should be living statistically longer. we will need a lot of financial 25, 40es to go up about

years, but our savings are just not high enough. david: one relied on -- we once paidd on pay -- pensions by companies, but if you take a look across american corporations, how many people, what percentage of the workers who have the ability to put into a 401(k) are actually doing it through their work? you mentioned the stat -- close to 80 million americans are country getting to a workplace retirement, but you have to figure there are probably another 80 million or so that are not. is why.tion a lot of folks who have a 401(k) plan where there is not an employer match will choose not to say. people that do not have access to retirement plans through their workplace are not setting up an individual retirement account. we are still not in the habit of saving, whether we have something offered by employers or not. thatst have to change mindset. it is difficult to look out 20, 30 years from now when we need these dollars, but we sure are going to do so. julia: julian? julian: tom, i was wondering how

you were thinking about the propensity to say that at this point, in regards to the fact that rates are rising, is this a good thing or a bad thing? tom: i think we always have to save. no matter what we do, we try to teach people to do a little bit of a b testing and look at their spending habits he -- each month. if they took six movers last month, maybe they take that to three. how can we find money from your existing wages, your existing net pay to at least put something away. theypeople start to save, see the accumulation of their balance and realize that is going to be something that will sustain themselves for themselves and their family, and you start to save more when you see it start to grow. so i think it is a bit of personal discipline, no matter the situation, to force yourself to look forward. julia: the interest rate situation and the lack of incentive to save, but we are borrowing more and more as well. chartas you look at the

on the screen with the savings rate, we can see it has rolled over pretty significantly over the past couple of years, maybe in the latest tail and they are butting to see some pickup, the savings rate is largely tied into consumer expectations for the economy. certainly i agree with tom, that we need to save more collectively, however, in the past couple of years, we can see the optimism for the economic outlook has improved. beenouseholds have less -- less likely to stock savings away for a rainy day and spend on a big-ticket purchase, like houses, cars, home renovations, those types of things. david: tom, address and as you there -- address another issue. as we are shifting away from pension plans, we are asking a lot from the average american worker. how do they know how to invest that money? aren't we putting a lot of pressure on them to make wise investment decisions?

tom: we really are, and we see in our business that urges fans are less they understand what they have. folks do not understand that, for example, mutual funds have embedded fees in them. statistics are very stunning to show that over 60% of participants in 401(k) plans believe they pay no fees for their investments or their employer pays them. over 40% of the employers who have set up these plans that you mentioned do not know the underlying fees. so let's think of america today. it will be very, very hot across our country today. the last thing we want from an efficiency standpoint in our houses is to have a couple of open windows letting that hot air, and when we are trying to cool down the house. what we are seeing is regardless of your savings rate over 20, 30 years, the savings are being eroded by needless and excessive fees that people do not even see or understand. really it is an educational process. one thing i like to say about

money is what you need to know about it is how much you have, where it is, and if it is invested, what are the cost of those investments. to bes not have complicated, but it helps to have someone in your life that can be a sounding board to give you an idea of where there could erosionwrote in the -- going on underneath. we do not want to be putting our hard-earned dollars away and have it be eroded unnecessarily. julia: an education thing, a mindset thing. what is the fix year? re?he tom: the fixes for people to take control of their own finances. and with the internet age, the information is out there and available. the other part of what i interpret tom to be saying is you can't be afraid to reach out for help once you have identified where you think the issues are in your own space. julia: tom, do you think people

recognize they have a problem here? tom: no, i do not. we look at what we have to do to sustain ourselves this month and next month, the high ticket items you talked about, we are just not conceptualizing when we old.0, 65, 70, 75 years we have to look at those around us and say how is my grandfather living, or my parents? they worked their whole lives. are they living a secure and dignified retirement? we have to look at something really close to us that we might have to change to ourselves going forward. i think people might not have an understanding of mutual funds or 401(k)s or whatnot, but they do have checking and savings account. i think as we see interest rates creeping higher and they see slightly bigger terms, that might create some incentive. tom, thank you.

julian emanuel and carl riccadonna, thank you for being with us as well. let's get a look at what is making headlines outside the business world. and: president trump has completed his interview with candidates for the supreme court seat that is vacant. that is according to foxnews. the president has spent a week deliberating on his choice that will fill the seat left vacant by retiring anthony kennedy. moret mueller is getting use of career prosecutors from the justice department as well as fbi agents. that is a sign he might be laying groundwork to eventually handoff part of the probe. president trump is turning up the heat on opec. the president tweeted that the oil cartel is doing little to reduce gasoline cost. he said if anything, opec is whileg prices higher the u.s. defends many of its members. oil prices are holding at a three-year highs.

and in thailand, rescuers are trying to drain water from caves before they can extract 12 boys and their soccer coach. right now, the only way out is diving. rescuers have been teaching the boys how to use diving equipment. global news, 24 hours a day, on air and on tic-toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm emma chandra, this is bloomberg. julia? julia: coming up, making money on the great right way. -- getting a look at making money on broadway. david: and if you turn to your radio, you can listen the bloomberg surveillance all across the united states on sirius xm radio. live from new york, this is bloomberg. this is bloomberg.

julia: this is bloomberg daybreak. i'm emma chandra. anthony scaramucci, the former white house communications director. this is bloomberg. now to your bloomberg business flash. aboutn sachs says forget a trade war, now's the time to buy commodities. goldman sachs the economic impact on the sanctions is small. the forecast is a 10% return over commodities in the next year. a tragedy has deepened the turmoil at struggling chinese conglomerate hna. police say the death was accidental. the ceo is 57. has been selling billions of dollars of assets to stay afloat. in one of itsers

biggest european markets are increasingly unhappy. the consumer council in norway says the electric carmaker has the fourth highest number of ts in the first half of the year. tesla says it is trying to improve service. that is your bloomberg business flash update. david: all week long, we highlight various businesses that focus on recreation, entertainment, sports, and tourism in our business of laser -- leisure series. broadway shows attract millions of people the theaters -- two theaters, and you can see the current 2017-18 season, attendance is up to about 13.8 million people, grossing $1.7 billion. with us now is cody lassen, his recent broadway projects include

indecent and the revival of spring awakening. we also welcome mitch white, broadway manager and author of "the business of broadway: a guide for producers and investors. -- investors." so how does this work? mitch: a large percentage from the hits and up and profit, and that is where the difference is. broadway losen all their money. david: 80%? mitch: 80% lose all of their money. 20%, you can go home and by 17 more houses. it is the best biggest crapshoot you could ever ask for. literally the money comes pouring in. david: cody, you have actually won the lottery a few times. but there must be a lot of skill involved. how do you make sure you are in the 20% and not the 80%? cody: like anything, do your

research, put together a good team, and work with people you trust. it is a high risk-high reward environment, but the success rate is the same as restaurants like a small business you are starting, and a broadway show is kind of a mom-and-pop startup we are doing from scratch each time. julia: you have pointed out that over the course of a season, so many seats go unsold and if you could just monetize those in some way it would contribute to closing that gap. season had 200 million dollars in unsold inventory. when you think about that, that is crazy that we have those empty seats. there are a lot of ways we can address that problem. one, the broadway league has made it a goal to make sure that every new york public school student gets to see a broadway show before they graduate. it is not revenue-generating, but there are a lot of great services and information --

distribution channels that we can get those out. david: but how can you be discounting the more expensive tickets? mitch: there are 100 ways to buy tickets, so different parts of the country, the internet, the box office, i want to go back to what cody was saying. we discovered a long time ago that less than 20% of the people living in the tri-state area forget the taurus -- tourists have never seen a show, even in high school. so the room for growth is tremendous and when you bring in the students at a young age or you bring in people at a cheap price, you are making those tickets eventually sell. coming oute people of broadway than we did 10 years ago. so it is working. it may be slow, but it is working. julia: what about licensing opportunities, particularly in the schools? there are opportunities here as

well, surely. cody: there are, and i think a lot of people in our industry even do not recognize this. there are 30,000 high schools in the u.s. and 50 million people see a high school production every year. to put that in perspective, that of ae half the size netflix subscriber base. so that is a lot of money. a hit show in what we call stock and amateur rights, that will bring in seven figures a year in income. and for 18 years for the producers and investors. david: in the movie trend, there are a real trend toward making the without -- making movies that were made before because they are presold. is it the same with broadway? advance, it was a movie. is it the same on broadway? cody: i think the pendulum has swung to commercial properties that people are familiar with, but when you look at our big hits recently, the visit with the film, but a small

independent international film that not a lot of people saw. you have enhancement, hamilton, a lot of our big megahits right now are not taste off of well-known properties. julia: what is the correlation between awards? betweenthe correlation those that win awards and those that are a commercial success? how often do those things tie together? mitch: there is a strong coronation -- correlation between winning one of the top awards. julia: does the money follow after the award? mitch: it does. there is literally a meeting the next morning where we are all looking at our sales for the coming week, the bump you will he afterwards. the quick -- the trick is can you extend that bump to 2, 3, or four years? musicalsd what about and plays? it costs a lot more to put on a musical rather than a play. if you put that 20-80 rule into effect, is at the same for musicals as it is for plays? mitch: yes.

it has not just the correlation about percentages, but there is a correlation about how many plays can actually survive for how long on broadway. we know that we have to make more money from a play in a of time, there is less of an audience, and traditionally, broadway did not have shows that ran 15 years. my fair lady, sound of music, they did not run that long. they made tons of money and went on to make money with films and records and songs, and then the subsidiary sending them to regional theaters, having high almost do them, that is the real way to make your money. get a hit and let it followthrough for the next 40 years. the investors are going to earn money for that many years afterward. what is the average

length of time of a run? if you are saying 80% of all of these lose the investor money, how long can they survive? what is the average length? do nothe actual mean i know off the top of my head. we get has been running for what, 15, 20 years? been running for what, 15, 20 years? so there are probably 50 shows that last for a few months for every one of those. mitch: i have worked on many shows that have closed if not the day after opening, the week after opening. julia: wow. box office sales, as managers we monitor them literally three times a day if not more. david: it is a tough business. julia: brilliant to have you on, thank you so much. broadway producer and consultant cody glass in and mitch right. thank you once again.

up next, glencoe's billion dollar buyback. they are planning to buy back their own chairs due to the investor concerns. more of what we are watching, next. and remember, bloomberg users, you can interact with the charts shown you in gtd go -- go ♪ -- gtd

julia: so what we are watching today, glencore. the company buying back $1 billion of its own shares beginning today to last through the year-end. the newsaying when broke earlier this week what a whopping price decrease it was, about 10% have fallen. the share price -- not stupid to be buying back the shares at a lower level. david: and then there's that department of justice investigation potentially, in venezuela also over africa. glencore has been this darling,

and then had a terrible time. the stock went way down and went way back up again. tensions in the democratic republic of congo, we thought they had been resolved earlier this year as well, but the interesting thing here is the outperformance in europe of those that are buying back their shares relative to the broader index. i think even without all the headlines here, it makes sense. in -- and this is a great chart that shows it. david: your earnings-per-share go up. julia: exactly, funny, that. back --p, matthew hang matthew warned back. this is bloomberg. ♪ 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. jonathan: from new york city for our viewers worldwide, i'm jonathan ferro. this is the countdown to the open.

coming up, the trade standoff continues. 24 hours away from the world's two largest economies sliding deeper and conflict. in some ecb members are uneasy about rate hikes as the euro is rallying as expectations are weighed in. and president trump keeps piling pressure on opec to boost production and bring down prices. 30 minutes away from the opening bell, futures looking solid, up 19 points on the s&p 500. there is your euro at 1.1713, and u.s. treasuries bleeding higher, two basis points to 2.85. the united states is set to impose tariffs on $30 billion of chinese goods at midnight tonight. china's promising immediate retaliation. in