francine: the trade war becomes a reality. u.s. tariffs come into effect. beijing has countermeasures. the fed remains calm after officials say they plan to keep hiking gradually. we get u.s. jobs data this afternoon. and brexit showdown. theresa may faces a decisive battle over her e.u. divorce plan. can she fight off a revolt by her cabinet? welcome to "bloomberg surveillance." these are your markets.

despite all the concerns about the trade war and the fact that we've seen the first trade war retaliation with the u.s. imposing $34 billion in tariffs and china saying they have countermeasures in place, stocks are pretty much unchanged. a lot of this trade war was already priced in. you can see the bloomberg dollar 1176.pretty much at i'm not sure if that is the exact way we should be looking at it. euro-dollar, 1.1703. u.s. jobs data later on. shares in thyssenkrupp trading up after the chief executive resigned amid growing shareholder backlash. we spoke to him on monday about the renegotiated deal he was about to create. thyssenkrupp gaining 2.4%. coming up, we have an all-star lineup. we talk trade war and risk with

british businessman jim mullen. later, an exclusive interview with the german defense minister ahead of next week's nato summit. herro's viewavid on the markets. go to tv on your terminal and click on the ask a guest button. let's get to the bloomberg first word news. sebastian: prime minister theresa may's team is set to finalize the post-brexit trade plan at a meeting at checkers today. a group of seven ministers are privately pushing for her to tear up her plan. the rebel cabinet ministers met in boris johnson's office to coordinate their opposition to the premier's policy. federal reserve issue rituals reaffirm -- reserve officials

reaffirm amid rising risks of a trade battle that could blow out the talent from fiscal policy. minutes from the june meeting highlighted debate over how many more rate increases would he needed to keep the economy on stable footing. listed their medium projections for a total of four hikes this year. german chancellor angela merkel has won the support of her coalition partners for a deal on migration. getting the social democrats on board further diffuses a divisive debate. [inaudible] german industrial production picked up in may, signaling the economy is stabilizing. the 2.6% increase was the best in six months, far better than

forecast by economists. while the readings have been volatile, it provides a sign that the ongoing expansion isn't under threat. the head of the u.s. environmental protection agency, scott pruitt, has resigned after damaging revelations about his spending, travel, and property rental. president trump announced he had accepted the resignation and said he had done an outstanding job. former coal lobbyist andrew wheeler has taken over. saudi arabia has cut prices as the world's biggest crude exporter raises production. the "wall street journal" is reporting that saudi aramco and the country aren't ready for an ipo that could bring unprecedented scrutiny. the journal quotes an unnamed executive, saying everyone is almost certain it is not going to happen. global news, 24 hours a day,

on-air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm sebastian salek and this is bloomberg. francine: thank you so much. let's get to our top story. the first chart in the trade war. midnight, $34t billion of tariffs went into effect on chinese imports into the u.s. beijing said the duties violate wto rules and countermeasures have gone into place. here's how our guests have been reacting. >> this is going to be a hot summer with both sides trying to be tough. >> this is probably going to be more like a trade skirmish. -- probablyably there would be an exit ramp. >> what we need to focus on is the growing risk for escalating

to a second round of tariffs. that probably will have a more in terms of china's gdp growth. >> we are cycling down in growth , but i don't think we are vulnerable to a recessionary shock. that can change. right now, no recession risk. metastasize ino terms of a migration or escalation, then i think all bets are off. at that point, the global supply chain starts to the threatened. francine: how does the trade tension play out in the markets? joining us, the head of u.s. equities at columbia thread needle, the senior investment manager at aberdeen, and joining jpmorgan's chief

china economist and head of china equity strategy. thank you all for joining us. is that it from the chinese side? are there going to be more retaliatory measures or have they done everything this morning? think that depends. war.is a small scale trade another is threatening $20 billion if china retaliates further. if you only focus on the tariffs matchclearly china is no to the u.s. china needs to think about it ultimately. the other point i want to make is, if the u.s. further expands the tariffs list, the list will no longer be -- [indiscernible]

damage thehreat of u.s. should be aware of. francine: we are hearing that president trump has threatened tariffs on another $200 billion in goods from china. what is the likelihood that will happen and what does that mean for the chinese economy? current 25% tariff is rather small. 0.1% and theoughly total impact is only 0.2% of gdp. if the tariffs expand to $200 billion, the impact would be bigger. more important what be the impact on employment. [indiscernible] on the nontariff side, the u.s.

talking about adding more investment for chinese companies and the more sensitive technologies. if these nontariff measures also were brought in, then the impact on china's economy, particularly china's effort to promote technology upgrades, would have a more long-term hit on china's efforts. francine: let me also get into nokia. when you look at some of the casualties, $200 billion in tariffs, how much would it impact u.s. retailers? hurt theprobably christmas shopping season. >> right. the way we look at it from an equity standpoint and a retail standpoint is, this is protectionism, and those tariffs are a risk to our otherwise strong outlook for u.s. equities.

the consumer has really shown strength over the past few months and it is a testimony of the strength of the economy. constructivevery on the u.s. economy driven by the consumer, but also investment. we are very much looking forward to those earnings results and we will get to hear more about the companies. getting too worried in terms of what impact on gdp unless there is further escalation. right now we don't think the impact will be material. carmakersjames, u.s. could be caught in the crossfire. how do you view the situation? >> carmakers are probably one of the sectors that stand to lose

the most. they are a powerful political lobby. they will not be silent. i would have thought that pressure will come to bear. someow, there will be economic impact, but it will be relatively minor. incentive be every for all protagonists to get around the table and come to a sensible agreement. francine: when you look at the industry's or the markets that will be hit the most, we are trying to figure out how much soybean shipments to china could be dropping by, is this one of the angles you are also looking at? tariffs, think about u.s. imports account for 40% of china's total soybean imports.

fully replaceable by the alternative supplies. you will eventually see higher in nation for chinese consumers. when the u.s. imposed tariffs on , it will affect transportation and related sectors. francine: if you look at some of the key battlegrounds, we were talking about soybeans -- where do financials fit in all this? financial is more indirect. mind that the macro impact at this stage is still very limited. from that perspective, given that the u.s. is in a strong business cycle stage, a tricky

is on the domestic side. -- from a banking system, look at how the policy is concernsto the rising from the external and internal side. francine: i'm seeing a little bit of selloff when it comes to nickel. do you believe china is or could be using the renminbi as a trade weapon? that it will be adopted in practice. we're talking about a large saw intion, not what we recent moves. the large devaluation is a very risky policy weapon from china's

side. it could trigger the competitive devaluation from other trading partners. the policy could be self-defeating here. thatber the 2015 story, china started, but a small depreciation turned into a very strong currency devaluation, and that led to huge capital outflow. although the current capital outflow is well-managed, the risk is still there. if you compare to a few years ago, fx reserve is $1 trillion less than the peak level. they shouldn't feel too confident about using the large devaluation. francine: thank you so much. jpmorgan's chief china economist and head of china equities. stay with us. next, we talk strength of the

u.s. economy and what is next for the feds ahead of jobs data today. later, our exclusive interview with the german defense minister. that interview in around 30 minutes from now. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance ." the fed are keeping calm in the latest fomc minutes. officials say the economy warranted continued increases in the benchmark rate, despite an escalating trade war and turmoil as risks to growth. investors are looking for any evidence of a hiring pullback.

unemployment is forecast to stay at a steady 3.8%. how should investors be positioned around u.s. assets? still with us, nadia and james. thank you both for sticking around. when you look at u.s. equities, though we have to wait for individual earnings to come out, overall, is there a risk that monetary policy goes too quick from here? >> right now we think the monetary policy is right. it has been gradually hiking. footingomy is on robust after the stimulus. monetary error is always the seems that the policymakers are adequate given the strength of the economy. we think it is a good thing to hike and have ammunition after

the extraordinary experiment that was done. we think the fed is acting right. francine: do you agree with that? dayou are an investor, jobs used to be such a big deal. now because of the trend on trade war overlay, does it make it less relevant? >> i'm just an investor indeed. it was the number one thing we watched for four or five years. definitely not the case today. there are more interesting things going on now when you have price indices at or above 2%. a number of things could move the markets. that is largely because this new edition of the fed, 7.0 or whatever, is very different from the yellen fed. they are not allowing themselves to be swayed by short-term gyrations, my things they can't

control, structural issues. they seem to be recognizing that their job is to take away the punch bowl. the economy is strong but it is probably strengthening as well. we are rebalancing stimulus. they could go ahead and even after pace and i don't think it would have a negative effect at all. the big risks are the financial risks. correct like that to smoothly, but you can't guarantee that. i'm much more concerned about market. i don't see a blip in the economy over the last two years. francine: and yet, nadia, the concern is that the yield curve inverts and that means an impending economic slowdown. >> yes. we are anywhere

close to a recession. the probability right now is low. curve isn of the yield one of the factors that one monitors. many one of the indicators. at the moment, we have no reason to get too concerned about the yield curve. if anything, this has acted as a headwind. we think financials are fundamentally strong and we like that sector very much. the regulation is becoming looser. francine: do you agree with

that? is this something you are watching more closely? we heard from the imf managing director that clouds are getting darker by the day. >> i'm not a massive fan of some of the imf commentary. nadia that the curve itself is not something to be concerned about. i find it pretty incredible. [indiscernible] twist,gaged in operation which was intended to stimulate the economy. we are now concerned about a recession. it seems incredible that the flat yield curve can do both these things. i think there are technical and global reasons why the yield

curve is flat. francine: people say -- i know this time is a bit different, inversion look at the , it preceded the last several recessions. bonds?take notice about >> yes, pretty much so. it is going to be fraught with problems in terms of trying to keep volatility down while still taking away the punch bowl quick enough that you can do that before we head into recession. problemvery complicated and we tend to have a flat yield curve just before recession, but the period before the flattening and the start of the recession is pretty fluid. i think that is a sort of coincidental situation as

opposed to a cause and effect. reacted, thet has economy has already turned area the dangers of them doing that are high because they've been so intransigent. they've been so at pains to wait for an accumulation of evidence instead of taking away little and often, recognizing this is decision-making under uncertainty. they seem to want to wait for certainty, which i think is dangerous. francine: nadia, what does it mean for u.s. equities? are there industry groups you find frothy in valuation terms? >> yes. in terms of industry groups, we do not find particularly attractive, mostly those that have been inflated by the monetary experiment, by qe.

the likes of telcos where we don't see a lot of earnings growth, where you have more rewriting than earnings growth. sectorally like the tech quite a bit. it is the beginning of a very exciting secular megatrend. we are early in the generational shift. the prospect of artificial intelligence. overall, the economy is going to be competing. we want to stream things online. we need that data accessible at high speed. we are excited about the company's that are exposed there. -- it grows ar

lot faster. francine: thank you so much. breaking news out of deutsche bank. deutsche bank share prices in the last couple hours. , a localtand from wiwo publication, jpmorgan are said to way taking a stake in deutsche bank. on the back of that rumor or report, you can see deutsche bank up at 9.84. we will be back with more on deutsche bank, more on trade. this is bloomberg. ♪ retail.

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

near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. francine: economics, finance, and politics. this is "bloomberg surveillance ." we need to look at the share price of deutsche bank. it is gaining quite a lot, above 10 euros per share.

a german media saying that jpmorgan and icbc are said to weigh deutsche bank stakes. we don't know how much it would be. we don't know if this would be sooner or later in the year. this has also not been confirmed or denied. we are trying to get to the deutsche bank chief executive to try and figure out whether this is true or not. it is something the market is taking in stride. a surge of 5.4%. let's check on what else is trending. londoners will get to see two versions of donald trump next week, the 45th president of the united states and a 20 foot high inflatable version that protesters will fly during his visit. theresa may gathers her divisive cabinet at her country house today to flesh out a complete

brexit plan. head to the website for more on that. our most read stories on the bloomberg terminal, third-place, elon musk's team in talks with time officials about aiding in the rescue of the boys football team stuck in a cave. second, singapore's crackdown on speculative property demands. at the top, the u.s. pulls the trigger on china. find out more on our line of blogs and the bloomberg terminal. to get more on the bloomberg first word news, here's sebastian salek. sebastian: prime minister theresa may's team is set to finalize the trade plan at a crunch meeting at her country checkers residents. a group of seven ministers are privately pushing for her to tear up her plans. the cabinet ministers met in boris johnson's office yesterday to coordinate their opposition. federal reserve officials reaffirm their commitment to

gradually raising the u.s. benchmark lending rates amid rising risks and emerging-market turmoil. the minutes from the fomc's june meeting highlighted a debate among policymakers over how many rate increases would be needed to keep the economy on stable footing. officials unanimously raised the main lending rate for the second time in 2018 and lifted their median projection to four hikes this year. angela merkel has won the support of her coalition partners for a deal on migration policy. getting the social democrats on board cap's three weeks of political tension. earlier this week, merkel agreed to a demand by her bavarian sister party to clamp down on asylum-seekers from greece and italy. german industrial production picked up in may, signaling an economy that is stabilizing. the 2.6% increase was the best

in months, and far better than the 0.3% forecast by economists. it provides a sign that the ongoing expansion in europe's largest economy isn't under threat. the head of the u.s. environmental reduction agency has resigned -- environmental protection agency has resigned. president trump announced that he had accepted the resignation and said he had done an outstanding job. former coal lobbyist andrew wheeler is to take over running the epa. saudi arabia has cut prices for oil as the world's biggest crude exporter raises production. the "wall street journal" is reporting that saudi aramco and the country aren't ready for an ipo that could raise $100 billion but also bring scrutiny. the journal named and unnamed senior executive. tariffsys retaliatory

for u.s. goods are in effect after u.s. president donald trump fire the biggest shot yet in the global trade war, imposing levies on $34 billion worth of chinese imports. billionid another $16 could arrive in two weeks. >> the war was lost on trade many years ago. now we are going to win it because we have all the cards. sebastian: global news, 24 hours a day, on-air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm sebastian salek and this is bloomberg. francine: thank you so much. let's get to one of our other top stories. nato's summit kicks off in brussels next week. ministers meet over the weekend ahead of the annual meeting that begins tuesday and the gathering could prove contentious. president donald trump has

already disrupted the mood by sending letters to european leaders complaining that they are not doing their fair share in paying for defense. that has been a frequent theme at his rallies. >> i'm going to tell nato, you have to start paying your bills. is not goingates to take care of everyone. we are paying for anywhere from 70% to 90% to protect europe. of course they kill us on trade. they kill us on other things. they make it impossible to do business in europe. francine: german chancellor angela merkel pushed back against the criticism, defending her country's spending. again,nt to make clear germany is a reliable partner within nato. we are second in providing troops and participate in numerous russians, and germany -- numerous missions, and

germany will continue to be a reliable nato partner. crucial iso just how this summit? joining us now for an exclusive interview is ursula von der le yen, germany's defense minister. thank you for giving us a bit of your time. the chancellor won't raise spending as much as president trump demand for the for seeable future. will this week in germany? ms. von der leyen: you know, germany has come a long way. you remember that at the summit in wales, it was president obama who insisted on implementing the 2% goal, rightly so. since then, we have an increased budget. just coming out of the cabinet, we had a raise of 11% for the next year. decade,ok at the whole

the projected increase in real terms in the german defense budget will be roughly 81%. this is a lot and this shows we are committed to the 2% goal. francine: do you think president trump will take that as a move in the right direction or do you worry that it will be an excuse for the u.s. to say germany is not doing enough, and to attack germany? the senser leyen: that germany is not doing enough , we have on one hand, cash, how much we are spending in the defense budget of the gdp. on the other hand, we have the question of who is contributing what capabilities and contributions to nato. germanyook at the fact, is the second largest troop contributor to nato. we are the second largest net

payers. lookave to have a balanced at who is doing what, who is investing what, and in the end, it is about unity. we are defending the same values. we are sitting on the same side of the table. we are determined to strengthen the alliance. francine: what was your initial reaction to that trump letter to the chancellor? ms. von der leyen: the letter was unexpected. like i said, it is a goal we've had since we decided on it with president obama. we are on a good way and i think it is important to debate, to talk about the issues that really affect the alliance. who are our opponents? our opponents would be delighted

if there's a division in nato. to work on the strengthening of our alliance, to work on the unity, is the most important goal for the summit. francine: the italian government was trying to say the way that defense is calculated is flawed, that it should be targeted spending. do you share the view that a simple percentage of gdp is too simplistic? ms. von der leyen: the percentage of gdp is right because it shows if you have a small gdp, you have a small amount to invest in defense. youru have a large one, defense spending has to be larger. it is only one side of the coin. the other side of the coin is capabilities and contributions. there, the balance sheet of germany is a pretty good one. francine: are you prepared for

president trump to raise the issue of trade at nato, given he's linked the issue of surpluses and defense spending before? ms. von der leyen: he did that before. of course we are prepared. i think this is an immature discussion. if you look at trade and the topic of tariffs, tariffs are certainly not beneficial for growth. if we hinder growth, if we have a negative impact on growth, this will be negative for the gdp and negative for the tax income a country has. spending lower defense for the opportunity of defense spending. i think we should turn the discussion into a mature discussion. they are not related to each other. francine: but if the president does relate them, how uncomfortable will it get for germany particularly?

ms. von der leyen: it will be a discussion we have to wait. it is not only germany. 29,ave 13 countries out of almost half of the alliance, who do not meet the 2%. it is an overall issue we do have. we've come quite a long way. we've strengthened the alliance. this is the way we have to proceed. it is ok to have this issue, to have this discussion. with whatestion is kind of message we are getting out of the summit. francine: when president trump nafta,to is worse than

does it go back to trade? is this partly about getting nato allies to buy more defense equipment from the u.s.? actually, weeyen: by the defense equipment that is the best and that we need. might be american products, but it might also be european products. the fragmentation in europe will be stopped. so that we have larger interoperability between our armed forces, this is a strong goal in nato, and that we stop fragmentation. we want to buy what is the best

product for our armed forces. francine: vladimir putin and president trump are about to hold their first summit. is there a risk that europe will be left adrift in the middle and -- in the middle? ms. von der leyen: i think it is good that president trump and president putin our meeting. it is always good to talk. i think it is always good to talk. it is good to talk from a position of strength. the message coming out of it is important. in general, if we are clear about our values, clear about the fact that the annexation of crimea is violating

international law, then it is good to stretch out the hand and to talk together to solve the issues at the negotiation table. francine: we've also had quite a lot of instability or upheaval in german politics. investors have been nervous about what comes next. are we going to have even more volatility when it comes to german politics? we had aer leyen: debate over the last four weeks about how to move in topics of migration. we've improved a lot. down in15, migration is numbers by 95%. i think the european summit we just had was a big success. they have signed a commitment to

go into a concept for the migration issues, to start with the african continent, to have a clear order at the external border is the topic there, but also to clarify how are we dealing with migrants that have come to europe, who are granted asylum, and who have to be sent back. time, allry first heads of state and government agree to the same concept. this is a step forward. francine: thank you so much for your time. that was the german defense minister. let's get back to our top story. the first shot was fired in the trade war at one minute past midnight. $34 billion in tariffs went into effect on chinese imports to the u.s. beijing said the duties violate wto rules and countermeasures

have gone into place. joining us from there is jim mullen. the 2008y foresaw credit crunch. i hope one day to have the right answer. where is the next crisis coming from? is it trade? jim: there's plenty of opportunities for crisis. the world political situation is heating up. there's an atmosphere around it in terms of stock markets and this posturing that is going on, the nonstop attacks on allies and on trade partners by the trump administration. it is not helpful. my own view is that this will be resolved. on the other hand, trump does have a point. there's five times more exports going from china to the u.s. than vice versa. but the trade deficit itself is

not economically significant to the u.s. what is significant is the fed is tightening its balance sheet and raising interest rates. let's face it. what has this trade done to hurt the united states? the economy is running hot. unemployment is at almost record lows. how could the u.s. produce 400 dollars worth of goods to send to china? there is no productive capacity to do that. you have that trade issue as one thing. you have political instability in europe, which is becoming worrisome. francine: are these dark clouds that will have an impact? how bad can it get? jim: there's definitely a slowdown in the world economy. thingserything is rosy, start to go wrong. we are seeing a slowdown across the board. europe, in u.s., it is still

pretty strong. in china, you are getting evidence of slowdown. in japan, it is flatlining as normal. we are not in a goldilocks situation anymore. we are getting rising interest rates. the fed is tightening its balance sheet. francine: what is the inflection point? policyld argue that won't come from the fed, but it could come from the european central bank. rates and. raises goes into recession and the east be is so far behind the curve that it can't deal with the crisis. is that a real risk or would it come from china or something else? jim: it is possible that the italians could run a parallel currency. that would have dire consequences. i wouldn't rule that out.

it is possible that the european central bank titans more aggressively or stops easing monetary policy. there are all sorts of uncertainties. against that, stock markets are very incentive. why would you want to be overweight in the stock markets? the last time i saw you, i was saying the bank stocks were overpriced. they did go down, and they went back up. sooner or later, the over concentration of is going to be undone by massive selling. francine: jim, stay with us. in the meantime, breaking news about 35 minutes ago on deutsche bank. deutsche bank briefly touched above 10 euros at 9.90. this is after we heard from the wiwo. my german pronunciation is terrible. jpmorgan and icbc are said to

weigh deutsche bank stakes. we've been trying to figure out what they mean by that, when they would come in. for the moment, we are trying to reach the various press offices. as soon as we have anything confirmed or denied, we will bring that to you. investors looking at that story, saying it could be plausible because the share price is greening -- gaining 3.2%. theresa may is facing a battle with her cabinet over future ties to the e.u. the showdown with ministers threatens to throw the brexit process into disarray. joining us is bloomberg's the mea news writer. still with us is jim mullen. david, is this crunch time? there's rumors that boris johnson may resign. >> i'm nervous about saying it is a crunch moment or a decisive moment. we said that so many times. approaches, ane

decision does have to be made. they are being locked away. some people have called it the body bag summit. high drama really. we are expecting a decision to be made. we may see some people feel that they cannot go along with that decision. apparently the ministers have had their telephones taken away so that no leaks will come out. we going to go into a news blackout. we know there was a meeting in august johnson's office last night. some members of the cabinet getting together to work out their position. we've had lots of threats for resignations. none of it has actually happened. the cabinet have rallied behind the prime minister. we know that her version of exit is on the softer end. is it soft enough that they want to really jeopardize the

stability of the entire government? we have to wait and see. francine: jeopardizing the stability of the government, is that actually a good thing or a bad thing when it comes to a you negotiations? does it make it more likely we get a hard brexit if certain members of the cabinet resign? jim: you've got to think about parliament. i think what mrs. may is saying is that, what is the version of brexit that she can get the support of parliament? we have a couple bills coming through parliament on trade and customs. there is no majority to get a hard version of brexit through and approved. mrs. may has come up with a proposal that she thinks parliament can support. remember that the proposal that mrs. may is discussing today has already been shot down in part by the european side.

we have mrs. may flying to germany to speak to mrs. merkel. german government sources telling us the arrangement isn't going to fly. that perhapssense this proposal is dead on arrival. francine: what do you make of brexit? jim: i thought it would be a very soft brexit. we are in that state at the moment. i agree with david that none of them are going to resign, or if they do, it will be one or two. they don't want to precipitate the fall of the government and jeopardize their position. francine: what it not give boris johnson a bigger chance of becoming prime minister further down the line? jim: boris johnson is a clever man, but he really has shot himself in the foot so many times. i don't think his chances of being prime minister exist at all. i don't know about you, david,

but i think he's a dead duck in that respect. he will probably want to be foreign secretary. i do think we are moving towards a very soft brexit. the european union has many other problems. they want to solve those much more so than brexit. nothing fundamentally will change. we will take our passports to europe. nothing will happen. francine: i know you are doing a lot of work on trying to invest in tech to deal with an elderly population. do you feel that investment will be coming in the u.k., no matter what brexit takes shape? >> i think the u.k. government has really nurtured the life sciences industry very well. there's a lot of money going into it. there are two industries that i think the u.k. should focus on. one is longevity and the fact that people are going to live 110 or 120 soon.

the other is a meatless future, where you grow lab cultured beef as a substitute for having cows out there. that is going to be a world shaking industry. francine: if the u.k. wants a part of that, you need a system which allows researchers to come in. >> i've always said that immigration should be absolutely open, at least a points-based system. i also am a free trader. i believe we should have completely free trade all around the world. i think we can make brexit work quite well for us. francine: do we know about immigration, or is that to be discussed next year? >> in the times today, saying they are softening some of these strict rules on immigration for skilled workers, like scientists and professors. that is a change. we saw it a few weeks ago.

mrs. mays very strict rules seem to be softening. the economy is going to need these people to come in. francine: thank you both for joining us. david merritt and jim mullen. "bloomberg surveillance" continues in the next hour. tom keene joins me out of new york. we will be talking to david herro. he owns a big chunk of some of the biggest banks in europe. we will be asking about glencore and deutsche bank. ask him questions by clicking on the terminal tv . this is bloomberg. ♪

francine: the trade war becomes a reality. you have tariffs on $34 billion worth of chinese goods come into

effect. beijing takes countermeasures. cbcrts that jpmorgan and i are weighing a state in the lender. officials plan to keep hiking gradually despite the escalating traderom the conflict. we did jobs data. tom keene in new york, showing up in london for all of our benefit as the president shows up for nato and that all-important meeting in helsinki 10 days from now. is all about trade. in corporate news, we have deutsche bank. tom: extraordinary news now. we have the trade with chinese response coming across the bloomberg at about 4:21 new york times this morning. the deutsche bank news, are we

fortunate or what? on "bloomberg surveillance." francine: a lot of planning, but sometimes lock steps in. it is just the best when you have that luck. deutsche bank news, the share price briefly went above 10 euros. that is a key psychological level. here is taylor riggs. hasor: president trump fired the biggest shot in the global trade war, and china has retaliated. the u.s. began imposing tariffs on $34 billion worth of chinese goods just after midnight in washington. the president threatened another $16 billion worth of trade tariffs could follow next week. imposed tariffs on goods ranging from american soybeans to four. federal officials are watching the trade news closely, planning

to raise interest rates gradually because of a strong economy. they say the escalating trade war could hurt growth. minutes from last months fed policy meeting suggest some officials believe the economy could run too hot. vladimir putin wants to give donald trump something to boast about when the two meet later this month. kremlin officials are negotiating with their washington counterparts to strike at least one deal. at the top of the list for the ismmit in helsinki a deal on syria. showdown withs a her cabinet today that threatens to throw brexit talks into disarray. seven pro-brexit ministers want theresa may to tear up her place. he wants to link the u.k. trade regulations closely to

those of the eu. 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. this is bloomberg. tom: thanks so much. one quick data points on job stay, the market a little quiet news jostlinge things around. trade came from, 27 basis points, euro-dollar 1.1717. nymex crude with a bid. not much going on there. let me show you a great chart. this is a great trade war chart. thanks to alex for telling me, shut up and show soybeans. i did not realize how elegant this chart would be. all of these fancy lines. this is more than i usually do on tv. it is so perfect, i had to show it.

this is a massive move in soybeans down and the trend from last summer. we are down eight standard deviations. francine,ed to know, is that is a massive move in soybeans for the american farmer. that is a crushing move francine:. it is. it is a good chart. you get full marks for that. if you look at soybeans, it is one of the battlegrounds. when you go into it, you need to figure out the battlegrounds between the u.s. and china in this trade war. took quite a plunge. i need to show you what european stocks are doing. they have trimmed some of the gains if you are looking at u.s. equity futures. sentiment overall looks shaky after china put in place its response to this well

telegraphed u.s. tariff. this is the yield curve. we talk about it, and this inverted yield curve, a lot more come outers have saying this is something we need to watch out for. it is u.s. jobs day. u.s. ofcusing the violating wto rules. at one minute past midnight washington time, $34 billion worth of tariffs went into effect on chinese imports. beijing responded in kind, targeting u.s. agricultural products and cars. >> this is going to be a hot summer with both sides trying to be tough and looking like they will not back down. >> this will probably not be a trade war but more like a trade

skirmish. i think after one or one of the half rounds of escalations, there will be an exit ramp. >> i think where we need to focus is the growing risk for escalating to a second round of tariffs. if we are talking about $200 billion as president trump already threatened, that will probably have a more meaningful impact in terms of china pose a growth. >> we are cycling down in terms of growth. i don't think we are closing a recessionary shock at the moment. that could change. right now, no recessionary risk. metastasize ino terms of a migration or escalation from $50 billion to $200 billion, then all bets are off. at that point, the global supply chain starts to be threatened. >> joining us for the latest on

asia newsr beijing editor. this is outstanding on the u.s.-china trade war. we have some outstanding analysis. it is not quite over yet from the chinese side because he says there has been a game of pass the parcel between government departments. is that right? >> yean. that's right. corn, beef, but also automobiles. francine: if the threat from

donald trump of imposing an extra $200 billion in tariffs on chinese goods comes into effect, how will china responded that? >> they obviously cannot hit back in kind when it comes to a $200 billion threat. relationship just doesn't have the scope for that. that is where you get questions over what they do next. they have got other things, boycotts, exports imports held up at the border due to inspections, factory inspections, making life difficult for u.s. companies operating in china. there are a host of ways that they could make things difficult for the u.s. to make their displeasure felt. the rhetoric very strong today, saying the u.s. has ignited the worst trade war the world has ever seen. tom: i want to bring this down to granularity. not is emma's real job,

coming on tv and making us smarter. let's look at emma o'brien's real job, which is a brilliant map that tracks the boats. you have the uss soybean coming into china. i don't know where this is. this is where francine took a vacation two years ago. explain to us what this boat doe s. it is loaded with soybeans, and china says, we will not accept you? last u.s. is the soybean shipment coming by boat into china ahead of the tariffs. it did speed up today before the news of china invoking its own 25% tariff had been clarified. probably hoping to get to the

port and be able to offload its cargo with a cheaper rate without that 25% tariff. i think it arrived 10 minutes ago according to our calculations. it will just be hit with that higher levy. it will not be barred or anything like that as far as we know. tom: francine, that goes to name the uss at a mommy -- edamame. francine: in your live blog, you talked about the feed for u.s. sorghum, i did not know that china is actually the consumer.p wheat joining us for the hour is david herro. associates chief investment officer. does this trade war make you

nervous about europe, german ,armakers could be hit financials, or anything else in the region? i think the german carmakers, and also there have been threats about import duties on cars from germany into the united states. there are two issues, cars coming into the u.s. from europe, and european producers who export cars from the united states into china. that is what is being hit right now, birth mercedes and bmw -- both mercedes and bmw exports from the u.s. into china. this is their only source of production that goes into china. they can substitute, go around some of these things. they can source those from other places. daimlerchrysler said this will negatively impact us. david, deutsche bank at its

lowest, down 16%. that affects everybody, including oakmark funds. is mr. trump putting the global markets into a bear market? david: i think he has certainly created uncertainty that is affecting share prices. at this point, it is all noise. they're have not been any concrete steps that have truly damaged the ability of countries to earn profits. ultimately, what we're looking at is their ability to generate cash flow streams through time, not just a day or the next quarter. the question is, does all this noise really have a fundamental impact on the long-term cash flow streams of the businesses in which we are invested? at this point, it is very little. it is too little information to determine what is noise. until today, there has not been a serious tariff.

then again there are the positive things that the trump administration has done, smarter regulation, lower taxes. this all has to be balanced out. tom: david herro with us. we will get to the banks in a moment. an important conversation in the 9:00 hour, jonathan ferro with a gentleman from the university of pennsylvania. kevin hassett knows his trade war economics. that is in the 9:00 hour. ♪

taylor: this is "bloomberg surveillance." let's get to the bloomberg business flash. shares of deutsche bank are rising today. icbcjpmorgan and china's

are considering taking a stake in the bank. chairmanrkel asked ubs for his opinion on deutsche bank last tuesday. deutsche bank is not commenting. years atafter seven the helm. quit days after two agreed to set up a european steel giant. activists are pushing for a major restructuring. the british satellite carrier rejected equus stars bid. that is your bloomberg business flash. thank you. now to banks.

deutsche bank's market decline has drawn attention from investors. speculation from investment bankers. shares in the lender have spiked. consolidation shows no signs of going away. deutsche bank spoke to shareholders about a possible merger with rival commerzbank. at deutscheyou look bank. you don't own any deutsche bank. what would it take for you to go in and buy some? jpmorganports about looking to buy some, would that make you take a second look at the bank? david: not really. there are a couple of problems with deutsche bank from our viewpoint. we need better transparency financials. so many of their profits from the global market business are not so strong. they have a widespread of global

markets businesses, but there are other strong players, credit suisse, ubs, morgan stanley. in their home baking markets, in germany, it is very difficult for companies to make money in retail banking. their core business should be should beeir core retail banking, and they cannot make money there. nobody can make money in germany's retail banking. this?ne: what should, look for businesses, and we know quite its release is -- credit suisse is growing, a reformulated global markets business trading at 7.5 to eight times normal earnings. why look at deutsche bank that

is opaque when we can look at something like credit suisse where we have seen improvement with a lot more visibility at an attractive price? tom: you and i know that mr. a history of acquiring assets on the cheap, sometimes at gunpoint. he is not at gunpoint now. dimon wouldwhy mr. be interested in affecting some sort of ownership of this german national bank? david: i would really hope that he did not get some form of ownership because i just think -- if you look at jpmorgan's business, it is so strong and getting stronger, why ruin that? teal defeat from the jaws of victory? they don't need deutsche bank. there's nothing in there that

they don't have enough. basis, just aok quick look at the book, 0.33 is one measurement of the book. mr. dimon could buy this thing andhe cheap, turn around help the german government move this turkey forward. isn't that the way this looks? david: you have to look at the cost of integration and what businesses they have to give up etc.. look deutscheoes bank is trading at one third of book. really worthets 100 cents on the dollar? chart of wheree we are now. this is not of the milwaukee brewers. touching 10.ioned,

i will do this in real time just like we do on the bloomberg. i am going to do a quick long-term chart of this turkey. you can see the rollover and collapse of deutsche bank. this is an elegant chart in herro hasws how mr. been correct not to own this dog. they come with a lot of real estate. would you suggest that mr. dimon is just acquiring real estate? david: that is what is happening. there are some complement true businesses, but others they would have to selloff. if mrs. merkel really wants to help deutsche bank, they need to do something about the retail market. italy and spain did it. they have done these things to make the market more balanced. one of the reasons deutsche bank is half crippled is they have to compete in this retail banking

market in germany where it is almost impossible to make money because of unfair competition. francine: when we start asking about deutsche bank, you said, why look at deutsche bank if you can look at credit suisse? are you buying credit suisse? david: as you know, we never discuss our current trading. if you look at the last few quarters of their earnings reports, they continue to improve, strengthen their business. of their business transformation has to been to take costs and focus on capital allocations in the private bank. this is actually working. you are starting to see much better results. in the meantime, this business continues to be raided. we expect eight times normal trades at, andit

it should be 13 times given their trade exposure today. francine: should they further scale down their global markets unit? david: they should only scale down if they are unable to make through cycle profits. do, and wee they think they are doing a good job at it, is examine where you can make good through cycle profits. maybe build those up, make those stronger. areas where it is tough to compete, back away from those businesses. francine: why do you prefer credit suisse to ubs? david: we like the valuation differential between the two. they are not wildly different. i think credit suisse will be getting more of their income, private banking come, as a percentage total from asia. there too.ty strong they trade at a substantial premium to credit suisse.

we think it is undeserved. tom: i want you to give us a view strategically on how a busted bank turns it around. bring up the chart on deutsche bank. this is a next ordinary chart of failure going back to 2008. i look at the moving averages. all you need to know is that this is beyond elegant. the mathematics of this chart, the timeseries order of this trend is just shocking. david, how the universe this horrific trend if you want to do right by the employees and the shareholders? david: i think what someone has to do, what the leader of this business has to do is carefully comb through the various business segments, the various business areas and see where do they have a competitive advantage, and why? where these businesses are, you

have to bolster these businesses, invest in these proceeds ofselloff businesses where you don't have critical mass. you really have to retrench into those areas where you have a strong business franchise. i have not gone through deutsche bank with a calm, but there must be some areas where they are strong. you just have to keep looking until you find those areas where you are strong, so the areas in which you are weak, and start from scratch again. you cannot be all things to all people. businesses who do that please no one. francine: you get another deutsche bank question. are you worried about compliance procedures at julius baer? david: julius baer has been under the microscope ever since their ceo left. there has so far been no verification of this. the person who is now ceo of julius baer was the chief

compliance officer. i think they have a firm grip on compliance. a globaler is now only private bank. they are doing fairly well. in the area of private banking, compliance is extremely important. you have to know your client and make sure you have wealth managers who are not just bringing in money from anywhere. i think julius baer has a grip on it. francine: thank you. david herro of harris associates stays with us. questions on tv to david. ♪ phones have made our lives effortless.

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and it can be included with xfinity internet. which could save you hundreds of dollars a year. it's a new kind of network designed to save you money. click, call or visit a store today. francine: this is "bloomberg surveillance." tom and francine from london and new york. tom getting ready for his big trip to london next week as we

track the president's arrival in europe, brussels, nato, then on to london, possibly scotland, then helsinki. this is what is trending across the universe. the 45th president of the united states, the real one, and a 20 foot high inflatable version that protesters will fly during his visit. theresa may gathers her divided cabinet today to hash out a complete brexit plan. the most read stories on the bloomberg terminal, in third place, elon musk's team in talks officials to help the rescue of the boys stuck in caves, and the top of the pile, the u.s. pulling the trigger on china tariffs. let's get straight to the

bloomberg first word news. here is taylor riggs. taylor: china is accusing the u.s. of launching the largest trade war and economic history, and it is striking back. president trump began imposing tariffs on $34 billion on chinese tariffs just after midnight in washington. beijing responded by imposing tariffs on products such as soybeans. that could lead the u.s. to hit with more tariffs. secretary of state mike pompeo is in north korea where he has to make sure that kim jong-un's nuclear commitments lineup with president trump's promises. kime have been reports that kept wrapping up his weapons production before the summit. lobbyist will be afterief at the epa

serving as the number two at the administration for two months. muska sending a team of engineers to thailand to help rescue the boys soccer team stuck in a cave. they could help by trying to pinpoint their exact location or providing heavy-duty power packs from tesla. 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 taylor riggs. this is bloomberg. francine: thank you so much. theresa may is facing a battle, which threatens to throw brexit talks into disarray. the prime minister is hoping to finalize their blueprint on future ties with the eu during a

meeting with cap members today. a group of seven rebels have been plotting against her plans. herro ofs is david harris associates. bring us up to grade. is this crunch time? >> it has been called the body bag summit an expectation that some of the cabinet members are going to fall on their swords because they are so outraged by mrs. may's softer brexit plans. it is crunch time. they really does have to be some sort of decision made today. they do have to agree or coalesce around a vision of britain's relationship with europe after brexit. we are seeing some of these more brexit linning cabinet members membersng cabinet plotting on what they can do to stop plans.

david cameron has talked boris johnson off the ledge apparently about resigning and telling them all to rally around the prime minister. that is what we have seen so far. every time we have seen threats of resignation, they have fallen into line. francine: to the hardline brexiteers need to choose between a softer brexit and keeping the tories in power? of if they a debate do resign that it would topple the government. mrs. may will begin playing that she can afford to lose these people. we know that they could trigger a leadership contest. they help that they do not have the votes to unseat her. when you think about parliament as a whole, she is saying that this version of brexit is what parliament can support. there is no majority in parliament for hard brexit. tom: how is this perceived by

europeans? partythe conservative while labor sits on the sidelines and andy murray and all that. great. how does your response to the london ballet? >> the ballet is a great way to put it. mrs. may flew to germany yesterday to try to get some support from the german government. what we heard yesterday was that this proposal is not going to fly. i don't have enough time to explain the details of it. it has never been tried before. it breaks some of the roles that europeans are trying to protect in terms of the single markets. the germans have said that this proposal is pretty much dead on arrival. well the british government argues amongst themselves, what are they arguing for? europe may actually reject this thing. whether the proposal is agreed on or some sort of compromise is reached, then the ball gets

kicked over to europe. tom: what happens in the summer besides francine taking her seven-week vacation? excuse me. what happens in the summer? do we just wait until september? >> we will have a recess in parliament in the u.k. a lot of europe like to take the majority of august off. that is why today is significant. the next big milestone is october. that is when the next big european council summit is when there has to be an agreement on the withdrawals so there is a time before next march to be ratified. who knows? we may still get some political drama. francine: i am expecting tom to show up with flowers and chocolate after that, because i have had to cancel my holiday not once but twice in the past

couple days. are you interested in u.k. banks? is there a brexit parameter to how you own them? david: we do have positions in u.k. banks. we have lloyd's and ubs. lloyd's is basically a u.k. only retail high net worth sma type of bank. to the degree to which brexit andcts the u.k. economy confidence, that certainly hurts banks. in the case of lloyd's, it has done very well with the exception of some of the provisions they have to make for ppi. they have done well even improving amid uncertainty. of whether kind through all of this. it is undeniable that if this

brexit situation does not get resolved with some kind of reasonable outcome, it will eventually hit the u.k. economy, which to date has been relatively resilient. it has been some softness and weakness here and there, but i oundose the weaker p has helped the manufacturing and tourist sectors. uncertainty becomes very difficult for market dispense to do with. are americanro, stocks of value right now? are they attractive? david: you really have to go through sector by sector. it is funny. the u.s. market has become somewhat bifurcated even as the global market has become. certain areas in the tech space in particular are relatively expensive. other areas seem relatively

attractively priced. even the airlines for instance in the u.s., very attractively of higherr periods fuel costs. that is the beauty of a firm like where i come from is that we just focus on bottom-up stocks, companies that meet our value criteria. when there is money moving around the globe based on global political, geopolitical factors, that enables you to make money in some of these sectors. tom: maybe that means mr. harold is not buying fox tv at 20 times. anti-herro.e the greatly appreciated. i am getting ready to go to london and all of the festivities of mr. trump in europe. that will be interesting.

we need a briefing on the global economy, the american economy this jobs day. no one better to do that then william lee of the milken institute. it is jobs day at bloomberg. ♪

francine: welcome back. this is "bloomberg surveillance." at glencore, the world's biggest commodity trader said it would buy back as much as $1 billion of its own shares. this is amid attempts to soothe investor concerns after the group was hit by a u.s. department of justice probe that wiped out $5 billion of its value on tuesday. in the aftermath, glencore since rose 4.7%, the most

april. herroget back to david with harris associates. what will happen to glencore? david: this will probably take some time. keep in mind, glencore is involved in some very sticky areas of operation, mining in africa, mining and south america , and so they are looking into some of these practices. i think glencore has been very careful. they are experienced to follow rules and regulations of global trade and business. every now and then, there may be some stray person who did something wrong. i personally think the market reaction was a bit abrupt, $5 billion decline in share price of glencore. let's say they did something wrong, and i have no clue whether they did or not, it seems a fine anywhere near that

would be especially egregious. the fundamentals seem quite strong. francine: do you worry that it would impact management? is that what you are nervous about with glencore? for the think ivan's in long haul. it is hard for me to believe that ivan being the experienced operator that he is and a person that knows how to measure risk would do something outside the line. i think ivan is one of the most capable and high-quality ceos i have ever seen. i would be surprised. it is possible but not probable. i think glencore in general if you have looked at where it has been through the years, ivan has a strong team around him. glencore, itook at goes goes back to those of us that are fossils to mark ridge.

explain modern commodities trading versus the cloud it was under 20 years ago. commodities trading is about 35% to 40% of glencore's business. in the old rich days, that is what it was in the majority. then they got exposed into mining companies. now they are exposed to mining what they trade. they are a good visibility into the market as both a producer and trader of these commodities. i think the important thing to realize about glencore's trading operations is they are some of the biggest buyers and sellers and transporters of these commodities around the world. i don't really take risk. they buy something at a contracted rise and deliver it. they clip a coupon for doing it. when you are a large fire and a large seller, you have the

ability to take advantage of this scale. that is what glencore is. it is a very sharp commodity outlook trader. scale, of their size and it is hard to compete against them because they have additional market being the producer of many of the commodities they train. tom: from where you sit as an equity guy, backdrop a new commodity cycle? david: it is funny. you see there is commodities within the broader baskets disperse in price. you sell one the commodity cycle popped, they went out together, and when it collapsed, they went down together. now we see commodities behaving differently. i am a strong believer that you have to treat each commodity separately. look at the supply and demand curves and determine which one is going out and which is going down based on supply and demand. if you look at the areas in

which glencore is exposed, copper has been relatively weak as of late. this whole note of -- notion of electrification, these things will come into heavy demand. coal, on the other hand, which some people are against because it produces omissions, it is a cheap source of power in the emerging world. the price of coal has been going up as china continues to build coal-fired power plants all over the place. francine: would you favor the delisting of glencore? would you prefer the company private? david: i think so. i am a very happy shareholder of company publicly. we like being shareholders of glencore. it is attractively priced. we don't marry any of our investments.

if the price hits and intrinsic value, we would sell. in to buy atmes an intrinsic value, we would sell. if management wants to do a buyout at the right price, we would sell. at this price, we think it continues to be extremely attractive. tom: it is great to have david herro with us from harris associates. you are captured in your car, bloomberg daybreak, coast-to-coast. that is on sirius xm channel like 19 -- 119. this is bloomberg. ♪

taylor: this is "bloomberg surveillance." i am taylor riggs. samsung is starting to feel the pinch from sluggish smartphone sales around the world. it posted quarterly profits that missed estimates because of weak demand for its funds.

still, samsung semiconductor sales continue rising. k, apex partners have walked away from an offer for sales of eca marketplace. last month, they said the $2.1 billion bid was too low. apex has not said why they are no longer going after the company. bloomberg has learned that switzerland's the parties and is planning the sale of its in indonesia. they want to sell off assets as part of a five-year plan to increase sales and cash flow. tom: thank you so much. this is so important in the news flow right now. we are advantaged to have david herro with us. this is just coming out over the bloomberg. guy collins in london is looking at this. bring it up on the screen.

i am doing it exactly as we do it at "bloomberg surveillance." this is very hard to read because of the color codes that i use to help me read with my old eyes. seconds ago, jpmorgan denies the german report on interest in deutsche bank. this is from our good competitors at reuters. we are following that up right now. let me tell you about kit juckes in trade. he wrote a good note over at socgen today. this close right into david boosts morning headache, to inflation, drag on growth everywhere. despite the reaction, dollar and yen are likely to be the main winners if this escalates. remnant the is the main component on ecb and had traded waited indices, and has a share that is three times as big as it

was when we were younger. if we have a trade war and a stronger dollar, it is your problem. what do you do about it? david: i think hopefully what all of this noise and skirmishing about trade war is about is about a solution to a better global trade situation. what appears to be behind the u.s. policy is to get a better, fairer, more open global trade system. there is perhaps a silver lining in that this war, this skirmish leads to a better global trade system. one of the problems outside of trade with china, and this has been a huge issue, a huge issue has been the theft of intellectual property. there is no denying this. everyone around the world has experienced this. mature china is

enough now that they should not have to steal people's intellectual part of the to compete -- property to compete. this is one of the issues that has driven this trade battle, the theft of intellectual property from western companies. hopefully the skirmishes lead to resolution. if you have resolution, all of the negatives of a trade war become completely unraveled. francine: i have a question if i can get my thoughts together. the magenta on the screen is quite something. allowed a rival company? david: there have been debates over this whole separation agreement. this separation agreement was made years ago. whoever made this agreement to or three years ago did not do the best job. i think it take to ask -- dates

back to the previous chairman. i don't think the current chairman is involved. martin was a very crafty negotiator, and perhaps there were people on the board that were more sympathetic to what he wanted and not what is best for the company or the shareholders. i think now this is becoming obvious. tom: thank you so much. this has been incredibly timely. greatly appreciate your commitment "bloomberg surveillance." to "bloomberg surveillance." i want to show this headline as we go to break. francine will know about this more than i do. cannot confirm merkel meeting on deutsche bank. more next. this is bloomberg. ♪ bloomberg. ♪

♪ this morning, china response to president trump's tariffs. the trade war -- it begins.

soybeans and cars will be affected. both ford and bmw will be wounded. jamie dimon to the rescue. according to reuters, deutsche bank surges on a report that jpmorgan and i cbc may take stakes in the beleaguered bank. it is jobs day. america is fully employed. can we survive the low wages of the american gig economy? good morning, everyone. this is "bloomberg surveillance." live from our world headquarters in new york, i am tom keene. francine lacqua in london. headlines are coming moment by moment. jpmorgan denies, but we have this odd headline of chancellor merkel and axel weber. he cannot confirm that angela merkel is meeting axel eber on deutsche bank.

maybe the market will determine it is ubs. it could be an advisory board or on a personal level. we do not know where that takes us on deutsche bank. the first headline we got was an hour ago. deniedorgan saying they this report that they are interested in a deutsche bank state. tom: the stock stays elevated here at 9.91 euros and we did get a brief print of 10 euros per deutsche bank share. now with the first would news, here's taylor riggs. taylor: president trump has fired the biggest shot in the global trade war and china has retaliated. imposed tariffs on goods just after midnight in washington. the president warned that more could follow in two weeks. beijing says that the u.s. has started the largest trade war in history and has started

terrorist on everything from soybeans to pork. they plan to keep interest rates gradually, but they say the turmoil could hurt growth. minutes from the fed policy meeting says that officials are worried that the economy may run too hot. russian president vladimir putin wants to give donald trump something to boast about when the two meet later this month. bloomberg has learned that kremlin officials are negotiating with their washington counterparts to strike at least one deal. at the top of the list for the summit in helsinki is iran's rural in syria and moscow negotiating that with iranians. british prime minister theresa may has a showdown with her cabinet today that reference to throw brexit talks into disarray. it's supposed to finalize the

relationship of britain with the eu. they may want to like the u.k. trade relations closely to those of the eu. global news 20 for hours a day and on twitter powered by 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. awaited and a jobs awaited data check. a little chart. the curve flattening over the last three days. charging at 72.80. francine: u.s. equities fluctuating after china said it was retaliating. 72.80. traders are looking ahead for u.s. jobs data and the euro actually rising at a stronger-than-expected jump. german industrial production showing the global expansion story is continuing at least in

europe. tom: we are trying to bring the best voices we can on this trade skirmish and now perhaps a trade war. here is how our guests have been looking at this trade war. >> this is going to be a hot summer with both sides trying to be tough and looking like they are not going to back down. >> this is probably not going to be a trade war but more like a trade skirmish. or one and a half escalations,iff there would be an exit ramp. >> i think what we need to be focused on is the growing risk for escalating escalations, there would be an exit to a secd of tariffs. we're talking about $200 billion that president trump threatened. that will have a more meaningful growth.n terms of china

>> we are cycling down in growth, but i don't think we are vulnerable to a recessionary shock at that moment. that could change so you have to keep watching, but right now, no recession risk from this. >> if this is to metastasize in terms of a migration or an escalation from $50 billion to $200 billion, it's fair to say all bets are off. at that point, the global supply chain starts be threatened. tom: particular thanks to robert kaplan of eurasia group yesterday for his appearance on "bloomberg surveillance." right now, we think her appearance on "bloomberg surveillance." asia news bloomberg editor watching the minutia of china's response to the men that trade war. kevin cirilli is in washington tried to figure out how to get to helsinki. et me go first to you as begin a presidential trip to europe. in china, is this a trade war? emma: that's an interesting question.

the state media has been using those words, which suggests it is being sanctions. they are in a defensive position when it comes to reddit. they are trying to paint china as an unwilling participant in this war and that this is all about what donald trump wants. it's all being instigated by the u.s. they will come to the party if they are attacked, but they will not be furthering this. tariffs,e retaliatory the exact same amount that has been slapped by the u.s., but focused on different things like farm products that are so key to some of those states that voted in donald trump. francine: emma, what's the next step in the story? for thehinese weight trump administration to put extra tariffs? if they do, convey themselves retaliate more aggressively?

emma: i think they will wait. some sort of speculation that they could be fostering boycotts or holding up imports at the border for building up inspections of factories of u.s. companies that operate here in china. there may be scuttlebutt and speculation about that the next couple of weeks, but i do think they wait for trump's next move. if it is the $200 billion move on $200 billion worth of goods, they can hit back on tariffs, so they will have to find other ways to retaliate. tom: thank you so much. i'm sure your monday morning or sunday night will be interesting in china. an op-ed on the trade war's from a nobel laureate who wrote on trade and international economics. whatever you think of professor krugman, this is his wheelhouse.

the organizations like conservative congress or the heritage foundation declare that tariffs are a bad idea, they are on solid intellectual ground. a trade war may be only the start of th big businesses self-inflicted punishment. much worse and scarier things may lie ahead because trump isn't just a protectionist, he's an authoritarian. kevin, what does the president do this steamy friday on trade? kevin: i think you stumbling down and continuing. this is only the first round. terrace going into effect at midnight and $60 billion likely to come in the next two weeks. if you look at the president responded to the rhetoric not just from the chinese, the european union, mexico, japan, all the multinational corporations that are going to respond to this to mystically here, this is where mr. krugman hits it on the head. -- thend growth,

chamber of commerce and the heritage foundation have backed the republican party for quite some time and the president is barely blinking. that is where all this is continuing, including from republicans and their constituents waking up this morning. they are going to have to recalculate their response to china. francine: kevin, when you look at trade -- and we had an interview with the german defense minister -- is president trump going to bring up trade at nato? what does that mean for his allies? kevin: he absolutely is. i was on a call with senior administration officials briefing reporters on the upcoming situation with nato as well as with helsinki and vladimir putin. theof them according to administration officials say getting nato allies to pay the increased share in terms of their membership to nato has come up, but we have seen nato allies respond to that by

saying, what about trade? all this is very much interconnected in a way that quite frankly i think many folks are just starting to realize the interconnectedness of what the president is pushing for on things like nato and whatnot. tom: i've got to switch to the presidency after last night in montana. it was an extraordinary performance are once again he almost gets in the way of his own message on a close senate race and montana. he goes after elton john and talks about elton john's organ. ,f you look at his second album you would realize he was the greatest p&l player and singer-songwriter of his generation. why is the president going after elton john? discuss. trump oresident donald candidate donald trump in his element in the stadium, feeding to the crowd. this is something that will never change. it is very theatrical.

look, elton john -- he played his songs before the rally. elton john in regards to little rocket man before singapore. if you have never seen president donald trump in a stadium setting in terms of his theatrics, it's really difficult to describe, but that movement, that type of energy -- if you look at these rallies, they have not waned. tom: thank you for the briefing. kevin cirilli, our chief washington correspondent. we will get a briefing from the white house and the 9:00 hour and conversation with the president's chairman of economic advisors counsel. he will discuss the trade war. stay with us. this is bloomberg. ♪

taylor: this is "bloomberg surveillance." i'm taylor riggs. let's get the bloomberg business flash. deutsche bank shares have pared earlier gains. jpmorgan is denying a german business magazine report that it was considering taking a stake in the bank. china'szine also says ic bc may invest in deutsche bank. the german lender has no comment so far. shares of biogen are surging in pre-trading. company and its japanese partnership positive results in a large clinical trial. the drugmaker says patients who took the drug showed significant slowing of disease progression in the brain. there will be a new ceo of one of germany's industrial giants.

he resigned after seven years at the helm. he quit days after there was an agreement to set up a european and steel giant. activists and investors are pushing for a major restructuring. that is your bloomberg business flash. tom: thank you so much. i want to bring up a chart right now. i made this on short notice. this is a chart we have shown many times perform. before. this is the american boom economy off the mat of 2010. what's interesting with june 30 there is no one better to talk about this. is a boom economy. why are people so miserable? following a quarter of

growth, we have seen a pickup growth of about 4%. i think one of the reasons why people may be a little pessimistic is that there are concerns about what happens after that and with this ramping up of trade wars, there is concerns of dampening effects on growth the second half of the year. my feeling is that we are probably still looking at a solid growth trajectory. there are risks related to trade. tom: bring up this chart again. we showed this in the last hour. thanks for the feedback on this on twitter. that's a hockey stick chart. ben bernanke he would say that's a hockey stick. that is soybeans and that is trade. that little red circle is eight standard deviations off some pretty good math. these are tangible moves. can that bring the economy under 3% gdp? conrad: i think there is that risk. one of the problems with what's here and ith trade

think this plays into the uncertainty is that we don't really know the endgame. what is the administration trying to achieve? what is a better deal? if a better deal is fairer treatment of u.s. intellectual property and china, i think that would be a good thing to work towards. if a better deal is just trying to get a lower trade deficit with china, i don't think that is something that is necessarily achievable. maybe we get a lower trade deficit with china, but we will have larger deficits elsewhere. that's where you started with growth. we have strong growth, but we have an economy fully employed. when that happens, we need to rely on trading partners to fill the strong demand in the u.s. that means larger trade deficits. francine: how much do you worry about the world economy on the back of this trade war? conrad: we have shifted now. a couple weeks ago the concern was centered around europe and political risk in europe. now it's may be more on asia.

i think the concern is that it's not just china that would be negatively impacted by trade wars. it's all a china's trading partners so the re-exports of their goods from china to the u.s. i think this is disruptive to the u.s. supply chain. for now i think what we will mostly see is an impact on prices. the question as to what extent corporations take these higher costs from tariffs and let them hit their margins versus pass them on. from those perspectives corporat should we really be worrying about with an economy performing above its potential and a unemployment rate below 4%? i'm worried about the inflation side. tom: we will continue on this jobs to. it is the seventh of july. that means there is 957 yards to be walked or run feverishly. we will show this later.

the pamplona bulls will be running. we will have to get video on this here in a bit. in spain, it's a great tradition. coming up tomorrow, to the running of the economists led by mohamed el-erian. we will bring that in the 9:00 hour. this is bloomberg. ♪

francine: this is "bloomberg surveillance." tom and francine from london and new york. we talked a lot about deutsche bank.

we are very lucky to of spoke to david haro on the back of that news. deutsche bank paring some of the gains after jpmorgan denied any interest in the lender. just to recap everything for our viewers and listeners, shares in deutsche bank spiked even above 10 euros following that report which suggested the lender's market value decline had drawn interest from competitors, including jpmorgan and ic bc. they were interested in getting a piece of the pie by buying stakes, something jpmorgan has now denied. for more on this, let's get our finance reporter from zurich. first of all, does it make sense? would have theoretically made sense for jpmorgan or someone else to buy a stake in deutsche bank? >> i think one thing to start with is that banks usually don't buy stakes and other lenders.

i think the rationale -- you can make the point for it. look at deutsche bank's share price. as long as it's that low and the bad news keeps coming back and also consider that deutsche bank has a franchise problem, these rumors of other banks taking a state or buying deutsche bank will keep coming back. it wouldn't help deutsche bank in its current situation so they just initiated under the big restructuring plan with a pullback from various locations and businesses so i think they probably should execute on that first. from the deutsche bank perspective, it doesn't make that much sense at the moment. for other lenders, at least it would be a very cheap price and you would get a lot of exposure to germany and to deutsche bank's businesses. this is just hypothetically speaking. looking at this article earlier and the denial of jpmorgan confirms that that this was very

speculative. the interesting part is that deutsche bank shares rose 6% on such a speculative report. this shows you how weak the support is for the bank as of now. francine: does it make sense for anyone else? what does deutsche bank have to do to be attractive to another bank? is that something the new chief executive should be focusing on? have arik: they still strong brand and investment banking, but they need to restructure that and they are scaling it down. hypothetically it could make sense for them to merge with another german bank. we reported that the chairman has been sounding out to investors about the possibility of a merger with commerzbank. they could consolidate with germany and gain market share there. certainlys. brand, deutsche bank has some leftovers in the u.s. so it would

theoretically make sense for a u.s. bank to take a stake of that. as of now, the question would be from a deutsche bank perspective. doesn't resolve the problem for the bank? that from you for zurich this morning. we will continue with conrad on jobs day. we are bringing you are complete coverage and we do that with alan krueger of princeton university. i really want to talk to him today about what he's learning in his studies of the gig economy. this is bloomberg. ♪

tom: good morning, everyone. francine lacqua in london and tom keene in york. we are forward to report as the president travels to europe. i will join francine from our

london desk for complete coverage of the present trip -- the president's trip. here's taylor riggs. taylor: china is accusing the u.s. of launching the largest trade war and economic history and is striking back. president trump began imposing sanctions on $34 billion of chinese products just after midnight in washington. beijing responded by imposing levies on american products such as soybeans and poultry. the president says that the move that could lead the u.s. to hit china with more tariffs. secretary of state mike pompeo is now in north korea where he has a tough job. that kim make sure jong-un's nuclear commitments lineup with president trump's promises. met with president cam, he says that north korea is nuclear threat, but there are reports that kim cap ramping up his production before the summit. a former lobbyist will be the acting administrator at the environmental protection agency.

theew wheeler moved into job after serving as the agency's number two official for two months. wheeler is replacing scott pruitt. pruitt quit after a series of damaging revolutions about spending, travel, and a condo deal. elon musk is sending a team of engineers to thailand to help rescue that boys soccer team stuck in a case. space x and the boring companies would help by trying to pinpoint the boys exact location. did could provide heavy d he power pass from tesla. it's unclear whether officials have accepted musk's offer. dayal news 24 hours a powered by journalists and analysts in over 120 countries. i'm taylor riggs. this is bloomberg. francine: a ship with the u.s. chinas on steam for north has lost its race to arrive before import duties were

imposed. take 80% of global exports drastically different past. joining us now is the agricultural and mining team leader. conrad is still with us. great to have you on the program. soybeans -- how much will they be hit by an what is happening to the ship? >> the ship was racing to get to china just before the tariffs came in and took place and did not make it in time. it will be interesting to see what happens with that cargo. do they send that back? do they cancel it? this china end up paying for the tariffs? this is an example of how soybeans are at the heart of the trade war. the u.s. is one of the largest producers. it's an example of how china is really hitting the u.s. where it hurts. francine: what are the used for in china? it's expected to mainly feed

pigs. lynn: china is a huge pork consumer. they depend on brazil and the u.s. for those supplies. tom: bring up the chart again. all you need to know and good morning to all of you in the midwest -- the soybean chart is a bear market. this is an 18% decline in the price of soybeans. what is our study off our commodity team of the chronic nature of a price decline? if this goes on for weeks or months or quarters or daresay into the next presidential election, what does it do to the commodity complex? lynn: i think it's going to be a very negative sign obviously. i think you will see a lot of local farmers complaining about the price impact. brazil is obviously benefiting from this. they are doing well.

u.s. farmers are going to be the one that gets hurt. i think they are very important politically for trump. i think they will make that was heard. tom: conrad with us in new york. writing percentage point adjustments yet? if this is chronic, this means is a big deal, right? conrad: we are starting to see it some in the agricultural complex, but we have seen it and other commodities. on lumber last year that resulted in a significant increase in lumber prices. we have seen since the tariffs on steel, big increases in steel prices. we can look at industries in which of those have effective growth. very clearly we can see that in the housing sector. through surveys, homebuilders are complaining these prices are putting pressure on their building costs. i think that is having an impact. i think that steel tariffs are a lot more significant for the u.s. economy been some of these

agricultural moves. francine: i'm looking at our great live blog, which you can follow, and it's looking for copper, saying this is being hit by double whammy of the weaker yuan and also the fact that there's weaker demand. if you look at the battle lines because of the trade war, what else is there? nicholas taking a hit on the back of it. taking a is hit on the back of it, . lynn: i think what is interesting is that those will get hurt, but you'll hear from the manufacturers like carmakers and people who have to buy these raw materials and have to use them will be the ones paying the price. tom: i want to bring up this chart right now. i want to go to conrad on fed policy. david harrell in our last hour says he looks at individual economies. here's the make america great again move in commodities that you can almost time here as the tariff differential.

this is inflation-adjusted lumber. chairman powell is looking at that chart. when do these individual inflation stories some up to fed adjustment? we have started -- conrad: we have started to see the pastor of these -- pastor of these income prices. we have seen the core inflation pce that the fed focus is on. that has picked up more than we thought it would. we know the fed is looking to let this overrun a little bit, but the question is -- if we have added impetus to price gains from further cost increases because tariffs are ramping up and we have too much of an overshoot on inflation, that will get the fed's response. i'll think the fed will worry about 2% inflation, but if we move closer to 2.5%, i think the fed response. francine: away from the

immediate trade tensions, if you look at the composition of the chinese economy, are you expecting a slowdown? their building less things than two years ago. the core metals will be hit. lynn: what's interesting is what happens to pork. if china has to pay more for soybeans, that could ultimately feed down to the consumers the have to pay more for pork. you could see pain in the chinese livestock industry. maybe they have to find new things to see their livestock like rice or corn. those could be inflationary things as well that push up prices. francine: thank you so much, bloombergs mining and agricultural team leader. they will be staying with us. on your commute, what you do is tune in on the radio. they have a different take on what's going on with china. can beerg daybreak"

heard in washington, d.c., boston, the bay area, and across the u.s. on sirius xm. this is bloomberg. ♪

taylor: this is "bloomberg surveillance." i'm taylor riggs. let's get the bloomberg business flash. the british satellite carrier has rick ducted a takeover bid of $4.2 billion. the company says it believes the combination of the two is strategically compelling. echostar plans to win over the board. the world's largest cement maker is looking to streamline its operations. theyberg has learned that

are playing the sale of its business in indonesia. the company may try to get about $2 billion. they want to sell off assets as part of a five-year plan to increase sales and cash flow. changede dispute hasn't plans for the ceo and cofounder of chinese electric car start up. he still has his eye on the u.s. market in the near future. bloomberg spoke with him in an exclusive interview in beijing. >> we both start and the chinese market by the end of next year, which is not only the most important but biggest market for us. then we are going to the u.s. in 2020 and europe the second half of 2020. whatever future implications are, we will take into consideration. whatever happens, we would react to it. taylor: that is your bloomberg business flash. tom: it is jobs day and maybe now with the fireworks of a 9%

or 10% unemployment rate, but we do it the best we can. us. riccadonna joining conrad is with us. let's bring up the acclaimed carl riccadonna chart and we can do it right now. this goes back to eisenhower and frankly back to harry truman as well. this is where we are. 4%.re down under can we sustain under 4% unemployment? conrad: i think we will had closer to 3%. tom: do we go under 3%? conrad: i think there is potential for that. that's not this year but as we get toward the end of next year. this year will end the unemployment rate with 3.5%. close to 3% by the end of next year. we have job growth that theinues to outpace

growth of the labor force. tom: it's incredibly important. this is the first economist i've seen talking about 3%. let's go back to the chart. this is unprecedented and going back to the time of eisenhower. is that a good sign of the economy? i think it would tell me that 2.9% unemployment is frictionally not a good thing. carl: that's a pretty hot level, tom. the issue the fed has been debating is that may be whether it's 3.8% or 3% we are breaching next year, doesn't mean what it used to. the fed is looking for various exhibitions as to why that is the case. a moretor may be we have educated workforce that we did in those earlier. . periods. if you look at the unemployment rate by educated level, it's much more for lower educated than higher educated.

if the overall workforce is at higher education, we can sustain . lower growth workforce francine: does it go back to the way it was before? carl: the education trend is moving in one direction. lower skilled jobs are more likely to be replaced by automation and other types of productivity gains. we are on that continued slide toward higher levels of education and probably a lower sustainable level of the unemployment rate. another factor to consider is not only the education debate, but the fact we have a more globalized workforce. unionization rates are lower. therefore, we can run the economy hotter without getting those types of wage pressures that we have seen in the past. francine: overall, how much will the fed look at this jobs data and how much will it look at the trade war? i don't know if you can give us a percentage, but if you are on

the fomc, is it 50-50? carl: we got some clea clues yesterday from the june meeting. policymakers are wringing their hands over the potential consequences of a trade war. they are not entirely sure how to factored into that forecast. i will say 60-40 split, but i will blur the numbers because they will be watching the jobs those early for warnings of what i will call the powell premonition, which he highlighted and central portugal at the ecb conference a few weeks back. we have been watching the unemployment rate and wage pressures on the jobs report for the last several quarters running. now we have to watch for evidence of casualties of the trade war and the jobs report. as we watch for that, the place to watch is the payrolls change. payrolls are surprisingly weak. that could be evidence that businesses are pausing in their hiring intentions.

even more so than the payrolls, the jobs diffusion index. if that rolls over, that could be an early sign of a trade war casualty. tom: they came out with retail today. how is the american consumer doing? they don't care about diffusion indexes. how is american consumption? conrad: i think the consumers doing quite well. away from the jobs report, we will learn more in a short time. we have survey data that was out yesterday that showed an increasing share of small businesses are hiring. it does look at the hiring environment is still quite strong. i think that labor compensation is picking up and will continue to pick up. we have the second quarter were consumer spending is looking very strong. we have high levels of consumer confidence. i think the consumer is in good shape. tom: talking about inflation coming out of a trade war and inflation takes that real wages, right? carl: it does, but we are not seeing much inflation in terms

of imported goods. that moves the needle a little bit, but the bigger driver of inflation is a tight labor market driving up wages. $34 billion of tariffs really does not add up to much in a $17 trillion economy. tom: i want to be clear about conrad statement of dropping below the 3% unemployment rate is really something. doing this for 20 or 30 four years, that's a huge statement. francine: that's a huge statement and i know we will get back to conrad and carl. maybe we will ask them both about whether they see dollar strength. we will be back with conrad and bloomberg's chief u.s. economist, carl riccadonna. remember -- bloomberg users can also interact with all the charts shown by tom and i. just go to gtb go. tv . you can also steal some of tom's charts. this is after all a competition.

this is bloomberg. ♪

tom: good morning, everyone. francine lacqua in london and i'm tom keene in new york. you look at wages with conrad

and carl riccadonna. a beautiful thing on jobs this. day. i want to show a great "atlantic" article on the gig economy. here's the ugliness of 2%. and we are back. this roll over -- are we concerned? conrad: i don't think so. we need to consider these different wage environments. first is the inflation environment and second and more important is the productivity environment. we are much stronger productivity growth than these with periods highlighted stronger wage growth and we're looking at nominal data here. we also had higher inflation in those periods. adjusted for that, it's not too surprising we have wage growth where it is and i do not think this is that poor and in where we environment have moderate inflation and a month t moderate productivity g. tom: you guys in the fancy suits and fancy math do this --

terminal values of gdp, terminal values of inflation come on terminal values of what the fed will do. is there terminal value of where wage growth should be and is it set lower than it used to be? carl: it seems to be set lower than it used to be. we can look at where the benefits of those productivity gains have manifested themselves . we are often told productivity enables higher worker wages and that is one potential outcome. they can also simply diapered those profits and to corporate profits instead of higher worker wages. you do not necessarily see higher wages as a result of productivity gains. the worker's share of national income has diminished over time. and that means it is a lower wage run rate than prior cycles. francine: overall is there anything that bugsy about the u.s. -- bugs you about the us

economy right now? if you had one thing answered from the fed chair about why things are not working like you thought they would, what would it be? carl: i think the biggest problem that i can see in the wants the potentially fiscal tailwinds fade in 2020, how does the fed tend to navigate around that? back to ben bernanke use wiley coyote comments. the fed is tightening policy as inflation pressures are gradually picking up and growth is well above trend. what is their strategy in 2020? if the fed does not use off, we have a risk of a downdraft that could potentially become a recession. tom: i want to dive into this right now. this is the read of the month and i put it on twitter a couple days ago. must-read-- this is for your weekend reading. i have delivered packages for amazon and it was a nightmare. alan krueger will be with us later and leading

research on it. is the gig economy enough to impact the entire economy? recent research shows the gig economy is much smaller. we have to watch where things are heading. it's a very small share of the economy, but we are moving in that direction with how sharing, ridesharing, all these new innovations in the economy. when you think about the gig economy, you should not necessarily think of the paycheck you are getting from your ride app or whatnot. you have to account for the fuel costs, insurance payments, depreciation of your vehicle. when you do that, the paycheck is not looking good on further inspection. take whenwhat does it will it take for the u.s. to create quality jobs? is that a thing of the past because of the changing economy? absolutely,changing

but as cycles where on, you tend to get more of that high-quality job creation at the later stages of the cycle. reason simply for the that when economic cycles and, it tends to be lower quality jobs that are destroyed. those are the workers that are rehired in early stages of the recovery and whatnot. while you see this transition to higher-quality jobs as the cycle wears on, also as workers become employers have to create higher-quality jobs with better benefits and more flexible be to attract talent. tom: everyone knows gig economy people. i don't care what the pay grade is. everyone is like why my doing this? that is a huge tapestry across america right now. conrad: as carl said, it's a relatively small share of the economy. i would push back a bit on this idea that we are not creating quality jobs. if that was the case, we would

not be seeing or we would be seeing significantly lower wage growth. two things to consider -- i mentioned productivity growth. we also need to consider lags. there's a lag between tightness in the labor market and wage growth. we are likely to see wage growth pick up further. of 2008 was00 to 4% just before the economy went into recession. we have some rain to go before we have to worry about that. tom: this has been fabulous. conrad and crawl, thank you so much. stay with us. it is jobs day. this is bloomberg. ♪ 2, down. back up.

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be included with xfinity internet. which could save you hundreds of dollars a year. it's a new kind of network designed to save you money. click, call or visit a store today. ♪ >> the war was lost on trade many years ago. the war was lost, but now we are

going to win it because we have all the cards. david: whether it's a card game or a war, president trump may the first move on trade overnight and china responded immediately. we now know how it began. the question is when will it end? the federal reserve keeps to his path of gradual rate hikes, but watch for president trump's posture and what to do to the economy. sticking to fundamentals. the american job machine keeps going to matter what the rhetoric or policy. we will learn how strong it is and whether there is any signs of overheating. welcome to "bloomberg daybreak." on jobsfriday, july 6 day. i'm joined i've julia chatterley -- i'm joined by julia chatterley. julia: highly anticipated and the market reaction tells you everything. let us show you what's going on as far as european markets are concerned.