francine: the trade war intensifies as the white house adds another aliens in tariffs. they accuse the u.s. of dirty tactics. president trump says germany is a captive of russia. we are live in brussels. fight for sky, 21st century fox raises its offer for the broadcaster. will comcast now come back? welcome to "bloomberg surveillance." these are your markets.

a bit of a downside in the stoxx 600 as there is a bit of an arrow from the straight skirmish. -- traded skirmish. basics impacting a resources, and you can see basic resources in the stoxx 600 is down 2.5%. is as president trump arriving in europe throughout monday, we are also looking at the euro-dollar. the corporate space, let's look at what burberry is doing. they have a new creative director and will show his new collection in september. he also announced something with a special collection with westwood. today, they came out with earnings that were in line. it is guidance in the asian markets that is worrying investors. the share price is down some 4%.

we talk trade tensions and global growth. later, we preview president trump's tour and today's nato meeting. in the evening, it is leaders with lacqua,. let's get straight to bloomberg first word news. >> starting in brussels, the nato summit has kicked off with donald trump lashing out. he repeats his calls for other countries to spend more on defense and accuses germany of the quote a captive of russia. rupert murdoch's 21st century fox has boosted their bid for sky, topping a rival offer for comcast. offer of 14 pounds per share values sky at 22 billion pounds, a premium over comcast saw for.

offer from walt disney for the bulk of rupert murdoch's empire. u.s., the trump administration has pushed ahead impose over 200 billion in tariffs. the chinese ministry has called the move unacceptable and says they will forced to retaliate. they did not give details of what measures are planned. u.k., eurosceptic conservatives are considering a radical last-ditch move that could bring down the minority government. ,ccording to senior tories brexiteers who want a more decisive splits have only one choice. two votes down the final withdrawal agreement. may want to keep britain in a closed trading partnership with the eu, despite the resignation of two cabinet

ministers in protest. government sees oil production climbing next year, even admit transportation logjams and the most prolific shale play. they expect american crude output to average 11.8 million barrels a day, up from 11.76 barrels a day in the june outlook. this forecast would make the u.s. the world's leading crude producer. ofestors have pulled a total $580 million from bond funds in the first half of the year, as he turns in the worst performance amongst his peers. according to bloomberg estimates, june makes the fourth grosses --nth from gross's bond fund. the fun declined 6.3% this year through june.

,lobal news, 24 hours a day powered by 2700 journalists and analysts, in more than 120 countries. i am taylor riggs, this is bloomberg. francine: thank you. let's get straight to our top story, donald trump's trade war escalation. the u.s. has pushed ahead with plans to impose tariffs on an additional $200 billion in chinese goods. the world's second-largest economy has vowed to fight back. to first ladyence michelle obama's speech at a democratic national convention, the ministry of commerce said quote when they go low, we go high. what markets have taken a turn lower. asian stocks, futures, and metals, all fell on the back of this trade war. so what is next for global growth and how should investors be positioned? .oining us now is paul donovan

and alex, thank you for joining us. paul, last time, you were coolheaded. is that still the case? need to hit the panic button, but we have moved closer, no question. we don't have $200 billion of goods subject to tax. we have a list which will be subject in the future. this could be the "art of the deal." negotiating, but if it is, it is a messy form of art, more of a scribble. this is causing confusion and risk. but we are not there at the moment. second quarter, global trade was expanding. it was stable. alex, is this the arms of the deal or campaign promises? trump, before he was elected, want to deliver for his base. alex: i think it is a combination of both.

it the art of, is the deal, it's not much of a problem. is hee big worry is playing for the cheap seats? izzy making the base happy? the problem is, they don't care. if that is the case, i would have worries. , howine: if they escalate much impact does have on the chinese economy and on the u.s. economy? paul: the impact is larger on the u.s. then china. what you are doing here is sending a signal about u.s. isolationism. china is not cutting itself off from the global trading system. the u.s. is. so i think there is a greater risk. the issue with his next 200 billion is yes, the tariffs are a lot lower.

he is only suggesting a 10% tax on consumers. but that becomes more visible the cause you are broadening the range of goods to things consumers will notice when the price goes up. is something that might have repercussions beyond just the direct impacts of the tariffs. francine: does it impact fed policy? is the u.s. economy strong enough to withstand this? go down therther we route of u.s. isolationism, the more questions are raised. the fed is already saying companies are rethinking investing in the united states, which is logical. if you are global, you want to shift production out of the states. it is lower risk, a sensible strategy. remember that u.s. companies are not being attacked, it is production that is being attacked. so just moving across the border or to europe. that is where the fed will be focusing concern. francine: alex, what about your

portfolio? alex: it discontinues. you look at a number of things. will have inflation pressures, and back in effect, what will happen? will we see higher yields in the u.s.? if that is the case, you have to look at your credit and bond portfolio and say do i want to be here. ironically, the growth trajectory in the u.s. is doing quite nicely. no worries. is a back downis situation and the art of the deal, then maybe stay with an equity exposure. but if you are worried about this renewed volatility, because it has been reborn, you need to worry about underlying exposure. maybe the best way is to have your risk portfolio as equities. francine: how difficult is it? is being inside the administration, trump's head.

have you make a decision? alex: the canary in the coal mine is republicans, they are market friendly. be they come to say what is happening to markets, to our corporations? that will be the bigger impact. it profitability and employment are being hit and the pocketbook of the u.s. consumer, then he backed down starts. you are looking at looking at the u.s. and say the s&p is at a new high, we should talk about tariffs. i do not think that is the case, but every time we set off, what have we done? these are not big moves, so take advantage of the range we are given. francine: all right. alex and paul stay with us.

stay with surveillance, plenty coming up. including trump on the offensive. president trump arrived in brussels with a host of gripes with last month's feisty g7 in recent memory. and murdoch reaches for the sky, will 21st century fox a their bid for the broadcaster? this is bloomberg. ♪

francine: economics, finance, and politics. this is "bloomberg surveillance." i'm francine lacqua in london. donald trump has arrived in

brussels ahead of nato's annual summit, bringing with him several grievances ranging from defense spending to trade. hour, he hasst lashed out at germany over its pipeline deal with russia. it should have never been allowed to have happened, but germany is controlled by russia, because they get from 60-70% of their energy russia -- from russia. you tell me if that is appropriate, because i think it is not. i think we have to talk to germany about it. francine: for more, let's get to our reporter in brussels. first of all, if you look at the defense budget battle, it could escalate. are we going to see a repeat of g7? that's right, that is what many are worried about.

he left g7 hopped and puffed and not get along with his allies. if that willying happen here, and the meeting has not even begun. and we already see president donald trump attacking germany, this time for the pipeline with russia. he wase got to think speaking glowingly about president vladimir putin. the tone will certainly determine how he also decides on the rest of his trip when he goes to the u.k. and helsinki. in terms of what he wants out of nato, and really he is putting the pressure on germany, it is that 2% spending of defense targets. and germany is not hitting it. that are hitting us are the likes of u.k., estonia, poland, and greece. but he wants the remainder of members to get that target, and has gone so far to say they are delinquent in the sense that they own money to the united -- forforecast budgets

past budgets. that is not exactly how it works. but this is what he is hammering home, and this morning, already attacking germany is just another way to put pressure on these countries. francine: thanks so much. let's keep the conversation on geopolitics and market. still with us are our guests. do we care? does germany care? as long as there is no attack on the surplus, that the treasury does not take any measures against germany. is this just noise on the margins? paul: a little more, what economists call a signaling effect. the signal is it is part of the wider isolationism. there is worry about where the u.s. is going. there is also worried about the level of misunderstanding.

there is not a needle budget, as a report is saying. not that they own the united states anything, it is a separate situation. when you look at defense spending, what is that in the 21st century? trade tariffs are a weapon of the 19th century, and tanks are probably a weapon of the 20th, that's 21st. is your spending on police, intelligence gathering? hot wars andere county charges are no longer where we are going. francine: we spoke to the defense minister in germany a few days ago and says a lot of what we are hearing is immature. is this a tactic so that nato set is that allies here to ssent.e -- hear di paul: that is fine.

greeks haveeasons high spending is there are lots of people in the army. you could introduce conscription and get your defense spending up as a budget. it is not all going on hardware, and if it does, it doesn't necessarily come from the states. francine: president trump is coming to london briefly, meeting with the queen outside london. he is meeting with the prime minister and then goes on to helsinki, where there are concerns he could strike a deal with putin. do markets move on the back of these geopolitics? alex: this is not just a signal for nato, it is a signal of how we get along. better off with an understanding solid alliance than a loose alliance of people that sort of know each other? the problem is, because of the insult, it is going from solid friends to acquaintances. that is an issue. how does it affect markets,

bring it back to trade wars. hold on, eat we thought we were friends, and now you're saying blender putin is your best friend. so it does not make any sense. the problem is this is not be "art of the deal." a win or lose situation. there can be multiple winners. francine: if we see the trump administration contradicts himself, then the market is right to ignore it. it means these statements cancel each other out. is that fair? alex: it is fair, but markets hate uncertainty. even though he contradicts himself, noise has been created. that is what we have seen, noise is causally created. francine: what would a successful trump in europe week for europe? paul: it is hard to know. the bar is set quite low. no major blowup would be quite good.

an idea that unity is still there, as alex is saying. getting along together and that the structures that markets have built themselves upon are not starting to be eroded from the foundation. it is that sense of unity. again, it is signals, not substance. a nato summit is never going to have substance, we are looking for is the image. and how that translates into what people expect throughout the future. unfortunately, i think we will end up with more volatility, not clarity of purpose. francine: do you worry about the german economy? this is prime trump territory. not onlysay he is slapping tariffs on car companies, germany is doing this and this and this. paul: the german economy is in a strong starting point. we come back to that the u.s. is an important trading partner, but europe is more important.

asia is as well. and there is no problem in trading with europe. no problem trading with asia, japan, canada. it is a different situation from the 1930's where everyone is fighting with everybody else. everybody is getting along, except for the united states. francine: paul, they do so much. both stay with us. talk about media, rupert murdoch's 21st century fox has boosted its bid for the british broadcaster, topping a rival offer from comcast. a bid for sky is part of a contest between comcast and walt disney. joining us for the latest is our reporter who covers telecoms. great to have you on the program. this feels significance. what will they do? alex: great question.

expectation ishe that it will be another counter bid from comcast. we have seen disclosures recently that say this 14 pounds per share valuation is nothing more than fair value. you would expect to see the getting pushed further. francine: how strategic is it? why is it so good? the content is in play, a huge appeal from consumers. and if you will do that, you need scale. it is international. if you look at comcast, an additional 20 plus million customers would give them a boost in content and challenge the likes of netflix. how does this fit into the wider tussle for fox between

disney and comcast? matt: certainly a strategic pollen in that game. disney came back with a higher offer that comcast for the assets. will be something comcast needs to think about carefully. they could push higher to force disney or fox into a different negotiation. it is very integral to those negotiations. francine: matt, does this take three months, four months or longer? matt: i suspect we will hear something from comcast in a the coming days. francine: regulators? tomorrow, the u.k. government will rubberstamp the fox bid. that was subject to media plurality issues and seems to have been resolved. but the formal green light does not come until tomorrow. francine: is there a read across?

i do not know if you look at media in general. alex: is more on the scale issue. amazon,at netflix and they are only going one way. the scale operations, sky are the target because of that. this is the only way it will read across, because unless you are big, you will not be involved. francine: you like media stocks? alex: the winner has been technology, not media itself. if you are avoiding the hardware side, getting into this area of media software is working. but it is all about scale. we do sometimes ask you about what the wider technology space looks like. i don't know if there is a media component to the economy, but certainly, technology will redefine how you model our western economies. paul: absolutely, and that is what we are struggling with.

it is making the data nonsense, because the economy is changing faster than statisticians can keep up. looking at things like technology and the wider communication space, a lot of the issues here is that this is an area at the cutting edge in terms of disruption. when was the last time you bought a compact disc or a dvd? francine: what are those? paul: exactly. so it is causing problems in terms of measuring the economy. but in many ways, it is not the technology that excites economists, is what technology does to society that is interesting. and the degree to which we shift the way society operates through things like changing media, changing entertainment, technology, that is where the real interest comes in. francine: matthew, when you look at regulatory decisions, who gets involved? how the regulators could weigh in? matt: the u.s. authorities.

and to some degree, europe. so far, everything has been ok on that transaction. from the final verdict government, which i don't think will be a problem. francine: matthew, thank you so much. and thanks alex mcknight and paul donovan. up next, burberry may be in fashion with melania trump as she made her arrival in one of the most famous trenchcoats ever. but do investors feel the same about quarters earnings? we discuss that next. this is bloomberg. ♪

francine: economics, finance, and politics. this is "bloomberg surveillance." i am francine lacqua in london. let's check in on what is trending across bloomberg. qatar is seeking to raise $4

billion for combat jets. england and croatia go head to head this evening, but that is not the only football story around. find out what astronomers all those big move is an even bigger win. and our most read stories over the past few hours. one issue dominates, china responding to trade threats. in second place, more on trump reloading the tariff bazooka. and up top, more than $200 billion of threats. we were talking trade earlier, paul donovan is still with us. this is a good benchmark to see what our viewers like to read. what do you read in the morning? lot. i cover quite a i do a daily comment. francine: good at shameless plug. paul: as a result, i use a lot

of sources. i use bloomberg, the financial times, bbc. i go through what colleagues are sending me from around the world to get a wider range of sources. memoryes, my on faulty kicks in and i dig back into the past for analogies and so on, useful in these times of turbulence and uncertainty. francine: paul, i like that. paul, of course, stays with us. let's get straight to bloomberg first word news. >> in brussels, the nato summit has kicked off with donald trump lashing out. the president's repeated his call for other countries to spend more on defense. he also accused the germany of being a captive of russia because it buys us so much energy from its neighbor. >> it should have never been allowed to have happened, but germany is controlled by russia. they are getting from 60-70% of

their energy from russia in a new pipeline. and you tell me if that is appropriate because i think it is not and it is a very bad thing. i think it should not have happened and we have to talk to germany. >> rupert murdoch's 21st century box has -- box has boosted their bid for sky. offer of 14 pounds per share values sky at 24 and a half billion pounds, a 12% premium to comcast's offer. contestrt of a wider between comcast and walt disney for the bulk of rupert murdoch's media empire. u.s., the trump administration has pushed ahead with plans to impose tariffs on an additional $200 billion of chinese goods, by releasing a list of targeted products. china's commerce ministry has described the move as totally unacceptable and says they will be forced to retaliate. a statement did not give details

of what measures are planned. u.k., eurosceptic conservatives are considering a radical last-ditch move that could bring down the minority government. to senior tories, brexiteers who want a more decisive split on the block have only one choice left, to both down the final agreement. this is as theresa may pushes ahead to keep britain in a close theing partnership, despite resignations of two ministers in protest. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. francine: let's talk fashion. burberry shares have fallen as much as 5%. wereis after investors disappointed by the brand's latest quarterly sales in asia. comparable sales rose at single-digit rates, but it is

still playing catch-up with rivals. so what do you need to do to regain investor confidence? joining us now is brian roberts. it is a bit of a rough cell, looking at the share price. they have a new creative out, butjust starting we have to wait until september to see the new collection. bryan: it is a time of transition. we have a newly appointed ceo about to announce a new collection. so it is a harsh reaction, given what they are saying is their profits will realign with expectations, if not better. 3% of the board, i think it is decent results for a business that is in this. of change. francine: what would you do? do they need to move more

upmarket, to get the asian strategy right? bryan: there are a number of things they can control, one of which is the designs. definitely shift up market. they have been moving more into expensive leather goods, for example. high ticket luggage items. and i think they are heading in an anti-connection. direction. have something of a track record of being quite unpredictable, and i think that we will see that in terms of the designs and the timing. perhaps with less of a reliance on this traditional, twice a year launch of new ranges and perhaps more frequent lunches. bringing a degree of unpredictability to what has become a, not necessarily predictable, but certainly a

quintessential written brand. -- british brand. the biggestasia, concern has been slowdown in spending in european markets as asian consumers are generally staying in asia or in markets like hong kong. lots of things the company can't control and is changing a lot of things. they just have to roll with it. francine: looking at the board of year to date for some of its competitors. , thenk caring -- kering owner of gucci, is doing quite well. is that just from gucci's success? why are they doing so well, design? a lot of these companies oversee a broad number of brands and categories and gives them a degree of insulation. if one red is doing well, that

can bring up the rest of the group. but burberry is a single brand operation. if it gets any collections or products wrong, it will have a quarter or year. all of his aides are in one basket, if you like. also it is in the mercy of forest patterns and spending. -- poorest patterns and spending. i think that shares have risen by a third over the year. not a bad performance. be on the newill launch from the new creative director in september. if that gets a thumbs up, we could see shares performing even better. francine: thank you so much. brian roberts, global insights director at tcc global. still with us is paul donovan. when you look at luxuries, is it community to gdp slowed?

down?une to gdp slowed not: the issue is it is just about gdp, it is about income distribution. with the high net worth individuals are doing, they tend to be resilient. class,t the upper middle as we put it, how they are faring. if you look at china, we are seeing an attempt to boost consumer spending. the chinese have become more concerned about income inequality. problems in the rural areas. that is not something that is going to appeal to a luxury rand. are a farmer in hunan province, you'll will not be looking at luxury brands as her

spending.-- big francine: what about the u.s.? paul: we are seeing increases in income, a function of more jobs and people getting pay rises. interesting thing is a lot of the momentum has been towards the lower income and of the spectrum. you're getting more part-time, low income jobs being created. a reason why average hourly earnings have not performed well but household income is. because you are creating below average pay jobs that shifts the spending power. the higher income groups are not doing badly in the united states, but the momentum is away from the. -- them. francine: you know who is a fashion guru? tom keene is a perfect fashion commentator. paul donovan states of us.

from fashion to copy, the latest episodes of "leaders with lacqua." is tonight we speak about competition expansion and keeping businesses. >> sustainability is extremely relevant. one.the social economic coffee to remember that is loved and consumed by rich countries. it used to be 80% of the consumption in oecd countries, now it is 50%. now it is rebalancing. still, there would not be a coffee industry without developed countries. u.s. is number one. u.s., as a matter region, is by far number one. but 100% of coffee is grown in the south of the world.

and most of them are developing countries, still struggling. this is not the only problem. thatther big problem is agricultural commodities are, for some reason, deflationary. prices never go up, they go down. on top of this, coffee price is very volatile. triggered by different market factors other than coffee itself. for instance, it is anchored to currency and the price of oil. really havehat we to do great effort to make copies sustainable. otherwise, we will run out of business. well, first of all, not get the quality any longer, and second, we might have a shortage of production with a price shock and so on. francine: watch the full show at

9:30 p.m. new york time. 7:30 p.m. london time. up next, charting the euro. we are joined by the currencies top forecaster, according to bloomberg analysis. can it break out of its range as the ecb talks about a rate hike? this is bloomberg. ♪

ecb will raise rates next summer at the earliest, according to a governing council member.

the single currency is trading above 1.17, within a range it has helped. so where does it go from here? , theng us now is our guest top euro-dollar forecaster for the second quarter in a row. that is according to analysis by bloomberg that takes into account margin of error, timing, and accuracy. paul donovan is also with us. you didn't win any prizes ball, oh so keep you on. metals -- medals? phillip: the honor is sufficient from you francine. we take a look at the world economy. in particular, what the market is looking at. and clearly, markets are very concerned about global growth slowing down.

of a potential tariff war, and one has to say that is a risk. is thatbaseline case somehow, the adults in the administration win the argument and there will be some sort of solution hammered out with beijing and we won't see a big escalation of tariffs. from a gdp perspective, we are thinking we probably won't get to 4% growth this year. a poor first quarter in a couple areas cuts it back, but we get fairly close. in that case, let's look at monetary policy. we are of the view the ecb will cease its qe program at the end of the year. and after a break of about eight or nine months will get a tightening of monetary policy. specifically, the deposit rates. that should support the euro.

an easing of trade tensions perhaps. francine: trade targets? matt: we are looking at 1.22 euro-dollar. 2019. close to 1.30 by ironically, it being supported by trade war threats. it would not specifically be a global -- a u.s. event, it would affect global growth. what would you expect? you go into risk assets and safe havens, like the u.s. treasury. so if you see a reversal, you should see the euro benefiting thomas --, especially if the ecb titans. htens.ans -- tig francine: these are some pictures from brussels. we find out in the next couple days if the trade war escalates? depending on what president

trump tells his allies and may and putin. don't know, we have the stress of another round of tariffs on china. with a confrontation. over august. is if you go back to the conversations between washington and beijing in march and april, the rhetoric can really get stirred up quickly. that is what we are frightened about in terms of what could happen and what the market response will be. francine: how do you see ecb moving from here? paul: i think they have become incredibly boring. draghi is speaking, but does anybody care? francine: not with chopped into --trump in town. paul: but also, where is the element of surprise? i think the ecb will be very clear.

the issues around trade protection, possibly to side. one of the concerns is the vast reserves in asia. could they be a weapon? trade conflict does require countries to use all weapons at their disposal. i don't think they will be used, but there may be fears they will be, which could cause additional volatility. francine: we get back to this and much more. about whoill talk will replace mario draghi, and that is not boring, right? up next, euro skeptic rebels are said to consider blocking theresa may is deal to avoid a soft brexit. the move could topple the government, but will it? on croatia, taking does anybody really care about brexit? we discuss that next with an economist and currency forecaster. this is bloomberg. ♪

francine: this is "bloomberg

surveillance." president trump arriving in europe, speaking with nato allies. and we just heard from the secretary-general of you know. -- nato. this morning, we had a tense exchange between president trump and people in a brexit meeting, and that included stoltenberg. trump pressed the secretary-general on why the u.s. paid money to the alliance will countries pursed just -- purchase energy from moscow. this before he flies to helsinki to meet with putin. here in the u.k., tories are considering a radical last-ditch attempt worked the plan for brexit. some lawmakers who backed a decisive split from the eu could vote down the final withdrawal agreement when it comes to parliament. but the stakes are high.

it is a move that could also bring down mays minority government. so cap rebels pull together the numbers? still with us is paul donovan and philip shaw. , ite are all the numbers just depends on if rebels who want a stronger brexit could take theresa may down, and what they even want to? paul: it is both. of course, a soft exit is generally considered to be the best economic situation, given the range of choices available. -- liberal the level democrats rallying around to government, but a soft exit strategy in that situation. for the idea of a conservative rebellion and bring down the government, remember the current electoral system is biased against conservatives.

and parliament is due to vote on changing the system to make it fairer. they have a strong incentive to not bring down the government until the system is no longer tilted against them. francine: what is your forecast on the pound? phillip: we do not think we will be here with the amount of uncertainty we have. baseline, some deal will be struck before the end of the year. that should support the stone. at it aroundking 1.40. croatia versus england at 7 p.m. london time. ,oes it have an effect on gdp on consumer spending, on around -- morale? paul: it does on consumer spending. -- it is an economist in the public generally more productive? [laughter]

there is the question about actual economic output. it can have a brief impact on sentiment, but these things tend to be quite short-lived. it is not quite likely to make a dramatic impact. something like hosting the olympics is quite different. cup,hing like the world less of an impact in terms of just winning the world cup. francine: ignore paul, still enjoy it. paul donovan, and philip shaw. bloomberg continues in the next hour, tom keene joins me in new york -- in london, we are in london. ♪ this is bloomberg. ♪.

francine: the future of nato. speaks ahead of

the meeting calling germany a captive of russia. the white house adds another $200 billion of tariffs to chinese products. beijing accuses the u.s. of dirty tactics. 20th century fox raises its offer for the broadcaster. will comcast come back? this is "bloomberg surveillance." i am francine lacqua in london joined by tom keene. --are in brussels where a real understanding of the president of the united states on the hydrocarbon dynamics of europe. i am not sure he got briefed on that. boy did he start early. stoltenberg.

speaking to reporters right now and we will see if he says anything about the relationship he is expecting. let's get straight to the bloomberg first word news. taylor: president trump is escalating the trade spat. with.s. has pushed ahead plans to put tariffs on an additional $200 billion of chinese goods. roddick's affected include tv components and refrigerator. beijing calls it unacceptable. in the u k, conservative lawmakers opposed to theresa may's brexit plant are considering a radical move that could bring down her government. bloomberg has used -- has learned that the eurosceptics that one of more decisive split, which would be to vote down the withdraw when it comes to parliament for approval and that could lead to an early election. the brit more over britain's top tv company is heating up.

fox boosted its bid first guide tv. r skytv. the bid is part of a broader contest between comcast and disney. -- bloomberg has learned that the eurosceptics who won a more decisive split --m the eu francine: -- global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm taylor riggs. this is bloomberg. check.t's do a data a major move off the tariff news last night. that was broken by bloomberg.

-21.es it was much worse in the early asian hours. euro still strong with currency dynamics. the idea of the equity market is still resilient. , nowre at a 12 on the vix 13.84. lira to new weakness. francine: i like your data check. we are seeing stocks sink across the board as you could argue that trump is reloading the tariff bazooka. preparing for another escalation of the burgeoning trade war between the u.s. and china. i am looking at the european stocks down 1%. euro dollar can see

at 1.17. tom: this is important. the new cycle is extraordinarily rapid. we have the tariff news last night and just in this early london morning we have news from brussels. let's listen to the head of nato and the president of united states. together when be a country is getting its energy from a person you want protection against? >> because when we stand together and also in dealing with russia, we are stronger. >> you're not dealing with russia, you are making russia richer. their spin more trading with russia than there has been disagreement. >> i think trade is wonderful. trade -- energy is a different story. tom: the symbolism here

extraordinary, the 13th secretary general of nato speaking with mr. trump of the united states. before we bring in our guest to drive forward these conversations i am just flabbergasted at how quick this occurred. i thought there be some form of cadence. forget about it. we spoke to someone who was saying this is a threat for now but we do not have the timeline of the $200 billion. he was still giving a percentage chance this was just rhetoric. i do not know whether it is true or not, but this could just be rhetoric or the art of the deal bargaining. tom: i do not know the art of the deal bargaining works in europe. amey toring in michael translate all of this for us? michael amey from pimco.

he usually speaks about things that are boring. michael amey, wonderful to have you with us. the summary in the fixed income world is a metric. price up, yield down. how does pimco adapt to that? michael: the challenge with the trade rhetoric and the political thelation is you have global economy, which is doing well, you have the fed raising rates and then you have these risks, which are quite hard to price on a day-to-day basis. the trade war escalates. the way we tried to think about that is to recognize those flags that are out there and to think about where the pressure points would be if these things escalate. the best bond market in last 24 hours his been the u.s. treasury market.

we think relatively speaking, over reasonable value. even though you have these uncertainties, there are ways in which you can grade a portfolio that will give you some protection if they get worse. accept the fact that bond yields are relatively low. tom: as we begin our coverage of ,he president's trip to england and after that francine and i will go to helsinki. right now we have the gentleman from canada arriving in nato. this is justin trudeau with the volume of quebec echoing in his years -- in his ears. someone who understands pageantry and photo ops would be nicholas stern of the london school of economics.

does it feel good to be in our climate perfect headquarters? nicholas: this bloomberg building is fantastic. it is not only beautiful, it has lovely views of london and it is incredibly green. tom: so is the president's rhetoric with nato. i you -- i know you want to tread lightly with nato. francine: is the news, that it is also on trade. if you look at the cross between nato and trade, is there a danger that at every single opportunity president trump turns up the heat on trade. will he do it with its european partners in the next couple of hours? nicholas: i suspect he will because president trump does heat. if you look back over the last 70 years and ask the question has the world done well out of international collaboration, the buildingf trade, the

of the imf and the world bank institutions and the u.n., you look back over that time and the world's income per capita has four andy a factor of life expectancy has gone up from years.0 five muncie year. those are the payoffs -- five months a year. the payoffs to getting together on trade, climate investment across the world. i do hope we're going to see a coming together. your question is are these things linked? is collaboration in one area good for collaboration and other areas? the answer is clearly yes. where in 2018 is the idea of elites getting beyond president trump? is there a risk to just hoping any nation will move beyond a certain term of a

administration, after a certain prime minister, after a certain president, after a certain chancellor, that is a risk to wait for that? nicholas: yes it is. you have to stay with the principles. the principles are trade is good for the world economy. it has been good in fighting poverty and in growing the u.s. and other economies. i think you have to stick to what matters rather than playing by the person. you have to think of what the instant -- what the issues are. tom: i want to ask if you are available to be prime minister. nicholas: i can declare categorically i would not be asked and i would not be available. tom: i am the ugly american asking the ugly questions. i want to know about the reliance in america on the adults in the room -- that would be general mattis right now.

where the point nation has to be held accountable. are we wrong to rely on these advisers? nicholas: i think we have to look at the team. to have generals in those positions does make sense because on the whole generals have risen to the top through a meritocracy and they understand wardangers of war and that is a serious business and to threaten it is a very serious business. tom: what do we -- francine: what we understand about trade wars? , and if therert was ever any point in history where the u.s. could afford a trade war, is it now? once natural response would be trade wars are most damaging to those with trade surpluses and that is what the president is trying to achieve. the challenge they have is knock on effects on the blotter global

economy. you end up with both sides. if financial conditions tightening, that it is probable the u.s. economy could slow in the event of a trade war because you have greater degrees of risk aversion and uncertainty and you have to process that into asset markets. i do not think anyone would expect there to be winners and losers out of a trade war. ,ou get up full-blown trade war you can see this in the rally on treasuries, everyone will fight back carter. pimco andmike amy of nicholas stern, but stay with us. this is bloomberg. ♪

taylor: this is bloomberg surveillance. that's get to the bloomberg business flash. still waiting for new leadership to revive the brand as a trails rival luxury makers in the chinese market. as investors were disappointed in the latest quarterly sales. the ceo has been on the job for a year. he will show his first collection in september. jetblue is making a big bet on new planes. the discount carrier is ordering 60 of airbus is a 220 jets. jetblue is expected to get a discount. plane was formerly known as the c series.

bank is trying to win more business with wall street's biggest dealmaker. bloomberg has learned that the ceo and other senior managers have been meeting with managers of large american private equity firms. deutsche bank wants to be one of the top five in u.s. leveraged lending. that is your bloomberg business flash. francine: thank you. in theresa may's conservative party are considering a radical attempt to halt the prime minister's plans for a softer brexit. thats have told bloomberg lawmakers who back a decisive split with the eu could vote down the final withdrawal agreement when it comes to parliament for approval. the stakes are high. it could bring down the government. michael amey of pimco and

nicholas stern are still with us. i do not know where to look anymore. even if the prime minister does get challenged, where are we on the actual negotiations with europe instead of the tories negotiating amongst themselves? are three stages to the process she needs to try to complete. the first stage is to agree with her own party, which appears to have been done. the second stage is to get an agreement with the european union on something that both sides can agree on and the third stage is to get that vote through parliament. you can actually see the timeline. the timeline now is october of q4 for the agreement with the european union and then the vote thereafter. round one is the best way to think about it. focusk the next round of will be between the government

and the european union and the final round will be in the u.k.. francine: what does that mean for gilt and what does that mean for the pound? michael: if she can get the deal done it is good for the pound and it is high yields. it is a relatively stable economic backdrop. if she fails to get a deal done that is bad for the pound because it creates uncertainty. trickier because of you start to get the point where you trigger another general election , it does not matter what you think about the competing views on how to run the economy. the labour party is open about raising more -- tom: is this british politics as normal? the parliamentarian battle that is so different than america, is this just business as usual or is brexit unique? nicholas: i think brexit is

unique. it is a thing that happens only once. it is not like electing a government and if you do not like it you elect another one. if you leave the eu the difficulty of getting back in would be so deep that you have to think about this as committing for a number of decades. this is not business as normal. -- the the competition composition of the house of commons is different from earlier times. you have scottish nationalists in numbers and the welsh and the northern irish. it looks different. the prime minister does not have a majority. the closest analogy is with john anti-europeans tried to attack him and he said bring them on and he had a leadership election and he faced them down. that is a possibility here. i think there could be a leadership election and it could be the case that mrs. maywood win it.

win it.mrs. may would americahave an idea in that democrats can reach over republicans and republicans can reach over to democrats. how do conservatives reach over to labor nicholas:? i do not think -- reach over to labor? nicholas: i do not think the prime minister could very easily . there are groups that are talking to each other. there are groups talking across the isle. i do not think the prime minister could reach out to the leader of the opposition. francine: where are we -- even if we have the publication, will the eu say yes to cherry picking ? michael: there is a risk of that. what we would expect the european union response to be would be cautiously positive.

they would want to open negotiations and there would hope there's enough in the white paper for them to feel they could do that. ideally, you would like the noise to go down. and you can get the parties to have the discussion between themselves so the u.k. and the european union. if the rhetoric and the noise stay high, we should take that as a bad sign. tom: does it model in the gdp? with all the work pimco does in europe, does it dampen gdp? michael: yes it does. it does it by two routes. prices,yclical by more and now you have to think of the long-term issues, we think those relate to population growth. if you have a more restrictive immigration policy, then by definition it is harder for your economy to grow. tom: you and others have built a

social analysis. what is the social analysis of what will happen to the united kingdom if there is some kind of norway or canadian brexit? nicholas: i think a norway brexit would be fairly small. that would leave the u.k. close to the eu and essentially involved in customs union and much of the single market. brexit a norway style would have a small affect. i think a much stronger brexit than that would have a significant negative effect on the british economy. most of the modeling which was done on what the medium-term loss would be was 5% to 7% of gdp. what we are seeing is consistent with that over 15 years. tom: francine and i spoke whoseday to a gentleman representation was the wisconsin of the united kingdom -- there

are a lot of cows. how does an elite like you speak to those not in london in the united kingdom, the tone of trust us we know what we are doing. how do you speak to people in who are notingdom attached to the london service sector economy? nicholas: i think any argument that begins trust us, we know what we are doing, is an argument you should be careful about. whoever is involved in this have to present arguments on their merits. if you put obstacles in the way of trade, if you create risks around investment, then trade will go down and investment goes down. that is where the economic analysis of the likely losses from a hard brexit come from. it is not mysterious. if we are offering those up, we have to make the case and speak calmly and clearly. do not begin any argument with

trust us. -- what: coming up, how does the u.k. want? is it the norway agreement? do we have a good handle of how they deal with the irish quarter? nicholas: the problem is the u.k. has not made up its mind. the closest we had was last friday's agreement where the government now has been negotiating position. much better to have had that a year or more ago. we are closer to being able to say the u.k. knows what it once now than we did before. this is a country with lots of different views. when you ask does the u.k. know what it wants, the right way to look at it is the u.k. government does what it wants and the answer is finally it is putting out something that is clear. we are not going to happen irish border -- we're not going to

have an irish border without hard blocks on it if you have something like a hard brexit because the tariffs are there. someone has to administer those tariffs. if the movement is closely controlled, you have to have a border. , talk to meght about your portfolio strategy in europe. is there a brexit angle to it? michael: we start with europe. we are cautious on the periphery in large part because we see material uncertainty out of italy. the challenge we have is the level relative to the rest. yieldsyear italian bond 2.617%. it is common for the price

volatility to be a couple of percent. it does not look as if you will pay for that particular risk. we are cautious on the periphery. furcal european rates, we think the ecb is going to be low for a long time. tom: wonderful conversation. michael amey from pimco and nicholas stern from the london school of economics. we will drive forward the conversation on nato and the events in and the europe. this week in london, this is bloomberg. ♪ retail.

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near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. francine: this is bloomberg surveillance. tom keene is in town and we traveled together to helsinki as president trump meets with vladimir putin. let's check in with what is

trending across the bloomberg universe. for europeaning combat treads. britain and theresa may go head-to-head. we are not going to hadley on the bracket -- we're not doing -- britain and croatia go head-to-head. did you see the 19-year-old in france? he played superbly. our most read stories on the bloomberg terminal, one issue dominates -- china responds to trade threats. in second place, more on trumps reloading the tariff is due to and on top that $200 billion threat. space.ries in the media 20th century fox boosted its bid share, to 14 pounds per valuing the company at 24.5

billion pounds. joining us now is matthew blocks and who covers media for bloomberg. also michael amey with pimco still with us. why is sky so valuable to both companies question -- why is skies so valuable to both companies? are we expecting comcast a come back with another offer? skied has done amazing things, the technology is amazing as well and in the wider context of a content market dominated by netflix and amazon the traditional players need scale to keep up and spread the contest they have to keep making. sky gives them that scale to make the investments and compete with netflix and amazon. francine: when are we expecting comcast to counter offer?

hear -- wewe could could hear something in the next few days. they would've been expecting fox to come back with a higher offer. tom: if they get back to 90 billion as a round number -- if they get to $90 billion as around number, what will be the makeup of equity and debt of outside sources for mr. roberts? that is a good question. one of the questions we have is if you look at the disney offer for fox, it includes a share component which mr. murdock seems to like. that would temper some of the leverage that comcast has to put into the offer. the question is comcast channels do not -- already do not seem infused -- if they look to diluted with equity that may

turn them even more against it. tom: what has sky learned about football by the world cup? did they learn from the world cup that the cash flows from football can hinder -- can endure? matthew: i think it will of confirmed that soccer in europe -- tom: is a durable cash flow. matthew: it is an amazing market event. it is going to be one of the best world cups i can remember. they will go to next season with more excitement. tom: this is so emotional and so francine. i think this is a good time to bring this up. let me bring up my screen on the terminal. the surveillance excellence in the upper left corner is extraordinary. francine: our executive producer

is top of the top of the top. tom: worldwide. francine: we chose well. tom: we just want to be jonathan ferro. that is all there is do it. i was going to wear waistcoat but i do not pack it. matthew, thank you very much. right now in new york, here is taylor riggs. fight: china is vowing to back against trumps latest threat on tariffs. the u.s. pushed ahead to impose tariffs on an additional $200 billion of chinese products and included are list of goods that includes television components and refrigerators. china calls move unacceptable and is vowing to retaliate. thailand, the boys trapped in

the cave are being described as in good health. an official says the boys lost weight but they and their coach are take -- took care of themselves. all 13 are now recovering at a hospital. algebraic investments considers the pound to be mispriced and should be 10% lower. the portfolio manager says the market is too comfortable with the political uncertainty in the u.k.. he says traders overestimate the chances of a bank of england rate hike. he says the pound should be closer to $1.20. 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'm taylor riggs. this is bloomberg. taylor, thanks so much. tariffs are the headline news. guess what, it has been pushed comments of fiery the president of the united

states to the secretary general of nato. and -- an -- nemarie is in brussels. what an extraordinary beginning to these meetings. the meeting is not kicked off yet, but before president trump sat down, he attacked germany for their pipeline deal with russia. thisd has been focus about , worried about the security. this is more pressure on his allies, especially germany for what he says not contributing enough to the nato budget and spending. he wants countries spending 2% of their gdp. so far the other -- the only other than the united states are britain, estonia, greece, and poland. this shows the pressure he is

putting on his allies. francine: who does he listen to at the table? we know the french president tried to prevent -- tried to befriend president trump. is there anyone that kind -- show his commitment to nato and persuade him to do so? annmarie: many are saying this may be deja vu from the g7 and said they might stop military exercises in south korea. are we going to see a similar version in europe when he meets with nato? he goes over to see theresa may and says an off-the-cuff comment with a nato flow, president putin when we all gather in helsinki? is it -- it is anyone's guest who he listens to. he said the secretary-general is the only one that likes him. is the only one who likes

-- he referred to himself in the third person -- mr. trump. tom: thank you so much. what we try to do a bloomberg surveillance, francine and i and jonathan ferro grinding out the idea of important conversation. we do that with michael amey of pimco and we are thrilled to macmillan withet the heritage of david lloyd george and her work at the university of toronto. it is wonderful to have you with us today. thank you for coming in. you are reeling from quebec. will brussels be another quebec? margaret: i suspect so. if president trump can turn on one of the united states most dependable allies. we are a good friend. we do not cause you trouble in the united states. if he can do that, i expect anything is possible in the nato summit. seems to be a history

to the president of the united states. i am sure he does not know who david lloyd george is and i'm sure he does not understand the courage of canadians in antwerp and belgium and understand the .ynamics of russia and germany do you trust his staff to protect them from the emotions he represents? margaret: i think his staff has become weaker. when he became president he was surrounded by experienced people. come to see he has himself as someone whose instincts are right. his conviction that he is always right and knows how to deal with people has grown. there seem to be fewer and fewer people who say to him you are wrong. francine: do his instincts translate into policy? you could argue he was taken aback by the fact that justin trudeau said something in a press conference while he was looking at air force one and he did not think -- and he said

trudeau did not think i was watching but i was. did that translate into policy against canada? margaret: it has translated into tariffs and a weakening of the friendship. this is a long friendship. god knows we have had our problems before. we had tensions during the vietnam war. we have been good friends. the move to canada is one of anger. nowthirds of canadians are not thinking of going to the united states on holiday. time we: at the same saw blossoming friendship between emmanuel macron and trump, but trump not listening to anything emmanuel macron was trying to get them to do. margaret: i think that president blossomed. trump felt immensely flattered, but it is not going anywhere. we will do this later with kevin cirilli, but this phrase europe.and-ization of

it goes back, no one remembers the courage of the fins in world war ii. is that the risk? margaret: it is a risk. and i think roger: -- roger: and was doing the finlandization of the united states. fins paid a heavy price for that deal. they fought very hard in the soviet union decided not to absorb them. europe is disunited at the moment. tom: how they get united, how they fight back, what is the path of the new europe to fight back in the presence of this president? what europe has to do, if it is to avoid being work mored is to

together on foreign-policy issues and strategic issues but that looks unlikely at the moment. we have countries like hungary and poland which are going on a different path from europe, italy is a question. francine: mike, as an investor you need actionable policy. how do you make a distinction between actions and noise? michael: that is the challenge. the most important thing you have to do is structure your portfolios so if you recognize there are tariffs which have profound implications, the structure of your portfolio does not get heavily hit in the event of an unlikely but significant event occurs. you have to plan for the central expectation but make sure your portfolio has some resistance in the event the different outcomes happen. we think global growth will hold up reasonably well, but we are relatively cautious on risk

assets. tom: what does angela merkel need to do in the next 24 hours in brussels? margaret: i think she needs to try to bring like-minded leaders with her. theresa may is probably on the same page as angela merkel but she has been weakened by the defections from her cabinet. it is a time of turmoil in britain. .ngela merkel is compromised she has bought a difficult battle in germany. she is much weaker than she was. tom: margaret macmillan with the university of oxford. thank you for joining us today. we will continue our discussion as the news flow continues in brussels. in america, your morning briefing. it is bloomberg daybreak across america and on radio london. from our studios in london, this is bloomberg. ♪

francine: this is "bloomberg surveillance." tom and francine in london all week. the u.s. has pushed ahead with plans to impose tariffs on an additional $200 billion in chinese goods. the chinese have vowed to fight back. mobius told bloomberg we are in uncharted waters. >> the previous american administrations pretty much endorsed world trade, freedom of trade, the wto and all of these other agreements. trump is going in the opposite direction. he wants bilateral agreements. he is upsetting the apple cart. francine: that was mark mobius

of mobius capital partners. beattyw kamakshya try joins us. is there in any way a --sibility that chinese use as a trade weapon? kamakshya: i think what we have seen is china is quite willing to let the currency move. whether those be economic ships or political shifts. what you see -- what you saw police -- what you saw a recently was that the cny was allowed to weaken in response to some of the trade tensions but also trade weakness. i do not think they will treated as a weapon but i think that as things shift some of the weakness we have seen so far is not unwelcome to the chinese policymakers. francine: what are you expecting

over the next 12 to 18 months? kamakshya: over the next three to six months we see more weakness, we think trade tensions get worse before they get better. over the next 12 to 18 months i think you could see stable or strengthening because we think china's growth will hold up ok and more fundamentally, it is hard to reconcile substantial weakening with president trump's focus on bilateral trade deficits. in general, a strong dollar outlook against a surplus currency country that runs bilateral surpluses is hard to reconcile. the idiosyncratic nature of each story. moving frome we to turkey, argentina, the philippines, etc. to a combined

move? kamakshya: i think the flow of fund dynamics, you have seen outflows from the large crossover funds, that is pushing him away from idiosyncratic toward more contagion tight outlooks. and the other key thing one has to remember is that markets can create their own fundamentals. if you see market pressure, even good emerging markets, indonesia is a case in point forced to raise interest rates and that is tightening financial conditions and softening growth. i think it is important to differentiate between the idiosyncratic stories and the more healthier fundamentals. i think you have to be careful to not overreact and tighten their own domestic financial conditions. francine: thank you both for joining us. we will get back and talk more about emerging markets and turkey.

our guests are staying with us. charts.still tom's today we are doing good on the brackets in football. there is a really good chart looking at the run although bump . we can also chart football. this is bloomberg. ♪

tom: "bloomberg surveillance" from london and then we'll be in helsinki. the headline coming across the bloomberg. this is what you'll see from brussels where the president will meet with the chancellor. we are looking at that three or four hours from now. we are thinking 3:15 brussels time. is in the vicinity of the 9:00 hour in new york. we are talking about idiosyncratic items within the news. pimco. amey with us with michael amey, let me go to you.

ande is turkey domestic there is turkey with a foreign debt structure. those are different worlds, or have they coalesced into one world? think his behavior would indicate he thinks they are separate worlds. there is a point in time where they coalesce. comes undersh lira pressure, then it becomes a domestic problem. what level of dollar-lira is sufficient pressure? is it a round number? kamakshya: one of the consequences of the election is has seen a erdogan 20% appreciation and he still got elected. dollar-lirathat level is high. that means you want to stay cautious. francine: where do you see

dollar going? turkey is also suffering if the dollar goes high. kamakshya: we have in the medium-term a flat dollar view. in the long term we see a soggy dollar outlook. turkey is an exception. gyen when you have a sog dollar turkey was still appreciating. can takethink turkey much comfort from trends in the dollar. i think they can accept they need to slow down the unwind of the inflation that is there. soonhow big a loss is mr. second -- kamakshya: i think he is a big loss because he was that one person that had credibility with the markets. francine: -- tom: thank you so much for joining us today. nato front and center along with

china tariffs. it is a good time to speak with robin of chatham house. we will do that within our next hour. our annmarie is in brussels. we are here in london for a few days and then onto helsinki. markets in a tumult overturf news. we saw -- over tariff news. from london, this is bloomberg. ♪ 2, down. back up.

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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. tom: this morning tit-for-tat markets respond to new trump tariffs.

how would china responded to the president responding to them? in this segment, robin niblett of chatham house. will trump control the nato meeting? still no word from the president on croatia-england. burglary shares respond when the first lady -- but very shares respond when the first lady walks down with --. i am tom keene and embarrassed with me is francine lacqua. burberry canry -- just not get it done. francine: they have a new creative director. his first collection was -- will show an september. more collaboration with vivian

westwood. tom: merge with vivian westwood? francine: not merge, but collaboration. how was president trump collaborating with his nato allies? that is our top story today. tom: right now with our first word news is taylor riggs. taylor: president trump is escalating the trade war. the u.s. has moved ahead with plans to impose tariffs on additional $200 billion of chinese goods. tv components and refrigerators will be affected. the aging calls the move totally unacceptable and says it will be forced to retaliate. president trump is also in brussels just before the start of nato summit. the president called germany a captive of russia. he said the pipeline is something nato should look into. conservative

lawmakers opposed to prime minister theresa may's brexit planet are considering a. radical move that could bring down the government. the giroux skeptics who want a more decisive split from the eu have only one choice left, and that would be to vote down the treatment andal that could lead to an early election. thisidding war over company is heating up. -- rupert murdoch bodies the company at $32 billion, 12% more than the offer made for comcast. the fight for sky is part of a wider fight between comcast and disney. eyes in england may be glued to a television later today. england plays croatia for a chance to make it to the world cup final for. the first time since 1956 the winner will play france, whose fans may still be celebrating. the final is set for sunday in moscow.

global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. francine, tom? tom: thanks so much. i was looking for a vest yesterday, a vest, not a waistcoat. it is all the rage 11. -- in london. francine: both of us started our brackets badly but are not doing too badly. we are beating jon ferro. that is all we care about. tom: my data check is matthew miller is based in berlin, so he is smarter on football than we are. dow futures at showing a large 200-300 point move. the curve has enrolled dynamic to it. euro resilient oil. the vix pulling back from that wonderful bull market.

three-year bond is a good metric that should be read on the screen and two basis points. we are looking at some currency dynamics. turkish lira, 4.76, front and center for me. francine: stocks are down overall in europe. out of the assets figuring there is an escalation of this trade war between the u.s. and china. the markets overall see a little bit of risk off. currencies in emerging markets als down., met the stoxx 600 basic resources down 3.6%. tom: this is an exceptionally prescient morning. writing in the new tion times the finland-iza

of trumps united states is complete. trump is not neutral as finland was during the cold war. the president means moscow and goes out with brutal language to speak of the president attachment to italy. this begins our coverage linking and nato to helsinki. kevin cirilli, to be direct about it, the nato meetings are linked to the meetings and helsinki come on take -- aren'ti, onto the -- they. >> yes. allies tordering nato play 2% of their budget for defense. only two countries are paying that right now and one of them is the united states. that is that map.

it is the u.k., poland, greece, estonia in addition to the united states. you look at france and italy, the president saying he wants them to increase their fair share. i spoke with a senator yesterday who was over in russia with the largest delegation of russia -- of u.s. lawmakers heading to russia, and they are urging russian president vladimir putin to commit to not meddling in the midterm election. they were unable to receive that commitment. this, kevin, which is so important is the position of general mattis and other officials. do they have a voice or is this truly trump alone? haveey say -- everyone i spoken with weather in office or in the administration, say the president trump understands and wants to have a negotiation where things like cyber meddling

are on the table, as well as national security in the gop -- and the geopolitical implications of syria, crimea, and whatnot. does theion becomes, pressure that is coming behind the scenes from the administration as well as members of congress who were in russia last week, does that match the one-on-one meeting that the president will have with russian president vladimir putin on july 16? right now we do not know. francine: we were all pretty surprised the first time we heard the president talking in europe at his breakfast meeting with the nato secretary-general. he started talking about this gas pipeline with russia, briefing him on hydrocarbon -- with russia. who is briefing him on hydrocarbons? >> there has been a lot of>> controversy on the president's communication with this type of policy -- energy policy.

frustration with the articulation of the president's energy policy is mounting. i would note that what you saw at the g7 when the president was insinuating that russia could join the g7 again, that caught a lot of people off guard. you have these additional tariffs that the president is imposing against china, 200 million dollars worth, and china says they are going to respond , and chinalion worth says they are going to respond. europe saying they are going to respond as well with the without russia and with or without nato. tom: the president meeting with chancellor merkel within the next two or three hours as well. her bloomberghn fra with bloomberg news. and we also bring robin niblett

from chatham house. the university of chicago on the map that we just brought up. this map is simple, this is the adjacencies to mr. putin's moscow. did nato and the united states fail in pushing nato to far east? john: i do not take that view. nato i think was pulled rather than -- i think nato was pulled rather than nato pushed. george w. bush wanted to push right towards the end of his second term for membership or ukraine. that was probably a push to far, but all of the preceding stuff, poland, hungary come czech republic -- hungary come czech republic -- hungary, czech republic.

i would say based on where we are today, thank goodness they joined. francine: does nato still make sense? or does it need to change? john: it is a very fair question -- robin: it is a very fair question. i think nato makes an enormous amount of sense. the u.s. is not replete with real allies across the world. are countries in europe closely linked to the united states, whether it be with this administration or thinking more the long-term. the irony is right now that the nato alliance is becoming more militarily effective. it started even before president trump. politically, just as it is getting stronger militarily, it .s being i think used for trade purposes there is a conflation going on here that is undermining it politically. francine: how do businesses deal

day in and day out what the policy which may not be a policy, which may be just comments from president trump? john: i think like everyone else they are just living day by day. i think obviously there are lobbying efforts going on in washington to try to take the edge off of the president's policies here. we know he has been in charge for one year and a half, he is probably -- that is probably not going to do much good. position of the cultural place of american military in germany? for that matter, on the continent? you have lived there, then there, the president -- been don't have a clue what the day-to-day living of the american military is in europe. what is it? john: it is deeply rooted in post world war psyche.

i think germany still has the highest regard for america, for the u.s. i think that is changing. that is changing very quickly. --h the iraq war, you heard going very aggressively against the state a policy of the u.s., and now you hear -- see a repeat of that come up but magnified. -- america'sca is cultural standing in europe is changing the most perhaps since --dward and desk world war i world war i. francine: there was talk about nato reimbursing the u.s., which does not work. -- does nato it to get allies to increase more on --? john: if germany were to

2%, theyits budget by would have a stronger air capacity and a make president trump happy. i think what is going on here fundamentally is -- if germany were to increase its defense budget to 2%, they would have a stronger air capacity and make president trump happy. i think what is going on here fundamentally is --. what he is doing i think is -- you could call it, i have called it a protection racket. the world could get a lot more dangerous if you do not purchase our stuff. he means if you do not turn around that trade deficit, we are going to make life difficult for you. tom: is all of this centered on the european experiment and an artificially weak euro? does all of this center back to the euro? robin: i don't think so.

europe as a whole does not run that large a trade surplus with the united states. the imbalances exist as much within the eu. francine: thank you, robin niblett of chatham house an john fraher stay with us. coming up, we also speak with the austrian economy minister. we talked to her about trade, nato, and migration. this is bloomberg. ♪

♪ good morning, everyone. this is "bloomberg surveillance."

tom keene with me all week in london and then we migrate to helsinki for president trump's meeting with vladimir putin next monday. earlier this week austria took over the presidency of the european union for the third time a mid-growing trade tensions. the alpine trade tension -- the alpine -- said it is ready to book trade trends. the prime minister, margarete schramboeck has weighed in on the issue. she has held a high number of corporate positions. are moved to politics occurred late lester when austria elected a new populist government. margarete schramboeck joins us now exclusively from brussels. thank you so much for giving a little bit of your time to bloomberg. overall, europe and therefore austria has a number of concerns. one of them is a lack of commonality amongst leaders. this may be brought on by immigration. the other with attached deals

for brexit, and president trump maybe his -- turning his back on with allies. out of those three what worries you most? margarete: big responsible for trade and economic affairs, the trade topic is one which worries me most, and which is a challenge to europe. we have upcoming asia, china on the one hand side, and we have the u.s. who has changed its position. it has always been a long-lasting partner and has shown that there is a change now. this is something we really have to deal with and we have to find solutions for. francine: minister, how do you find solutions? is it trying to convince president trump that actually europe should be spared? as it trying to look for trade elsewhere, maybe with southeast asia? margarete: yes, exactly. one solution is to concentrate on new partnerships.

ships which are upcoming don't our presidency, and which are very heavily supported. partnerships with japan. heree actually talking about one third of worldwide gdp , and then in singapore upcoming, and also vietnam we are starting discussions with new zealand and australia. the first is also to have new partnerships, and second of course, is talking -- starting the talks again. i think we have now reached a status where we have equilibrium, so there have been tariffs on steel and aluminum. we have also shown that the european union that we can stand together as one, and that we are struck. this is a very valuable market. therefore -- tom: minister, let me be rude and interrupt as mr. trudeau arrived in brussels one hour

ago. . as the prime minister of the united kingdom. of course for those of you worldwide, she is much distracted by the domestic politics of brexit. but the prime minister, there she is stumbling. maybe she stumbled over some debris from the labour party, or fractious conservatives as well. prime minister theresa may arriving in brussels this morning. we continue with the minister of the economy for austria, margarete schramboeck with us today. tell me about populism you see in austria, the populism that is sweeping across europe. hush and president trump a depth to the new populism of europe -- how should president trump adapt to the new populism of europe? margarete: i don't think it has anything to do with populism. he thinks that tariffs are a good thing to do. my opinion is that they are a bad thing to do. it has shown and has also shown tenure andent bush's

also obama. the tariffs have never helped anybody. they are like a boomerang, they will come back to the one sending it up. with have already seen this. harley davidson, for example. everybody laughed at the fact that we would put tariffs on harley davidson and what has happened? what we are seeing is exactly what has happened in the past. peggy so much, and now let us listen to the prime minister. >> we will be employing an additional 440 personnel to nato 's mission in afghanistan. that gives us a powerful voice in nato. has enabled us to work as we have done to ensure that nato adapts to meet the new threat of cyber terrorism.

i'm sure at the summit we will be talking. president trump and all the allies around the table about how we can ensure that nato is adaptable and flexible to meet the needs of the future. >> are you expecting more resignations this week? >> the checkers deal is a plan which has been put together, a goodbye government. we will be publishing our white paper this week which was set out more detail on it. it is there because it delivers on the boat that people give on brexit, delivers on the fact -- have an endve to free movement, would not be sending vast contributions to the eu each year. we delivered that brexit and we do in a way that protects jobs and livelihood, and meets our commitment to northern ireland. >> [indiscernible] >> good luck. i have met the croatian prime minister yesterday.

job have done a fantastic and i'm sure they are going to do -- go on and do well. thank you. >> [indiscernible] that was the prime minister of the u.k., theresa may, talking about football, talking also about brexit. they were asking her about nato. that is the very latest. it will be very interesting to see the linkage between -- and brexit. you wonder whether you have on pact which is really pushed by italy and he wonder whether a possible post border europe means that -- still holds? tom: give us an update from chatham house on the scale of

the migration issue. the irony is the -- >> the irony is the scale of illegal immigration has dropped dramatically the last two or three years. it is something like 5-10% of those levels we saw at the height of the syrian war. will happens as always is there is a lag. the lag has come in popular opinion. people believe that the government is not a control. -- in control. countries like france lecture them for not taking the votes, but then refused to take them as well. you have got deep divisions about immigration throughout the eu. francine: that may bring back the minister of austria, margarete schramboeck. we were talking about the linkage of bugs and immigration. if we see europe close board -- brexit and immigration.

if we see europe" borders, what will happen? margarete: i think what we need to focus on is what we have done or chosen as the mode of our presidency. it is europe that it protects. minister ofhe economic affairs, for me it is important that we are taking the role which we need to take on the borders outside so that we areas forunding businesses safe and that we protect the area from outside, so we can have free flow of services and people inside the european union. this was the intention, and it was always intended to be so. what is needed from my view from politicians like us that are responsible now is execution on this. ien it to find a solution and think we have in these few days that we are in the presidency

gone further than a lot of others before. i am very convinced that we can solve this. the main topic is to make it possible for companies to flourish, and to grow, and this is what we are here for. francine: minister, of course austria is quite boehner will to any changes and the german just -- vmona rubble changeable -- vulnerable to any changes in the german economy. margarete: it is important for the european union and therefore we need to find a new way, new allies are needed, but also i would say that when he to have a look at how we handle this international trade topic, and how we improve it, rather than

make it worse, because it is our responsibility to make the economy better and not worse. tom: minister, becky so much. we greatly -- thank you so much. we greatly appreciate it. arriving in nato, mr. ebitda of of turkey.r. erdogan francine: if you look at turkey, yesterday we also saw a record volumes and the selloff -- in the selloff. let's get back to our guests in the studio, robin niblett and john fraher. i imagine that a lot of art business reporting in markets reporting at the moment is on turkey. we talk about a negative spiral. does the president even want to break this? john: that is a big question.

bloombergerview with before the elections he threw markets into a tailspin with his comments on monetary policy. also overnight, it so yesterday we saw the news that he has put his son-in-law in charge of economic policy in turkey. clearly this is a man who has a lot of unorthodox views on what monetary policy needs. he sort of believes that the way to fight inflation is not to raise interest rates, but to cut them. most economists disagree with that. tom: here there is a political trilemma as mr. erdogan comes in here and others arriving. to link it all together again is the lord scale, whether it is disney.cast, the scale of migration from mr. erdogan is totally different

from the scale of migration for president trump. europe ended up taking about a third of the migrants. from a security and political standpoint, there is and a beauty about this -- ambiguity about this from the turkish standpoint. which has a population of is attractive populate a very contested area with kurds. think the scale of the size of turkey means that it is not that they are having to completely absorbed these negative things into the economy. it is a much more nuanced challenge for turkey. for years the turkey dialogue with europe is totally different than when we you were on the watch. what is the relationship of turkey with traditional europe

now versus what we knew five years ago? >> it has transformed. icy.ry for a long time there was this hope that turkey and erdogan would show the roots for ism to reconcile itself with european democracy. he has unveiled itself -- himself as an autocrat, completely at odds with the values of the european union. five years ago it was not unrealistic to talk about turkey joining the eu one-day. now it is just as likely as russia will join the eu has turkey will. francine: talking of russia, president shot multiple times giving -- president trump giving multiple views -- multiple times giving glowing reviews of --.

what they strike a deal that will catch nato allies off guard? john: it is so hard to predict -- >> it is so hard to predict how any summit with president trump will play out. you should not expect to see any big deal get done. i don't think president putin trusts president trump to deliver. they are cautious. i think president has got to be very cautious as well, because he might lose part of his republican party on the other side. -- whether a president trump or president clinton begins a discussion begins- president putin a discussion about crimea. tom: this makes the next few

days interesting, to say the least. john fraher of bloomberg and robin niblett of chatham house. his taylor riggs with first word news. taylor: china is vowing to fight back against president trump's latest threat on tariffs. the u.s. pushed ahead with tariffs an additional $200 billion of chinese products. the targeted goods include television components and refrigerators. china calls a move totally unacceptable and is vowing to retaliate. president trump is threatening pend the nato summit in brussels. he called germany a captive of russia because it pays moscow billions -- pays moscow for gas and pipelines. he wants other countries to spend more on defense. in thailand, the dozen boys who were trapped in a flooded cave are described as being in good health. the boysficial says

lost weight during their ordeal, but he says they and their coach the care of themselves. all 13 of them are now recovering at a hospital. global news 24 hours a day, 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. we just saw angela merkel arriving and ada -- at nato. we saw theresa may just a short while ago. before that we also saw president erdogan. and will be interesting to see whether angela merkel decides to release a statement or not to the press. we will see in a couple of seconds if she decides to take a right and speak to the cameras. tom: the backdrop is that turkish lira is almost breaking out to a new weakness. the backdrop is the litmus paper of the system, which is really interesting now.

real emerging-market tension with a dominant, stronger dollar. i think the backdrop of currencies is a litmus paper is extraordinary. it appears that the chancellor will speak. here is a chancellor of germany. >> [speaking german] francine: we are lucky because we almost have instantaneous translation. she is acknowledgment the fact that there are differences within nato, sort of addressing the key issues of the day had on. there will not be much agreement. know, she is reiterating the fact that germany has a very strong .resence in nato

she is anticipating the criticism from trump. a similarwe heard kind of message from secretary general of nato, try to say that everything is ok. is there a united block amongst most nato allies that they are minimizing the risk of the u.s. antagonized in its allies? >> i think they have learned that the best way to get ahead of president trump is to try to show at least some movement in his direction. there is no doubt that every eu country has increased defense spending over the last two or three years. when i have a countries of spending -- or above. it is still a small amount. does the u.s. spend 3.6% of its gdp defending europe alone? i don't think so. the mixing of numbers is completely --. is not justthers me

about defense spending. for example, there was a terrific essay on estonia. how does nato project to assist estonia and the baltic states? and their defense, that is a tangible discussion point. >>and their defense, that is a tangible discussion point. >> what has happened since the warsaw summit four years ago is that you now have troops deployed and stationed in those baltic states, some led by british forces. you have german forces deployed in the 20th right now, unheard now, lithuania right unheard of. tom: we must thank john fraher for the immediate german translation. nobody will be calling me to translate italian when the leadership arrives. francine: angela merkel talking about germany ready to raise defense spending and she also

says doing so, from her own personal experience, she understands about the soviet threat. this in response to a president trump said earlier on, he was talking about the gas pipeline. angela merkel also saying that germany has helped to defend u.s. interest in afghanistan. if you look -- you want to jump in, tom? tom: i think the headline of her personal experience, expand on that francine. that is a deeply emotional headline from a woman from germany. francine: if you catch yourself back to her three years ago, we were also saying that she was one that could speak to putin like no one else in europe. relationshiphe between president trump and vladimir germany is stuck in the middle because of these tariffs are carmakers. it is changing very fast. >> it is interesting that she is just about -- maybe she is not

the queen of europe anymore, but queen of europe anymore, but she is just about hanging on in there as the indispensable leader of the -- the glue i guess that keeps the eu together. for trump she is the one who symbolizes what he sees as the evils of the eu. francine: together. will get back of course to angela merkel and her possible fight with -- on immigration. that was a john fraher and robin niblett. we will get back to both in just a couple of minutes. in the meantime, be sure to tune into bloomberg radio. it can be heard in new york, washington, d.c., boston, the bay area, and across the u.s. on sirius xm. this is bloomberg. ♪

♪ taylor: this is "bloomberg surveillance." president trump has pressured pfizer into delaying scheduled drug prices for certain drugs. the drugmaker says it will hold off price hikes that took effect last week to give the president time to come up with a health care plan. blackstone group once you take advantage of the growing demand for buyouts. to equity firm is expected sick more than $20 billion when it starts marketing its eighth buyout fund later this year. according to a data provider, buyout deal value gross and 90% in the first quarter -- grew 90% the first quarter from a year ago. lawmakers and the u.k. may find facebook over the cambridge analytic a scandal. was not able to keep

user data from licking. been misused.have that is your bloomberg business flash. tom, francine? francine: taylor, thank you so much. a big story is the bidding war for sky. a first century fox it boosted its bid to 14 pounds per share, now valuing the company at 20.5 billion pounds. this topples comcast's previous offer. joining us now is matthew. will comcast come in with a higher bid? >> i think that is what we expected to happen and may come as soon as the next couple days. they want sky, they really like the asset. it certainly makes sense for them to come with a higher

offer. francine: why is sky so valuable? >> it is the leading pay-tv andness across europe, big the u.k. and germany, with over 20 million customers. it has got great momentum and for a big media -- international media company like comcast or disney, it brings additional scale to help those content investments is your to make in the wake of tougher competition like netflix and amazon. tom: what will you look for in press release? think to some degree how much of this 14 pounds per share level he goes. i think to some degree it is kind of linked to where they go next on the bigger offer for the fox assets. i think one of the issues they have got is that they have set the threshold for acceptance on the sky bid to 50% plus one share, so they could end up with

murdoch or disney being a very substantial shareholder. i think they need to tie this into what they do with the fox bid. tom: give us an update on the speculation of a outside money coming into this transaction. >> outside money in the sense of other bidders? money i wasside talking about was private equity or sovereign wealth funds helping out. >> i think it is certainly possible. obviously they would -- comcast would love to keep this just as a comcast transaction. how much more debt can they afford to take the balance sheet? how much get are there shareholders prepared for them to go into? that is the question i think. tom: matthew, big you so much. on the look with matthew

latest media wars, and the delicacy of diplomacy in brussels. will continue that discussion with robin niblett. your nasal be shaking meeting with the director. graph gth the bloomberg tv . today, including a graph today, including a graph on rinaldo and juventus. yay! tv , or whatever. there is. stay with us on nato. this is bloomberg. ♪

♪ "om: "bloomberg surveillance." from our studios in london. ofh us is robin niblett chatham house. ino with us is john fraher our london studios.

i want to go to that stark headline of the chancellor speaking about how she is personally experienced. we forget she went to karl marx university and eastern germany -- and eastern germany. how has that been in her political life? >> i think what that gave her is a very deep and unique view of what european integration is about. tom: she did not go up on fifth avenue, rounding third base of prosperity at age 15. >> she did not. she used to go hiking and young to go to greece. what it gave her was this very deep of initiation and sense of political power of your -- a united europe. tom: in europe -- new york there is pieces of the iron curtain. does the president understand there was once an iron curtain? >> i don't think so. i think history for him his

remarkably and maybe historically connected to the 90 states, with -- the united states, with the big cushions on the side -- oceans on the side. he is fixed on his post-cold war view. now, what are we doing here? in a way he is midwife in america back to its traditional position. tom: i have to go, because i just got a message. francine: tom needs a martini, a p, and he needs to go to radio while we can talking about y actually,burberr one of the biggest losers. how does this end? does theresa may stick to power for the next 12-18 months? >> i think one of the key things

about the resignations we had sunday and monday, my reading is that the hardline brexiteers, i want to call them that, have lost the argument. they lost in the cabinet and i don't think they believe they in parliament. they should just get out and be able to campaign in the future. i will leave the other focal maybe do believe they have an opportunity politically to run. i don't think anybody wants to challenge theresa may come at because it is the most godforsaken job to delivers this deal. i think she survives. will they go along with the customs arrangement? >> if she loses the brexiteers do you think she's to has the numbers to the and a deal to parliament -- through parliament?

-- through parliament? >> i think she probably holds the 12 remain opponents that she in the conservative party. she hold probably the labour party side who are in favor of brexit, about 15 votes there. the question is how many of the really hard brexiteers vote against it with the labour party. my instinct would in the consere wants to go to an election. the brexiteers in the end britain to leave. even on her deal britain will be out. francine: what does this all mean for industries? even if you look at the white paper, services, which accounts for 80% of the uk's economy, are just not there. >> it is remarkable. we still do not ruling out. looks liken what from the outside like a concerted lobbying effort by some of the really biggest companies, airbus, bmw. they have been very vocal in the last few weeks or a deal.

in the absence of prosperity, we are seeing that sucking away of influence from london, especially in the financial services sector. ernst put out a report yesterday that showed how much other areas are catching up to london. we still do not really know what it is, but clearly business is extremely still very unsettled. we do not even know. on friday we thought maybe we would get a brexit and we're back to where we were. if you're a company sort of responsible for large supply lines and they factories, what are you going to do? francine: president trump just arriving in brussels. thank you so much for sticking with us today and good morning to everyone in london. we just heard of course from angela merkel talking about her experience with dealing with the soviet union. this is on the back of president trump talking with -- at a

breakfast this morning, or he'll most attacked germany on the fact that they -- where he'll most attacked germany on the fact that they signed up on this pipeline. we don't know whether he will speak to the media. it looks unlikely that he will speak to the media. robin niblett, what would be a victory for president trump this week? is he talking to people back home? if the campaigning for the midterm elections? or his he actually expecting something from the european union and his nato allies? i think his nato allies have given him pretty much all that he can expect or hope for at this stage. spending,defense increased commitments to invest in acquisition and research and development, sending troops out to afghanistan, a commitment to a training mission. the europeans are linning for as much as they can. what they are not going to give

, they are not crying -- on trade. they have put proportionate countermeasures to the tariffs ball on a european steel and aluminum. they are going to the wto to check for the next amount of about 3.2 billion could be imposed after it. they are not crying uncle and not giving up on the trade. will president trump but that slide or does he need drama in the lead up to the midterms? he could go far. he can call into question either wto membership, literally, and talk about stepping out. threatened to bring back troops from germany, number exercises. big.ould do something >> i think both china and the eu have underestimated how trump -- far trump is prepared to go.

whether it can see is on trade or military spending, the divisional mines with the u.s. and its allies, and china are getting deeper and deeper. francine: thank you both for joining us. robin niblett of chatham house and bloomberg's john fraher joining us for if on our as we watched most of the world leaders commented that nato meeting. up next, tom keene on bloomberg surveillance radio. with are also looking at some of the fault lines on the nato allies and what the meetings with trump will bring. 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. alix: upping the ante. president trump pushes the trait

feed with china to the brink with more tariffs. china vows to fight back. rattled markets. s&p futures with their biggest drop in weeks. pay up. president trump tells nato allies to pony up their share for defense spending as alliance leaders gather for a brussels summit. david: welcome to "bloomberg daybreak." i'm david westin, finally back with alix steel. this guy is going on vacation, which he never takes. david: i'm sure president trump will give us a this guy is goinn headlines. alix: if you mail me about email me aboutmal politics while you are away -- dow jones off by triple digits. what is the safe haven?