anna: good morning from london, i'm anna edwards. and i'm manus cranny, live from dubai. this is "bloomberg daybreak: europe." anna: washington and beijing hit at talks to resolve the trade war. some relief with brent crude bouncing back from it for selloff in two years. president trump expected to continue his pressure on nato allies today. he arrives in the u.k. this afternoon. and your move, murdoch. skyast raises its offer to in the global standoff between the media giants.

anna: good morning, it it's 6:00. this is bloomberg -- "bloomberg daybreak: europe." putting aside disappointments of the world cup, focusing on small bounds were seeing in asian equity markets. a by .2%, talk of trade talks, that seems to be the best we can do it the moment but it might be enough to draw a line in the so inor the next hour or terms of the tensions on trade between china and the united eighth. the epicenter on the tension on trade it was the commodity market in the last 24 hours. none x crude and brent under pressure. the whole commodities complex under pressure. we saw the biggest drop in two years in oil prices. wasn't overdone?

what would tell from treasury markets about what kind of selloff we should be seeing in commodity markets. lira, we'veturkish seen pressure on the turkish currency and this all emanating from a local tv broadcast in turkey broadcasting comments of president erdogan, suggesting he once the rates to fall further. we touched a record low on the turkish lira as a result. manus, what is on your mind? torch he seems to like to paper in those markets. one other market with a slow , the offshore yuan, the biggest loss since 2016 with a little bit of reprieve today. sinking feeling that the pboc has not stepped in with any force. prepared to take on the

risk reversal? it cost you less than nothing. less than nothing physically to short the offshore . i would put it a different way. the question for the market is this, the 50 day moving averages below the 200 day moving average. we have not seen this kind of momentum in the currency since the forced devaluation a number of years ago. you need to ask yourself

renminbi? right now it cost you nothing against the drop in the offshore yuan. it's talks about talks, that's a big shift from yesterday when there were no talks about any talks. >> just talking about talking is moving the u.s. futures. that's the expectation. usb less damaged than everywhere else by a trade war? we will keep an eye on where the futures go and chinese equity markets with a rebound today in session. we will hear from the philadelphia fed president at 5:00 p.m. u.k. time. what does he have to say about the u.s. economy's resilience in the context of a trade war and the potential for inversion in the yield curve as well? morgan stanley talking about how that could be a possibility mid 2019. juliette saly is in singapore. raisede: officials have

the prospect of resuming trade between the two nations after donald trump ratcheted up the pressure by announcing a huge new round of potential tariffs. after washington unveiled a list of chinese imports were $200 billion that could face higher duties, beijing called on america to resolve the conflict. signaled house is also it could restart talks. is two of the nato summit taking place. donald trump expected to remain on the offensive against american allies. house speaker paul ryan call the organization indefensible, but added that the president is right to push other countries to pay more for their defense. that came as the house passed a nonbinding resolution supporting nato. u.k.'s seeking to strike new traders around the role as part of a brexit pan -- brexit plan. open -- to preserve

theresa may is expected to publish the planet is so-called white paper spanning more than 100 pages detailing a thatehensive vision expands on a three page paper published last friday after she in a fighter cabinet behind the plan. cabinet she unified her behind the plan. say binderources supertex dissipated in the multibillion-dollar deal will -- it has ambitions of becoming the world's largest sovereign find, seeking to diversify the kingdom's oil dependent economy and boost returns. the spokesman declined to comment. croatia will face france in sunday's world cup final after dashing england streams within extra victory in moscow. england to delete with a

pre-kick and held it for more than an hour. but it was equalized with extra , with six minutes left, won three extra timeouts in a row to make the first world cup final. global news, 24 hours a day, on-air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. stories on there bloomberg at top . on today in asia, we're seeing quite a lot of positive momentum coming through. check out the nikkei in late trade, a by one point 1.2% as we see the yen in a six month low against the dollar. csi 300 was slammed yesterday, up 2.5% today and -- sensexthe sin sex at a record high.

zte shares soaring after the u.s. signed a deal. we have the shares up by almost 24% in hong kong. and a lot of positive movement coming through in the health care sector today. tokyo up by 9%, a lot of in thege upgrading stock wake of positive results on the drug. and further to the upside, a lot of chinese baby goods getting a boost today. we are hearing reports that the chinese government could be providing some incentive for people to start to have more children. as we saw that one child then removed. manus: we've got chinese thecials, they've raised prospect of resuming talks as anna and i have been telling you over trade and discussions between the two nations. quite a significant shift from yesterday as donald trump ratcheted up the pressure by announcing a huge round of potential tariffs out of washington.

$200se imports worth billion. beijing called on america to resolve the conflict. they came from the chinese vice minister of commerce. the escalation has hit commodities with losses spending from oil to cross and metals. crude futures plunge the most in almost two years, falling on 7%. ralph, great chris to have you with us, good morning. have you recovered from the games? chris: just about. let's talk about the route we've seen in commodities. do you think that makes sense, what we have seen in commodities? is that where we should see the pressure if there is a trade war in the offing? we've seen weakness in

the price of copper for some time. it still considerably higher than it was when president trump was elected. but clearly, there a slowdown in the global economy that is caused by the trade wars, and there's going to be an impact on things like commodities which are the raw materials for a lot of global production. manus: in terms of that drop we have seen in commodities, the stepped back a little bit in the united states. this crushing of commodities, whether it's temporary or goes on a little bit longer, ashley reduces the inflation footprint -- actually reduces the inflation footprint. chris: the markets have been concerned about the potential pickup and inflation and there won't be so much of the upward pressure from raw materials they

companies would want to pass through in terms of rice increases. with -- what is taken away with one hand will create less pressure on the other. so there are definite benefits from these prices coming back. this is to do with how china is going to respond. talking about whether we might see funding costs dropping. it's a complex system, but are you expecting them to do any kind of easing in china or other measures? we haven't seen boycotts of u.s. goods. chris: what is interesting is the way the chinese are playing the long game. they are trying to clamp down on short-term borrowing and some of the credit expansion that has been going on in the chinese economy, clampdown on some of

the wealth management objects. so it could have some of these short-term impacts but i think a more chinese domestic economy more than a trade war. chris ralph, thank you for being with us. we will dig and a little bit deeper into these markets, the oil markets on the move. and a drop of 7%. we talk about geopolitics as well. this is bloomberg. ♪

anna: this is "bloomberg daybreak: europe." in brussels were looking ahead

to the nato summit. not content with pressuring other members at nato to raise defense spending to 2% of economic output, u.s. president donald trump has proposed doubling the target. tensionittle to ease and already -- in an already starts meeting. for thefly to the u.k. next leg of his european trip. isning us from brussels anne-marie, a very good morning to you. is this a repeat of the g7, geopolitical tensions plenty? vu.any say it is deja and angela merkel have a very good relationship, and then he tweets angrily at he went onis -- attack on germany on twitter last night, saying what good is nato if germany is paying russia

billions of dollars for gas and energy, why are there only five out of 29 countries that it met their commitment? 2% of gdppay immediately, not by 2025. the number actually changed, now eight countries are hitting the 2% target, but an already charts meeting and behind closed doors, trump was floating the idea to even double the target to 4%. , the white house press secretary this was just him kind of saying -- this is his web pointing out that nato needs to do more. moment for an already charts meeting. it was certainly charts before they went in yesterday. we were listening to that conversation, challenging germany's relationship with russia. i'm fascinated to know, this

could be the backdrop to his arrival in the united kingdom. do we get any hint in terms of how that is shaping up? >> last night they dined next to president as well as erdogan at the reception where they were said to discuss iran and the middle east. of course theresa may i'm sure was on edge with the england match. but when he leaves here today, he will go to the linen palace where -- he will meet with business leaders and then friday is really the big day for him and theresa may. jeremy hunt will also be there, they will be discussing russia, trade, brexit, as well as the middle east. right now all we know is that he meetings, hehe will be the easiest. we are looking forward to see

what comes out of his trip to the united kingdom and what specifically they will discuss. manus: thanks for the latest from the nato summit. in spring and chris ralph -- let's ring in chris ralph who is with us here in our london studio. you go from $110 billion which would be 2% of gdp if they all ,tood to it, to a demand of 4% a floating 4%. if defensey looks as and spending are set potentially to rise. does that influence your thinking in any way? chris: i think we have to put it into context first, manus. as your correspondent pointed out, there were a lot of -- me

more countries that are meeting the 2% target. obviously if the rhetoric does result in greater defense have ag, that will beneficial impact on some of the companies that will be supplying the defense industry. we will have to be watching what actually comes through in this. but there is a lot of rhetoric at this stage. let's see what happens when the facts actually come out. anna: and talking about the u.s. economy, comments to morgan stanley, saying the yield curve is going to invert in 2019. not much at the moment, but inversion -- with that matter to you and give the same signs as it has always done about recessions? or is it different this time? chris: i don't believe it is different this time.

more are talking about where the u.s. economy goes in 2019. it probably won't be as good as the q1 results but it looks in pretty good shape. will it be softer, and could we whisper it quietly? could we see the possibility of a recession in 2019? the commentators just beginning to say we should watch the signals quite carefully. there are a couple of others am watching really closely. there was one fed governor recently who said you cannot be too cavalier. , turningok at this

negative, suggesting no rate hikes in 2019. the majority of the fed expect rates to be height at least once or twice by 2020. market is now saying no hikes in 2019 and is betting on a coin toss for 2020. the market is beginning to doubt trade war's into their processing. the market is getting a little bit ahead of itself. trying to respond to the information coming through on a daily basis. he comes back to the point we were making earlier about if we see commodities and inflation falling back, the necessity to raise interest rates weather in are the united states, the pressure is not going to be there the way it was. so again, we need to look at all the evidence coming through in saying what is the impact on dietary policy going over.

anna: chris ralph stays with us. juliette saly has the bloomberg business flash for us. juliette: comcast has increased , escalating a global standoff between the media giants. comcast, the largest u.s. cable company, is now offering shares , 5.4% above 14 pounds per share proposal from fox which already owns a stake in the european broadcaster. 18.9 billion dollars in cash, branching out into corporate software to diversify its business. the semiconductor maker whose acquisitions have reshaped the industries, will pay $44.50 per to thea 20% premium

closing price yesterday. the deal will immediately add to broadcom's earnings once completed, which is expected in the fourth quarter. indonesia is expected to end a year of wrangling over a copper and gold mine. according to the indonesian on his ministers daily agenda, signing ceremony will be held in jakarta at 10:00 a.m. u.k. time. the ceo of report -- of freeport has told bloomberg he's keeping his options open. , and ween very clear may stay are we may go. as soon as their something tangible to the market. upiette: pandora is teaming in a bid to win over a new

generation of listeners. they will be able to share content with friends directly on pandora. the pandora ceo said the move will help the company focus on ad revenue, unlike spotify an apple music, which makes money from subscriptions. >> most will consume music like they do on terrestrial radio today, which is the $16 billion marketplace. pandora is well-positioned for that. we think about spotify an apple for our subscription business, but 70% of our revenue is advertising. the competition is more about terrestrial radio. juliette: and that is your bloomberg business flash. anna: thank you very much, juliette saly in singapore. manus: we were talking about the

yuan at the start of the show. i know you love these kind of things. the 50 day dropping below the 200 day. whether you believe in it, the is more bounce in the yuan today. the point is, doesn't suit the chinese to have something like a slight drop in you one as a little bit of a stick as they go into the potential new round of negotiations. mark barton would be proud of us. he absolutely would. i will make sure to tell him later. we will talk about brexit shortly. can the u.k. keep its open custom borders with the e.u. after brexit? and getdiscuss that that white paper. , writinge in brussels

at the nato summit there. will stay on top of any further exchanges we get. this is bloomberg. ♪

london,t's 6:30 a.m. in 2:38 -- 2:30 in tokyo. you're seeing a little bit of move higher in dollar-yen averages. asian equity markets also on the move as well. has the bloodletting been done? that's get the latest on the markets. nejra: that's a great question because we are seeing some relief in asian markets. you can see gains in china, japan, australia, and hong kong as well. relief, thereof

could be some back channel negotiations going on between the u.s. and china but they've also got seven weeks before the latest round of tariffs would be imposed so perhaps a little bit of time for reprieve. the offshore yuan, you showed that earlier, but were seeing a after someof relief weakness yesterday. japanese yen up by .2%. elsewhere, we're seeing some gains, south korean won worst performing currency against the dollar. dollar-yen has moved above its three-year to sending trend line. the break above the trendline could be a reason why we are seeing continued gains in the dollar against the yen. you might ask how we have not seen the safe haven is concerns around trade wars. interesting technical to

keep an eye on. and we have to talk about commodities because there was the most lead letting in commodities yesterday of all the asset classes. you saw a have its biggest drop in the year. wti holding about 70. you can see the white line, a little bit of a rebound, copper closing at its lowest level this year, a little bit of a rebound but goldman is now cut its 12 month forecast on copper. copper is below at the moment, trading around 6200. the longer-term chart is interesting because we saw oil drop yesterday, and what the longer-term chart pointed to is the supply dynamics between oil and copper. year oil is gain $.17 this and aluminum and copper down 14%

because of supply risk in oil whereas with copper, we're looking at more of a surplus. let's talk about the u.k., seeking to strike new trade deals for services around the world as part of her brexit plan. with details on the so-called wife ever today that the government scheduled to publish, the core is a free trade area.

us in london. what are we likely to hear today? >> they've been briefed on that, so the proposal to spin off the treatment of goods and keep the trade flowing and solve the problem of the irish border, effectively staying in the single market for goods and food and then splitting off the treatment of services and what the government is saying is that they will strike new trade deals and services. bear in mind the trade deals are a rare thing, most trade deals cover goods. so maybe it's more academic, but it does free up the regulatory side. what begins get today is more detail on all of this and how is going to work, the specific treatment for financial services. then it will go toward the other sectors and how they will be treated. what is the plan for broadcasting or pharmaceuticals, aviation, all these other areas, we will layout all of those things coming up. obviously the european response varies.

was based onponse indivisibility of the four freedoms, and to that extent, how do you think europe will respond? angela merkel was positively engaged. we've been asked not to throw out the proposal straightaway. the position is they see there's a lot of compromise with the proposal. she's taken a big risk by moving brexit and we've seen that in the last few days with the resignations. we will probably get is acceptance that this is a starting point in negotiations. a lot of it will be down to

, accepting the jurisdiction of the european highest court. will there be any special allowances for europeans as -- in terms of freedom of movement? a plan,t we will get that's what europe has been asking for for a very long time. anna: and it seems that theresa may remains in hopes. >> we talked about the precariousness of her position. who has the numbers behind them? probably the numbers to challenge her leadership, but probably not enough to unseat her. rebelse conservative look inside their souls, do they have what it takes?

she is facing down the rebels in her policy, and so far it is working. thank you very much, david. james is still with us. when you look at the daily how dotions of brexit, you reduce any exposure to the u.k.? how do you reduce exposure to sterling? changed as a result of the daily machinations? david: it is difficult to say in terms of the daily machinations. thee is more opportunity in u.k. markets, more shares have come back in relative terms to their global competitors, given

the better opportunity to buy into those companies. the companies themselves are still performing quite well, despite all these political machinations. clearly, with the u.k. being a very export driven economy, you're looking at 60% of earnings are outside of the u.k. rather than inside. for u.k. companies. actually we say opportunity rather than money being taken away from them. i credit my colleague with this, he was talking about the linked and, inflation gilt. who is making the point that maybe this was just liability driven, life insurance and the like.

we have really strong demand for this yesterday. >> that has always been a problem, distortion in the market. i think it is hard to read into government demand in bonds. if you look at the state of the u.k. parliament, they're in much better shape than people might have thought they were in six or 12 months ago. we should be looking at the gilt asor conventional we go through the rest of 2018. chris will continue his conversation with us at 7:30 a.m. u.k. time. last month, lloyd's of london

ceo announced that she would step down next to her. she was the country's desk companies first ever female executive. >> i was committed to doing fine here. job, approached with the it was really exciting. i would love to come in and modernize the place and introduce modern technology. when you're striving for transformation, you have only a set amount of time. i would have completed my five years. i would feel pretty good in what was done during that time. hand overfore time to the company to someone else. i have to be a little selfish as well. i'm not getting any younger. i have worked in insurance my entire career.

>> do you feel i do you feel like you have done everything you wanted to do at lloyd's of london? if you had had more time, would you have not gone out with a weaker bang? natural catastrophe, that was the biggest thing. $12 billion it cost the lloyd's market. but that's the purpose we are here, to provide that financial and competition with things go wrong. we know that is what we do. we have to expect it. we model for these large catastrophes. we do have to also try and fix probability. lloyd's of london has changed

dramatically over the years. it used to be funded by lots of individuals who put their own money into points. that all changed a little bit a few years ago, before i joined five years ago. , is no longer% individual private names. who either insurance groups want to access the specialist business, or it might be some hedge funds, pension funds. people want to diversify their exposure and their investment portfolio. they are an important part because we are all about being innovative and entrepreneurial. a lab that'sing going to be looking at engaging , andinternet startups

entrepreneurs. they will need backing. we will be doing lots of new stuff. >> did you always feel like you had the new chairman behind you, that he was ready with your policies and year innovation? >> i've hardly ever worked anywhere where you think the pace of the bosses is not fast enough. there is always that pressure, the goods are in a market and we have so many players to bring along with us. and we have customers who have been with us for years. one of the first things i had to do was present the chinese aviation authority with the special scroll of a 40 year relationship. i think the chairman has come on board. he realizes the complexity of the new stuff we are driving. manus: frank and forth work --

fourth right interview right there. episodewatch the full of -- next edition this is bloomberg. ♪

anna: good morning, this is "bloomberg daybreak: europe." is the early part of the morning over in the united states. the asianto see equities driven by trade talks. some of that putting a little bit of a line of sand in the equities.

let's get the bloomberg business flash with juliette saly in singapore. juliette: broadcom has acquired -- agreed to branch out into corporate software. the semiconductor maker whose industryon lead the will pay 20% premium to the closing costs yesterday. the deal will ask for earnings once completed, which is expected in the fourth quarter. wrangling on year ownership of the giant mine. a signing ceremony will be held in jakarta at 10:00 a.m. u.k. time. details of the agreement were not included.

ceo of partner rio tinto said he is keeping his options open. comcast has increased its takeover bid from sky. escalating a global standoff between the media giants. a deal foroffering the sky. juliette: it already owns a stake in the european broadcaster. that's your bloomberg business five. manus: thank you very much. this battleck to for sky between fox and comcast. david, good to see you this morning.

comcast comes back at 14 pounds, $34 billion. , it's hardly what butwould call a knockout, he expected 18 pounds. what do you make of the bid? that comes to just a little more than 5% above the previous thread. so it is more to the story. than twomore work companies competing for an asset. you have the interlocking wardrobe issues. they are bidding for that as well. giving comcast a chance to pick up this asset in a certain way

sort of undermines the position. the 23 million alsoribers, it would bolster their position should they decide to raise their bid. they told us they are still considering what to do with that in the bidding war they are having with disney. we will have to wait and see. it is also strategic. what can we expect from the u.k. government today? what do we expect? >> they have already said they skyd approve a fox deal for , that they don't already own. full scholarship

and now they have the regulatory green light to do that. we don't have any insight as yet as to how the regulatory contrast would be for -- comcast's -- would be for we don't have to wait and see what shape they will be in. we would have to see. >> the result is a trade dispute. there's seven weeks before that 10% tariff. the world's two largest economies step back from the ?rink of an all-out trade war is next guest believes there

no winner in a trade war. is not just that everybody wins, but some lucid and others lose later. some have suggested u.k. will be least damage because of the dollar itself. >> if you look at the extent of include iverall to have billion dollars. the u.s. consumes more than it produces. [indiscernible] of course it will take a bit longer. he will see what mr. trump has done.

>> there's a lot of posturing to be made. but i believe that it will come down. >> whatever way you come, the market is completely unnerved, from commodities, the biggest contributor to a decline in expectation is battery spirit talk me through your thought and there may be someone a wells right now. inflation.on supplyhave a major stock, and the second point, over the last 25-30 years, it

has been going down. -- if you gosh of with the full rate, you're seeing inflation. mean?oes it if your unemployment rate is 4%, it brings it down. anna: many have talked about when we can expect to see every session in the united states. if we did see a recession, that's one way of bringing down a trade deficit. >> every nation cannot have a trade surplus and the largest gdp.

the u.s. problem is that and deficit. essentially, it becomes a problem. pressure.under manus: thank you so much with your latest thoughts on risks from fred washington. we go to thisas break here yesterday the bazooka was getting loaded, nobody fired it. anyone who wasn't alive when donald trump was born. we'll talk commodities as well.

escalate.war's what does the commodity sector have to say about this? 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.

good morning from dubai. i am manus cranny and this is "bloomberg daybreak: europe." .nna: and i am anna edwards these of the top stories. manus: stocks and commodities show relief. brent has its worst selloff in two years. divisions in brussels, president trump expected to put pressure on nato allies today. move, murdoch, comcast raises its bid for sky.

a very warm welcome to "bloomberg daybreak: europe." we have this moment of reprieve in the markets. set for a slightly higher opening on the ftse 100. dpi in germany, breaking news on the inflation spectrum. seeing inflation numbers pretty much in line with what the market had expected. 2.1% year on year. let me break them down a little bit more. the preliminary estimate was for 2.1%.

euro-dollar 0.35% on the year. these numbers are stoic for mario draghi. a number of factors are driving the market. u.s.-chinanting that might have talks on paris. this is a move away from yesterday if you think of the ways and means committee. closer, the worst year,december of last comcast opening a bid for sky. that will possibly play here in the u k. a reprieve for the moment in these equity markets. we just had the cpi from germany , and we are waiting for french numbers to come through. it's have a look at the bond market. the bond markets are showing the stoicism rather than meltdown you had in metals and minors, and the drop in aluminum.

the butchery of the commodity complex. the bond markets remain relatively sanguine in terms of their positioning. you have treasuries opening down , and the bunds are flat on the day. anna: let's talk about what we are hearing about online retailers. they look to show strong growth in the u.k.. growing, forales your sales up. no change in that. they see the margins about 4%. , no change in the guidance. , no change in the guidance. the online retail side of things, this is what is causing headaches.

shareholders are told there is a burning platform for change. it is a specter very into focus for markets. let's talk about the risk more broadly. we see this line in the sand drawn in the asian session, a little more robust than what we had yesterday. much more positive than yesterday. could we see the u.s. and china finding and offramp from the trade war? 0.2% on the msci asia-pacific. so weak markets in the u.s., and a lot of the weakness came through on oil prices and oil stocks. wtis in twodrop in years. has the selling been overdone? low. record

more fashion breaking news. ,anus: a little more fashion this time, third-quarter aheading, that is quite of what the market had estimated. -- that is the nine months in japan, the nine months overseas profitability year on year is up by 65%. this this is the nine-month report for uniqlo in japan. the full-year guidance coming in

at a profit of side, fastion retailing delivering. let's get to juliette saly in singapore. officials have raised the prospect of resuming talks about trade after donald trump announced a new round of potential tariffs. list washington unveiled a , beijing called on america to resolve the conflict. the white house has signaled. in brussels, at the nato summit, trump is continuing his

offensive against america's allies. paul ryan called the organization indefensible, but added the president's right to push on countries to pay more. nonbindings a resolution supporting nato. the u.k. is speaking to skies , in a blitz to preserve open custom borders. today, theresa may's government is expected to publish the plan in a white paper spanning more than 100 pages. it is a comprehensive vision. lastpands on a paper friday after she unified her cabinet. inatia will face france sunday's world cup finals after dashing england's dreams with a victory in moscow. england took the lead in the fifth minute, and held it for

more than an hour. the equalizer forced extra time before croatia won it with six minutes left. won three matches in a row from behind. global news, 24 hours a day on air and at tic-toc on twitter, powered by 2700 journalists and analysts in more than 120 countries. on the find more stories bloomberg at top . a late rally coming through in the asian markets. japan is closing out the session by 1.2%, with the yen at a six month low against the dollar. check out the movement in china. andver 2% after we saw it shanghai heavily sold out yesterday, and working look at the indian market as well. a fifth day at a record high. coming back,mentum and investors willing to take more risk.

these of the hong kong listed shares, after the u.s. signed a deal to lift the tech purchase van. the impact of the tariffs, and we are watching -- we're also hearing that bmw will up its stake in the venture by 75%. in tokyo, after tiger global. anna: juliette saly joining us with the latest from singapore. up-to-datering you to what we are getting out of brussels. president trump has been tweeting this morning. he says presidents have been trying unsuccessfully to get germany and other nations to pay more for protection from russia. they only pay a fraction of the cost, and the u.s. pays tens of billions of dollars, and loses

on trade. this a us again, is legitimate -- or, by splitting up nato and dividing nato, does it start to lose some of its purpose? does it loses his inherent qualities? manus: he said yesterday before hewent into that meeting, took the germans to task in their energy needs, and how they were tempered to russia, and that irked him quite substantially. he has floated this one. spend.sibility of a 4% they are nowhere near a 2% level. it will be another interesting day. let us continue the conversation about trade wars. the chinese side talking about

dental talks. raising the prospects about talks between the nations. if it comes, it comes after donald trump ratchets up pressure. washington and beijing have about seven weeks to strike a deal before duties are scheduled to take effect. rafaellas right now is tenconi, chief economist, ada economics. it is amazing how in 24 hours, the whole world has changed its perspective from a market perspective because we hang our hat on the hopes of potentially talks about talks. that is hardly what you call solid footing for progress, is it? raffaella: no, but at this stage you should not expect progress yet. it is too early. in any case, mr. trump has very in vicious goals in -- very ambitious goals and how much

trade he wants from china and europe. whether theres will be an escalation be on that. whether there will be an escalation, and that is one of the important questions looking at commodities the last couple of days. commodities,ds and what are treasury yields doing? do they tell us something about global growth? do commodities tell us something about global growth? this,re taking issue with but do you think commodities have been sold too much? raffaella: to some extent, yes. the global economy remains resilient, but at the same time there is a big picture respective. we have probably passed the peak in the global business cycle. .urope is passed the peak in the u.s., it will demand --

it will depend how much you play the tariffs hard. the downside of the cycle is the worst. you have at tivoli -- you have activity, and inflation is going up. monetary policy is hawkish and not helping the situation. the chart tells you that yesterday was overdone, but the direction in the next two years will not be pleasant. manus: i just wonder where we are in terms of fx wars. the you want is weakening -- the yuan is weakening. i wonder when we talk about currency wars again. raffaella: absolutely. most dangerouse part is the currency ward, not so much the trade itself. the impact of the tariffs we are

talking about is still in the few decimal points from u.s. growth. but the move on the dollar and the yuan is what is going to be more costly, and the expectation of that going through in the coming years is the most difficult one because it has repercussions. anna: we will come back to the story on china in a moment, just a word on the latest comments coming from donald trump in brussels. he is taking aim at germany again, and says nato must meet a 2% commitment and go to 4%. we will get analysis very shortly on this. we are watching these headlines come through. in terms of the trade story, the chinese respond so fast. there was a little tolerance of yuan weakness. they are not going to weaponize

the yuan. you think they will maybe? raffaella: i definitely think they will, because to some extent china is in a weaker position at this stage than what it seems. it has a robust economy that depends on exports. trump from adding pressures. it must respond with a yuan with regulation in the u.s. companies as well. , sick andbal growth eyes at the start of the year, and here we are debating perhaps the folly of trade wars, and the risk of fx wars. as an economist, how do you look at the world? fluctuations carry the burden of trade disruption? raffaella: most definitely,

because there is not much flexibility in monetary policy at this stage. if you think about the downside of the business cycle, to put it into context, the swing in gdp betweenit is anywhere 3% to five percentage points. monetary policy, tightening has been done in small amounts. there is not going to be real easing. on top of that, the unfortunate side of the business cycle means pricing inflation. staysrafaella tenconi with us, from chief economist, ada economics. theresa may and donald trump

spent a lot of time sitting next to each other. they had a lot of time to catch , and president trump is taking aim at germany this morning. we will get back to nato shortly and get analysis from ann marie.l . let's stick with the global growth story. indonesia moves closer to a deal on the copper and gold mine in which rio tinto is a player. .eo jean-sebastien jacques >> we have been very clear. as soon as there is something tangible. >> some see rio as underweight.

are you looking at doing more exploration? jean-sebastien: we are doing lots of exploration in copper. we would like to have more copper, it is a broader question. we believe in diversification. we are not going to diversify the portfolio just for the sake of it. we are highly exposed, but we have a strong work class which has been delivering. however, we would like to have more copper, more commodities. are other important metals due to do to this --

this trade war? jean-sebastien: there are two key drivers. gdp growth is strong. .nd the other is trade if i use the u.s. as a proxy, 90% goes from one country to another. times been to china a few , and to the u.s. as well. it is something we are watching carefully. i thought the last 30 to 50 years, a lot of wealth has been created on the back of trade. everybody acknowledges it. with the u.s.this and china, some feel trade is not inclusive, and everyone needs to sit down around the table and solve these issues.

we want to create wealth for everybody. ceo,: that was the jean-sebastien jacques. let's get to the native -- the nato summit. president trump has said on twitter that the u.s. pays tens of billions of dollars, too much to subsidize europe. he has been on twitter this morning, saying all nato nations .eed to commit to 4% we are nowhere near 2% at this juncture. these are the salvos being sent. ann marie is tracking the story for us. it will be another interesting day. he is now calling for 4% and taking another swipe at his nato colleagues. tensions sense of the

at the nato gathering? >> good morning. european leaders are on edge, and it started yesterday when he took aim at germany with their deal with russia. and he is starting this morning in a similar fashion. the last three or four tweets have been aimed at germany, this pipeline deal they did with russia. nato allies that are not spending enough on defense. we know yesterday in a closed-door meeting he disclosed the idea that we should get to this 4% target, but now it's seems that he is taking it public. he is asking for defense spending to double, and not all countries are even close to the 2%. the 4%owhere near target, the united states are not even there yet, they are apt 3.5%.

spending on defense has risen 40%. they want their allies to match that. going into this meeting it will be contentious with germany under attack again. analysis of yesterday's comments from trump, some suggest he is raising legitimate concerns over running something like nato, and others suggesting he is undermining nato by the act of dividing nato so publicly. brussels, trump is going to come to the u.k. a little later on. that looks to be a contentious visit. annmarie: yes, that is right. friday is the big day. tomorrow, he will meet with business leaders at the palace where winston churchill was born.

friday he will meet the new foreign secretary and they will discuss russia, trade, which is huge and trumps agenda, the middle east as well, and brexit as theresa may guides europe through this. they are keeping trumps schedule tightly focused outside london, where we are expecting mass protests in the capital. hordernank you annmarie . a good time to talk about the u.k.. as a result of friday's agreement, the softer brexit, then the resignations this week, do you think the tail risks have increased for the u.k.? hardink the chance of a brexit or no brexit is on the rise, or do you feel more

comforted after the weeks of elements? raffaella: i have to say i do not feel the tail risk has increased, in the sense that the no deal is not really a credible threat on either side. there is enormous disruption that will, for the u.k. and europe if there is no expansion of the discussion in april of next year. because it is not just the goods disruption which will be significant, but the fact that all of the services need to be regulated, and that is a lengthy discussion. and we do know what is the state of u.k. politics, to put it mildly. on the other side, things are not that easy either. respond tooing to internal disputes. we have a new italian government that is assertive. i think no deal would be terrible for both sides, and it would question what the

solidarity is at the european level gender pins financial stability here. manus: one would not say there is solidarity in europe at the thent, are we underpricing lack of solidarity in europe when it comes to the relationships? i think we cannot yet cast the ultimate judgment if there is solidarity or not in the eu. the union is doing what it is meant to do, but i think it is also transforming, and we are seeing a union were not enough of the nationstates contributed. i think you will be able to see what is the european project in the long-term only at the end of the eu budget negotiations by spring of next year. the political risk in the coming months are significant. anna: in the u.k. too?

should the central bank hike in august? raffaella: i think they will end up hiking. anna: it will be a mistake in retrospect? raffaella: in retrospect, probably yes, something they wish they wouldn't do. at this stage it is still very resilient. there is still a lot of activity taking place even though brexit is unfolding. manus: let's just see how reliable mark carney is and whether he will step back from the prospect of a rate hike in august. 80% probability at the moment. rafaella tenconi, chief economist, ada economics.

anna: this is bloomberg. ♪

guy: good morning welcome to "bloomberg markets." we're live in our headquarters in london. the cash trade is less than 30 minutes away. guy: stocks stabilize, chinese markets are up. we will talk about why in a moment. turkish assets tumbling. president erdogan goes on tv. should investors