francine: trade warnings at china's ministry of commerce as --de war's the president arrived in the u.k. this afternoon. comcast raises its offer to 26 billion pounds. good morning, everyone. this is "bloomberg surveillance."

markets are your doing. we are seeing a little bit of fluctuation when it comes to the stoxx 600. we did have a couple of gains over in asia. investors trying to position for an eventuality when it comes to trade wars between the u.s. and china. we were just briefed by the commerce ministry in china. -- 1.1688. we are just getting some iea headlines. our top corporate story of the day, right here in europe is what happened with sky. we are seeing a bidding war brewing. that number just keeps going higher, which is why sky is gaining 5% in the last week. this bidding war actually wraps

up a touch. coming up, we talk trade war, markets. a little bit later on, we have an exclusive interview with andrew bailey who is chief executive of the u.k. conduct authority. we hear fromlater, inga beale. taylor: day two of the nato summit is kicking off with donald trump doubling down on his criticism of america's allies. he sent a series of tweets calling for nato members to.raise their defense spending and 120, he said, president have been trying unsuccessfully for years to get germany and other nato originations to pay more for their protection from russia. they pay only a fraction of their cost to the u.s.. the u.k. is seeking to strike

new trade deals for services around the world. and is part of the brexit plan bid.will tie its theresa may's government is expected to publish the plan in so-called white paper, spanning more than 100 pages and detailing a comprehensive vision .u.k. and eu economic ties and expands on a three page paper published by may last friday after she unified her cabinet behind the plan. saudi arabia has started approaching banks for its first ever loan. bloomberg sources say lenders who participate in a multibillion-dollar deal will form the core banking group for the public investment fund. it has the ambition of having the world's largest sovereign fund, seeking to diversify the region's oil economy. a spokesperson declined to comment. croatia will face france and

sunday's world cup final after dashing england's dreams with an extra time victory in moscow. croatia has won three extra time it matches in a row to make their first world cup final. global news 24 hours a day on air and at tictoc on twitter, powered by more thna 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. much.ne: thank you so kicking off the markets. stocks stabilizing somewhat after a bruising stop on wednesday. that is despite lingering concerns around the trade war. china's ministry of commerce says the two countries are not currently in touch to resume talks, in the trade war could cause a global recession. how should investors be positioned among the ongoing trade war? mark is joining us for the hour. always, it is really good to speak to you to trying get a broader view of what the main risks out there are. we are hearing from the chinese

ministry warning of a recession. it seems it is not being wrapped up as quickly as it could have been. great confident it will deescalate? mark: we will get de-escalation itrtime, but for the moment, resume, great if talks but it's pretty clear the u.s. president believes this is an issue that can help them into the fall election. with the u.s. economy booming, this seems to be the time or they want to push the case. francine: does that mean that his rhetoric stocks after the midterms? this is what his promise was based. mark: i think it's a mix of both. i think the markets believe that eventually, we will get to a deal. we are in a risky. -- period now. we don't know how china is going to respond to this, because they can't respond with just tariffs on goods. what are the secondary fx that

fax -- effects that might snare? how to bake that into the outlook? francine: have you actually break it down? do you model if china retaliates on tech stock, what that does to u.s. technology companies, or do that if a broader view this goes up a notch, it means deflationary and central banks will have to do something? mark: as you know from looking at the new tariffs, it might be hard to analyze this by individual commodities. i think one of the things to look at is just how much this does start to touch the u.s. consumer. it gets come -- complex because it means the u.s. purchasing power for the consumer could

increase a little bit. that is how we are looking at it. another thing to keep in mind through this is just how strong the u.s. economy has been doing. the real driver for markets over the past a few weeks has been that strong employment outlook in the united states. this time ever use the yuan as a weapon in the trade war? mark: right now, they are saying no, the we have seen the moves. do you follow the words or do you follow what is actually happening? i think that has been considered to be a nuclear option. i don't think they're headed in that direction. chanceill have both the to negotiate this and also the chance to work with europe and come up with some better trade relations.

we also like dollar denominated merging bonds were the spread is still very strong. francine: this morning, the president sent a series of tweets. joining us now is our reporter, and marie.

first of all, the president is wrapping up its criticism of nato countries, but how do they respond? --ann marie: when emmanuel macron walked in this morning, he said the atmosphere seems friendly. what we are hearing, is that president trump's twitter bast germany for the pipeline that germany is planning on building with russia. very much, he is attacking his allies again today. whether or not this is going on, how much of this is going on inside, it seems like it is a little bit him playing to his base. finally, he is going after not just germany, but all of the nato allies not increasing spending fast enough.

he says that 2024 is not quick enough. he is not just asking for the 2% to be met now, he is pushing for it to be doubled. he wants a native allies -- nato to pay double. he wants all members to work toward a 4% target. thank you very much. back to mark. do you follow tweets from the president? is that an actual investment strategy to try and understand what becomes policy or is it just noise for the margins? mark: i think most of the time, it is just noise. we want to focus on when these tweets are getting converted into data that starts to impact the economy.

that said, i think we should all be glad, think of as they rescued the boys in the thailand cave, and thing goodness that the world cup will soon be over, because i've just been traveling the world globally and it is really cutting into doll trumps airtime. rhetoric,ed up the thing to get some of that back. francine: again, what does it mean? do you worry about a central-bank policy mistake? peace ishink this nato both ineresting because europe, but also in the united states, many people feel there is something of a point here. when you look at the actual numbers, it gets very complicated. the u.k. as a leader, spends spending.p on defense that includes military pensions and some intelligence, though

there was a little maneuvering there. there is something that certainly people in the u.s. have seen in this, which is if the u.s. and its allies are the so producers of oil and we were to boost defense spending, that thatsell my comedic -- does sound like a make america great again investment plan. but somethingm, that is playing into the election. francine: thank you very much. up next, an exclusive interview with the chief executive of the andrew bailey. this is bloomberg. ♪

francine: economics finance politics. good morning, everyone. this is "bloomberg surveillance." i'm francine lacqua here in london. into has taken on some of the most high-profile positions in the, city of london including deputy governor of the bank of england. "surveillance." always a pleasure to keep up with you. what is the next step? andrew: i'm going to talk this morning about what progress we

have made over the last year, particularly about the progress for launching risky rates. the dollar is one of the examples were most progress has been made in recent months. we talk about what needs to be done to meet our objectives by .he end of 2021 to remove the pace is going to have to pickup from now on. this as part of a big international endeavor. today, we also have a big event in the u.s., with the sec holding. holding. fcc francine: earlier this year, you cyberd the idea of a libor rate. andrew: our third option is we have the risk-free rate in

place. one of the points i'm going to is the derivative markets. should market structure should form the basis for that. we now need to come onto cash bonds. in the background, but still an option? still an option, but i do say there are some big challenges, which we have always known with how you would construct this. don't rule it out. we have a preferred better solution. the fda'sdo you think recent proposals actually lead to a new wave of ppi complaints by consumers? andrew: i don't think so. this is actually a piece of what has always been there. breadth of the commission structure of ppi may

throw up some areas where we'll have to provide further guidance. and further discussion that is what we have done. we have picked this one area which is really about a production. it made sense for us to get more guidance. francine: so you don't have an estimate? andrew: i would say some of the numbers being bounced around are bigger than what we would have on the back of our envelope. francine: talk to me about some of the criticism the fda has received. -- fca has received. andrew: i don't want to be slow.

we are a public authority and we have to bide by public law. difficult,cases are and i agree have been going on too long. i want to draw them to a close. the stuff that we are battling today rather than stuff of the past, that we have to be fair to people who lost out in the past. i would make one other observation. oflive in a world today vastly more information and data. the one thing you can go and see it as we are going to be hit with vastly more information than we used to the. the have to deal with it. francine: talk to me about crypto. andrew: we are looking very much and will talk a lot about the sec. about the things i like what jay describes with how he does his business.

i think coming at these things from a very sort of, is it narrowly wanting or the other? was the purpose of this bank? seen as much in the u.k., but it is clearly growing. i would like us to end up with my much more purposeful system. francine: what kind of action are you expecting? andrew: what do we think falls into what we may call financial contracts, and therefore where should the regulatory be? francine: this would be implement it, will we have something in place in the next six months? andrew: it depends on what needs doing. if you don't need legislation, you do things much more quickly. if you do, you don't. we will come to the right conclusion. do you think the fca

should take some of these auditing roles currently under the finance reporting council? andrweew: i think what john is tong -- the first question adjust is to have a robust regulator in the field. , empowered to do its job think that is the best outcome. francine: final question on libor, how much support you get from what you're trying to do? lots of support. i think there's a very big consensus. libor is not doing what it was set up to do anymore. it's not moving with the markets. ratese seen the risk-free come into play. they have been traded.

anks are nowb more robust. francine: always fun to get you on the program. thanks very much for coming. in escalation of the trade war is growing and emerging-market currencies. all but one of the currencies are currently falling. the turkish lira leading to global. erdogan cc interest-rate falling. some investors are increasingly worried that turkeys troubles could start a contagion across emerging markets. how should markets be positioned around turkey and emerging markets? us.et is still with when you look at turkey, is this idiosyncratic? is it a turkey story or does it also folded the wider

emerging-market story? mark: unfortunately, it's both. on the one hand, you have the political economic situation, and you have the twin deficit for turkey, which makes it very fragile. in an environment where there is risk off in em, turkey suffers from that as well. keep in mind, turkey is very dependent on external oil and the rise in prices there doesn't help. francine: where do you see dollar doing from their? speaking, we were surprised by the strength the dollar has had. we can see the dollar weakening against major currencies. francine: that would be for what, the next 18 months? when does the u.s. actually get a recession? mark: given the strength of the u.s. economy, was certainly don't see a recession in the

u.s. for the next six months. think what most people that we talked to, and we do a lot of work, with the fiscal stimulus 2020, androll off in of course the fed has hiked rates so much, that is kind of the areas of concern. francine: what is your area of concern? overall, what kind of impact does oil prices have on some of these emerging markets? does that make a difference to other you like them or not? it's definitely one of the factors that lead to some of the idiosyncratic risk. within turkey right now, the only asset we really like are the dollar denominated sovereign bonds. we have an overweight there. em, every time we try to split that basket up and look more idiosyncratically,

many times you get pulled back into a broader em trade. thing for the world and for global allocators, they look at it from both sides. francine: when will that change? is the world changing as the central banks are normalizing, or is it still quite a long time away. it's going't think to change in this cycle because the fed has been very explicit so far in saying that they're more concerned with what is going on with the u.s. economy, which is very strong, and saying em can and should look out for itself. that was very negative for the e.m. complex. francine: thank you very much. up next, theresa may walks the line. the prime minister set to unveil her complete brexit vision. the famous white paper actually gets published in about 30 minutes from now. can to strike a compromise to

satisfy the factions in her party? we will discuss that next. it's the -- in the meantime, this is what i am looking out across the board. tracking a rebound in asia. did not have quite a sharp selloff in yesterday's trading. the prospect of more trade talks between the u.s. and china is helping steady nerves. the dollar edging lower. treasuries also lower. commodities were covering of the ground they lost yesterday. this is bloomberg. ♪

it is now time for a weekly brexit show. let's go to taylor riggs. >> u.k. prime minister, plunged

into a major crisis, after key members of her government resigned in protest. david davis, and his key assistant resigned in a 24 hour period. despite the resignations of senior administers, most conservatives appear content woulder proposal that keep britain close to the european union on trade and regulations. to the opposition party to help get her plan through parliament. conservatives are considering a move that could bring down the minority government later this year. exiteers that want a more decisive split have only one

choice left, vote down an agreement in parliament. that is your look at brexit. francine: the brexit division there willde plans -- be a comprehensive report that is published later today. the service sector accounts for 80% of the economy. cost freeit will trade with the european union. there is on answer questions on everything from the irish border to the role of european justice. lawmakers are deciding the basis for negotiations with brussels. >> thank you both for sticking around and joining us.

>> we are neutral and everything at the moment. this week is amazing. you say, donald trump has this line where, china has a lot more to lose in a trade war than the united states than the rest of the world. stored that line from europe. it has been saying to the european union, you have a lot more to boost from this than we do. -- lose from this than we do. the next chapter unfolded this week. do we know what happens to financial services? is there an agreement that safeguards them? the white paper does talk a little bit about financial services. there is going to be 120 pages. are not yet clear on what it

will say. we are still waiting for a bot of the details but we think the united kingdom government recognizes the importance of financial services. there will be some changes coming. so why is financial services not a priority? thatwould disagree financial services is something we have to get a relationship for. it underpins so many parts of the u.k. economy. a lot of people will be pouring over this over the next couple of hours. 120 pages, hoping for a lot of details, and hoping we can move this conversation forward. it has been stuck in customs for a little while. we need to see where we are on

services. not just financial services, it has to be about data flows. there is a lot of stuff that has to be sorted. >> if you are an international imaginations of t he tory party, figuring out what kind of brexit we get. >> as a global investor, no one needs to move into the u.k.. there is a very high level of uncertainty. it makes it difficult to take a position. on the financial services issue, it is hard to see the u.k. financial services come out in a better position through this process than they are in currently. >> what will it take? the pound seems to be stuck in a range. i don't know whether they are position for a soft brexit at

this point. >> the softer the brexit gets, the more the pound will trade with intrinsic value. and the bank of england policy has an impact as well. >> depending on what is in the white paper, we have to look at brussels to see whether this is cherry picking or not. say,u think brussels will this does not suit us, this is cherry picking? >> theresa may has a challenge dealshe says every trade that has ever been signed has two sides coming together saying what they want and you have to compromise. we need to see both sides compromising. we need to see the european union -- there are 1.5 million jobs in europe. we need to get this sorted. >> we have a weakened angela

merkel, german carmakers being this battleground between united states and china. germany also recognizes that they have to move the european program forward in this time of strength. europe has had difficulty doing that as well. there is a chest game in many dimensions simultaneously. -- chess game in many dimensions simultaneously. >> thank you both for joining us. up next, life after london. what about the u.k.'s capital

future as the global financial hub of france? this is bloomberg. ♪ mberg. ♪ >> welcome back to our weekly

brexit show. sayingn union officials the chances of a no deal brexit are as high as 50%. russell is urging companies to ramp up their contingency plans -- the resulting uncertainty has seen banks move from london to other major cities. the u.k. capital in danger of losing its position as the leading global financial center?

now, the chief executive of luxembourg for finance. welcome to "surveillance." are you successful in attracting business to luxembourg? >> it has been rather successful. we are an established asset management hub in europe. those big asset management firms are consolidating their presence in order to build post-brexit eu hubs. how many jobs have you attracted because of brexit? point, we estimate in the first two years we will be around 3000 jobs. this point, everybody is still looking at and a starting to implement their plans. it is difficult to see how many

jobs have been created now. imagine you have a stack of papers. you go to luxembourg and say, this is what is on the table. what do you get from these chief executives? nicolas: i don't think that is what happens. we do go out, whether in london or new york, or in tokyo. people that those we know have an interest for luxembourg. these financial institutions take certain activities to where it makes sense. it makes sense, to bring insurance to luxembourg. the question i get most frequently asked is, why luxembourg? we do have a stack that explains that. know becauselready

they have a presence there. people say, i need to find a city where my staff wants to go and live. big enough,e, doesn't have the right schools? -- does it have the right schools? these financial executives thinking london a versus luxembourg versus paris, versus madrid for quality of life for employees? nicolas: there is no toxic vintage when coming to luxembourg. is about the ecosystem it can provide. i think luxembourg has an interesting page. it has a fantastic quality of life. if you look at any of the rankings established, luxembourg really ticks all the boxes. it is not a metropolitan area.

for people who want a quality of balance,ice work-life ask the young mothers that have to work 8-10 hours a day, whether they would prefer to have a commute of 15-20 minutes -- francine: are you attracting more females in financial services than men? nicolas: we are working to get women to work in luxembourg. we are attracting everybody. francine: thank you so much. last month, lloyd's of london, bankhief executive of the announced she will step down in 2019. i spoke to her in an exclusive interview. i asked her what was behind her decision to leave. >> i was committed to doing five years. the approach for the job was

really exciting. i said, i would love to modernize the place, introduce technology. when you are driving the transformation, you only have a certain amount of time. time to hand it over to somebody else. i am not getting any younger. insurance? >> i have worked in insurance might entire career -- my entire career. francine: do you feel like you did everything you wanted to do at lloyd's of london? if you had more time, would you not have gone out with a bigger bang? bythe losses were driven catastrophes.

billion it cost the market. that is what we're here for. we are here to provide that financial compensation. we know that is what we do. we have to expect it. we model for these large catastrophes. we do have to try and fix underlying profitability in a non-catastrophe type of business. is the role of hedge funds in your industry and in lloyd's of london? >> it has changed dramatically over the years. it used to be funded by lots of individuals. they put to their own money into boyds. -- into lloyd's. it all changed when i joined. now we have 90% of the capital. it is no longer individual or private named.

--is insurance groups, might be pension funds who want to identify their exposures and their investment portfolio. we are all about being innovative, entrepreneurial. lloye launching a boyds -- d's lab, which is going to be engaging with startups, entrepreneurs. more going we are forward than we have been because we are going to be doing lots of new stuff. >> did you feel the chairman was ready with your policies? did he think you were going to fast or too slow? anywhere hardly worked

where the pace was fast enough. that is always the pressure. we have so many players to bring along with us. one of the first things i had to do was present the chinese aviation authority with a special scroll. we have to bring our customers along as well. since the chairman has come on board, he recognizes the complexity and has completely supported the new stuff. that was the lloyd's of london chief executive. you can watch the full episode on bloomberg. a companynext, increases its takeover bid of sky. we will break down that battle. this is bloomberg. ♪ >> economics, finance, and

politics. this is bloomberg surveillance.

let's get to the first word news in new york city. >> donald trump is doubling down on his criticism of american allies. president called for nato members to raise their defense spending. the president has been trying unsuccessfully to get to germany and other nato nations to pay more for their protection for russia. theresa may possibly government is expected to publish a plan in --hite paper for for

establishing future u.k. and european union economic ties. last friday, theresa may unified the cabinet behind the plan. pandora is teaming up with snap in a bed to win over new -- in a new generations of listeners. users can listen directly on pandora. says the moveceo will help the company focus on ad revenue, unlike rivals spotify and apple music, which make money from subscriptions. >> most consumed music that is advertising supported, like they do on terrestrial radio today. it is still waiting to migrate from traditional broadcasting to ip streaming. when we think about competition, we think about spotify and apple. 70% of our revenue is

advertising. our competition is really more about terrestrial radio. bloomberg sources say lenders who participate in a multibillion-dollar deal will form a core banking group for this public investment fund. it has ambitions of becoming the fuld's largest sovereign nd. a spokesperson declined to comment. croatia will play france in final afterld cup dashing england's dreams with an expertly timed victory in moscow. croatia has won three matches in a row to make their first world cup final. global news on air, 24 hours a day and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. riggs.lor this is bloomberg. francine: let's get to our top corporate story.

comcast has increased its takeover bid for sky, topping an offer from 21st century fox. it is creating a global standoff between the two. broadcom has offered to acquire a technology company for $3 billion in cash. joining us now is a reporter who covers telecoms and bloomberg intelligence. matthew, you predicted this bids.day, competing does this go higher and higher? >> i think so. investors will see this $14 billion bid is nothing more than fair value. most are expecting it to go higher. some have been talking about 18 pounds a share. we would agree under some scenarios. the second is whether sky

remains part of this portfolio that disney and fox are fudging over and that fox is selling. what you could see happen is that sky goes to one of these two and the rest of the assets go to another. that might be a good solution. francine: is it regulatory, or to unlock more value? >> it is a good solution. nobody ends up paying too much for the assets. means they get something out of the bid. rupert murdoch seems to prefer the disney tie-up, in the long-term and share option. they might struggle to keep pace with that. francine: if you can't split the company, does it take longer for the sale to go through? sky m&a was already in process.

it carves out fairly cleanly. francine: matthew, thank you so much. "bloomberg surveillance" continues in the next hour. we will be talking to the former bank of greece governor. about thelk to him central bank and trade in about half an hour. in the meantime, we are not only looking at football in our bracket, we're looking at the markets. asia inre rebounding in the wake of a bruising selloff yesterday. more trade talks between the u.s. and china. 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. ♪ francine: trade warnings, stocks and commodities show really after yesterday's downturn.

the ministry of commerce says the trade war has caused global recession. this court at nato. freight is an -- president trump continues his pressure on allies. the arise in the u.k. this afternoon. comcast raises they offer for pounds whilelion qualcomm agrees to buy ca technologies. i'm francine lacqua with tom keene, we are still on speaking terms. tom: are brackets are doing well. francine: we are doing all right. tom: all of the united kingdom stopped yesterday for the soccer game. it was fabulous. look at the headline. nato, full briefings, across all "bloomberg surveillance," the president threatened withdrawal from nato. important headline. francine: this is the german

press agency, this is not the first time we heard that. it depends on the rhetoric. whether he is actually thinking about doing it? tom: nicholas burns, former ambassador to nato from the u.s. writing a heated essay in the new york times today, making clear there is a difference from the rhetoric and the action of the administration. francine: let's get to the first world news. taylor: sticking with nato, president trump has resumed his twitter attack on nato while attending the summit in brussels he tweeted "the u.s. pays tens of billions of dollars to much to subsidize europe." he demands members meet their pledges on defense spending. london,day he flies to protesters there are getting ready for him but he will spend much of his time outside the city. president trump's latest threat on trade could prompt the u.s. and china to resume talks.

china called for new negotiation. the trump team is also willing to resume talks. trump administration ratcheted up the pressure by unveiling a list of $200 billion of chinese products that could face tariffs. government comes out with a plan today that outlines a vision for post-brexit ties with the eu. it would tie them to the eu guidebook when it comes to product but it would seek new trade deals. and theversus france world cup final in moscow. end to put ian england's dreams of making the world cup final, the persons 1966. croatia could become the smallest country do in the championship and 68 years. 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. thanks so much. that hasatter today, been quiet for the last couple days but last night, major moves in the commodity complex. futures up 12 with curve steepening, 10-30 spread is flatter. yen gives away. stewartg in oil, wallace of bloomberg commodities will join us across "bloomberg 13.7.llance," the vix, a landmark in brent crude, down 6%. featuring ed morse later of oil.roup, he says buy francine: yen is falling, european stocks up after a rebound in asia. big selloff yesterday. the prospect now is more trade

talks between u.s. and china seems to be saving the nerves on wall street. treasuries down. commodities recovering. tom: commodity complex. i had seven charts i could have done. the markets are moving given all the international relations and political economics. this is an important chart. this is the bloomberg commodity index back to the president's election. up we go with advancing commodity complex and then a long recovery helping emerging markets, assisting brazil and the like. then the massive tariff tax effect of the recent implosion of commodities. basically we come back to where the commodity complex was as a general statement of the president's election. this is critical, soybeans leading the way. francine: i'm looking at a more simple cable chart. we look at a death cross formation, a bearish signal within the market, when the

short-term 50 day moving average, also called a price trend, crosses below the 200 day moving average. weakness, the debt cross formation, we will push that out on social media. good morning to the london digital listeners. the nato summit in brussels, stay tuned. donald trump doubling down on criticism of america's allies. tweets thisries of morning calling for members to raise defense spending. this comes as u.s. and china raise the possibility of resuming talks over trade. for more, we are in brussels, and our chief asia correspondent is in hong kong. first of all, we understand from the german press, president trump has once again threatened pulling out of nato. what does that mean? reporter: good morning.

this is from the dpa, german news agency. he is threatening to pull out due to defense spending. we know earlier today, he is not asking for the 2% target to be reached. he wants it to be 4%. we need to take us with a grain of salt. we have not confirmed this yet. this.pa is reporting it shows you the confusion surrounding president trump's presence and nato. allies are unsure. peter had a brilliant essay overnight about the absolute comedy about calculating defense spending nation to nation, for is heavilyeece weighted by pension benefits and military salary benefits to their military. no one has any certainty to what

anyone is actually spending. what is the pushback of the european nations against the president's criticism? reporter: a lot of european nations agree with him and continuously go back to the 2014 wales meeting are they all agreed within the decade they would increase 2%. you make a good point. a lot of these countries, some of the money is not directly for military spending. it is pension spending, for example. what nato needs to do, if it wants to have a more specific target on what each country is bringing to the table, they need to look into the books of each country, where the 2% is going. said onlymp's tweets five nations were doing it, but it is actually eight nations of the 29 that are at the 2% target. francine: we have conflicting

reports. will we see talks resume between the u.s. and china or not? francine: i don't know if he can hear us. reporter: sorry. francine: i think you can hear us now. the department of commerce with china, are they ready to talk to the u.s. or are talks on hold for the moment? reporter: it seems that there is an element of playing for time. there was a signal that talks are not happening at the moment but we know that. the question is -- are they willing to come back to the table in terms of both sides to resolve this? we did not get any details from the commerce ministry today in terms of how china will respond to terrorist. ] -- tarriffs.

china has always made it clear they would retaliate in kind but there is a shift in the language saying they will respond but they are not detailing how they will do that. perhaps china is playing for time. perhaps they're trying to get the u.s. back to the negotiating table ahead of the august 30 deadline. francine: thank you so much. just to bring everyone up-to-date with what we heard, the u.s. president donald trump has threatened to pull the u.s. out of nato if allies do not immediately increase defense spending. this is according to the german news agency, dpa citing unidentified people following the talks. bloomberg has not been able to independently verify this. tom: 24 hours ago we were in the same position with mr. stoltenberg of norway. it is day 2 of the president in leavess, the president

for the united kingdom this afternoon. there is no one i know that can synthesize the political economics of the president in the united kingdom then stephanie flanders. four years at jpmorgan, our senior editor. will you be there? stephanie: so selective. they seem to have forgotten to invite me. tom: the invitation is somewhere. we saw the start headline from nato. will he disrupt the english dialogue in the same way? stephanie: whether he continues in his wish to see the former foreign secretary boris johnson, the mischievously said i want to see my friend, boris. if you find some way to meet him, which may happen, and if he somehow offers support to those pro-brexit ministers who have been complaining about theresa may's compromise, who she is

hoped to get the cabinet behind, that could make a difficult week for her a lot harder. francine: what does she want out of her relationship, out of her meeting with president trump? is it getting him on board with russia and what has been going on with the nerve agents? nato? trade talks? stephanie: if i were her, her main goal is to avoid anything terrible happening. anything to do with his visit undermining something she is trying to do. avoiding him involving himself in the brexit debate is important. if she can come out of this with ofong statements of support a potential u.s. trade deals consistent with the deal she wants to do with the eu, that would be fantastic. they're not expecting anything of that. i'm afraid it will be damage limitation approach, to get this visit over with. it has been hanging over her since she invited him when he

was elected. reporting across the continent and asia, is the tone termtwait this president's or terms, or is there a feeling that america has changed and there is permanence to the tumult? tophanie: i have talked senior policymakers around the g7, g20, there was initially a sense that they could corral together on the sidelines and maintain the multilateral system for when the u.s. comes back to normal. that mood is changing. they can see it is not just it is atrump, move away from this rules-based order, it is not just america. they are preparing for the long haul, looking at long-term consequences that he could have.

the effects on the ground of what he is doing in the middle g20 couldwto, and the be significant long after he leaves. francine: thank you so much. stephanie flanders, bloomberg senior executive editor, in charge of all our economic outlets. coming up on "bloomberg surveillance," davide serra -- george provopoulos former bank of greece governor, we will talk to him about the central bank. we will talk to him about corporate governance in greece later on. this is bloomberg. ♪

♪ this is "bloomberg surveillance," let's get the bloomberg business flash. next move for rupert murdoch.

comcast has increased the bid to $34 billion for sky. it is the latest move in an international and in a fight, -- m&a fight. broadcom raising questions with the latest acquisition, they have agreed to buy corporate software maker, ca technologies for $19 billion. the acquisitions have reshaped the semiconductor industry but this offers no overlap. shares at broadcom are lower. one of the world's biggest miner's watching the trade war between the u.s. and china closely. simple. there are two key drivers. gdp growth, it is strong.

the other is trade. nine out of 10, 90% of products are from one country to another. taylor: that is your bloomberg business flash. francine: thank you so much. moving onto central banks, the ecb has signaled a rate hike will not happen until after the summer of 2019. our next guest, former ecb governing council member and former governor of the bank of greece, he presided over the ecb during the financial crisis. george provopoulos and stephanie flanders, still with us. overall, stephanie, layout the concerns people have on ecb? it is about cycles. should investors worry more about a cycle in the u.s. turning and the ecb not having to raise rates enough to deal with the next downturn?

stephanie: that is the question all central banks are asking. the problem with eurozone is, it has been so early to get the proper recovery but it has felt for a while, that time was running out for europe to have normalization of policy. that prejudge is a question of what kind of recovery you will get? you want to have this recovery in the eurozone continue for as long as possible. underlying fragility, italy, greece, they are still waiting to produce another crisis potentially if we have a recession too soon. even among the hawkish members of the ecb, the focus is still primarily on recovery rather than some sense of, we need to give ourselves ammunition for the next recession. they know that is a dangerous conversation to have. francine: when you look at the world economy and that we now need to normalize or think about normalizing, is it as risky now

as it was in 2008 when we saw all that cheap money going into markets? george: the normalization will start by the end of this year, ecb will stop buying. although they have through formal guidance indicated that interest rates will remain at a very low level, until a few 2019., let's say mid tom: within this is the prosperity of europe. can greece and the southern periphery be part of that prosperity? george: it can be. recently we had the euro group decision to proceed to debt relief of the country. the prospects, as far as the debt analysis is concerned, are good, up to at least mid-30's.

debtof the decision, relief -- tom: we had a debt relief but we did not have a cramdown. we saw extension of debt, interest-rate adjustment, but we did not see a diminishment of the burdens of debt from greece and other nations as well. what do you need to see next from a dominant power in europe? george: the decision of the euro 2032,was that in the year there will be a new meeting, presumably, which will review andprospects of the debt, they will take the decisions. what isfor the country, imperative is, we have sustainable growth rates and strong growth rates. tom: i might point out we need

to be here in 2032. francine: of course. we are getting pictures for radio listeners coming in from the nato meeting around this time, they had, we see the president of france, emmanuel macron, and we are expecting the chancellor of germany. these leaders take a bit of time on the to reporters, blue carpet as they arrive into the new nato headquarters. stephanie, we were talking about the fragility of the european economy. we still need reforms from france. italy turning much more populist. worry about germany on the political side and the fact that they are stuck in a trade war and they are getting beat up because of the surplus, by donald trump? stephanie: the problem is you have, still he country that is very dedicated, they have locked in this amendment around the

budget. the flexibility around defense spending and the fiscal position generally is not great. they have reached a stalemate not just on the trade war but the political situation of the chancellor and her coalition, a lot more fragile than it did when we first saw that coalition come to power. she is still the swing state of europe. the country that people look to. in debates like this, the nato summit is an interesting example. many european countries feel they need to increase defense spending but the last thing they want to do is to have president trump tell them publicly to do it. that limits their room for maneuver. i worry about that. but also the relationship with france is not the one we want to see. one year ago there was a hope we would see a much stronger coalition between president emmanuel macron and the chancellor and we are not seeing that. this is all the reform you are going to get until the eurozone and it is probably not enough.

francine: what is mario draghi's job now? he is pushed back interest rate raises. is it damage limitation or will he be inventive? stephanie: the dynamic is going to shift. we thought we knew who the successor was going to be an outlet site it could be a full year. the sense is the germans are lobbying very hard to get their man into that position. the? mark puts it into a slightly more challenging position. it is not clear whether the institutions put in place willy-nilly during the crisis are going to be cemented and used in the next crisis. tom: governor, i'm sure you are following the political economics of europe. front and center, no other topic now. do you see this is a

generational shift in the political economy of europe? in nato? in england? in all the other debates with president, is it a generational moment or a hiccup? george: it could be a shift of this kind, as you indicate. politics dominate the whole picture. economic and the financial developments. everything depends on politics. neweems we have a kind of orientation and politics worldwide, not only in europe. tom: which institutions will matter? one of the great calls from global wall street is, who to watch. are the mechanisms in place to assist in the turmoil? losing credibility, they had a clear position which was not respected by the other parties in europe. mf, as a model i

of the multilateral system which is still functioning relatively effective, the imf is the last institution. it is striking people are still turning to central banks in this. they come out of this is the only kind of credible actors. people are talking about central banks having broader mandate, not just inflation. people don't have any faith in the other institutions. tom: headlines out of brussels. nato leaders hold unplanned -- sessions. francine: we are seeing them come in. tom: does it have a quebec field? it feels very quebec. francine: that was basically donald trump. and justin trudeau getting along and then donald trump getting on a plane and saying he was sat in the back. -- stabbed in the back.

stephanie did a great interview with justin trudeau and we will talk more about canada. thanks so much, george provopoulos and a stephanie flanders. bloomberg users can interact with the charts using gtv to catch up on key analysis and save charts for future reference. plenty more on that. the markets are edging sideways. they were lower, higher. yesterday, selloff, yanis stabilizing, yen treasury stable. a lot will happen to markets depending on what president trump says. this is bloomberg. ♪ ♪

♪ so fed up with soccer, it is beautiful. gorgeous new york. i miss the dreaded new york yankees.

there it is, the beautiful weather of july in new york. with all the distractions of europe. francine, you are killing it. you have to be jonathan ferro. francine: we are doing the "bloomberg surveillance," bracket. it is not as bad as it used to be. let's get to the corporate stores. comcast has increased the takeover bid for sky, the largest cable company has topped an offer from 21st century fox. they value sky at 26 billion poundsand is offering 14 76 pence a share for it. look at what happens next, will it be a bidding war that escalates and more and more and more? or do they break up sky? there is a lot going on here. skyhave a bidding war for

in the u.k. in europe and you have the bidding war in the u.s. for the fox entertainment assets. what we're seeing is a back-and-forth. the big question is -- what does comcast want? will they go after the entertainment assets and sky or will they settle for just sky and let disney when the assets -- win the assets? francine: how long does it take for something like this to be sealed? on for a this could go wild. there is a key shareholder -- for a while. there is a key shareholder meeting coming up. there is a whole another element in the u.k., the takeover of panel has a key decision to make on whether they will force the bidders two bomb for sky -- to bump for sky, the chain principle.

the ideas -- let's sort the sky bidding before we carry out the war for the entertainment assets in the u.s.. 15 times,sting synergy, coming down to a crazy 12 times. -- needsts means outside money, where will it come from? reporter: people have been talking about whether comcast could team up with private equity, there has been speculation, could a technology company get involved, like amazon? he will need to hit the financing banks, the debt markets, hard to get more cash to compete with disney. disney has a stronger balance sheet and more cash. is he willing to take more risks to miss this one-time opportunity to compete with disney, to go global? that is why they are interested in sky. multiple markets in europe, 23 million customers per paid tv.

they want to diversify geographically. they are fighting so hard to win this. tom: thank you so much. in new york city, first word news, taylor riggs. tolor: president trump goes the u.k. today after wrapping up the nato summit in brussels. may willister theresa try to reinforce the idea of a special alliance between the may will try to reinforce the idea of a special alliance between the countries. there will be a demonstration of how british and u.s. special forces would handle a terrorist attack. protesters in london are ready for the president. he will be spending much of his time outside the city. opec's output may be stretched to the limit by supply crises. the agency warns that the gulf members may have to pump as much crude as they can to cover losses from venezuela and iran. saudi arabia may have to draw more than ever on its spare production capacity.

the trump administration says there are no signs russia has renewed efforts to tamper with u.s. election systems. still, a homeland security official told congress the november 6 vote remains a potential target for moscow. the federal government is working with states on election security. hasion or elon musk promised to pay for clean water for homes in flint, michigan. that is the water supply that was contaminated with lead in 2014. the state says the water is safe but some homeowners say it is still undrinkable. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. calm, francine? francine: thank you so much. let's talk about corporate governance. it is why george provopoulos is in town. he is meeting with investors to make the case for reform.

the special example he is talking about is a greek company mired in the financial crisis. stephanie flanders is still with us. ctor, but talk about la in general, do you think after the financial crisis that greece is slowly emerging from, are they adopting a governance standard that is more internationally appropriate? george: part of the greek crisis had to do with corporate governance issues. not only in the corporate sector but in the wider public sector and also in the banking system as well. withemember, the problem , also excessive deficits for a number of years which led to a huge debt mounting.

part of the problem here had to do with governance within the public sector. this problem more or less has been corrected. let's go to the banking system. out of this fiscal crisis, the banking system was badly affected. i was governor of the central bank of the country when we had to undergo a huge consolidation and restructuring within the banking system, part of which governance,nt with internationally best practices in governance issues. this has already happened. the sector for the moment lagging is the business sector. we have to see drastic improvements in the corporate governance frameworks. in that particular example, it

is a good example. francine: is it a good -- is a changing? george: yes. it will take time. decisions should -- should be taken soon. francine: how soon? now? george: yesterday. of course, of course, of course. 10 years, a country for 10 years in crisis. so, it is not early. it is too late, perhaps. they should have already started this process, which will take some time of course. tom: germany has a few distractions now, the basic idea of him immigration -- of immigration, and center. what does greece need from germany? george: i don't think we need something in particular from germany as far as economics is concerned. this country has put quite a lot

of money on the table for the country. they have saved the country. it is not a matter of continuing this kind of help. we do not need more help. from countries like germany. francine: breaking news from theresa may. i have never seen it before. theresa may not only has tweeted but she has also posted on facebook, may be a way of reaching out to citizens of the u.k. saying that the brexit plan, she was determined to deliver. it almost looks like an opinion piece, and editorial. i imagine this is about the white paper, that is about to be published in the five minutes. -- in the next 25 minutes. this is what was signed off on last friday. theresa may saying "the brexit deal respects the people's will

." also saying that the exchequer's plan puts an end to freedom of movement. tom: i think this is front and center. with this white paper coming out and stephanie flanders, you are reporting on this revolution between norway and canada, somewhere in between, iceland or greenland mode? it will be extraordinary. stephanie: theresa may is appealing directly to people. the thing so striking about the moves after the agreement, then the loss of two ministers from the cabinet, it reminds me of the old thing about the crisis plan beats no plan. theresa may has a plan and these exiting brexiteers have not been able to come up with credible alternative plans consistent

with the problems around the irish border and everything else. this is why she feels she can try to go on the offensive. whether she has the capacity to succeed, i don't know. tom: she is durable, to say the least. stephanie: you were talking about this earlier. one of the things we should not forget, this is considered a soft brexit but it is still sending 80% of the economy. services sector is excluded. tom: we say thank you to mr. george provopoulos for joining us today. let me tell you about an important interview on american central banking. the philadelphia federal reserve bank, on the watch. a conversation with mr. harker. look for that. this is bloomberg. ♪

♪ francine: this is "bloomberg surveillance," and we survived a week with tom keene. as president trump meets with vladimir putin. tom: the chill in helsinki. francine: let's talk brexit. this comes from a tweet from theresa may saying "the brexit deal respects the will of the british people and is prime minister, it is the brexit i am determined to deliver." the vision will include new trade deals for services but not goods, according to a government briefing on the white paper report, published later today. joining us now, bloomberg's senior executive editor, stephanie flanders and joining us from tokyo, the chief

as part of ajapan delegation visiting the country. thank you so much for joining us. stephanie, thank you for sticking around. we were talking about what kind of brexit theresa may can deliver. how do we know this will get the blessings of brussels? it looks like cherry picking. stephanie: we still don't know. laid were start options out by the commissioner about what the possibilities were. they had made clear that if you were not willing to accept most of the rules around the single market or the customs union, you were talking about it canada style deal. what theresa may is proposing, just the goods, something much stronger than canada and much closer to a customs union without actually accepting all the obligations. it is quite possible after all the briefs, getting this agreement and the criticism about being too soft, that brussels will reject it. we have not had an outright

rejection. they are nervous of completely undermining her. there is probably room for negotiation. 80% of the economy, enormous. by no means, this is not going into the single market through the back door. we are losing a lot. francine: why do you think financial services is not a priority for this government? reporter: i think the issue here is not so much, just financial services. u.k. is a service economy. with the first industrialized nation in history and we have now evolved to the third and fourth. as a result, keeping 80% of the economy after a hard brexit is suicidal. a 20% soft exit with a fake customs union is not going to make much difference. surprisedt, i will be

, it will lead inevitably to a gdp downgrade. tom: stephanie, you touched on something so important. with the brexit focus we have seen in the last few days -- the response of europe. processes,ining of working for the wings of airbus, we have done this with the aviation team as well -- what will be the response of europe to the soap opera i have seen for the last few days? i don't mean wimbledon. i mean brexit. how do they respond? stephanie: they have been impatientlyently, for the u.k. to clarify its position. every time the u.k. tries, they come up with something, which from brussels standpoint is more unreasonable. we have already heard the warnings from airbus, from lots thinking,es who are

right now we have to extricate ourselves from the supply chain, which was built up over these years. the other interesting point -- the goods and services are intertwined. there was an example about elevators. you sell an elevator, you say that is good. what about the services that go with it? even just a clean distinction between goods and services is actually messy. tom: to the points of goods and services intertwined, so i the banking systems. just as one proxy of deutsche thatwants to roll over, signals urgency within financial europe. are we anywhere new that consequence, where deutsche bank enjoys new weakness? davide: financial services in my view, in part because the regulator in europe, ecb had made clear there would be no

such thing as a soft brexit. a regulator is a regulator. in tokyo, we are applying for , and in tokyo you behave like the regulator asks you to. nobody cares. in europe, it will be the same. , 2019, the of march ecb will be in charge in europe. if you're not regulated by ecb, you are not in business on the continent. all the institutions need to apply and change rapidly. more rapidly than they have been doing. tom: what will be the outcome for the city if we get some sense of a harder brexit? what theresa may has presented is de facto hard brexit for services, 80% of the economy. given, the city,

onshore capital in europe, over the next five years, you will thatbly see shrinking for third, to at least half. 15% to 20% over the next three to five years with a cliff in the next three years because people have been too slow in adopting. they cap on thinking, -- they now it isinking, getting more real and clear to everyone that that will not be the case. francine: thank you so much. algebris, we will get back to that. in the next 10 to 15 minutes, we are expecting theresa may's government to publish the plan of her exit in a so-called, white paper. it will be more than 100 pages

detailing a comprehensive decision for the future of accordingonomic ties, to details from officials that briefed reporters on the ground. pound, 1.32 against the dollar. this is bloomberg. ♪

♪ taylor: this is "bloomberg surveillance," let's get the bloomberg business flash. bmw will become the first foreign automaker to ear -- to own a majority. a new ownership structure will be unveiled soon. shares of chinese telecom equipment maker zte surged today. they signed an agreement with the u.s. to start doing business again with suppliers. they have to complete a $400 million payment. they may have sustained $3 million in total losses. the first ever female ceo of the

insurance market will step down next year. inncine lacqua spoke to her an exclusive interview and asked her what was behind the decision. >> i have to be a bit selfish. i am not getting any younger. i want to do one more big executive role if i can. francine: in insurance? >> maybe. taylor: that is your bloomberg business flash. tom: taylor, thank you so much. aboutset that can be had political economics. we do this with stephanie .landers and davide of algebris that is a hockey stick. eight standard deviation off thes and soybeans back-and-forth between the u.s. and china and the white circle, broken down again overnight. that is extraordinary.

i want to bring this to banking. hockey stick charts are bad for banks. how are banks at risk in their financial stability from these discussions over tariffs in taxes? tariffs and taxes are basically creating chaos across supply chains, that have now been established for decades. whether brexit or trump tariffs, what happens is you have winners and losers but we are not necessarily, the one that should have been. as a result, you might see losses, banks have extended whatt based on merit, would have been the status quo and suddenly you get this tackle from the side, completely irrational, lose-lose for everyone. you may see more losses. , thank you sorra

much. breaking news from brussels. a tumult of emergency meetings. the chancellor of germany. >> [speaking german] tom: the intensity of chancellor angela merkel speaking. yesterday, i'm looking around the desk, it will not happen. let's go to stephanie flanders. you don't speak fluent german do you? i am working on it. it is not funny though. this is historic back to world war ii. francine: we have translators on the ground, helping us with what angela merkel is saying. germany has boosted defense spending and it is well underway. trying togela merkel defend herself against the accusations president trump put on germany. stephanie: the issue is,

everybody within the security establishment and it europe understands there has to be more money going into defense. the bigger problem is the quality of money. of defensek expenditures in germany is on pensions, very outdated technologies and ammunitions. it is about upgrading security as well as increasing the budget. it is challenging when it is done by tweets by donald trump who is not popular in europe. it harder politically for them to do the right thing. francine: whether the spending should be 2% or the rough figure doesn't make sense. angela merkel has said she has told the nato meeting that germany is the number two contributor for troops. she says they are stronger together and it should stay that way. is this damage control?

nato allies trying to keep the u.s. in nato? want to send a signal that this is an institution that is not going to be crumbling under this unilateralist impulse from donald trump. it is more important than a single press conference or a single tweet. not to bring everything back to brexit but it is an important time for europe to continue to have a close relationship with one of the most important and mature military powers, the u.k. one of the few countries in nato maintaining 2%. europe maybe should start to think about, how can we reach out to the u.k. and not have quite such a strict approach on security and defense that we have had on the economic side? tom: will we see that in the white paper? the answer is, no. it is very economic. servicesa need to meld and goods together.

when we see these important questions about defense and offense? stephanie: the european response is nothing as agreed to until everything is agreed to. the conversations have been in abeyance, awaiting the fundamental agreement. time is running out to have britain maintain close relations for things like security, antiterrorism and all of that. francine: angela merkel taking questions from the press in brussels, saying it has been an intense nato summit. she has renewed a true commitment to afghanistan -- a troop commitment to afghanistan. angela merkel saying that trump demanded, what he has been asking for for some time, extra defense spending. hour,e begin the next history being made in brussels. chancellor angela merkel

speaking to the press. we go to brussels in a moment. we say thank you to stephanie flanders on her most busy day. with your news briefing, incredible news flow from new york, extraordinary. let's get a briefing from taylor rigs. taylor: president trump's criticism in brussels has prompted a nonscheduled budget meeting today. the president threatened to go it alone unless allies increase their defense budgets immediately. the white house is not commenting. president trump resumed his critical comments today and said we pay tens of million toose much to subsidize europe. the threat on trade could resume talks. the minister called on the u.s.

to resume negotiations. bloomberg learned the trump team is willing to resume talks. the trump administration ratcheted up the pressure by unveiling a list of $200 billion chinese products that could face higher tariffs. opec's output may be stretched to the limits. the international energy agency warns the cartel's gulf members may have to pump almost as much crude as they can to cover losses from venezuela and iran. the i.e.a. predicts saudi arabia may have to draw more than ever before on its fair production capacity. and it will be croatia-france in sunday's final of the world cup in moscow. croatia put an end to england's team by making hits first final since 1966. the croatians won in yesterday's semifinal. they will try to become now the smallest country to win the championship in 68 years.

global news 24 hours a day on air and tic-tock on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. i'm taylor rigs. this is bloomberg. francine and tom? tom: thanks so much. francine lacroix and tom keene in london. we welcome you to bloomberg surveillance. the president will make a statement in moments. right now a headline from the kremlin. the kremlin rejects the criticism of gas pipeline to germany. so there's a number of themes here and of course all of this will coalesce monday in helsinki. join francine and myself in helsinki monday as we look at the compression of the trump rhetoric. and of course comments from the president could be incendiary. francine: we're keeping an eye on when the president will speak. angela merkel finished briefing her reporters on the ground. angela merkel reiterating she

becomes -- welcomes the planned meeting in helsinki between president trump and putin of russia. angela merkel saying she personally feels the same and don't see a link between trade and defense spending. this of course is a fault line the link president trump has been trying to link from the beginning. tom: this is a litmus paper in the system, the thing the pros look at. bring it up here quickly. a two-day short of dollar yen, a weaker yen with a big jump up last night with the commodity collapse that we saw and then the further erosion, and erosion in two waves in the last few hours. these are ever slight moves but nonetheless weaker japanese yen. let's take it to the data check here as i believe we're waiting for the president's speech. francine, you have an important chart on bloomberg as well, don't you? francine: i do. i'm looking at pound weakness or what the death cross could

tell us. it's basically a bearish signal and the 50 day moving average, the price trend crosses below the 200 day moving average. a important indication as we look at the imaginations of brexit as well as the technicals. tom: we want to go to kevin sirily in washington and pleased you've joined us on short notice. what will you be listening for from the president? the president has now day 1 and day 2 in nato rocked the boat. what will you and general matusz be listening for? kevin: it's clear he'll stick with the them of how much allies pay to nato. originally he pushed for 2% behind the scenes and in private negotiations with other

countries and now you've seen this continuation of his urging that they double how much they pay. so yesterday was quite remarkable. obviously that sent shock waves here inside the beltway, to be candid, that interaction with german chancellor angela merkel. tom: we see it again, kevin, with the debate over u.s. troops in germany and of course the combined nato forces in the baltic states of estonia, latvia and lithuania. what is that expense within our defense budget? i don't want to catch you unawares here but is it a large expenditure by america? kevin: no. i don't have the specific exact number in front of me but to your point, it's not a significant ofly large number in terms of the grand scheme of all u.s. defense spending. from a broader standpoint, however, the tension between german chancellor angela merkel and president trump is something we've covered for quite some time and something

that took a new turn within the last 24 hours. the president's mentioning of vladimir putin especially with the energy sector within the region as well as europe and germany in particular as well as the pipeline in europe, that i can tell you also caught folks here in the u.s. not somewhat offguard but caught their attention. the president has in recent weeks been seeking more aggressively and more off script regarding energy policy. what exactly his end goal is specifically following the meeting in helsinki with the russian president. that's something the administration hasn't articulated particularly at a time when so much of the optics of this and the political nature of this, much of the sideshow that we laugh about here a lot, but is really putting and reframing this debate that we're about to see with president trump, expecting to make comments in the coming minutes but also with russia.

francine: kevin, could the u.s. really unilaterally pull out of nato? i imagine the president would be advised against that. kevin: i don't think we're at a point right now, francine, where the president would withdraw from nato. i don't think he's forecasting that. that said, i think the level of unpredictability is something he's tried to harness as an asset but right now it appears his main goal is to increase the funding from nato allies in which there's only five countries meeting that. however, to germany's point, they make the case they're funding nato through other mechanisms. francine: let's check with our team in brussels. it was an unplanned meeting and what does it tell us about the angst among nato allies?

>> nato allies are certainly angst and those who want to join. there are some members here that are supposed to be speaking to the likes of ukraine and georgia about the baltic sea and this whole day has turned again into spending. and donald trump has caused quite a lot of chaos. many are saying this reminds them deja vu what happened at the g-7. we heard from angela merkel and she was delayed two hours now likely due to the emergency meeting they all went in to. she didn't directly confront trump but did say germany is doing their fair share and point they're the second in terms of troop deployment. she also said merkel and trump specifically talk about russia. this nato meeting is really setting the tone before trump leaves to go meet vladimir puten in helsinki. tom: let's frame the 45th president of the united states, his family is from germany and

from scotland. his relations did not become u.s. citizens until the late 19th century. and they are -- he is maybe second or third generation immigrants. and yet he's lecturing europe. have you seen any interest in the president and his heritage and their linkage to germany and scotland? kevin: no. and i can also tell you the comments yesterday in return to the fair share q there are many republicans and independents when you watched the exchange with the president at that table and making the case, they feel that was a political win. when he's over there saying the words american taxpayers, there are many political folks here in washington as well as throughout the country that would argue that's something that plays well for him. that said, his critics would argue this puts him back on his heels on the world stage and is something that is wrecking

allies -- with key u.s. allies. there is a tension that's emerged. francine: kevin, is this, president trump, the candidate for the midterm elections, is that what we're seeing now? it was striking for me listening to angela merkel giving her news conference in brussels saying not once but twice she does not see a link between trade and defense spending. does president trump believe in that link or does he just want to speak to people back home? kevin: he does. i think he definitely believes in that link and his administration believes in that link and i think this is something that he campaigned on. this nato rhetoric actually really started in a bloomberg interview on the campaign trail. so you're watching this play out in real time around the world. and to your point, francine, i do think that the rhetoric yesterday, especially when he's at nato meetings and mentioning the american taxpayers, clearly

one can make the political case this helps him in the midterms and one can also make the case this is him representing america. tom: we should paint the picture for our radio in london, the assembled press with four american flags and the blue backdrop, maybe that's nato blue in the background as well as we prepare for a press conference or statement from the president of the united states. francine? francine: how much do we know about how these news conferences are prepared? does he read out of script? does he improvise? do we have any idea what he'll say in a couple minutes? kevin: two things. first and foremost the president in these situations very much keeps to a script and these are very much highly scripted events. the president typically consults with various people including the white house secretary sarah huckabee sanders as well as chief of

staff general jon kelley and is a formulation of key advisors and as well as political types behind the scenes who are all approving this process that gets him on the stage. the second point in terms of what he'll say right now what we're trending towards is for the president to double down on the comments he made yesterday with regards to his administration's frustration with nato and the funding. tom: kevin, one more quick question before our guests in london, that is are we on the edge of quebec and you've been following this tit for tat for weeks and weeks, is it on the edge of quebec? kevin: it is and no other way to look at that and also at the beginning of july 16 in helsinki with vladimir putin. tom: kevin will stay with us in washington and annmarie with us in brussels. the must read, tina was a student of international politics and of course of

citigroup and is our global political analyst. nicholas burns who has been with us on bloomberg surveillance many times and says threats to our collective security have not vanished, mr. putin remains a determined adversary. i thought this perspective from the ambassador was important, 45-50 states of america export more to europe than to china, and he goes on to say canada and the european allies volunteered within hours of 9/11 to invoke article 5 of the nate to statement which compels all members to respond to an attack of any single member for the first time in history. as we wait for the president of the united states, all this goes to helsinki next. helsinki changes this morning, doesn't it? >> i'm not sure it changes dramatically because president trump and vladimir putin have not met together very much in the past. so trump sees this meeting with

putin as one where he can establish a rapport with putin and that i think is his priority and he's been pretty clear. i think sometimes we tend to overanalyze how much economic analysis may be going into the formulation. francine: i'm confused. we talked about a possible deal between the u.s. and russia that would cut out the nato allies but shows up in brussels in a brexit meeting with the secretary-general of nato and others saying germany was wrong for this gas pipeline because russia is unreliable. so is he a friend or enemy of russia right now? tina: we like to use the term friend miss. -- friend meese. -- frienemies. from ambassador burns who knows better than anyone else, you're not the only one confused and a enormous amount of inconsistency in the messages

we're hearing and one important idea to consider at this moment is that maybe we should take president trump at his word and start to consider he doesn't believe these multilateral allies serve u.s. interests any long per. francine: we're following developments in real time in brussels and nato in an unexpected twist, nato held a unplanned emergency session if on the last day of the summit. we saw all the leaders walk in and expect president trump to speak any second. i guess this news conference will be upended by president's trump's attacks of allies on defense spending. we also had a news flash from a german news agency, which has not been confirmed by bloomberg, but that president trump was also threatening to unilaterally pull out of nato. he's threatened that before.

our expert doesn't think it's a real threat and we're chasing our sources on the ground. will it be interesting to see the president, his main message for allies and the world after hearing from angela merkel a couple hours ago. tom: tell us about the body language you've observed in brussels [ann marie is there but you know general kelly and general matusz is there as well as an extensive part of mr. trump's team. are they as on the sidelines as they appear to be on the sidelines? kevin: look, this is the plan. last week in a briefing with senior officials it was clearly articulated the president would head to nato and make the case that the nato allies would have to increase their pay and how they pay with nato. i'd also note every time a foreign head of state of the nato alliance has visited washington, d.c. or the roosevelt room and had a meeting with the president,

including angela merkel, the topic of nato has come up. this is not truly a surprise in terms of -- and i totally agree with what tina said. he's been forecasting this for more than a year. tom: i agree with that. certainly once again his actions follow up on his rhetoric. annmarie, how alone is angela merkel in brussels, how alone is she among the other european allies? annmarie: that day one yesterday where he kicked off the meeting by attacking germany by the pipeline became a division throughout the entire day where all the reporters kept asking every delegation, do you agree with trump, is germany captive of russia, many said no but like the polls have been saying, they are worried about this and didn't want the north stream 2 pipeline to go through. there are some that look at his remarks and see some validity

to them. but the fact is here they all say germany is not aptive -- captive to russia and macron said absolutely not, no. i want to say this emergency meeting that happened this morning which caused quite a bit of chaos here at nato, one official said it was a make or break moment for the rganization. francine: kevin, president trump set the tone last night with a tweet by saying what good is nato if germany is paying russia for billions in gas and energy and why he continues in the tweet, why are there only five of 29 countries that met their commitment? usually, and you told us this fore, the white house goes into i guess overdrive and starts talking -- go back on some of the comments that we heard from the into back some of his comments. we haven't heard from the white house this time, have president so they walk we? kevin: we haven't and i wouldn't anticipate that we're

going to. and for the broader point, this is something the president has -- it would appear pushing back as he's trying to frame the meeting with president putin in a couple days, it would appear he's also trying to frame the crux of negotiations with president putin, especially as he takes a look at how russia has a relationship with germany and other countries in europe. and with regards to the energy sector, you're seeing that the president for, you know, is in the negotiations with regard to the area. tom: thank so you much. we'll have to bankrupt kevin, here in brussels the president of the united states. president trump: for years presidents have been coming to these meetings and talked about the expense, the tremendous expense for the united states. and tremendous progress has been made. everyone's agreed to substantially up their commitment. they're going to up it at levels they've never thought of

before. prior to last year where i attended my first meeting, it was going down the amount of money being spent by countries was going down and down very substantially. and now it's going up very substantially and commitments were made. only five of 29 countries were making their commitment. and that's now changed. the commitment was at 2% ultimately. that will be going up quite a bit higher than that. so we are -- we made a tremendous amount of progress today. it's been about at a minimum they estimate and they'll be giving you exact nhpas -- exact numbers but since last year raised an additional $33 billion that's been put up by the various countries. not including the united states. and the united states commitment to nato is very strong and remains very strong. but primarily because everyone, the spirit they have, the amount of money they're willing

to spend and the additional money they will be putting up has been really amazing to see the level of spirit in that oom is incredible. and i hope we'll be able to go along with russia. i think we probably will be able to. the people in the room think so but they nevertheless really stepped up their commitment and stepped it up like they never have before. we have taken an additional 33 -- the number can actually be higher than 40 when they give you the final number. the secretary-general will be giving those numbers sometime today probably in his concluding press statement. but we are doing numbers like they've never done before or ever seen before. and you'll be seeing that and hearing that a little later. ok. we have our secretary of state, as you know. and we have john here.

so if you have any questions for the three of us, mike pompeo just got back from a third trip, as you know, to north korea. he's become an expert on the trips to north korea, the best way to get there, the best way to get out. and he gets along very well and he's doing a great job over there. yes, ma'am? [inaudible question] >> can you tell people you warned -- [inaudible] president trump: i told people i'd be unhappy if they didn't up their commitments substantially because the united states has been paying a tremendous amount, probably 9o% the cost of nato and countries will start upping their commitment. i let them know yesterday actually, i'm surprised you didn't pick it up and took until today. but yesterday i let them know i was extremely unhappy with what was happening and they have substantially upped their

commitment, yeah. and now we're very happy and have a very, very powerful, very, very strong nato, much stronger than it was two days ago. yes, ma'am? how are you? i know, you're very famous on television. >> did you ever at any point think the u.s. might stop engaging with nato? and you said your rhetoric helps nato conclusion or are you worried -- [inaudible] a lot of people were worried and stressed by what you did yesterday [ president trump: they were probably worried because the united states was not treated fairly but now we are because the commitment has been upped so much so now they are. i was very firm yesterday. you have to under, i know a lot of the people in the room. i was here last year. i let them know last year in a less firm manner and pretty firm and they raised an million as 2 -- $33

of today. and then today and yesterday i was probably a little bit more firm. but i believe in nato. i think nato is a very important -- probably the greatest ever done. but the united states was paying for anywhere from 70% to 90% of it depending on the way you calculate and that's not fair to the united states. in addition to that, as you know, we're in negotiations with the e.u. and we'll be meeting with them next week. we've been treated very unfairly on trade. our farmers have been shut out of the european union. now, you can say they're different but basically to a large extent they're the same countries. so i think we'll be ultimately treated fairly on trade. we'll see what happens. but i can tell you nato now is really a fine-tuned machine. people are paying money they never paid before. they're happy to do it. and the united states is being treated much more fairly. yes, sir? >> did you win any concessions in your meeting and discussions with the german chancellor when it comes to german defense

spending and also this issue of purchasing energy from russia? and secondly, what would you say to your critics that say by creating this scene here at nato, you're only enabling president puten in russia to further disturb things in ukraine and georgia? president trump: if you consider putting up tremendously additional fund at a level nobody's ever seen before, i don't think that's helping russia. i think that nato is much stronger now than it was two days ago. i think nato wasn't doing what they were supposed to be doing in a lot of the countries and we were doing much more than we should have been doing and frankly were carrying too much of a burden. why we were burden sharing. i used the term a lot today, burden sharing. we had a fantastic meeting at the end. 29 countries. and they are putting up a lot. germany has increased very substantially their time period and germany is coming along and

we still have to figure out what's going on with the pipeline because the pipeline is coming in from russia so we'll have to figure it up. i brought it up and nobody brought it up but me and we all are talking about it now and actually i think the world is talking about it now more than anything else. we'll figure that out. but frankly, maybe everybody will have a good relationship with russia so there will be a lot less problem with the pipeline. but to me that was a very major point of contention. we discussed it at length today. germany has agreed to do a lot better than they were doing and we're very happy with that. we have a very good relationship with angela merkel. >> mr. president, margaret from bloomberg. president trump: after all these years, i know, margaret. >> maybe i'm being dense here but could you clarify, are you still threatening to potentially pull the united states out of nato for any

reason and do you believe you can do that without congress' explicit support and approval? president trump: i think i probably can but that's unnecessary and the people have stepped up today like they've never stepped up before. and remember the word, $33 billion more they're paying. and you'll hear that from the secretary-general in a little while. he thanked me, actually. and everybody in the room thanked me. there's a great collegial spirit in that room that i don't think they've had in many years. they're very strong. very unified and strong, no problem. no problem. >> mr. president, john with the associated press. you said previously you wanted the countries to step up their spending at 2%. yesterday the suggestion might be 4% or perhaps 2% in a much quicker timetable. can you clarify, what did they commit to doing and is that satisfactory to you? president trump: what they're doing is spending at a much

faster clip. they're going up to the 2% level. you have to under, some of them have parliaments and their own congresses and a lot of things they have to go through. they're here as a prime minister or president and they can't necessarily go in and say this is what we're going to do but they're going back for approvals. some are at 2%. others have agreed definitely to go to 2% and some are going back to get the approval, and which they will get to go to 2%. after our 2% we'll start talking about going higher but i said ultimately we should be in years in advance, we should be at 4%. i think 4% is the right number. now, the united states, depending on the way you calculate it was at 4.2% and said that's unfair and we have the largest g.d.p. by far especially since we increased it by so much since a thing called the election. our g.d.p. has gone way up. so the fact our g.d.p. went way up, it means we're paying for even more which is very unfair. i explained that.

we will go to much higher than 2% into the future but right now we're getting people up to 2% and that will take place over a fairly short period of time, a short number of years. eah, go ahead. >> thomas from croatia newspaper. president trump: congratulations, by the way, in soccer. >> thank you. we understand our message but some people ask themselves will you be tweeting differently once you board air force i? president trump: no, that's other people that do that, i don't. i'm very consistent. i'm a very stable genius. go ahead? >> thank you, sir. jeremy diamond with cnf, how are you? quick question with regards to germany and the comments you made yesterday. do you feel like given the threats you made about potentially leaving nato, about insulting germany's sovereignty it appears suggesting they're

totally controlled by russia, do you feel it's a effective way to conduct diplomacy and could you be a little more specific about the commitments you secured today with regards to increasing a financial agreement, is there an updated time line or specific countries you could cite because a majority of them are planning to meeting that 2% threshold by 2024. president trump: germany was going to be in the year 2028 or 2030. yeah, i think it's a effective way to deal but didn't deal exactly the way you said. i have great respect for germany. my father's from germany. both my parents are from the e.u. despite the fact they don't treat us well on trade but think that will change, also. and i think we'll see that because on july 25, they're coming in to start negotiations with me. we'll see. and if they don't negotiate in good faith, we'll do something having to do with all the millions of cars coming into our country and being taxed at a virtually zero level, very

low level. jeremy, i think it's a very effective way of negotiating. i'm not negotiating. i just want fairness for the united states. we're paying for far too much of nato. nato is very important but nato is helping europe more than it's helping us. at the same time, it's very good for us. so we have now got it to a to a here people are point where people are paying a lot more money and that's starting really last year. it really had, as you were there last year, and last year we had a big impact. again, we took in $33 billion ore and if you ask the secretary-general, they give us total credit, meaning me in this case, total credit. i said it was unfair. what has happened is presidents over many years from ronald reagan to barack obama, they came in and said ok, do the best you can and left and nobody did anything about it and got to a point the united states was paying for 90% of

nato. and that's not fair so it's changed. we had a really good meeting today. we had a great meeting in terms of getting along. i know most of the people in the room because of last year, because of the year and a half that we've been in office, a year and a half plus. but we have a great relationship. everybody in that room by the time we left got along and agreed to pay it more and agreed to pay it more quickly. go ahead, phil. >> mr. president, phillip wrecker from the "washington post." you tweeted yesterday what good is nato? and you talked about nato as an alliance that benefits europe, defends and protects europe. do you see any value of nato to the united states, vis-a-vis russia? does it help protect the united states from russia in your view? president trump: i think it's another very strong ally and stronger than individual countries. i think the way we have it now i think nato got -- you know what was happening with

spending prior to my getting in office. the numbers were going down. now the numbers have gone up like a rocket ship. the numbers have gone up a lot and gone up rapidly and now are going up further. i think nato is going to be very, very effective. i'm very impressed with and really know, he's a friend of mine, but secretary-general saltenburg has done a fantastic job in putting it together and we were the ones that really -- we gave him an extension of his contract as you know. i think he's done a very good job. saying that, i'm concerned about the pipeline. i don't like the pipeline and when i talk about nato, how do you have nato and somebody paying the people you're protecting against. maybe we'll get along with the group we're protecting against. i think that's a real possibility. as you know, i'm meeting with president putin on monday and i think we go into that meeting not looking for so much. we want to find out about syria, we will of course ask your favorite question about

meddling. i'll be asking that question again. but we'll also be talking about other things. we'll be talking about ukraine. ukraine was here today, by the way. very interesting to hear what they had to say. >> did he deny? president trump: what am i going to do. he may deny it. it's one of those things. all i can say is did you and don't do it again. he may deny. you'll be the first to know. >> robert wall with "the wall street journal." if the germans and canadians nd others don't come up to 2%, what is your fallback position? how will you up the pressure to make them actually -- president trump: well, they will. i have no doubt about it. they all made what is commitments and they will be up to 2%. it will be over a relatively short period of years. >> thank you so much. georgia tv.

mr. president, what do you think today about support from nato? president trump: georgia was here today representing. >> we'll talk about georgia in a meeting with president putin? president trump: they were here and made a favorable impression and we listened to their plight. it's a tough situation with georgia. but they made a very favorable mpression in the room. president trump: go ahead. you really did. go ahead. >> i had a question as well but nonetheless will ask. russia and ognize crime eea as part of russia. president trump: that's an interesting question because long before i got here president obama allowed that to happen. that was on his watch, not on my watch. people like to say oh, crimea. they built bridges to crimea

and opened a bridge years ago and built a submarine port, substantially added billions of dollars. so that was on barack obama's watch. that was not on trump's watch. would i have allowed it to happen? no. but he did allow it to happen so that was his determination. what will happen with crimea from this point on? that i can't tell you but i'm not happy about crimea. but again, that was barack obama's watch, not trump's watch. go ahead, sure. reuters. son from will you be raising arms control issues with putin, would you like to extend new start and will you raise concerns about violations of the i.m.f. treaty? president trump: yes. >> as follow-up to the nato meeting today would you suggest tom or consider stopping military exercises in the baltic states if he requests? president trump: perhaps we'll talk about that. but i'll say we'll be talking

about those three issues and many more, we'll be talking about it, jeff. [inaudible] >> i'd like to know if you are planning to guarantee the taxpayers that the new money that is flowing into nato will be spent in the best possible way especially the money coming from the countries that have problem with the public finances? president trump: the money will be spent properly. we have many wealthy countries with us today but some that aren't so wealthy and did ask if they could buy the military equipment and could we help them out? and we will. we're not financing it for them but make sure they're able to get payments and various other things so they can buy -- the united states makes by far the best military equipment in the

world, the best jets and missiles, the best guns, the best everything. we make by far. that's one thing i guess i assumed it prior to taking office but really learned since being president our equipment is so much better than anybody else's equipment when you look at our companies, lockheed and boeing and drummond. the equipment we make is so far superior and everybody wants to buy our equipment. the question is can they make it because they are doing very well, can they make it for so many people? we are helping some of those countries get online and buy the best equipment. yeah, go ahead. >> i'm christen brown with fox news. on your upcoming summit with president putin, did any of your allies express any specific concerns or talk about any messages they'd like you to take with you going to the summit? president trump: just the opposite of concern. and they actually and will probably come out with a bit of an edict but actually thanked

me for meeting with president putin. i look forward to the meeting. they thanked me and thought it was a great thing that i was doing it and gave us our best wishes -- or their best wishes. that being said, we'll see what happens. just a loose meeting. it's not going to be big schedule. i don't think it should take a very long period of time and see where it leads. it could lead to something very productive and maybe it's not. but i think meeting with people is great. we had a great meeting with chairman kim and i'll tell you, mike pompeo did a fantastic job. i might ask you to say a few words while you're here, mike. just one second. mr. pompeo: thank you, mr. president. i did, i returned -- actually came straight from north korea with a couple stops here to brussels. we had a productive conversation. there remains a great deal of work to do but most importantly, my counterpart

made a commitment consistent with what president trump was able to achieve with chairman kim, which is the intent to denuclearize and they're going to accomplish it and now the task is to get it implemented. president trump: just to finish on that, you know, so important, that was an amazing -- really an amazing meeting, i thought. and i think we established very good relationships. we'll see where it all end. but there has been no missile tests or research, they have blown up a site and i hear they're blowing up another missile site and have taken down the propaganda and someone said there's no more music going on at the borderline. they said the music was going on for many years and said wow, the heavy the heavy music and propaganda. they've done a lot of things and we got back our free hostages. it's a good process. the main thing is there have

been no rocket launches, there have been no missile tests. there's been no nuclear tests, no explosions, no nothing for almost nine months. >> i'm from the guardian. your trip to the u.k., there are lots of protests planned in london and elsewhere, how do you feel about that? president trump: i think it's fine. i think they like me a lot in the u.k. and i think they agree with me on immigration. i'm very strong on immigration. i made a point today, i said you've got to stop, you're ruining -- you're going to have a lot of problems. you see what's going on throughout the world with immigration. i partially won on immigration. giseppi, italy and he won his election because of strong immigration policies on italy. i think that a lot of the people in the u.k., i think that's why brexit happened. i don't know what's going on with the negotiation, who knows. but i guess that's become a

very interesting point of contention. i said i'm going to a few hot spots, nato and the u.k. and then we have putin. and i said putin may be the easiest of them all. you never know. but i'm going to a pretty hot spot right now, right, with a lot of resignations. immigration is a very important thing. told them today the e.u. better be very careful because immigration is taking over europe and they better be very, very careful. i said that loud and clear. yes, go ahead. >> president trump, from romania. what will you tell president putin about this summit and about nato? president trump: well, i think he's going to see about this summit. it's turned out to be a very successful summit. i think really nato is more put together right now, is more

coordinated and think there's a better spirit for nato now than perhaps they ever had. it's richer than it ever was. the commitments are made at a higher level than they've ever been made and the money to be paid out far faster. the 2% was a range. it wasn't something they were committed to but now there's a commitment. there's a big difference, the 2% number and why so many people weren't reaching it or hitting it. it was like an amorphous number out there and now it's a real commitment. i think he's going to see there's great unity and great spirit, great aesprit de corps. i think we'll have a good meeting. this was a fantastic two days. this was fantastic. it all came together at the end. and yes, it was a little tough for a little while. but ultimately you can ask anybody at that meeting, they're really liking what

happened the last two days. there's a great, great spirit leaving that room. yes, sir, go ahead. >> jonathan beal from bbc, you think you'll get along with president putin? tell us why you think that, is there something you admire about him? president trump: he's a competitor and he's been nice to me the times i've met him. i've been nice tom. he's a competitor. people say is he an enemy in? he's not a enemy. is he a friend? no, i don't know him well enough. but the times i got to meet him, we got along very well. you saw that. i hope we get along well. i think we get along well. but ultimately he's a competitor. he's representing russia. i'm representing the united states. so in a sense we're competitors, not a question of friends or enemies. he's not my enemy. and hopefully some day maybe he'll be a friend. it could happen. i just don't know him very well. i met him a couple times and when i did meet him most of you people were there. >> on brexit, sorry, sir,

because you are going to the u.k. what will be your message on brexit? president trump: i've been reading a lot about brexit the last couple days and seems to be turning a little differently where they're getting at least partially involved back with the european union. i have no message. it's not for me to say. i own a lot of property there. i'm going to scotland while i wait for the meeting, i have turn berry and scotland which is a magical place, one of my favorite places and going there two days while i wait for the monday meeting. but it's not for me to say what they should be doing in the u.k. i have great friendships. my mother was born in scotland. i have great friendships over there. we have a wonderful ambassador, woody johnson. and by the way, woody is doing a great job. it's not for me to say. i'd like to see him be able to work it out so it could go quickly, whatever they work out. is it heartbreaking?

>> hard brexit. president trump: hard breast pit. i thought you said it was heartbreaking. i think that might be going a little too far. heartbreaking, a lot of things are heartbreaking. i would say brexit is brexit. it's not like -- i guess when you use the term "hard brexit" i assume that's what you mean. the people voted to break it up, so i would imagine that's what they'll do. but maybe they're taking a bit of a different route. i don't know if that's what they voted for. i just want the people to be happy. they're great people and do think -- i'm sure there will be protests because there are always protests. there were protests the night of the election both ways. in the end, 206 -- 306 electoral votes. and one state, it was interesting, one of the states we won, wisconsin. i didn't realize this until fairly recently. that was the one state ronald

reagan didn't win when he ran the board his second time. he didn't win wisconsin and we won wisconsin. we had a great night. protests, there might be protests. but i believe that the people in the u.k., with scotland, ireland, you know i have property in ireland and property all over. i think that those people, they like me a lot and they agree with me on immigration and i think that's why you have brexit in the first place because of immigration. yes, ma'am? go ahead. >> i'm from finland. what would be the best deal with putin when you come to helsinki and don't you think that you're playing to the same goal with putin with your diplomacy towards the e.u. and nato? president trump: i can't tell you what would be the ultimate? no more nuclear weapons anywhere in the world would be the ultimate. no more wars, no more problems,

no more conflict. lett find a cure for every disease known to mankind or womankind and that would be the ultimate and we'll start from there. go ahead. >> from afghan service in bbc world service. sir, i would like to ask you, mr. president, that afghan prison is going to be here. president trump: he's here right now. >> he's here and are you going to meet him and what have you got to say to him and when the war is going to end in afinogenov -- in afghanistan and people are fed up and want to know. president trump: i agree with that. it's been going on for a long time and made a lot of progress but it's been going on for a long time. we've made a lot of progress in afghanistan, i will say. your president is here now and he's in the room. when i finish this i'm going right back into that room. >> one question, please. mr. president, can you tell us what you think of future

membership of georgia in nato, please? president trump: at a certain point they'll have a chance, not right now. they just left the room. at a certain point they'll have a chance. >> a reporter for -- [inaudible] will you continue to support kurdish forces in iraq? president trump: i think the kurds are great people. they are incredible fighters. they're wonderful, warm, intelligent allies in many cases, as you know. it's different groups of people. but they're great people. i do believe they're great people. go ahead, please. >> mr. president, working with german tv. you said putin isn't an enemy, isn't a friend, just a competitor. president trump: competitor. >> do you consider him a security threat to europe or to the u.s.? president trump: i don't want him to be and i guess why we have nato and why we have a united states that just had the

largest military budget, $700 billion approved. $716 billion next year. no, i hope we'll be able to get along. i've said from day one whether it's china or russia, we're working on trade with china right now. and i don't say that's an easy situation because that's been of the united states but presidents frankly allowed that to happen. i've taken over a lot of bad hands and i'm fixing each one of them and fixing them well. but china is going to be i think very successfully, ultimately taken care of. i have a great respect for their president, as you know. president chi spent two days there and was among the most magical two days i've ever lived. and i think we're going to end up doing something very good with china. right now we're in a pretty nasty trade battle but i think ultimately that will work out. i think we have a big

advantage. we picked up $8 trillion in value and worth since i became president and we're close to two times the size of china. a lot of people don't know that. and we're going to negotiate a fair deal if that's possible. and russia, are they getting along with russia also would be a very good thing. yes, go ahead. >> from bbc persian tv. we've seen escalation of tension between you and the iranians, what is your exit plan? president trump: i would say there might be a escalation between us and the iranians. by the way, they're treating us with much more respect now than they did in the past. and i know they're having a lot of problems and their economy is collapsing. but i will tell you this, at a certain point they're going to call me and say let's make a deal and we'll make a deal. but they're feeling a lot of pain right now. go ahead. go ahead. >> mr. president, do we expect the rise of the russian influence in macedonia

following the start of the negotiation process like we've seen in montenegro? and what will nato and the united states do to counter the russian influence in the western balkans. president trump: we never talk about our future plans. go ahead. >> thank you very much. i am from occurs us stan, iraq. -- kurdistan, iraq. my question is about the government of iraq, after two years the government has not been -- [inaudible] and you want to talk about syria with president putin. can i have any information about puten in syria? president trump: i hope we get along well with iraq. we certainly have spent a great fortune in iraq and many, many and hundreds ds of thousands of lives on both sides of which i always think

about both sides, not just our of side. and they had an election and i hope we'll be able to get along and see how that goes. we've already been talking to the people that won the election. i was not in favor of that war. i was very much against that war. i never thought it was a good thing. but that's another deck of cards that i inherited and we'll do the best we can with it. i think the election was pretty conclusive. and again, we've spoken to them and see what happens. yes, sir, go ahead. >> we have time for one more question. >> i'm from a newspaper in tunisia and come from a very small country in northern africa. y question, mr. president -- [inaudible] we really wish and hope something can be done in the middle east to avoid more wars and more blood and more killings in the middle east, if we could work on a peace

process. president trump: we're looking for peace, and africa, you know, it's on our very strong list. we're looking for peace. we want peace all over. we want to solve problems. we're looking for peace. africa right now has got problems like few people would understand. they have things going on nobody could believe in this room. if you saw some of the things i see through intelligence what's going on in africa, it is so sad and so vicious and violent. and we want peace. we want peace for africa and peace all over the world. that's my number one goal, peace all over the world. and we're building up a tremendous military because i really believe through strength, you get peace. but we're going to have a military like we've never had before. we've given out orders for the best fighter jets in the world, the best ships and best everything. hopefully we'll never have to

use them. that would be a dream. to buy the best stuff and have the best stuff and the best equipment in the world and never have to use it would be a really great part of my dream. thank you very much, everybody. thank you. i'm going to be going, leaving in about half an hour. thank you. francine: that was the president of the united states of america speaking in brussels there at nato reiterating the u.s. commitment to nato after a pretty contentious meeting allies agreed to raise defense spending by $33 billion. there were earlier reports he was thinking of withdrawing from nato but he is saying that everyone has agreed to substantially up their commitment. he says in this impromptu press conference in brussels that finished moments ago with the president of the united states of america, that he just wanted fairness for the united states. now, it lasted about 45 minutes. what we heard, of course, from president trump is he also talked about brexit and russia.

he was asked several times about russia meddling in the election and the crescendo, of course, of president trump in europe will be in helsinki on flies over here to the u.k. where he's to meet with teresa may and the queen and on to helsinki where he meets president putin of russia. this was certainly flies over h unexpected twist. nato leaders holding this unplanned emergency session on the last day of their two-day summit and then finishing with president trump saying that actually he could withdraw from nato but he has no intention of doing so. stocks up. this is bloomberg.

♪ president trump: tremendous progress has been made. has agreed to

substantially up their commitment. taylor: collegial spirit following the summit. he has agreed to reaffirms the ommitment to nato. it's a buying opportunity. u.s. inflation expectations dropped short term spikes and a long term rise with u.s. c.p.i. >> welcome to "day break." what would it be if we didn't have the president making things interesting before we come to air. >> it never happens to us because we never get press conferences in the morning and may get a tweet and it's usually in the 8:00 hour. we got a full on press conference. and some good superlatives in the press conference. in the market we were debating whether we'd call it a risk on or a recovery after that sell-off yesterday. s&p futures up by 16 points. i wanted to point out dollar yen. 112.59 is how