francine: the u.s. president slams the prime minister's brexit plan. what does it mean for the trade deal? protests are expected across the u.k. is the president meets this afternoon. target with the frequent of cap tax sadiq khan. china's monthly surplus with the u.s. hits a record. welcome to "bloomberg surveillance." these are your

markets, you can see the stoxx 600 a little weaker after president trump giving an interview to the sun where he says theresa may is negotiating brexit wrong. he suggests it will impact future u.s. trade deals. and you can see crude oil above $70. let's take a look at how the british press is responding to trump. first, let's have a look at what's, for example, the daily press is saying. "i thought you brits wanted brexit." it seems as though he has done well, channeling a lot of what we hear boris johnson say. and this is deathly the interview you want to read. he talks to the sun, talks about the nhs, things that are domestic.

unusual for a u.s. president to get into that kind of domestic detail. and then we have the daily press and the guardian. protests greet president trump and his wife during the first official offense of their u.k. visit. whereds lined the roads trump dined with the prime minister. however, it is unlikely they even saw the protests, and they will meet the queen today before spending the weekend at trump golf resort in scotland. china signals they are open to resume negotiations after days of exchanging retaliatory threats. high-level discussions have stalled since last month. steve mnuchin says beijing must commit to deeper economic reforms and downplayed the severity of the trade dispute. >> don't think we are in a trade

war. we are in a situation of trade disputes, not wars. and we are very focused, as i said, on the nafta issue. which is a renegotiating an old agreement. we are very focused on the china issue, which is comforted. >> and china's total trade increase in the first half of this year. 13.1%lars terms, a group and exports were up 13.6%, compared to 2017, while imports rose 11.8%. wilbur ross says he will offload all of his remaining holdings after the governments top ethics watchdog says his failure to sell off assets could pose a conflict of interest quote created the potential for criminal violations. the ethics office says his failure to sell may have negatively affected public trust

. and the philadelphia fed president has defended their inflation targets. say they would be couple with price increases at 2.5%, half a point higher than the official goal. he also sees up to four interest rate hikes this year. >> at the beginning of the year, i have put in three. that, whatput off of i am open to another if we see it inflation accelerates. >> global news, 24 hours a day. powered by more than 2,700 journalists in over 120 countries. this is bloomberg. francine: thank you. let's get to our top story on the special relationship. a doubleump has dealt blow to theresa may on his first day of the visit. his comments on brexit and

criticism of her premiership is dominating the front pages. are acrossprotests britain as the president visits. joining us now is our reporter annamarie. review --colorful interview. but talk to us about the protests. colorful and quite a political grade. natoer one on the heels of where he also criticized theresa may. , we haveof protests seen them around central london, there is a big one this afternoon and trafalgar square. i don't many people have been tracking this on social media. thetold the blimp is on center of parliament square, and we are hoping we will be able to see it above parliament in the next hour. francine: thanks so much.

on theorter will be ground tracking the protesters, and we will also speak to london's mayor city on --. focused on a trump and theresa may and what it means for foreign markets. is our us now correspondent, in london. and the head of multi-asset strategy at gamma -- gam. this is highly unusual. a sitting president gives an interview to the sun, and talks not only about brexit, but goes on to talk about nhs, things that are very domestic. how awkward is the meeting with theresa may going to be? alex: i can't imagine it will be comfortable. this is just how he operates. provocation is part of his game. it is a remarkable interview and

i wish i was more surprised, but i have grown accustomed to the sort of thing. francine: is it provocation or that he says what he thinks without a translating into policy? when he says we might not get a , is itk. trade deal going to be the case, or is just a comment? alex: i don't think he has a particularly clear grasp of brexit. puti do think he likes to before leaders he deals with on edge when he meets with them. i think there is, i don't know if you could call it strategy, it is a tactic, i suppose. to make them uncomfortable. francine: are the markets uncomfortable? >> they appear to be. but i wonder if he has done the u.k. a service. by effectively killing any prospect of soft brexit, we are headed for a softer version of this. -- hard brexit.

there seems to be very little interest from the potential partners. and in the protests, we're seeing the inflatable baby trump. actually, on a serious point, does it impact brexit? does it make theresa may look weaker? the freethe leader of world showing up and saying i would have done it differently. at the margins, it must hurt her command ability. julian: i wonder. checkers, she showed a chart showing how much traded the u.k. does with the eu with all the other countries. this is what's long it. -- swung it. i think trump saying we will not do a trade deal confirms that messaging, that the reality is we will not really change our trade partners, it is unrealistic.

maybe in the future weekend, but for now we have to keep things stable. francine: i think this inflatable they be a donald trump is also carrying a mobile phone, probably because he tweets so much. alex, what do we know about the relationship between brexit and donald trump? does he really think he is a catalyst? in that interview, he brags about predicting brexit during his campaign. when he made a stop at his golf course. i do not think he got elected in part because of brexit. i just think he thinks he saw this coming and that he would be able to negotiate this deal better than theresa may. it is, again, remarkable. donald trump gave his big speech where he talked about the value of sovereignty. how all countries should be sovereign and respect one another.

and here he is, lands in the u.k. and immediately gets right in her business. francine: how is this playing back home? he actually gave that speech ,esterday at nato, impromptu where he said the people in the u.k. like me very much, i am looking forward to it. and then you see security try not to keep him in london so he does not see protests. u.s. look atthe this and see that this is a world leader not loved by the u.k.? there are a lot of americans who are embarrassed by this behavior. true he isink it is popular in the u.k., certainly not in the united states. his polls have never been above 40%. so no, i do not think it plays particularly well. except with the slice of the country that strongly supports him, and really, that is who he is playing to all the time on every stage is his base. francine: we still have 3-4 days

and then we go on to helsinki, where the show will be live for the meeting. agreement between russia and the u.s., does that influence markets? julian: i don't really see that. but my final point i want to make on trump and the u.k. and tois that if you want influence outcomes, actually want to steer us towards hard brexit, he had his opportunity. but the fact is, he and his administration have pushed hard for this. these comments come late and forlorn. because his it just friend boris johnson resigned from the cabinet? is it as simple as best? -- as that? julian: well, there is no plan. engineer a hard brexit, he could've come to our rescue, to make a deal.

but he is just not forthright after that. it seems very late now that we are about to start negotiations. there should have been more involvement previously. if you are of the view of a hard brexit, he should have stepped in earlier. so i wonder how much she believes it himself. thank you very much, alex and julian. stay with surveillance, plenty coming up. including the factory of the world keeps on wiring. china's monthly surplus hits a record in june as exports jump. could the readings for trump to take further action? speaks, wes mayor bring you the interview as britain hosts president trump. this is bloomberg. ♪

francine: economics, finance, and politics. this is "bloomberg surveillance." i am francine lacqua in london. you are looking at live pictures of protesters in front of parliament square in front of the house in britain, flying a trump baby balloon. he arrived in britain yesterday and is scheduled to hold more talks with the prime minister and then take tea with the queen a little later. we have been to speak to protesters on the ground. the giant balloon had been designed to speak to trump in a language he understands, which is personal insults.

this is according to those who make the balloon. of course, a lot of people are against the flying of the blue, say even if we disagree, we should show more respect to the leader of the free world. apart from criticizing the prime minister, the prime minister also hit out at london's mayor, saying he was doing a terrible job at preventing terrorism and crime. spoke withedwards the mayor a few moments ago. president trump explained the things he does and the tweets he does. clear, we love americans and america, they contribute quite a bit to us. i have met, over the course of the last few days, many londoners who are americans who are americans for joining the protests. and today, you will see londoners and others not protesting america, but

president trump. he thinks he has said and does. it is not an anti-america protest. but i cannot explain what goes through president trump's mind or why he picks on me. do you think racism is something that motivates him? what i do know is sometimes he can normalize and give credibility to some views that far right groups hold. tweetsmple, he retweeted from britain first, who have been banned from facebook, from twitter. and members of that party are in prison. it seems to explain what goes through his mind. one of the great things about the u.s. and u.k. is pluralism. you can disagree about certain things. i think it is a strength, not a weakness. i enjoy the fact that in london you can be of a different

religion, different ethnicity, and just get on. embassy -- u.k. embassy warned americans to keep a low profile. is that sensible? sadiq: i do not think they should be worried at all. conferencessed in a by an american company and they are loving london. i meet, on a daily basis, americans who love our city. i went to the protests today and said look, thanks for what you do for our city as americans, thanks for your contribution. there is no reason at all to be alarmed or worried. what is important is the protests are peaceful, and i'm sure they will be. francine: that was the london mayor speaking with anna edwards. well anna edwards joins us now from city hall. anna, great interview. what was the mayor's main message to donald trump?

anna: the main message was that he wants to rise above the recent war of words, if you like. and he was to invite the president to see diverse parts of london where communities get along and benefit from that diversity. that is his main message. i was asking him there about what he thinks motivates president trump, and he has been given this answer a lot. that it is something we need to ask the president about. he does make the point that he criticize places and the way they handle their immigration policy, even though it is not handled at the city level, of course. he makes that point. and he spoke, very fondly, about the relationship more generally between the united states and you can -- u.k.. francine: thank you. china's trade surplus hit a record in june.

the gap grew to almost $30 billion, according to the customs administration. , china is climb continuing to benefit from robust global demand, but the increasing tensions are weighing on the outlook. so could the reading prompt washington to take further action? julian, when you look at china and the trade relationship. china did not escalate, despite these billions in tariffs. does that make you feel less nervous? julian: very slightly less. think the chinese will produce some kind of concession. i think it will come. for what they are trying to do is play this out in order to demonstrate they are not going to be bullied. but it will come eventually. the u.s. administration is playing in terms of the midterms.

that 200 billion is planned, but also an additional 200 billion. by the time you add these up, it is excess in the amount of trade that is done. in a sense, trump is right that he has more bullets in china. he literally has more bullets in that way. i think the chinese will be, since about, and they also realize it is not a matter of concession that is required. it is a relatively small one. as november approaches, he will take what he has gotten and go back to his base. maybe they're playing it up to the wire. francine: china can also hurt those specific sectors. they can hurt technology, parts of the states where donald trump wants to do well. u.s. anden will the president trump personally, try to avoid that? enough, a lot of people in these target states have patience and say they can wait through.

it is not quite as obvious retaliation will hurt those groups. i think they voted for donald trump for bigger reasons than just very short-term narrow interests of their particular product. so it is not obvious that one equates to the other. francine: is there a problem of china having to look like the strong man in this? concession,s no big does it depend on how it is packaged? julian: i think so. i think if it focuses on technology and subsidies, rather than a language of the deficit as a whole, that may be enough. there is a way out, but you have two big characters involved. if they get into a game of chicken, we are going to see more volatility in markets. even if the tariffs impact on gdp is amenable, you can multiply it in the impact on earnings and profitability, for example the s&p 500.

so we are in for a ride, and i think we will have sweaty palms, but ultimately, there will be some kind of concession. but brace yourself. francine: will china ever be in a position or wanting to use the yuan as a weapon? julian: they haven't easing, but also stabilize. -- it is not being used as a weapon. they want to be careful to not be too inflammatory. i do not see that. francine: is there anything they can do at the margins to hurt the u.s. a little more without aggravating president trump? this is like game theory. [laughter] the longer-term play is shifting away from exports into consumption, and then the problem goes away. so i think they are working hard on that economic transition. that is ultimately their plan.

in a way, this is yesterday's war. if you fast forward, i do not think this will be a big issue for china. francine: writes, well what about germany? german carmakers are probably hurting more than any other sector in europe. julian: they are getting rammed from both ends, if you ski is upon. -- excuse the pun. there is no way they can win, it is very difficult at the moment. the trade war escalates, does trade get redistributed? is the trade between south and south instead of north-south? julian: that is hard. global supply chains are complex and it can take years to unravel. the pressing question is do they take is on the margin or pass this on to consumers.

there may beerm, distribution, but you really want to change your supply chains? there are only two more years after november, so the problem could simply evaporate. you might have taken all this time to change or supply chains, which takes two years anyway. this is the difficult thing, people say president trump would never hurt the economy, but this is what the campaign on. if he gets another term, this is the next six years. julian: right, but i think we should see with the midterms bring first before we talk about 2020. francine: thanks so much. up next, a step too far. commodities have thrived amidst the trade war, but could an escalation actually see the up?s dry up -- demands dry that's coming up next. plus, we monitor the protests in london as donald trump repairs

to meet theresa may. getting some live pictures out of the houses of parliament. president trump arriving in britain yesterday with the first lady of the united rates. today, he is scheduled to hold talks with the prime minister theresa may, on the backs of an awkward interview he went to "the sun. where he says theresa may has wrecked raises -- brexit. and he is also due to take tea with the queen later on. so we will see if any leaks from that will emerge. this is bloomberg. ♪ phones have made our lives effortless.

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and it can be included with xfinity internet. which could save you hundreds of dollars a year. it's a new kind of network designed to save you money. click, call or visit a store today. francine: economics, finance, and politics. this is "bloomberg surveillance." i'm francine lacqua in london. first of all, let's check in on what is trending across bloomberg.

london crowds are cheering an american, not donald trump, the tennis star serena williams, through to her 10th wimbledon finals. on bloomberg.com, trade deals between the u.s. and u.k. could lead to higher prices, according to researchers who think britain could compromise to get a deal. and our most read stories on the terminal of the past few hours: the big money in london real estate is small warehouses. stephen cohen is set to invest in a crypto hedge fund. trump says the brexit plan is likely to kill off a u.s. trade deal. get straight to new york city with our first word news. >> starting with that story, donald trump has dealt a double blow to theresa may on his first day of his visit. he told britain's the sun

newspaper that her brexit plan will kill any trade deal with the u.s.. he also suggested boris johnson would make a better leader, saying may ignore his advice. britain's financial industry also slammed meza latest brexit proposal, some even calling it the worst outcome possible. and protests greeted president trump during the first official event of their visit. whereds lined the roads trump dined with theresa may. however, it is unlikely they even saw the protests as they flew in from helicopter. they will meet the queen today before spending the weekend at trumps golf resort. signaledand china have they are open to resuming negotiations over trade after days of exchanging retaliatory threat. high-level discussions have stalled since last month. treasury secretary steven mnuchin says beijing must commit

to deeper economic reforms and downplayed the severity of the trade disputes. in a not think we are trade war, we are in a situation of trade disputes, ok? trade wars, we are very focused, as i said. on the nafta issue, which is renegotiating an old agreement. and we are focused on the china issue. >> china's total trade with the u.s. increase in the first half of this year. in dollar terms, a group 13.1% in the first months and exports were up 13.6% compared to the same. while imports rose 11.8%. says he will offload all of his equity holdings. this is after the governments top ethics watchdog says his failure to sell assets that could pose a conflict of interest "greater the potential

for a criminal violation." failure to sell will affect public trust in the trump administration. global news, 24 hours a day. powered by more than 2,700 journalists in more than 120 countries. this is bloomberg. thank you so much, taylor. we are getting some pictures in of trumps baby balloon. i think it is just about to take flight. this is important. if you're going in and out of london, take care of the numerous demonstrations held today. briefed by the embassy of the united states of america saying lots of people are expecting tens of thousands of protesters to march against president trump. when he meets with theresa may end of the queen. actuallydent might not see the demonstrations because he's being helicoptered in and

out. i want to assure everyone that we have our team of reporters on the ground. a lot of them flew with the president from d.c., so we know where he is. anyourse, if there are impromptu news conferences or anything like that, we will bring that to you. at the moment, we have a marine one, wheels up, and we translate that in the next couple minutes. oils, soybeans, steel, tariffs are disrupting aliens in trade flows. that has seen commodities thrives, but there are concerns it could rattle economies and sap demand for raw materials. commodity index has slumped since may, following the most in two years. and china has sounded the alarm, warning that terrorists could cause a global recession. so are commodity traders right to be concerned? joining us now is the chief investment officer at the commodity giant. it is worth over $15 billion.

so banks for joining us. first of all, is it a simple binary on trade war escalating or ds leading that you have to take? jay: we are traders and investors. traders like volatility, whereas as in -- a investment officer, my role is to de-risk. so this is unhelpful in terms of our organic growth programs and investments. but we have made some good investments. we invested in the u.k., pre-brexit, and will invest post-brexit. we are investing in u.s. steel. just opened a georgetown steel plant, owned by wilbur ross in former days. it had been sitting idle for over a year. we have reopened it, fired it up a couple weeks ago.

we had to remove an alligator to open it up. francine: i need a picture of that, you know that. [laughter] jay: i will get you a picture. that is our model, to use materials like scrap, to make local energy, green steel, and to use that in the local markets. so the international flow is not impacting us as a steel group. well if the overall economy is going down, it will impact how much the steel plants can make and how much it can export. do worry about the world economy in general? jay: we deftly have concerns. concerns over some elements of growth. but we have focused our portfolio on areas that we are comfortable with. there is a lots of hype in the world today about the automated sector, a sector which we are ap

to.ly to -- a key supply and everyone is infatuated by who will drive the car. whereas we make what the car is made of. whoever drives or powers the car, it will still have aluminum wheels, made of steel. so our purpose has been to focus on essential raw materials. francine: of course, but you still need a relationship to see if they will buy it. does it make a difference? if driverless car's are owned by silicon valley or g.m.? jay: steel is a material that is not travel very well. julian was talking about the need of supply chains to evolve. if you are purchasing a bespoke product that your suppliers want and they benefit from proximity, that is good.

in some of our factories, we have 20 trucks leaving to go to be sent, to forward -- nissan and ford. frictionu have a point, whether it is cross-border trade, that causes a problem. but there is a benefit to proximity. francine: do you worry about brexit? we heard from airbus. difficult to get parts, they may change when they put them. that must impact you. jay: doing we worry about brexit, yes. is a moment of uncertainty in customs, in trade issues. i was in paris yesterday, we are one of the largest investors into france. we are buying aluminum smelters and we just bought a aluminum wheels manufacturer in france.

so we are investing on both sides of the debates on the continent and here. we do not see our trade in that being compromised. that's wheels manufacturer has a key customer base. in some of our broader customers, jaguar, honda, and ford. and we will have a commanding position in the production of certain materials, like wheels, for example. so there is not a huge amount of we'll supply in europe, so it does not matter where it comes from, it will have to be found. francine: julian, what is your take on commodities? also has an effect on white or commodities and how much china produces and consumes. julian: a couple of things which i think may push prices down. one is a gentle weakening in global growth.

and the second point, as you mentioned, a stronger dollar. we had a decent annihilation of the global economy. the u.s. is strong -- and the synchronization -- desyncronization. francine: thanks for staying with us. up next, more on president trump's visits to the u.k.. you are looking at live pictures of protests. we talked about the u.s. investment climates, the midterm election. this is bloomberg. ♪

francine: this is "bloomberg

surveillance." to our top story, trucks presidential visit to the u.k.. let's get back to annamarie asset parliament. are the grounds getting bigger -- crowds getting bigger? >> they certainly are. we saw the blimp rise. surrounding the blood is what they call a babysitters. they look like the trump hats. they are here because donald trump is in london and they want to say he is not welcome by some citizens. and quickly, just to note, there was a recent poll. of those surveyed, two thirds they think trump has made an awful president. but this blimp will not be seen.

his schedule has been crafted so that he does not have to be in a car in london to see the protests. there is some intra-volcker, at sign the ambassador resident -- trafalgar square, outside the ambassador residents. but he was not see them. know that he will hold talks on foreign policy. that is 47 miles outside london before meeting the queen. castle,l be at windsor and that is 26 miles from the capital. i wonder if he will bring up this interview, or maybe the prime minister will bring it up. on to monetary policy, jay powell has given an upbeat assessment of the u.s. economy. ,e says it is in a good place with unemployment at its lowest level in years and inflation will -- close to the target.

but he also warns that a sustained. of tariffs could be harmful to growth. so how much of a shadow is a trade were casting? our guests are still with us. when we look at the animal spirits of the u.s., i know you believe that a trade war will de-escalate, but if it were, is this the only time they can afford to do it because the economy is in such strong shape? their gdp forecast is something like 4%, so they are doing well. a trade war would be unhelpful. not because of the impact on youumer prices, i think remember them holding up a can of soup and say this will go up by one cent. but i just wonder if the effects will be more dangerous in terms of the fed. more inflation coming through and the fed might get carried away. i hope jay powell through this,

in the same way that the bank of england saw through inflation. the issue is it is a gray area. there is natural inflation coming through anyway, so how they distinguish? you say the job is done, but they have that fourth rate hike. maybe hold up on that and see what happens. what is your take on it? our animal spirits back? we definitely see a positive reason to invest. inare deploying capital steel, aluminum, energy and etc.. i think the reality is, for us as an industrial group, we are

experiencing a higher price environment. but that cost is being absorbed by the consumer in the end. it is instantly pass on to our customers and to their customers. tariffs -- ife they continue, the consumers will suffer. the reality is we will have a slightly more inflated environment which will hang around after the tariffs disappear. that, i think, is not a positive result. so we just continue to invest. we see the environment as being strong. so we are sticking around in steel, producing steel for the automated and constructive side in the u.s.. they are both areas that are booming. francine: how much are currencies a variable? julian: as i was saying, we try

to invest locally. we also have a very large that is muchprise, more focused on currency risk and moving around. our shipping business moves millions of tons of commodities at the moment. they are much more focused on that and de-risking in that portfolio. francine: are you invested in any of the unpronounceable rare metals that go into smartphones, mobile phones, ai and things like that? hugely. we do have a broader investment portfolio which has exposure, but not within our core business. francine: when you go back to central banks, is the biggest unknown but the ecb does next? the ecb could not have on of tools unless they raise rates a little sooner.

possible, buts they could reverse the trajectory of the program and wrap it up. the problem is that bond yields are extremely low. it would be crazy to risk a recession to have tools to deal with a recession. i'm not sure they think that what. -- way. francine: banks both for joining us. up next, trump's telecoms fight back. the justice department restarts its battle to block at&t's takeover of time warner, but at&t says it is too late in the deal is closed. we break it down, this is bloomberg. ♪

>> what i do know is sometimes he can normalize and give credibility to some of the use that far right groups hold. it seems to explain what goes through his mind. one of the great things about

the u.s. and u.k. is pluralism. the londonhat was mayor, responding to attacks by president trump. at&t's says the trump administration appeal against this merger does not change anything, because the deal is closed. the justice department is challenging a judge's decision about the takeover, which created a telecommunications giant. matterdoes the appeal and what impact could it have on the wider media merger environment? joining us now is bloomberg intelligences head of telecom and media research. julian howard is still with us , how does thening appeal go through? unusual, butighly it could be reversed. and you could see at&t forced to

diverse -- divest time warner, but it would be unusual. francine: what does it mean for at&t? they perceived the strategy to defend against the changing media landscape and to broaden the base of the revenue. to get out of telecom and to have a stronger platform. not just in content creation, but broader advertising. it was interesting that immediately they bought a company which is a digital advertising platform. they are really going to expand into a broader base. francine: does this have an impact on comcast's bid for fox? matt: i think it does. this was something cited by fox as a reason they preferred the disney bid over the comcast bid, that there was a greater regulatory certainty. this creates fresh uncertainty in the minds of rupert murdoch

about whether a merger with comcast would have success. telecoms, iay from do not know if we see value in the emerging markets telecoms, and that is back to with the fed does and consolidation in emerging markets. but do you like emerging markets? julian: we like them on a structural basis. they are under a lot of pressure at the moment, but they remain the future of growth. if you take a multi-year, or multi-decade view, that has not changed. and right now, they trading at a discount of 30%. msci, there's the about a 30% discount. bad time to be increasing rates into emerging markets if you have the time horizon. axis, can extend your x it is a great time to be involved. but it will be bumpy. but if you want to be involved in that structural trend, you

cannot try and markets time this, and now is not a time to begin a long buy and hold period. francine: thank you so much. meantime, bloomberg surveillance continues in the next hour. tom keene is here in london for the last day of the week, and then we will be traveling together to helsinki for president trump's meeting with putin. of course, we bring you all the latest on president trump's visit to the u.k.. european stocks climbing at u.s. futures pointing to a higher open. the pound is falling as a brexit quagmire deepens. this is bloomberg. ♪ 2, down. back up.

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be included with xfinity internet. which could save you hundreds of dollars a year. it's a new kind of network designed to save you money. click, call or visit a store today. ♪ francine: the u.s. president slams the prime minister's brexit plan, singing boris

johnson's praises instead. protests are expected across the u.k. as the president meets the queen this afternoon. we will bring you an interview cup frequent truck target -- frequent trump target, london mayor sadiq khan. china's monthly surplus with the u.s. has a record in june. good morning, everyone. this is "bloomberg surveillance ." tom and francine from london as we continue between you the very latest of president trump in the u.k. he is meeting the queen later this afternoon, i believe for high tea. we will have to talk about the sunday interview with theresa may. tom: i've never read this before. what's, "the sun" or the interview? tom: "the sun." it is extraordinary. this is it this morning.

francine: president trump also weighing in on the nhs and one london hospital. pretty intriguing. let's get straight to the bloomberg first word news in new york city. did a: president trump double shot at british prime minister theresa may on the first day of his visit to the u.k. the president told "the sun" plan would probably end in a trade deal with the former foreign secretary boris johnson would be a great prime minister. china's monthly trade surplus with the u.s. rose to a record $29 billion in june. chinese exports to the u.s. also rose to a high. but the u.s. and china imposed

a week ago, and the president is threatening duties on additional $200 billion of chinese exports. trumpacing a renewed administration attack on its takeover of time warner. government is successful, at&t would be forced to sell time warner properties. a government loss could restrict future enforcements. uris commerce secretary wilbur ross -- u.s. commerce secondary wilbur ross says he will sell equities. a review found no evidence ross had violated conflict of interest laws. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs.

this is bloomberg. francine, tom? tom: thanks so much. some interesting twists today. it is not a big market day, but nevertheless things to note. s&p futures launch ever higher. curve flattening substantial, under 25 basis points. everything else in sort of a malaise. next screen, if you would come with the vix quite good. sterling up there just because of "the sun" and if mr. harroent was to go to d's and get something. are starting to focus on pretty solid outlooks for seven quarter results -- for second-quarter results.

donald trump warned the u.k. prime minister that her brexit proposal, already facing uphill battle for european union approval, could also kill any u.s. trade deal. tom: i'm glad you put oil in there as well. breaking down.o francine: our top story, the special relationship gets tested. u.s. president donald trump has dealt a double blow to prime minister theresa may on the first day of his visit. may'sticized brexit and premiership. in westminster, our reporter annmarie hordern. you spoke to the london mayor, sadiq khan. what did he have to say about the president's visit to london? reporter: good morning. there is wide-ranging criticism by president trump of u.k. politics and intervention.

one part of that was to focus on sadiq khan and his handling of terrorism and crime in the united kingdom. he was very clear that he wanted above these things and not respond directly to what president trump has said. he's not sure why he was singled out, and pointed out mayors of other cities were terrorism has taken place have not been talked about in this way. i asked him if he thought racism was something about it president trump. i do know sometimes he can normalize and give credibility to use that far far right views. reporter: he went on to speak very fondly about translating best transatlantic ties between the u.s. and the about kingdom --

transatlantic ties between the u.s. and the united kingdom. francine: thank you so much. ofe marie, you are in front parliament, where he heard about the inflatable baby trump. now it is up there. what are the protesters actually protesting? reporter: good morning. they are protesting donald trump's perceived racism, homophobia, sexism. there were so many cheers when the blimp went up. this has been quite prolific on social media. if you hundred people are here. they even have what looks like the trump babysitter. i am just a few feet away from the famous winston churchill statue. of course, churchill was the one who is minimized the idea of a special relationship in his 1946 iron curtain speech in missouri. that relationship is certainly

being tested today. tom: are they allowing for of thes in the map president helicopter and all around -- helicoptering all around london? will there be any protests in the vicinity of chapter -- of checker, westminster? reporter: there are, but they strategically and logistically set it up that he would go by transport via helicopter so he would not feel so unwelcome on the streets in london. that was deliberately done because the u.k. government knew they were going to be thousands protesting across the country, if you consider all the spots. i am here in parliament square overlooking big ben and central westminster. there are going to be other protests this afternoon in trafalgar square, checker, and windsor. francine: thank you so much, annmarie hordern in westminster. ,o add more flavor to the story

jacob now joins us. we have the protests. how might theresa may deal with him today? guest: i think the thing for theresa may to do is to try and keep things on an even keel to focus on what can be economist. this was not supposed to be a visit during which a lot of news would necessarily be made. the point was to reinforce the ties of the highest levels between the american and british governments. francine: we were trying to figure out what would have been a successful trip for theresa may as president trump was landing in london. it looked like she did not want news. guest: this is a trump

specialty, to turn up someplace and rip up the plan and generate headlines that are not necessarily useful to the host to keep things focused on himself. he is good at that sort of monopolization of attention. he did that at the eu summit. tom: what does prime minister may's weekend and next week and est of july looks like? how tenuous is a government? guest: i'm not an expert on british politics exactly. tom: well this morning you are. [laughter] guest: my guess is and it is very hard to say from the outside, that this isn't a deathblow. this is a significant problem, but the fact that the u.k. can't make a deal with the u.s. under which trump can't agree is not new. we knew this already. tom: in the white papers, it is

basically a norway process. the financial people got left out. now what happens, do they do a blue paper after this? -- the white paper paper is a bit of norway, but a swiss, but you need the eu to respond. you can put whatever you want out there. then it goes back to square one. tom: this is amazing. does the nation rally to the prime minister? does boris johnson rallied to the prime minister this morning? guest: how boris reacts to that will be very interesting to see. think the problem is there's an incredible tight rope or you can't alienate the u.s. you can't alienate the eu that has already done. the prime minister's holding together and already fractious coalition. of big there is a sort in a section of parliament to bring down the government.

tom: this is the first lydia the president in the helicopter to last night's dinner best the first lady and the president and the helicopter to last night -- the first lady and the president in the helicopter to last night's dinner. there was something of an uproar over the first lady's dress in french couture, apparently something you don't do in the u.k. you are something more british. francine: if we focus on the interview president trump thinkly gave, you have to whether he's trying to influence brexit or just whether he spoke to boris johnson at his repeating what he said. does president trump feel like it is thanks to him that brexit happened? guest: i think he probably feels like he had a part in it. i don't know if he feels solely responsible, but he's willing to take credit for things he has little or nothing to do with. there's a sense in which the same kind of current -- and i'm

very wary of saying brexit and trump are two sides of the same coin -- but the same kinds of currents propelled brexit and trump. i think yet advised the hardest possible brexit and the most nationalistic response. francine: thank you very much, jacob parakilas of chatham house. we will talk a lot more about this. peter westmacott is coming up about 45 minutes from now. there trying to follow president's visit to the u.k. from all angles. the muchhere was controversial inflatable trump baby put up in the houses of parliament. some say it is disrespectful to a democratically elected ally to the u.k. alone --t's go flying fly a balloon ♪

francine: this is bloomberg.

♪ taylor: this is "bloomberg surveillance." has ordered. louis johnson & johnson to pay billions of dollars to women who company's health products caused them to develop ovarian cancer. the company says it will appeal. walmart is considering a major change in its branded credit card business. bloomberg has learned the world's largest retailer may move its partnership from synchrony to capital one. negotiation's are still going on. private-label credit cards are a lucrative business for banks and retailers that want to monetize a cardholder's loyalty to a store or brand. more problems for don scathing,

which faces allegations of money laundering. a criminal complaint has been filed against the bank with danish authorities. he accuses the bank of lottery more than $800 billion in illicit funds. -- of laundering more than $800 billion in illicit funds. that is your bloomberg business flash. francine: thank you so much, taylor. china's monthly trade surplus with the u.s. hit a record in june. the gap grew to almost $30 million as exports climbed. china is continuing to benefit from robust global demand, but the increase in tensions and trade barriers with the u.s. are weighing on the outlook's. could this prompt -- on the outlook. prompt further action from washington?

and jacob. isabelle >> not exactly a circumstance that would warrant additional punishment from the united states. having said that, given the path we are on, we do expect -- [inaudible] because there doesn't seem to be an effective mitigation channel right now between the two governments. francine: we heard from the trump side that they are looking at $200 billion extra tariffs against china. china did not say they would reciprocate in kind. to that mean the chinese are trying to get it down and deescalate? >> that has been a consistent

pattern of behavior since the start of this trait -- these trade talks. they do not respond to mere announcements. is a consultation process. nothing will happen before late august. i think you are right, the chinese are trying to downplay the tensions and probably are thinking about ways to resume dialogue. on thish this news flow friday, going into our weekend reading, at blackrock you are advantaged with all your good people. you have to synthesize through all of these events. what is the biggest mystery right now in the china-u.s. dynamic for blackrock? >> the big mystery is that these tensions are afflicting significant amount of self harm. when is it going to stop? tom: isn't it behavioral as well? this is not about mathematics. we really don't know how people, how business, how societies will

with regard to blanket tariffs. increasinglyy are generating concern. if that were to last very long, it would not be very good. that is one thing markets are looking at closely in the earnings season. what are companies saying about how this whole planet is affecting them? tom: the yen had a jump yesterday. do you think these are markers of these tensions? absolutely, as are such weak stock returns in the start of the year despite very strong earnings growth. markets incorporates argan -- markets and corporate's are concerned, as they should be. francine: jacob, you look at donald trump and his most important visit with vladimir putin in helsinki on monday.

does the deal change anything with the allies and nato? jacob: it depends on what you mean by deal. like to domp would some kind of grand bargain with putin. it is something he talked about it sort of inconsistent terms during the campaign. the russian investigation in the u.s. has put a damper on it. any meaningful deal that would be overturn or overseen by --gress would have to have francine: the robert mueller investigation is ongoing. the donald trump shows up at nato to say they are in bed with people that shouldn't be. i think a deal would be something like the u.s. taking pressure off of russia and ukraine. tom: are you saying right now the president is going to go to helsinki and come in a private meeting was no one there but translator, he's going to essentially solidify crimea for

mr. putin? jacob: i don't know. it is possible. to sort ofauthority back down some of the sanctions, but congress has demonstrated by overwhelming vetoproof majorities the ability to overrule the. francine: hold on. whatever the president says, there are steps for that to become policy, right? even what he says about brexit. ithow much the you look at at face value, at how much do you just think what are president says in the context of meeting with world leaders? this is a really complicated issue of formal versus informal power. presidente, the can't withdraw the u.s. from it without congressional assent, but he could just come out and say i'm not going to come to the aid of allies. that hollows nato out without actually formally withdrawing the u.s. how much does congress do to stop him?

russia is one of the few areas where they demonstrated they are willing to step up and do that. how does itabelle, translate into markets? do you look at the tweets? do you look at the interview and "the sun" he traveled this into policy? with you just look at what congress does? we try to focus on every tweet. be surprised about this interview in "the sun." meeting of the putin and trade actions, one needs to put it in the context of the run-up to the midterm elections. there's a lot of political theater that is being played to the base back at home. i think a far as markets are concerned, we need to focus on any actions and policy measures rather than that theater. tom: who are the market vigilantes now? politicsatement in the

of the moment and who has power, i was just within the dynamic -- i would suggest market participants right now have an enormous, of power if they act, if they say something with yen or with curve flattening. isabelle: we could see some more curve flattening, but a suspect what president trump will be more reactive to is if there is significant downward moves in the stock market, which we haven't seen so far. this balancing process between -- francine: but his base doesn't care about the stock market. he likes the stock market, but is that really a benchmark he cares about? politically, it doesn't affect him. if you get a 20% correction, i would bet you this something you would pay attention to. francine: how does the president

measure success? is a ratings? is it stock market? jacob: it is political. it is reelection. it is republicans many control of both houses of congress -- republicans retaining control of both houses of congress in november. at the end of the day, americans tend to reelect the presidents. there's a sort of fundamentally political calculation. i'm beating a dead horse here. tom: we are good at that, particularly on fridays. francine: we actually have a pretty big news day. does the trump administration have a strong dollar policy? isabelle: we don't know. i don't know that there's a policy on this. tom: i'm the tourist here. what is so important about this tabloid is there's page two,

here's the cover that everyone , that's nott the story. two, page three, page four, page five. doesn't the country rally around the prime minister? francine: it is debatable. when you see our country with pro trump and anti-trump, it is the same with brexit. it has divided the country. isabelle: exactly. jacob: there is a rally around the flag effect, but the u.k. is divided muslim the u.s. among party lines -- u.s. along party lines. the reaction would be you shouldn't have invited him in the first place. tom: it has been an extraordinary week. it becomes even more odd on this friday. of course, the president meeting with her majesty later today,

tea with her majesty and the first lady as well. we are with isabelle mateos y lago of blackrock. we will continue, coming , with an important interview with tony lozada gartner -- tony gardner, former ambassador to the eu taylor: that's to the eu. -- ambassador to the eu. this is bloomberg. retail.

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let's check in on what is trending across british media. says" donald trump makes a tradedeal deal with the u.s. unlikely, and says boris johnson would be a good prime minister. in "the daily mail," and "the mirror," i like that we are looking at tabloids today. a little different on "bloomberg surveillance." tom: there's no question about it, the news flow and the tabloid flow. taylor: theresa may rolled up

the carpet for the u.s. president. hads later, an interview trump taking shots at the u.s. prime minister -- at the u.k. prime minister. he said her political rival, boris johnson, would make a great prime minister. president trump is praising north korea's kim jong-un in an apparent effort to boost nuclear talks. he tweeted that great progress was being made, and send out copies of a letter from kim expressing confidence in president trump. oil is poised for its biggest weekly loss in almost five months. plunged almost 5% this week. libya's plans to boost production quelled some fears of a supply crunch.

global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. francine: thank you so much. london mayor sadiq khan has accused trump of normalizing far right groups in the u.k. he spoke to bloomberg just over an hour ago on whether the president is motivated by racism. : the way he rationalizes things, his tweets, have made it clear. the last fewover days, many londoners who are americans who were joining the protests today. today, we will be seeing are londoners and others for testing not america or americans, but against president trump, some of the things he said and some of

the policies he has. it is not an anti-american march to protest today. i can't explain what goes through president trump's mind. reporter: do you think racism is something and motivates him? mayor khan: i will leave it to president trump to explain what he does. he can normalize and give credibility to some views that far right groups hold. he retweeted britain first, who has been banned from facebook and twitter. he and his party are imprisoned. i am quite clear what is great things about the u.s. of the u.k. is pluralism. you can disagree about certain things in a different -- in a respectful and courteous manner. i enjoy the fact that he read london, you can be a different religion and ethnicity and respect and celebrate each

other. searter: the u.s. and the --ament -- the : i was addressing an american comey whose headquarters -- american company whose headquarters are here in london. americans love living in our city. some will be at the protests today. thank you for all you do for our city as americans. there is no reason at all for you to be alarmed or worried about today or tomorrow. what is important is that the protests today are peaceful and in good spirits, as i'm sure they will be. francine: that was the london mayor, sadiq khan, speaking with bloomberg's anna edwards. teos ywith us, isabelle ma lago of blackrock, and joining

anthony gardner, former ambassador to the eu. what do you make of the president's comments in the sun is in "the sun -- in "the sun?" >> it is outrageous. many businesses want u.k. regulations to remain aligned with those of the eu. the second point that is important is a lot of the regulations the u.s. complains about and that the president and wilbur ross wanted the u.k. to ditch are those agricultural regulations that impede u.s. exporters from selling gmo products and hormonal things, those are not going to change. francine: when i was trying to get in my question is, the president of united states shows

up saying maybe it is boris johnson that is prime minister. does the u.k. rally for the prime minister? does it make her stronger? anthony: i think they probably will. we have seen a lot of reaction so far, mostly from the labour party. but i think we will see reaction from the tories saying it is not appropriate for the u.s. president to be interfering in this way. tom: you are one of the singular american voices. there cross-section of law and diplomacy -- your cross-section of law and diplomacy as well. how does washington extract itself to a better place out of the endless and ceaseless noise? what do republicans on the hill have to do? what do democrats have to do? what do these institutions have

to do? anthony: there is no clear answer to it. i think u.s. business does have to speak up. this is not a partisan issue. that is important. it is not partisan to ask how any of this is advancing u.s. interests, particularly business interests. when we withdraw from international trade, when the eu sets standards globally, including in agriculture and data protection, how does it advance u.s. interests? francine: francine and i were still trying to get through the debris of brexit into the next morning. i remember ubs purchased a property on the river thames. we are going to hear from james dimon today and his jpmorgan earnings. what does someone like jamie dimon say to suggest to president trump this behavior is not in the best interest at all? what does jamie have to do?

remember who your allies and your enemies are. stop confusing the two. we need to work with our allies, including the european union, and advancing our interest, particularly on trade. that means, for example, identify the issues where the president has correctly hastified -- president correctly identified as being problematic. intellectual property theft. francine: but this helps with his popularity. we are close to midterm elections. america going at it alone, a strong men president that can get a deal with china, sounds better they going to allies in europe and figure out what to do with ip. francine: that is -- anthony: that is short-term thinking. we will since he because it was his of a digitally when would

trillion dollar trade war on we will soons -- the $1sequences of trillion potential trade war on u.s. exporters. francine: do markets need to warn president trump? isabelle: i think they do, and i think they are. we are going to your some stronger language from the corporate world. that came out clearly from the fed minutes published last week, that businesses are beginning to speak. as i was saying earlier, the in muchare pricing higher risk premium and any asset class than they did last year, and large part because of all of this uncertainty that u.s. policies have been creating. tom: in your government studies at harvard, and onto oxford and

columbia law, all along the track of anthony gardner, what i find so important is you know the unthinkable happens. are we set up right now for the like whatbilities we saw in 1998 or 1989 with the soviet union? anthony: we are sending a lot of signals, and signals matter. we are sending dangerous signals about how the president is ambivalent about our alliances with nato and the eu. that is dangerous. tom: are the baltic states at risk here? we are talking about georgia and the ukraine. anthony: they feel they are at risk, and it empowers those who think they may not be defended in the time of need. let's look at historical experience. 1914, when both sides mobilized,

there comes a point when it is very hard to withdraw. i'm talking about the trade war here. we are at an inflection point. tom: we will continue with and anthony. a very busy day with the president, with events by helicopter on the outskirts of london. coming up, important earnings conversations from three banks today. london, a protest in and there is a balloon.

♪ tom: good morning, everyone. from london, "bloomberg surveillance." gold at new lows, some curve flattening, bank earnings out later in the united states. we are getting experts on the cacophony in europe. us, thegardner with former united states ambassador to the european union, among many other public services to the nation. we migrate to helsinki monday with our coverage, francine and myself. what i find interesting, it is 65 miles away. map.cans do not know the

anthony: on energy security, this is an important issue you raised with merkel. i think he did it in an inappropriate way. prior administrations raised the danger of germany and europe being overreliance on russian gas, but he should have done it behind closed doors. we've been making the point that europe needs to diversify its sources of energy and its roots of energy into europe. this is something that should not have been raised publicly in the way he did. to make we prepared energy go across the atlantic from the united states? it has been a hope, a dream, but are we there yet? anthony: not at all. europe will remain highly reliant on imported russian gas. all projections look at this and

say that europe will be importing substantial amounts of russian gas. lng shipped from the united states is simply not sufficient. it will not be. francine: we were talking about president trump and president putin striking some kind of deal in helsinki on monday. anthony: i am scared even at the thought of some kind of deal that could strike. think any idea that would happen would cause friction and potentially the collapse of our alliances. merkel and macron seem to have a good working relationship. anthony: i'm not sure he listens to any of the leaders. i'm not sure he even listens to

prime minister may. he certainly doesn't listen to merkel, saying she is captive to russia, which is insane because she lived under soviet tyranny. the president hasn't. tom: was in the blackrock combine, there has to be a discussion of infrastructure. i go to davos every year with francine. how is the investment in europe, and how is the tone of doing bigger projects across all of europe? is the investment there? isabelle: the talk is certainly there. the investment, not so much. is, i think, quite a lot of interest from the private sector, but there's been a dearth of projects. the difficulty is funding adequate projects. you're right, this is a lot more talk than action. there's a lot to be done, and that would be another constructive way of sorting out some of the long-standing issues like the german surplus.

francine: the problem is there is a time lag. we don't know to the 300 billion euro you'll care plan. best 300 billion euros yield curve plan -- 300 billion euro yield curve plan. isabelle: that is not necessarily true. if these are intelligent investments, you see productivity. francine: why have we not seen them? isabelle: the private sector is interested in investing in infrastructure that has a positive revenue stream. how you get that? do you put tolls? are we talking hospitals, schools? what is the revenue stream? there is difficult to be

aspiration of doing massive infrastructure investment and the private sector saying they will put investment if they get revenue out of it. tom: there is, across all parties, a desire to derail executive power and bring some of the choices back to the legislative branch. is that going to happen? do you predicted that, given the president's up rover, that we will -- of roar -- even the president -- given the president's uproar, we'll move away from that? there are some key statutes that allows him to act in the way he does. post the midterms, i would love that toongress change make it more difficult for this president to act in an unrestrained manner according to what he considers to be national security.

but i'm not sure what should have high hopes about that. more importantly, u.s. business needs to speak up and say europe , the eu has been good for it. we have considered a united europe to be good for u.s. business and investment. we need to protect it for our own interests. francine: thank you. remember, bloomberg users can interact with some of the charts using tv . you can use them at your meetings to gather your bosses. this is bloomberg -- to dazzle your bosses. this is bloomberg.

♪ tom: good morning, everyone. "bloomberg surveillance." protestssy london with and the president circling outside in his helicopter. we had isabelle mateos y lago was final thoughts this morning.

isabelle: it is out there for everyone to see, what we write in about central banks. they are on a pretty predictable path for now. the ecb has made clear it is not going to touch interest rates until sometime through the summer, whatever that means. it is basically on hold. the fed is potentially in a slightly more interesting more challenging position around how it adjusts to the chilly is asked to the potentially escalating trade war. so -- adjusts to the potentially escalating trade war. is not clear that they immediately need to adjust their pattern, so they're going to deliver essentially what the dots are signaling. tom: when and if the strong that's when does the

stronger dollar -- when does the stronger dollar start to matter? isabelle: if you look at the curve of the dollar against yen assets, it has already exercised meaningful tightening on financial conditions. i would say the inflection point with a couple of months ago. the question is where does it go from here. the dollar is already expensive by any number of measures you look at, but that doesn't mean it can't go higher. important, i must guess, as the dollar impact on emerging markets. bullish one remain emerging markets, but obviously if the dollar were to go through the roof, that would be a significant headwind. the fundamentals are strong. as long as global growth doesn't get derailed, we do expect emerging-market assets to do well because they are cheaper very significantly in coming

months. we like hard currency emerging-market debt. the we are getting more selective in that asset class, staying away from those that have the higher financing needs, essentially. tom: this has been wonderful. thank you so much. isabelle: my pleasure. thank you for having me. tom: much more to talk about here on the event today in the united kingdom. absolutely extraordinary. the former u.k. ambassador to america, peter westmacott, will join us. day, three earnings banks report. this is bloomberg.

>> this morning in the united

kingdom and the united colonies, each and everyone is reading the sun. pages, president trump comes down hard, clashes with the mayor of london, and looks forward to see with her majesty. helsinki can't happen fast enough. the american banks will show alive -- a large profit. it's a 56 mile ferry ride to helsinki. what will the people of estonia say to presidents putin and trump? this is bloomberg surveillance and i'm tom keene. we are on our way to helsinki. push to a secondary story today. i think theresa may was not expecting what happened but donald trump given an interview to the summer he said, if brexit goes as planned with what the proposal of government

is, there will probably be no u.s. trade deal of any goes on to talk about hospitals, in, and domestic issues. quite unusual for a sitting president. we heard from ambassador gardner moments ago and we will put this in respective over the next hour. to berdinary events and clear, the president having an byive day around london helicopter. we need to get a united kingdom and a global news briefing. here is taylor riggs. trade: time -- china's surplus with the u.s. was at a record. both the u.s. and china impose tariffs on 34 billion dollars of the others imports a week ago. president trump is threatening duties on another $200 billion of chinese exports.

-- aaronacing a new neutral missed ration attack on its takeover of time warner. hasjustice department appealed last month's federal court decision that clear the way or the acquisition to take lace. if the government is successful, at&t would be forced to sell the time warner properties. loss could restrict future enforcement. u.s. commerce secretary wilbur ross says he will sell all his equity holdings. ethics watchdog warned him that his fed her divest assets created a conflict of interest and possible severe criminal intention. global news toys for hours a day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs, this is bloomberg. tom: let's get to the data quickly.

some real nuance to the data check today. curve flattening occurring in the curve and further out. euro dollar stronger today and oil week. -- oil weak. resilient equity markets with the fix will under 13. we touched down 25,000 again. i put in sterling today. the pound of falling as the brexit quagmire seems to be deepening. the biggest winners today, most industry sectors advancing. it is earnings day for a lot of the financial stocks. --rall, european sector european stocks paring some big gains in treasury earning higher. let's get back to our top story. the special relationship gets tested.

u.s. president donald trump has dealt a double blow on the first day of his visit. he has criticized exit and theresa may's premiership. these do to me with the prime minister of her country house at this hour. our reporter is in westminster. our washington correspondent joins us now. how many more protesters are we expecting? few hundred here in parliament square and likely this afternoon there will be moving to trafalgar square. there also be protest that mays country estate as well as windsor. me, thisn see behind is taken quite a form on social media. the 20 foot high caricature of president trump as a baby, it costs $20,000 u.s.. it seems here on the ground the

fact that president trump has disregard for national order and the way they pulled out of the paris climate deal in the way they think about paris -- climate change, his perceived comments on racism, immigration and sexism. these are the themes happening here. chanting trumprs out but also tories out. many don't like brexit. francine: let's get to washington dc. unusual for sitting u.s. president to speak to the sun where he says theresa may has wrecked brexit and the rest he was off. what would the white house do today? they put out statements to limit damage? >> it all suggests to me that the president really did have the amount in the strategy to really go on to this european leg and shake things up. he saw that during nato and are seeing it now.

it's just three days before the president is set to meet with vladimir putin. all of this is in line with the president strategy. in terms of criticism here at who ishis is a president being argued that he is not represented the united states well but to be frank, republicans and even some democrats like the idea that the president is over there advocating for a better deal. gardnerhad ambassador on earlier talking about the need for a push back. he will draw for the conversation in a bit. nicholas burns had an op-ed in yesterday, if -- our former master to greece, looking for a push back from on the president. -- back on the president. will we see that? in thisot sure it will is a president who has grown increasingly frustrated senses become president with the u.k.

prime minister, theresa may. i think he is capitalizing on a moment that he believes is a moment of perceived weakness. i think the relationship between theresa may and president trump has been frosty to say the least as this escalated. thank you so much. we drive forward our conversation on bloomberg surveillance. we have another ambassador from the united kingdom. former ambassador united states also serving as ambassador to france and to turkey as well. peter westmacott join us this morning. thank you for finding time on this exceptionally unique day. in the johnoment adams television series were the claim actor paul giamatti as john adams goes in to meet the king after the revolution. stunning scene, at least for ugly americans like me.

he backs out of the room. i'm assuming the president will not back out of the room today with the queen when they have tea. howr what we have seen, would the queen of england greek this president of the united states? peter: the queen has a lot of experience meeting with a lot of statesmen. she's met a lot of presidents of the united states and elsewhere. my hunch is that this will be super correct, it will be cordial, and there will be conversation about relatively on political issues. i would be surprised if her majesty asked about the sun editorial and so on. this is a meeting which is .argely a are to see it will be a great pleasure for the first lady and the president but it's not a conversation, i think, which is likely to go into substance of any rate debt.

-- of any great depth. tom: will people not attached to politics, with a rally around the prime minister? peter: there's a sense that this is unpleasant paybacks are prime minister that has given donald trump the equivalent of a state visit without a state as it. this is a bit of a kick in the teeth. i don't know what is designed to achieve. the president was not ranting coming was calm and deliberate while giving that interview. was it something that he was encouraged to do while trying to strengthen the heart brexiteers? it was the opposite of what president obama had done. that was come in and support not doing brexit at david cameron's request. that supporting the prime minister of the country, i think

we are in walk -- different territory and it's not helpful. there could be some sort of a backlash to whether we agree or don't agree, and this is not fair. francine: issue weakened by it? tom: i think we wait to see. initially, it points out the contradictions that we know are unresolved in the government's position on how to handle brexit. in president trump says the trade deal off because he's looking at the time when the brexit package appeared to be of that excluded the right the uk's agreements. actually, it doesn't. not, i she is weaken or don't know. i don't think this helps the relationship of the perception of donald trump. does donald trump suit parallels between brexit at his own election? is that why he is laying --

wayne end? -- weighing in? he doesn't like other countries coming together and he thought the answer was a deal between himself and the uk's is that disappearing. the boards johnson thing puzzles me. boris johnson was one of the politicians rude about donald trump during the campaign and since then he is than flattering him. beyond that, does he really think or stress and can be prime minister? i doubt it. tom: you are one of the few people alive today that understands the special thationship of united understands the special relationship of united kingdom and in france where he served, the united states were usurped. this triangle of three centuries , it's really at risk here. ourselves atricate

this moment. it's a good question. when i was in paris, there was an element of the bilateral relationship in special and cordial and some british politicians want to focus six simply on the states in the french saw a bit more triangular. my view was britain and france were the only two serious european powers in defense and intelligence so it was important for all three of us to work together. often the three of us have been there. a rock being the exception. -- iraq being the exception. to get this relationship working again, very important. i think macron has done a great job. he stood up to donald trump, and also lavished praise on him. but he is also disagreed with him when he needed to do so. they're been numerous occasions onn british and french views

international affairs have been contradicted or undermine the president trump so we have to get our relationship act. how we do it remains to be seen. francine: thank you so much. in the meantime, we are getting some headlines from the spokesperson of theresa may. saying they can still do a good trade deal with the u.s.. telling our reporters on the grounds, theresa may is looking forward to discussing a range of issues with the president of the united states. we will see with those issues are shortly. this is bloomberg. ♪

taylor: mrs. bloomberg surveillance, i'm taylor riggs. attorney in st. louis has ordered johnson & johnson to pay $4.7 billion to women who claimed the company's health products cause them to develop ovarian cancer. the company says it will appeal. walmart is considering major change in its credit card business. the world's largest retailer may move its partnership from synchrony to capital one. negotiations are still going on. private-label credit cards are a growing business who want to monetize the cardholders loyalty

to a store brand. with moneyms laundering. criminalas filed a complaint against the banks in danish authorities. bank has apologized publicly. that's your bloomberg business flash. tom: thank you so much. there is so much to talk about. so much to speak of. , this is the prime minister of the united kingdom and the president of the united states. it's a photographic moment. these are not live pictures that we have a live feed coming in and sometimes it's delayed. the two world leaders are in along fine.

we heard from president trump as he arrived and spoke to reporters on the ground, saying it will discuss trade with theresa may and saying the relationship with the prime minister of the u.k. is very strong. this is the interview that everyone is reading, check everyone's talking about. if you are in the cabinet of mrs. may, you had to brief the prime minister who may have been baffled at some of the comments. he's saying the u.s. steel is now off. i wonder if the rhetoric changes. tom: maybe she's just going to turn to the president and say france or croatia? francine: we all wonder if they will -- what they will talk about. we know that the queen is never political. it's very unlikely that she will ask president trump about his interview.

i was frankly intrigued by the fact that a sitting president was talking about nhs, hospitals in london. we are so privileged to have with us, ambassador west mccaw -- ambassador westmacott. what a moment. just comment on how a british prime minister deals with the colonies. that's it's happening right now. i doubt we will see that decree from the queen rescinding the active independence. i believe he will continue with life as it is. this is a pivotal moment. lip.of british stiff upper she has gone out of her way to insist this relationship is strong and the united states is important partner to the united kingdom and we do a lot of stuff in both directions. we have to keep that going. the unhelpful --

remarks. we are seeing a lot of the press saying no, mr. president, you can't come to london and flag off everything. how does theresa may deal with this? does she need to be friendly but firm? only firm? depending on how she acts, she could lose credibility within her bureau. peter: i don't think she needs to make a brave stand like to grant doesn't the movie. probably also, telling public opinion that she has talked to the president firmly, seriously, as a grown-up, about the consequence of the nato summit and his meeting with vladimir putin. the british people are worried about western security.

she will remain polite and smiling and friendly. it may well be that this is a president to doesn't take these remarks are personally effective. he's just saying what he thinks are he's been asked to make a number of points to his good friend on the murdoch press. being the student of foreign affairs you are, how to describe the relationship between the u.k. in the u.s. right now? a morei think it is in difficult place than usual because between the government, there are a lot of issues we are not seeing eye to eye but the fundamentals of the relationship, intelligence, seems to me to be very strong and intact. tom: within your political study, designation have a permanence here as we move beyond trump to the next president? whether it's in 2020 or 2024?

or is a one-off event that the united kingdom and all the diplomacy can adapt to? which is it? peter: it depends on whether it's a one term president or a theterm president area is world in which trump has played fast and loose with the fact and undermined many institutions be at the cia, be at nato, the of this pretty counsel the u.n., is that going to be lasting? is he symptomatic of something which is not just about him? is the symptom rather the calls? that's something we have to think about. i have a lot of american friends that the damage to u.s. credibility and international institutions will be lasting. i hope not but we don't know yet. remember churchill's cigar in his hand on about that ship in 1932. what is a risk here is from the

atlantic charter on. do you believe we are leaving that or do we heal and return to the diplomacy that we have seen coming out of two great wars? i don't think we are leaving the atlantic charter are seeing the end of nato. i think we're at a bumpy moment. i don't think this is catastrophic. we are dealing with a very different president with some very different attitude. the most worrying on the strategy is that he appears to give more to the benefit of the doubt like -- to people like kim jong-un in vladimir putin then to the prime minister of the u.k. or the leader of the french parliament. tom: we saw those at the nato meetings. nato,ne: what happened at whether helating

could retreat from nato and the gave quite a glowing review on nato. state that nato feels it was three weeks ago? that's how fast the news flows going. francine: the long days in london continue. join us now is alex. alex, we so us -- we saw the pictures of the greeting. talk to us about the body language. >> we don't actually have side of the house. this a big stand of trees between us. we are in a big media center in the gardens. we didn't see the arrival, i'm afraid. francine: what will be prime minister be asking? smiles and currencies or tough questions? >> she will likely want to

smooth over the bit of disagreement they've had. maybe not in person but caused by trump's interview with the sun. she will want some reassurance that it really is the case. that the u.k. will not kill off the trade deal. she -- she will also want to make sure that he raises some russians with putin. is there an agreement out of this moment? is there a document or communique that we will see today? hold atwo leaders will press conference in two or three hours time. i imagine there'll be some pleasantries. then no doubt there will be some questions from the press about brexit. theresa may is just talking to the press right now saying the u.k. is working really close together with the u.s.. how do you talk to president trump? briefed on what

the president -- the prime ministers approach will and should be? >> i think the approach is taking is that he's -- is that everyone knows he's unpredictable. theresa may is taking this in stride and days a it will be fine. i think it will be very relieved when he has left the country or even when he's got to scotland to play golf. francine: how will the queen greet him? >> i miss that. crean -- how will the the queen greet him for tea? >> i'm afraid i'm not privy to that. reveals they pleasantries that the queen says. i know it's something that donald trump himself is looking forward to. he spoke extensively on her in his interview with the sun. said he's very much looking

forward to her and his mother loves the mean and what always switch on the television when the queen was on. tom: thank you so much, greatly appreciated. from the prime minister's country estate. estate. with the president of the united states. we have peter westmacott. maybe we will get some more video and moments. we need to take advantage of your early tenure in turkey. as i recall, and i'm sure you do, it was a popular thing. things have changed. tell us what you have observed in the special relationship between mr. trump mr. riddle on -- and mr. erdogan? peter: a lot has changed. much of my time was the good

years. great dealy made a of progress, economic, addressing kurdish questions, all that. 15 years on, we are no longer the same place area but i would it may be an opportunity to say congratulations on your reelection because he had just elected president. it's also a natural affinity between this president and what he perceives as a strong man who president and what he perceives as a strong man who gets stuff done. he might even like the idea of throwing journalists in jail and -- and directing the judiciary himself. with putin, with erdogan, with kim jong-un, trump identifies with an individual who is in control and is a strong man. it may be that part of the stuff about theresa may acc signs of week us. i think if there is a relationship between other one and donald trump, it is

something where the president of the unites race could play a useful role to encourage turkey to go back to the good old days. francine: how is president trump changing the way we do diplomacy completely? the way that leaders speak to each other, the way that people tweet, the way the policy is made day in and day out. peter: we are seeing a president who forms policy in the early hours of the morning. he's not reflecting and briefings. he's not reflecting in different policy made her on the table. we are dealing with an individual, quite impulsive, very confident in his own views. very critical of weakness, multilateralism, likes his stuff done himself area it's a very different way of going about things in a breaks a lot of china. that havesome things been damaged by the trump

approach. from a system to whatever the theory was an 18 atr the 20 century, we are all searching for new theory of diplomacy and international relations area we were doing that with mr. putin. what is the task in helsinki for ,he president, who i believe merkel was essentially alluding to the present representing europe. what should be the new diplomacy with russia? peter: we have moved on from the west failure of nationstates agreement are going to interfere with each other and each sovereign in its own right come we are now interdependent in a way we worked before. we need each other as part of alliances to keep the peace and develop prosperity. donald trump doesn't seem to believe very much in that. tom: what about mr. prudent? peter: -- mr. putin?

peter: he loves the recognition of the one-on-one. francine: this is all he needs, the meeting. there need be no formal deal for vladimir putin to have had one up on the west. i think that is right. it's what all of the nato leaders would of said. representing the alliance, not just yourself and vladimir putin. remember your broader responsibilities. now, we welcome all of you worldwide. paintedwhere churchill in the lily pond? it's about 46 miles from london.

a lot of people don't usually know how this gets set up but a minute by minute track of the camera to make the sure -- to make sure the two worldviews can address reporters. especially the ones that have been traveling with them. lookll be interesting to at the body language and also interesting to hear the questions from reporters about what they want to know from the two leaders. trump willresident get a lot of questions about his interview with the tabloid newspaper. tom: you one final question to the ambassador. here is the interview. gifted adent being jersey from a football team. the england run in the world cup really turned the spirit of sport in the united kingdom. peter: we have so many decades

of disappointment. but yes. to get to the semifinal, france will be in the final for the third time in 20 years. we managed to make it to the semifinal and we didn't quite make it but a cheer people up a lot because the expectations have been so low. was interesting to hear from the politicians who couldn't care less about football jumping on the bandwagon. tom: croatia are friends? peter: tom: -- tom: croatian -- tom: croatia or france? peter: france. francine: now to our interview with the london mayor city who dashers accused donald trump of stoking far right groups. our reporter asked if he thinks the president is motivated by

race. here in london, we love americans, we love america. americans are close to us. many londoners, and they call themselves londoners who are american, have joined the protests. their purchasing nuggets america or americans but against president trump and so the things that he said in the policies he has. you can't explain what goes through president trump's mind. there have been attacks and other parts of britain and europe. you think racism summing that motivates them? to president trump to explain himself but he can normalize and give credibility to some views that far right groups hold. he retreated tweets from britain

first who have been banned from facebook. it's hard to explain what goes through his miami does these things. when the great things are the u.s. and the u.k. is pluralism. you can disagree about certain things in a courteous manner. i enjoy the fact that here in london you can be a different religion, different ethnicity, and just get respect. the u.s. in the sea warned americans to keep a low profile. is that sensible advice? i was yesterday morning undressing an annual conference here in london. on a daily basis, americans love living in our city. they said thank you for all you do for a city is americans.

thank you for the cultivation you make. there's no reason at all to be alarmed or worried about today. tom: the mayor of london and important interview. this extraordinary morning of international relations as his the president meeting with the prime minister and we now need to meet with the professor and the joan from chicago as we look to american banker events. he's professor of financial institutions at columbia business school. his been a wonderful and careful student and critic of too big to fail banking in america. we are thrilled to have the perspective. he's been more than patient. let me got you first. banking iscan

minting money. let's start with one answer. why? why are they developing this huge operating income? they are developing income but net interest margins are actually low. they're probably in the 25th percentile of their historic range. it's not a great environment to make money borrowing and lending. there's certainly a lot of other activities the banks are doing to make their fees. you have been a student of our financial crisis. you seen our financial recovery. what is the risk here? what is the instability that mr. gaiman and his clan should worry about. i would say we've reached a point of low risk right now. the uncertainty about these earnings, the max movement of one or 2% in either direction.

i think the big story has been the resolution of a certainty about the value of these franchises of the last year and a half. if you look at any of these large banks, at the ratio of market value of equity to book value of equity which is a market values and franchises, they have skyrocketed. that's the big story. they reached the plateau and been out for the past three months. that's a story not just about the current improvement in that interest margin but about anticipated improvements interest margin which are due to the fact that we are in an interest rate environment. i think that's really the big story. we've really restored the franchise value of these banks. now we are looking at a call me calm era until we figure it would be big movers.

but dustedesident off a portrait of andrew jackson entered in the oval office. where are we in terms of nostalgia? are we can emerge into five canadian banks? which weighs the u.s. going to go? peter: -- charles: we have a handful of very large banks and thousands of other banks area it's been interesting over the last eight years or so. entry into small banking is virtually nil. that's because the regulatory burden on small banks. at the moment, we are in a frozen position with a large banks are maintain the status quo having consolidated a lot and got even bigger. the small banks really are not seen much opportunity for entry an expansion. whether we want

to make some regular tory reforms make banking more affordable, organized have pretty much the status quo. regulatory reforms to make banking more affordable, we are going to have pretty much the status quo. part of the probably with the recovery up to now has been weakness in small business lending. these facts are related. if you look at some of the investment banking fees, they have been pretty bleak. we are expecting jpmorgan earnings to come out in 10 minutes or so. week fees despite a record environment. when does that change? jack: this looks like a trend. that are a lot of pieces the large banks had a virtual monopoly on that are now getting this intermediated. presentations for repo that we can now do on the web.

i've seen deposit products that can now be looked away from the large banks. i do think technology is working slowly against the dominance that the large banks have had a lot of this business including investment banking. i think the small banks probably aren't going to necessarily pick up or lose that much but i do think this trend we saw towards the beginning of the year when we saw this revelatory rollback -- regulatory rollback it's on hold now. that's why a lot of investors are somewhat cautious. skepticala little bit of jumping in with both feet. charles, what your take on fees? charles: we are starting to see

just the last couple of months some indications that the federal reserve ward is starting to think that creating value in banking system might be a good idea for the u.s. economy. that's my read of the very careful warm of the volcker rule. for me, the story is not just the actual change but the process that was undertaken and within theness federal reserve to think about ways to improve the structures going forward. i am hearing compared to where a lot more openness and i think there is some that we are going to see a willingness to think more about growth and opportunities for improvement. tom: in the time we have left with you, we have to digress. jpmorgan earnings will be coming up.

you have been advisor to the greek government. they just did a debt workout and i was thunderstruck that there was a they cram down. it was the extension of the debt, there was a playing of the interest rates do and a delay in interest rates and all the rest. there didn't seem to be the normal pain inflicted that you see in a death workout. is that what happened and why did that happen? jack: there's been a lot of pain in greece but greece is a unique bargaining position in the sense that really trying to make greece the way estonia did in managing its financial not sustainability was impossible because in some sense greece have europe over the barrel. alternately, the risk of greece leaving was too great.

i think it's not been in the greek interest that they have been postponing major movements or policy changes for so many years. they been like the fog in the hot water that it's there and gets blown. europe the story is just scared of pushing a harder. there's an entrenched and incompetent government there. well time. thank you so much. .harles calomirirs you look at the research now and there's always little movement so there. is there a sense of stability this summer? or is there a sense of instability? jack: i'm seeing instability has we don't know what the game plan is. president ramaphosa to the

american people to say what the endgame here. was the endgame with some of these policies? guy with a pretty short attention span. i think he wants to get some of his stuff out there and then throw it back in and resolve the quickly. whether it is part of a long-term secular play that we want short-term pain for this longer-term gain, i think he owes it to the american people to get up at a lectern and let us know. we are waiting for those jpmorgan figures to come in. volatility you like and you like the good kind of toatility, investors want know if trading gains could persist for the rest the year. once your take on it? we are in a stealth correction. the s&p is up two or 3% this year.

if we can continue to plot along and deliver mid single-digit this year the s&p against the backdrop of 20%, that's a win-win. we want to get fundamentals back and my -- back in line with prices. best way to do it is tread water and let fundamentals catch up. francine: how much to trade concerns hit banks in financials? the trade to me, anyone investing in the large banks nowadays is assuming were panacea steepening yield curve and rising rates. in the firstck quarter. now remains to be seen. a lot of it depends on how persistent his tariffs are going to be and how much pain we're willing to suffer in the near whatever it isle

we want to reconcile longer-term. someine: we are getting earnings that we have been waiting for. the second quarter earnings or share coming in at $2.29 area of numbers are just out. we are expecting a break of the units and divisions. we will see what that means for volatility. this is what we saw overall. volatility likely to increase. releasing earnings-per-share. i don't know if we are getting more news. right newhe report, -- right? tom: this plot is out across the bloomberg. what i would point out is that the first look at what we have it's not only be but the idea of

loans, average core loans of 7%. that's a nominal gdp kind of statement in space to the president's tone of make america great again. a 4% gdp economy and you had on inflation, look at the return on equity. 14%. that acrossmember the u.s. landscape, jpmorgan shares have been doing better than all the other rivals. that's something to keep in mind. you can see sales and trading revenue. trading revenue is also a nice beat. tom: just got the statement out here moments ago. 11.9%. they are looking at return on equity at 14%.

revenues up. it's a brag sheet. the comments up top of they want you to see. francine: our reporting's are digging through. equities of 24%. that's well above analyst estimates. let's get to kenneth leon. they seem to be heading ever unit can every metric. kenneth: they are in the lead drivers of you mentioned is capital markets trading investment banking. commercialtrength in lending. consumer bank is also strong. i think the concerns of rising rates are getting to more races this year from the fed. issues,the geopolitical asia have large in china, that's

less than 25% of the book for most u.s. bank. as we begin the earnings season with a bank so dominant and running on all cylinders, the headline, this is the trading part. ficc. fixed income. the answer is, it's a pretty good number. as a general statement for all banks, is it is important as it was a few years ago? is.eth: it even for the largest banks, it's material to total revenue. in the case of jpmorgan, your 25% ofout trading being your total net revenue. that.han two thirds of

if you had one question you would ask, what is it? are they becoming too big? what your main concern? kenneth: the big concern is execution. the ability to take advantage of healthy markets but also to be managing cost. that would be my key question. keep in mind with all the discussion you had before, they raised their dividend 33%. they got a new $21 billion buyback plan. banksre leading a large to being a total return to dividend vehicle -- vehicle. francine: cadmium volatility is in the broker-dealers favor.

they had an increase in equity revenue. was at the time flat. or suggestd lessons that momentum is with them? trading always has a life of its own the. i think they will do well. i think they want to shift the conversation. -- jpmorganre's -- is one of the top two or three league players. andre seeing megadeals that's fueling strong advisory fees. the debt underwriting fees are down and perhaps i haven't seen it. maybe the changes of the tax reform. i would say that m&a and equity underwriting is going to bounce.

choppiness and training. francine: white is a not become bigger in europe by buying a bank? not become bigger in europe by buying a rank? -- a bank? i think their focus is here at home and they are essentially a surrogate federal reserve in many respects. how are you expecting volatility to shape up? kenneth: volatility is not an issue sometimes. as long as there is client

participation activity and trading. i would look at the larger picture as a relates to lending and it looks healthy and i think with a flattening yield curve it's been an overreaction in the media to what it means for returns, profitability for jpmorgan. francine: we are getting some breaking headlines. return on common equity rose by two percentage points to 14%. if you look at the provisions, they are down slightly. air slightly down. a little higher than analyst expectations. if you look at how they will compare to some of the rivals, with a blow everyone else out of the water? jack: it seems that way. what i'm looking at jpmorgan as a proxy for the u.s. economy.

we are going to get q2 gdp numbers. having this type of loan growth in this type of risk-taking or willingness to accept that among its customers may suggest we are going to come into q2 and q3 with a pretty strong running head start. that's a good offset to some of these uncertain is we are looking at globally. francine: the up 5%. consumer and commercial banking is not doing badly. does that point to the strength of the u.s. economy? kenneth: it does and it's important to get the balance of healthy growth is the banks are raising credit quality standards and taking a step back as it relates to home equity loans, hormone pitches -- home

mortgages and other areas that have always been problems in the economy that's overheated. francine: thank you both. next up, bloomberg surveillance radio. stay tuned. next week, surveillance live from helsinki on monday. a special coverage starts at 4:00 a.m. in new york, 9:00 a.m. in london. carrying theks advance. this is bloomberg. ♪

alix: banks on parade.

jpmorgan crushes that, beating estimates and wells fargo and citi on back. president trump critics theresa may's brexit plan, throwing down on a trade deal with the u.s., and it says boris johnson would be great in her job. i sleep pretty well, how about you? a fed chair says the economy is in a good place despite worries. welcome to "bloomberg daybreak." i is friday the 13th. david westin is off today. i'm alix steel. at a record yesterday for the year. and dollar-yen is the currency breakout to watch. dollar strength is unbelievable this week and dollar-yen not looking at upside resistance, one .15, what does that mean for the u.s. economy? we are watching the spread, 25 basis points off the lows of the