anna: good morning. i am anna edwards. i am manus cranny live from dubai. these are today's top stories. anna: fresh outrage. from u.s. lawmakers after failing to condemn flatten or -- vladimir putin. brexit turmoil. theresa may escapes defeat on her customs bill by three votes. member of her government has reportedly resigned. shares helmet after a week of expected subscriber growth.

good morning. "bloomberg daybreak: europe." we are up 9.2 of 1%, a little bit of calm and the market as there.ot to go disappointment from netflix. waiting for jerome powell. we are in a holding pattern. not so for new zealand. up .8 of a percent. it has been heavily sold ahead of the numbers but it got a boost from the rising inflation picture. gainer,leading inflation and its fastest pace

since 2011. wti, we put that in there, also looking calm. $68 a barrel down by 4% in yesterday's session. very near that three-week low right now. dropping prices for various agricultural products, metal under pressure but talk of the u.s. tapping their strategic reserves. and watching inventory data later on. there is a lot in the mix. let's talk about that as we get through the program. manus: there is a new geopolitical floor as well as a supply floor. as you were chatting i looked at this chart in a slightly rotted perspective and it is really wow. the s&p 500 relative to the rest of the world and the reason i am going wow is you go all the way back here, where were you in 1998? stupendous this

performance of u.s. equity markets. does that continue, do you have to get a while second-quarter reporting season? blackrock, the imf, the voices of concern are rising. larry fink makes it clear. could see the markets off i 10% to 15%. the imf is warning that you are going to need a block buster level of earnings. we could be susceptible to a repricing of markets if growth in the expected profit space begins to stall and that is why the while five or of the u.s. mainly against to change. there is a lovely piece in the story that goes with it which says the you first mentality could suffer. readth of the market is

there. some complain it is not robust enough that my favorite line in that market chatter is bulls will have to show more gumption than they did on the jpmorgan numbers. to question a successful bull trader in a market that rises and rises? anna: looking for the gumption. they tell us a lot about netflix. this is the contrasting picture, flat positive in that holding pattern. a little bit of weakness and nasdaq futures, probably netflix related. we will focus on the brexit story and what financial services still hope to get from any kind of deal across the channel. what does he make of the white paper of last week that had the common rule book for goods but not services, what is in it for the city?

here's debra mao. debra: in the u.s., several top republicans have criticized president trump's comments after .is meeting with vladimir putin house speaker paul ryan said russia must be held accountable for elections meddling and senator john mccain called the summit a tragic mistake. trump question whether rush interfered in the 2016 election and suggest he trusts putin as much as his much -- as much as his intelligence director. >> we are doing horribly before today. dangerously. i think it was great today. it was really bad five hours ago. i think we really had a potential problem. brexit strategy is in disarray after she infuriated .ories by bowing to pressure

the majority was cut to three votes after she adopted brexiteer amendments. the proposals were narrowly voted through the comments. a 10th member is reported to have quit in order to vote against her and she needed the backing of three rebels from the opposition leader party. -- labour party. more and buffett has donated $2.4 billion to the five charities as he continues making good on a pledge to give away all of his birth sure -- berkshire hathaway shares. the latest gift went to charities including the bill and melinda gates foundation, one named after his first wife who died in 2004 and each of his children's foundations. he has donated a total of $31 billion to the foundations. 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. you can find more stories on the bloomberg at top .

anna: thanks very much. let's get an update on the asian equity session with david inglis. mentioningard you msci asia and that is getting pulled higher by the session you see in japan which is reopening for the development there. you had the yen at the weakest level since january. the rest of asia is not looking too good. when you look at this. jpmorgan joining it. they are saying they be we should start looking at the risk from [indiscernible] not so much as a trade. the marketying that might be a little bit too complacent. ubs cut their forecast in china to 6.5 percent from 6.6%.

, ifrba minutes were out strong case to do anything. have a look at the big movers in japan. this is in japan, looking the train -- trend. on the back of concern orders out of china might he weakening from here. not exactly the most encouraging session. back to you. anna: thank you. little bit of breaking news from the european corporate perspective. business,'s norwegian valued at 21 billion norwegian krone. million.bout $2.6 and this is the cdc group ship -- selling its shares in sweden.

ofs is a scandinavian tie up telecoms and the norwegian assets are changing hands. manus: you're always buying on the money. 2.9. i did not do that in my head. mr. trump gave the assessment at a news conference yesterday. question,o is ask the my people did come to me, dan coats and others and they said they think it is russia? i have president putin, he just said it is not russia. i will say this, i do not see any reason why it would be. trumppresident donald called the probe into russia a disaster. john brennan who was cia director under president barack

obama and helped produce the report called the statement nothing short of treasonous. joining us now from helsinki, a lot of talk about the different relationship, did anything concrete come out of this meeting? it seems the best reading of what happened suggests there were no concrete deliverables and there was talk about treason. >> there was no concrete solutions to any of the topics and policies that were brought in the press conference. it was a must a laundry list of agenda items. putin did try trump a little on iran and syria but there was no solution at all not even on nuclear arms and the nuclear proliferation. the main takeaways as you were calls thetrump

mueller investigation a disaster and the fact that he indicated he trusted his national security team as much as he trusted the the president of the russian federation. that was the standout moment as well as when putin was asked about the 20 election, he said yes, i wanted from to win. -- wanted trump to win. those are two of the biggest takeaways and this is what trump is returning to home in the u.s. he is getting a lot of criticism especially from members of his own party. manus: great reporting. live from helsinki on the latest. joining us is the head of investment at her mess -- hermes. the hurly-burly seems to have

been done yesterday and the caravan moves on to assessing risk. larry fink is saying we are under assuming risk very there seems to be a complacency in terms of markets. our marketsree, complacent? the imf warned and so did larry fink. are we complacent? >> i would like to think i am not that larry fink is a must certainly right that the markets brought attention to the pro -- geopolitical risk. they seem interested in the trade war and protectionism but not much more on that side either. the, weu talk about talked to people about the models, how much damage a trade war does. and you suggest that a number of those estimates show a reduction in world gdp over a few years but they overlook the impact it

could have an certain sectors. >> there are consequences that will roll out through the potential trade war which are being ignored by markets for the time being. inevitably they will wake up to them at some point and are expected to see a hefty reaction. the numbers are significant when you talk about two or 3% over three years, that is a serious hit to global growth. anna: the imf is hoping its estimates, talking about a more fragile global outlook. u.s.do not tweak down the numbers nor the global growth number. this,oes to the heart of is thethe questions is u.s. going to be damaged by this? >> i would have had u.s. growth down as well. perhaps not to the same extent as the rest of the world. we are facing a situation where

there is a split in the global economy. the heady days of synchronized global growth of 2017 are behind us now. we looking at a picture where china, europe, and the rest of the world are separating from strong u.s. growth. anna: everyone was transfixed about the prudent-trump meeting. you said we would not have much market moving relevance. doesn't have any long-term impact? the reconditioning of the u.s., certainly trump's approach to geopolitics, does it have any impact on your asset allocations ? >> i do not think it does. we did not think anything grand would, out of this meeting and there were the words that came against the 12 russians that were indicted on friday. clearly those two things are somewhat at odds. to us there will be no real market impact from the conference yesterday.

coming up, neel kashkari is not buying. he says he sees little reason to raise rates much further. we discuss that next. hisjay powell delivers testimony to lawmakers and the senate. this is at 3:00 p.m. in london. ♪

manus: welcome back. the live shot of singapore. you have stocks rising slightly. larry fink might be warning about the potential that trade tariffs did have on markets, they could go down by 10 or 15% in the worst-case scenario. ubs cutting their growth target that stocks remain resilient.

is -- here with your business flash. has slumped inx extended trading after missing earnings and since grammar expectations and warning of potential disappointment in the third quarter. revenue was three point why -- $2.9 billion against estimates of 3.9 4 billion. one million users signed up. subscribe or growth may miss again in the current time. adopting netflix around the world, increasingly more in our newer markets as well. i think we are still on track for strong growth this year. and it will come and a little bit differently than we expected and others expected. deborah: amazon sales rose sharply as the prime day kicked off. the fears that glitches would hurt business.

shoppers spent 54% more in the first three hours of this event than a year ago. and jeff bezos has the consolation of coming the richest person in modern history. his fortune has risen to $150 billion. turmoil.asing the company decided to -- he decided to leave after he had no confidence of the supervisory board. his resignation as to a the ceo ofaccu after unexpectedly quit earlier this month. that is your bloomberg business flash. thank you. jay powell is delivering his semiannual policy report to the

fed banking committee in washington. he said the economy was in a good place and signals no urgency to raise rates. more than the fed envisions. manus: the sentiment is echoed by neel kashkari. writing in a blog he said there is little reason to raise rates much further. the brakes on the economy and the risk of that that it does. that triggers a recession. you could always say this time is different. i consider those the four most dangerous words in economics. i asked my last guest in the middle east show though those four words strike fear? we know he is a dove and he joins the chorus of other voices is itg about this and different this time, is he

right, do those four words fill you with fear? that itobably is right is different this time. perhaps not in the way that neel kashkari meant. i think it has the potential to be a lot worse this time. i was expecting jay powell to come out today and restate positive economic outlook and continue with normalization at its current pace. here, itof a fed error is significant and could combine with the effects of the trade war and hurt the economy. anna: i have a chart here, 5187 on the bloomberg. this is the flattening of the yield curve that neel kashkari set is dangerous. you think the fed is going to make policy errors. do they that manifest, keep hiking for too long when they should have been positing

-- pausing? >> we saw in some reports from the fed that a range of estimates for the neutral rate. the traditional estimate used i yellen had the neutral rate plus zero. the range looks at an average around .8. fed'suggests in the thinking maybe another four rate rises at leased. that could be too much for the economy particularly even the effect on long-term yields from repacked ration of money back into the states and the possibility of curve inversion. inus: on one of the things was looking at this morning was global inflation and how that has played out. i found it surprising. i was quite shocked. europe trolleys in their behind that and comes in at number two. global inflation is at 2.77%.

the same way larry things, your complacent about markets. making -- missing something in the global inflation picture? >> it seems it is a little stronger than the markets are willing to give it credit for. it depends on what is in there and if one discounts the effects of the potential for trade wars which could be, provide a positive shelter inflation which would diminish quickly. anna: we have the new zealand inflation data resulting in new currency. to look at the mental state of the investment community. this was talking about looking at the yield curve. this could be something different to what investment equities are telling you.

>> there are two things i have been watching, one is flows and it is fascinating to see how sentiment is moving capital around the globe and allocation terms and that seems out of emerging markets out of asia and into the states. the other interesting thing i observed is we have another repeat of 2007. in which all of these models are melted down together so the value factors, the momentum factors, all stopped working, all moved down together and were not offset by growth or quality. that is repeatable. it was a harbinger of nasty things to come. you're channeling my inner grinch. you know what you're doing. highest price, and a worries about it every day. the highest price since the

global financial crisis. you mentioned it, not me. do you want to shift, is there a shift in duration taking place? there is that switch, why would i be long tens when i could get 2.8 onto your paper? larry fink says you want to come down the duration curve, would you agree? guest: i think i would. the yield look attractive against the yield you could get with dividends in the equity market. manus: alan murray, had of investment of hermes stays with us. brexit strategy in disarray. we will talk about exit later and talk about the vote that narrowly went theresa what -- theresa may's way. -- blackrock's box sound bosque sounds the alarm. we told you about the potential for market selloff.

more fink will bring you on that later in the program. this is "bloomberg daybreak: europe." ♪

manus: record stocks repurchases, record m&a, that is like nirvana for investing. so the market is having a hard time digesting the whole change in globalization and trade as we start entering this conversation about trades and tariffs. we are seeing clients put back a little bit. they are waiting to see how this plays out. we have a true tariff war. we will see the markets down and the 15% having an impact on investor sentiment and that is

what we are seeing right now. we are seeing investors pausing first learned to. tariff0 billion --meaning what? the gdp will slow down dramatically. we'll have even more uncertainty about the war and how the u.s. is being portrayed. it has a different agenda than what i think is the right agenda at this time. manus: that was larry fink speaking with bloomberg. his views on trade and the markets and the risks. we have the market run done for you with maria. fink is that larry u.s. goes full monty on trade tariffs. reporter: good morning, manus. let's get you up to spain -- up to speed with the asian markets. this idea that traders are not sure if they want to focus on earnings and fundamentals or just be concerned about the trade war and the potential

escalation. that is what we are seeing in asia markets today. japan is outperforming the region. the yen is falling in a three-week low. still majorly under pressure. i also want to look at australia which is underperforming. a lot of this has to do with this idea of weakness in the commodity sector. i want to move on to my next chart. sticking with this idea of emerging markets coming under pressure. when you look at this line here, you can see the emerging markets stocks are now trading at the biggest compared to u.s. equities in biggest -- and 30 years. it was 2002 when we last saw those levels. that gives you an idea of these things we are seeing. equities doing much better and stocks in china coming under major pressure. lastly, also staying on this idea of commodities, i want to point you to the bloomberg community -- commodity index.

from oil, to coffee, it has come down to the lowest level since august. commodities have had a very rough week. you are seeing it reflected their. yesterday, it up -- a terrible day for wti which dropped $70 per barrel. anna: the get the bloomberg first world news. in the u.s. several top republicans have criticized president trump's comments after his meeting with vladimir putin. speaker paul ryan said russia must be held accountable for rush -- the election meddling. trump question whether russia interfered in the 2016 election. he also suggested he trust putting as much as his own national intelligence director. we were doing horribly before today. dangerously.

i think it was great today, but i think it was really bad five hours ago. i think we really had a potential problem. reporter: china's home prices rose at the fastest pace in 21 months in june even as the government stepped up a campaign against property speculation. in home prices in 70 cities the government gate 1.1% from the previous month paired with a 0% increase in may. it was the fourth straight monthly acceleration. in japan, newly released documents show that central bankers still expect the country's economy to grow at a moderate pace in the second half of 2008 -- 2000 -- clearlyard members were wary of the downturn in the u.s., they broadly stepped the view that the japanese economy would return to expansion after a slow down. it is a stark reminder of how policymakers around the world

underestimated the impact of the global financial crisis. global news, 24 hours a day, and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . anna: thank you very much, deborah with those updates there. market of materials -- -- bloomberg commodity index ranging from oil to coffee, to sink, has tumbled more than nine cents from its year to date high in may. joining us that for an overview is our exec it -- executive editor stuart wallace, good morning to you. where getting close to a correction when it comes to prices. what is the outlook for the rest of the year? >> it depends what you look at. when we are looking at the

commodity index as a whole, that is dangerous territory. it is reflecting wars against global growth. not terrific in terms of the outlook. also, trade wars. this is really bad for base metals. you have some phenomenal performances, though. the projection is that it will get even higher. manus: we have also had news from real reporting that it is on track for record annual sales. you talk about the potential slowdown in china. a lot of people really are reflecting on that. just square those two away for us in terms of prospects for oil prices. record or 2% in july according to morgan stanley. difficult oneis a

because yes, the chinese economy is probably going slow a bit has not already but within the are noor complex would've a trying to do, clean up their skies and the rivers and the environment. ore.need to buy quality price for that ore is going up. that stuff is much more harder to find. anna: we will get your thoughts on oil in just a moment. in wpi?hat a 4% sale technical investors like to look at it. have been plating -- flirting with a 100 day moving average. are you seeing risks for the upside or the downside of oil prices at the moment and how does that play into your started j? -- strategy? >> you have reasons for moving on both sides. everything -- everything seems range bound at the moment.

a recent drop in oil prices. if you look at the food context he can see on the one hand, droughts and a number of key producing regions. that is being offset by the -- by lower prices from the potential trade wars. tous: let's bring it back oil. one of the things that we have looked that is a bit of the demolition on oil yesterday. there is this concern about additional supply coming from saudi in terms of what they are exporting and at the same time from the united states of america. is oil trying to find a new geopolitical floor? >> absolutely. it is exactly the right way of describing it because of what is going on here. there are very clear signals from saudi arabia specifically to donald trump that they will do their best to bring down prices. where coming up two midterms, that is a crucial moment to get

that gasoline price in the u.s. back below three dollars a gallon. the saudis have pledged to trumpet we will try to do that. it is a very public and clear signal. iwould tell everyone come expect lower prices, notch or medically, but certainly lower than what we have been trading in the last two or three. -- notch or medically, but certainly lower than that then what we have been trading in the last two or three months. . anna: there has been some talk about the u.s. decision process? element of a little panic because they have realize in terms of the policies they have had, the trade wars, the sanctions, the pressure on rogue states. all of that is revving up the royal prices when they needed to be coming down. the oil prices when they need to be coming down.

you do need allies to bring that price down. they also have a lot of enemies out there that are hoping for exactly the opposite. i want to go back to the chart that we used a little bit earlier, the demolition derby on the commodity complex. we caught up with a number of afferent thinkers, copy has -- copper -- trump has been brutal on trade. almostalso been mercantilists. will -- they will fall before the the midterms and we will see a resurgence in this complex. do you think that trade deal will be enough to cause a resurgence versus the potential slowdown in china? on theink it depends skeleton. thinking specifically of the steel and aluminum market where

we have seen the hardest hits in terms of the sanctions. some of that is being -- in terms of the oiled waivers for iranian oil, again very mixed messages so far. on the one hand we have some saying we might think about it on the other hand, some saying no we don't. that will determine everything about the prices after that. period. that driven bypots will be the u.s. consumer as we get close to november. that will determine what he adds into sanctions. anna: thank you very much for that. think you to our executive editor stuart wallace and a when mari, head of investment -- owen, head of investment. manus: a reminder, if you are a bloomberg user you can interact with all of the charts in gtb

go. the most recent one that we featured. we even do that twice in one segment, that is a shocking move for an a and i. i.for anna and is theresa may under attack from european? from her divided party, we get the details. his: we will hear from second hike in a year. he and the team have reattempted -- this is bloomberg. ♪

anna: good morning, this is "bloomberg daybreak: europe." it is the day after the wooden

-trump meeting in helsinki -- the putin-trump meeting in helsink. i. the nasdaq is weak. lumpedr: netflix has index in the trade after missing earnings and zuckerberg expectations. and warning, a potential disappointment in the third quarter. 5.1 million new users signed up compared with forecast of 6.3 million. subscriber growth may miss again in the current. . sharply ass rose primed day failed event kicked off. they had technical glitches with -- which significantly hurt business.

those glitches will have an data ugly irritated jeff bezos, but he has a consolation up becoming the richest person in modern history. his fortune has risen to more than one -- $150 billion. the company said he decided to leave after realizing he no longer had the confidence of major shareholders or the supervisory board. his resignation adds to a leadership vacuum after ceo henrik eisinger unexpectedly quick -- quit earlier this month. the nfl distributed a record $8.1 billions to its team last year almost up 20% from 2016. that is from disclosure from the green bay packers. he saw no negative financial consequences related to the 2017 season which included public criticism from president donald

trump, declining tv ratings and player protests during the national anthem that polarized fans across the nation. this is your bloomberg business flash. manus: thank you very much. let's get back to one of our top stories this morning. netflix. emily chang brakes on the numbers from san francisco. it was a huge mess for netflix on your suspender addition -- subscriber addition. well below expectation. the company adding just about 5 million years of servers and the company. they expected 6 million users to be added. the company may not be making new content fast enough including new seasons of shows that are already hits. the world cup could have also been a bit of a distraction for some viewers. ghb chief strategy it is a big so --

surprise for him. >> it will add for quarter to this is definitely what i view as more of speed bump, not the start of a negative trend. ultimately, you will see the negative knee-jerk reaction. international growth story. the growth season goes much higher. emily: is it just a speed bump or part of a longer term trend? international growth will be a key metric to watch, of course, other entertainment giants are ripping pages out of netflix's playbook. apple, amazon, those are companies that are already there when it comes to -- fromit comes to the letter shareholders, they strive for accuracy but in some quarters we will be high and other quarters will be low, relative to our guidance. an interesting point to know, it

is going -- the fastest-growing expense for netflix is not on programming it is for marketing those new hit shows. emily chang, san francisco, bloomberg. anna: let's turn to our attention back to you. rebels have one key concessions on u.k. theresa may's expectations to keep the country close to europe in a post-brexit world. votete majority -- a three majority. let's take a step back and talk about where the city of london goes from here. last week we heard about the white paper that theresa may planned, if she can get it through parliament of course, to take to brussels.

your scale of disappointment last week on hearing of the government plans. >> we thought it was the best passporting. it preserved sovereignty on both sides. the reality was we have been pushing it in brussels and in the member state capitals. the government has been pushing it in the same way. the problem has been for quite a while, that the talk -- the clock is ticking down. anna: you were disappointed. >> we were. the critical thing now is how do we drive forward and deliver something to serve customers with a minimum amount of friction and difficulty. manus: good morning to you. the word that came to mind when i was thinking about what i would ask you first is there is a certain smack of betrayal here by this government. or is that overstating it in terms of cutting banking? economy, on 11% of the

are we over simple find the maneuver? >> at the end of the day service is 80%. if you look at the whole of services it is 79% of the economy. want to make sure you don't end up in a situation where 20% of the economy is customs is driving the whole thing. we need to be realistic. this is a phased sequence of talks. northern ireland border is critical to being able to move to phase one of the talks. we need something to unlock the talks to allow us to move forward. anna: what are your efforts focusing on now? you said that was a bacterial. -- a back deal. where is your focus now? tothe white paper we have accept, there is a reduction in market access between the u.k. and the you -- and the eu.

you need to understand what the basis of the white paper is but also put some flesh on the bones of the white papers. one of the critical's -- vertical things here is the paper is four pages on financial services. that is effectively a skeleton. we need to put some flesh on those bones. regulatory -- of regulations were many more pages. the government is very clear that where currently stand is not work. -- where they currently stand does not work. there are doing for equivalents. it is very unclear what they mean by that. you can talk to four people and get five different answers in brussels. the government seems to be talking about an expanded reciprocal arrangement.

we are in early conversations with treasury officials and others. we have been talking to government officials over the last few days. our next meeting after this is expanding, getting a sense of what the expanded equivalents maybe. that is where we are now. in the netherlands, toward the end of the week, we really need to get a sense of what they are looking for and how we can move this forward. ultimately, the guide here has got to be that next year we continue to service our customers and that is priority one, two, and three. manus: there are also $127 trillion worth of derivatives which may need a little bit of attention. there is no brexit threat to financial contracts, the european side, mark carney however it would raise a different risk level. how would review -- how would level?est -- ss the risk >> it is the 36 million

contracts that are affected by this. the bank of england seen -- thinks there is a reason greater than that. it covers everything from dozens to trillions of pounds worth of rivet its contracts -- of derivative contracts. we have been very concerned that there has not been a focus on this efficiently and the eu. certainly when you talk to people in brussels and in a number of the member states you tend to hear this is a private sector problem that needs to be a private sector solution. we do not think that is absolutely right. there just is not enough time, not enough lawyers, that enough lawyers -- courts or regulatory capacity. we have been seeing their needs to be a public sector solution is a part of this. anna: they keep saying that there doesn't. >> we are worried that this is exactly what we were concerned about. but this has become part of a political negotiation. it is not,, it is a technical

issue, like a plumbing issue. anna: the financial actor -- factor -- what is your latest assessment on jobs? are more jobs moving as a result of the white papers? >> what is clear is that the analysis oliver wyman did in october 2016 continually seems to be sort of reinforce in terms of what we are seeing. that spectrum was a high access out of an ecosystem of about 2.3 million jobs across the whole of the u.k. the critical thing there that we have always sort of stress is we are seeing one of the big things here, the jobs go out of europe. manus: thank you so much.

miles celic, chief executive officer at thecityuk. after jp morgan and citigroup, it is all about the banks. this is bloomberg. ♪

manus: good morning from dubai. i am manus cranny. anna: i am anna edwards in the city of london. these are today's top stories. manus: russia outrage. donald trump sparks fury as u.s. after maintaining relations are on the right track. brexit turmoil. theresa may escapes defeat. a 10th member of her government has reportedly resigned. netflix miss. shares plummet after unexpected subscriber growth and the streaming service proved it is

not a bubble investment. ♪ a very warm welcome to "daybreak europe." we are waiting to see the numbers drop across your number terminal. 27 carhis is the eu registrations, 5.27% but in the somethingk. it is during the first half as european command grows. german luxury carmakers fall on customers waiting for new models. let me break this down. the u.k. down 6.3% extending last year's slide. overall car registrations across europe rose by 2.8% in the six

months through to june. that is on the pan-european side. separately are the luxury car models, they are struggling as june.made a return in this is what we got for you in terms of sales, up 9.9% for bmw. it was not enough to offset the drop. those of the state of play on 5.2 of the auto sales, percent. let's talk about the markets. oil got itself off the floor. bubble, that is a question you to ask yourself. down by 10. there is a skittishness in this -- these market. you can see the political rhetoric rising, backlash against trumpet these markets are more vexed by trade. there he fink is warning that if the u.s. goes the full monty in

terms of the $200 billion of tariffs, that could slow growth and not markets by 10% to 15% and the imf are warning, saying that it seems to be a complacency and markets. are we discounting enough of the engstrom trade? the angst from trade. anna: we will talk banks and a second. we heard from netflix last night and that did not break us -- get us off to a great start. the msc asia-pacific is dealing with that and it is flat. on thelding pattern dollar and equities. jay powell well speak a little bit later on, he moved the yield curve so will he move the dollar? we talked a little about

inflation and this is what happened in new zealand to boost the currency. numbers coming in much higher than were expected. this is a currency that had been on the short side ahead of that number. nymex down .3 of a percent. that follows a 4% drop in yesterday's session. and around saudi arabia regulation around u.s. reserves, lots of political questions around the oil price, the u.s. administrations strategy in regards to oil. ares: the bond markets waiting to hear what jay powell has to say. will he reassure the markets? he says the you curve will invert. that sets us up for a conflict between himself and neel kashkari. this time it is different, those of the four words that he considers the most dangerous and

economics. there is a big trade that is shifting sentiment. he had a pretty big trade on bund was to do with the vs. u.s. treasuries. we are seeing the biggest expansion of that yield. quarterlyread on a basis since 2016. the spread is 250 basis points. that question is does the spread continue to widen, the u.s. over continue?s that that is a question for the bond markets. debra mao has our first new -- first word news. deborah: several top republicans had criticized president trump's comments after his meeting with vladimir putin. paul ryan said pressure must be

held accountable for election meddling and senator mccain calls the summit a tragic mistake. the question whether russia interfered in the 2016 election and said he trusts couldn't as much of -- as much as his own national intelligence director. a quick thought we were doing horribly before today. i mean dangerously. >> it was that dramatic. >> it was great today but it was bad five hours ago. i think we had a potential problem. ministershat u.k. brexit strategy in disarray bowinghe infuriated by to pressure from their eurosceptic colleagues. the majority was cut in three votes after she adopted brexiteer amendments for a key piece of legislation and proposals were narrowly voted through. a 10th of hers that her government has quick to move

against her and she needed the backing of three rebels from the opposition labor party. in hawaii, an explosion caused by love up losing into the ocean sent molten rock crashing through the roof of a sightseeing boat off big island. the love upon should the roof leaving a woman in serious condition with a broken thighbone and 22 others suffering burns and scrapes. they were aboard a tour vessel that takes visitors to see love up plunging into the ocean from the long erupting kilauea volcano. 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. you can find more stories on the bloomberg at top . manus: thank you. let's get a market check. warning signs from larry fink, the markets seem unfazed the moment.

much the tailso risk but something that creeps china my ubsrop in is one of the bigger stories, cutting their forecast for chinese growth. quotere abandoning their that the renminbi will and on a stronger footing. trade talks will weigh into currency which will way into the current account in china and it weighs on growth. look at that transmission effect, that is real. i mentioned china. if you leave japan into the equation we are up and if you take japan out we are down 2.41% for the benchmark. similar losses we saw yesterday. every sector group with the exception of industrials are down following the big drop in oil prices.

we have a chart, we will talk asia and japan. last of interesting things to happen. we are seeing -- getting the chart act. falling belowday the 200 day a couple of weeks back. what we had recently is the 100 day falling. and 2015, a 200% drop. who knows where we go from here but downside momentum and volumes are heavy as well. not exactly an encouraging sign for equity markets here in the region. anna: thank you. david inglis asking the provocative questions. president trump has says it he doubts whether russia meddled in the 2016 u.s. election giving pressssessment at a

conference with vladimir putin in helsinki. >> all i can do is ask question, my people came to me, dan coats came to me and some others and they said they think it is russia. i have president putin here and he said it is not russia. i will say this, i do not see any reason why it would be. president trump called robert mueller's probe into russian election meddling "a disaster." emery gordon has been tracking the events from helsinki. good to see you. a lot to talk about. diplomatic relationships are being called into question. senator john mccain, no prior president has ever a based himself more abject they before a tyrant. that is back home and that is the guts of your party. is going to face quite a

reckoning when he returns to the congress. members of his own party questioning and attacking for the way he handled and represented the u.s. in this press conference. the two biggest things as you alluded to talked about in the introduction was the fact that he called the mueller probe at disaster and he indicated that his own security team equally is on the footing of president of the russian federation. down well int go washington, d.c. and in europe this is not likely going down well. the foreign minister in germany saying he cannot rely on washington anymore. how he treated president platt america putin quite respectfully and a glowing manner just magnifies the extent to which he did entreat his allies at nato -- did not treat his allies at nato. saying merkel was captive to the

russian state as well as his bombshell interview with theresa may. anna: thank you. on the is up to speed events in helsinki over the past one for hours. joining us on set, jerry fowler. very good to see you. on the subject of the geopolitics what we saw in helsinki, a source, a lot of daily noise behind that, trying to find the signal is hard. someonerenced trump as who thinks there is only so much success to go around and he wants more of it. i wonder if that starts to spread to markets, there is only so much success to go around. he is not a win-win kind of guy. he is trying to bring that to the u.s. and he will be moderately successful but the u.s. is a performing anyway. if you are a small, open

economies that relies on dollar funding you have a problem in terms of adjusting to this news -- new landscape. assets are outperforming. we expect that to continue and in the longer term who is going to be able to adjust to this multipolar world with much tighter levels of dollar funding and actually the u.s. has high stock of savings, and a reasonable flow of savings, it is an innovative economy. it does not have a high debt burden so the u.s. looks pretty good right now. manus: this is the performance of the s&p 500. we started the show an hour ago, this is the s&p relative to the rest of the world and i went to wow, and well again. you look at this inexorable outperformance. when i see a chart like that i go, can that kind of momentum

continue when confidence gets snapped at over the politics of trump or maybe i am a little too grinch-like early for christmas. a lot of what we are seeing is the adjustment of global investors toward this more uncertain world. u.s. investors are pulling their dollars back from offshore markets and foreign investors are putting more of their money into the safer assets in the u.s. what is happening is economically justified, neil is saying we should hold our nerf because what is happening is economically justified. we have seen the slowdown in asia and europe, the performance of those markets and currencies haseflecting fairly what been happening. at what point do those slowdowns abate or what point does the u.s. surge start to abate?

you can get more convergence. when you do there will be some fantastic opportunities across emerging markets. we could add emerging-market equities or currency bonds at some point. anna: do you need to put aside what we are seeing on the yield curve in the u.s., does this ring alarm bells and the global growth story or is it not that prescient and it is different this time unlike neel kashkari says it is not. guest: the rate is moving toward a flat curve, moving in line with what markets are expecting. the market is pricing expectations fairly. my view is that it is going to be difficult for the fed to hike in line with the dots. rise that causes yields to which is natural, arising dollar

which is likely while the u.s. is pulling away versus the rest of the world, they are not looking to move rates until next year and you have high oil prices. those three are bad combinations particularly for emerging markets and that slowed down is likely to permeate and caused some tightening in the u.s. and the fed will have to respond. in our portfolios we are expecting high rates and we are still expecting a stronger dollar and have positions and we are expecting that oil will do better in the short-term. we are mindful of that combination being not very good for non-us assets and just looking for what might cause that to abate. we will spend a lot more time with one of our team. this is financials in the u.s., a lovely line in the mliv blog.

relativeank earnings to the six month and five year treasury yields. there is that symbiotic relationship and to what extent do you want to have banks or more banks in the u.s. in the portfolios? guest: we think banks are to be not. we held them against consumer staples which is a duration proxy. the earnings are the banks are doing well mod there are lots of ipo send m&a, they will be firm through the rest of the cycle. i'm a bit moreat concerned about for 2019 is the delta of growth will turn around and private credit markets have exploded significantly. there will be risks as rates rise on the economic impact that will feed through into the performance of loans that some of these banks are making and facilitating. anna: thank you for your time.

jerry will continue the radiosation on bloomberg . stay tuned tuned for that. let's get a bloomberg business flash, here is debra mao. deborah: netflix has slumped after missing earnings and subscriber expectations and warning of potential disappointment in the third quarter. 3.91 billion dollars against estimates of 3.9 4 billion. 5.1 million new users signed up compared with forecasts of 6.3 million. subscriber growth may miss again in the current time. theincreasing turmoil at top of the german engineering conglomerate. he decided to leave after realizing he no longer had the confidence of major shareholders or the supervisory board. his leadership left a leadership vacuum after [inaudible]

earlier this month. that is your bloomberg business flash. manus: now to the banks, goldman sachs will report the second quarter earnings later on. we have seen beach from j.p. morgan, citigroup, and bank of america. what will come for goldman sachs, will they continue the trend? are executive editor for global finance joins us. expectations from goldman, the m&a sweet spot the rest of the street is what is building in expectations for these guys and girls, isn't it? >> that is right. especially after j.p. morgan and citigroup beat expectations on the investor banking front, the groundwork has been laid to surprise on the upside. anna: where will they surprise on the upside, if we have learned anything from what we

have seen so far? >> we have seen positive on the advisory side, also on that capital raising side. it will be interesting to see how they stack up in that regard. the other area everyone will be watching is the trading side. ,hey had a strong first quarter recovering from 2017, it was not what they hoped for and we have seen the equity volatility translate into some of the better results for their peers so we will see what happens there. manus: under lloyd blankfein goldman sachs became the most property -- profitable company in wall street. that is the man that went before that, seeing this company through some pretty tough moments. what comes next, what does david solomon want to do, what will be the hallmark of the solomon air a the first 100 days? guest: that is the other big

news we are expecting, the more normal announcement that he will be the next ceo. there are a bunch of questions around that. we are expecting lloyd blankfein will remain ceo but how long? give any- will they guidance on when the handover takes place? solomon has been a big proponent of goldman's push into the consumer lending business. it surprise some people that goldman is getting into the consumer space and what will they say about that? they started to talk about the consumer lending business being an engine for growth. it will get a number of questions on that today and we may get more visibility into solomon's vision. anna: and how much it overlaps with that of lloyd blankfein. thanks for joining us. executive editor for global finance. traders expects -- fx will be watching out for what jay powell has to say.

he gives the report in washington and in the u.k. we have employment and wage data due later this morning. have mark carney presenting see financial stability report. delivering of financial stability report. there is a little bit more about the foreign exchange market. great to have you with us. what is next for the dollar, we know what trumps geopolitics frenzy is at the moment, we are waiting to hear from powell. i am wondering, we are up 7% on the dollar since april. we are going into a powell testimony. ?s the dollar near-term peak are we all priced for a powell gradualist speech?

we -- we are not expecting much new of powell. i would the surprised if we get a further boost. he has everything said already. he is very bullish on the economy and there is a risk of a trade war but that is not with the current focus is on and the fed is positive effects on the u.s. dollar going forward for now. anna: you are in a mood to seek havens, are you looking for havens from a trade war, and the dollar or do you seek it elsewhere? everybody waits for some signal how the fed is going to deal with a trade war. so far, the concerns about the trade war are not reflective in u.s. data, and looks different in europe or in asia. nolong as there is

uncertainty in u.s. real economic data, the fed will concentrate on the current state of the economy and that is positive and speaks in favor. manus: in terms of dollar-yen, yen is at a six-month low. dollar is at a six-month high. we are at one of those pivotal moments in dollar-yen. how do you look at that when you look at what larry fink has and an additional $200 billion you could see equity markets roll down by 10% or 15%. that would smack of a young bid to me. guest: i agree. fundamentally it might seem justified. the bank of japan is more expansionary than the fed. the yen is like the best safe

haven in times of trouble. i think there is more trouble to come. other placesout that you might see that expressed in the chinese currency, credit expansion has moderated. a weaker chinese currency can be expected. when and how week does it get? guest: there is more downside for -- you to come. simply because at the beginning of the year everyone was expecting the pboc to tighten monetary policy to support the deleveraging efforts. this is turned, they have eased monetary policy and they are either going to support the economy which seems to cool down substantially due to the trade war but also to internal troubles. i think yeah. furtherutlook is low as

monetary easing speaks in favor of some higher dollar renminbi going forward. anna: thanks for joining us. we appreciate your time this morning. let's take a check of the markets. minutes ago before the start of the trading day. mix, weures also in the have these on a graphic for you. which sharestflix are weighing on the nasdaq? 15% or nearly 15%. is that content double almost done? the question is this, are we complacent and markets, is larry fink right? thehe chief economist at

imf right? you and i are going to debate that further on radio. do join us. that is it for daybreak europe. the european market open is next. this is bloomberg. ♪ two, down and back up.

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i: good morning. this is the european open. we are live from our european headquarters in london. i'm guy johnson. matt miller is in berlin. matt: we had a mixed trade in asia overnight, chinese markets were down, japanese markets were .p after the marine day holiday it looks like investors are selling off treasuries so it could be risk on in europe. the cash trade is less than 30 minutes away. ♪ guy: