anna: good morning from bloomberg's european headquarters in the city of london. manus: this is bloomberg daybreak. here are the top stories. anna: the fed chairman warns against u.s. protectionism and says the fed will gradually hike rates for now. after trump goes back on his comments in helsinki, trump makes an about-face. is it enough to calm the backlash within his party? pound falls to a two-week

low against the dollar. ♪ good morning to you. this is "bloomberg daybreak europe." asml is the company we need to focus on. the europe's largest semiconductor equipment maker. -- quarter nett ands between 2.7 billion $2.8 billion. this is the forward looking stuff we are getting from this business. things look to be better than anticipated.

we have a gross margin of 3.3%. 3.3%.wth margin of a mixed, positive set of numbers coming out from asml. ultraviolet-lithography systems is always the focus of the earnings report. manus? manus: the drug earnings business. artis.ty -- nov tos is the performance year date, down 2.86%. are reconfirming their 2018 guidance on the sales numbers. this is in dollars. 3.01 -- $3.01e is billion.

sales guidance alcon revised up to mid-single digit growth. the guidance is low single digit declines. if you think back to the end of june, a $5 billion share buyback. the selling off of the alcore business would take place. this is a man who is transforming novartis, focusing on prescription drugs. absolutelyidance is bang-in. it is confirmed. a have a little bit more of 7:30 u.k. time. anna, you are never far from

brexit. go on. >> you have a strange impression of my weekends. company is selling off its chemical business to carlisle by the year's end. they'ves not look like impressed on second-quarter numbers. $2.45 billion is a shade below estimates. adjusting operating income for continued operations also below estimates. statements are coming through from them. they talk about conditions still challenging businesses. inflation is projected to continue in 2018. riseeraterial prices show a at the start of the year.

upward inflation from raw materials is still being factored. how will they manage to deal with that rising cost pressure? cost-cutting is planned. u.k.ll be joined at 7:30 time. looks like they have beaten even the highest of estimates coming through in the 6.0 --quarter, nothing billion -- netting billion in terms of swedish krona. a nice performance at this bank over the past year. mortgage lending volumes in sweden continue to grow. the tier one ration, --

ration, 23.6. a little log -- a little lighter than the market, 23.7. anna, we have had one of our biggest reporting banks delivering their first half numbers as well. what did you get from jay powell for now? anna: he said something to suit the markets. the fed continues to increase rates for now. it seems equity markets went with that. the fx market went with jus teh -- just the start of that.

the dollar is hitting a six-month high in the wake of these comments. weakness is coming through in oil prices this week. u.s. crude inventory data showed a surprise increase in the united states. let's get a bloomberg first word news update. juliette: u.s. president donald trump accepts the conclusion by american intelligence agencies that russia interfered in the presidential election. the retreat over comments made earlier came amid a backlash republicans. even with a prepared statement, he introduced doubt, saying the meddling in the 2016 election could be other people also. there is a need for

some clarification. just inlike to clarify case it wasn't. a key sentence in my remarks -- i said the word "would" instead of "wouldn't." should haveence been, i don't understand why it wouldn't be russia. e.u. members are being urged to increase operations for a no-deal brexit. a document will be prepared for a meeting in brussels today. are hopinge rebels to create a customs union within the eu if a deal fails. may will appear before parliament's liaison committee and address a meeting of tory mp's. looks to discuss the negative impact of the

ongoing trade war. it is unlikely to be included in the meeting's final communique. delicates seek to avoid the type of fiasco at the g7 meeting in canada last month, when donald trump withdrew from the final statement amid a flurry of insults. global news on air, 24 hours a day and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. you can find more stories on the bloomberg @tocgo. those comments from jay powell certainly giving a boost to sentiment. the dollar strength as well. the yen lower. -- the nikkei is up by some intensive 1%. percent.tenths of one to look at some of the

stocks we are watching. shares have received up grades. you are seeing quite a good boost in hong kong. at bhp with looking record iron ore outputs. a more than 3% gain. aerospace, the worst performer when you look at member-ranked returns in the region. manus: thank you. the fed is planning to raise interest rates gradually. those are the magic words. this was confirmed during powell's testimony. he warned against protectionism amid rising trade tensions.

it is difficult to predict the ultimate outcome of discussions over trade policy, as well as the timing of economic effects in recent changes in fiscal policy. some asset prices are high and there is a level of non-elevated debt in the nonfinancial corporate sector. we lead the world in productivity and we are great exporters. we would be very hard hit by these terrorists -- tariffs. and have grown faster thatr incomes, countries are not in a more protectionist direction. we want to make this more transparent. we want to improve it over time. all of our actions are designed to do that. if you look at the banking system and the fact this test

will require higher capital, are words are consistent with our actions. the shape of the curve is something we have talked about a lot. i think about this as the question, what is that message from the longer run rate, about mutual rates? set ine are joined on london by a senior investor. let's put into context those comments from powell and the u.s. fed. powell went into this testimony and suggested that there was a couple of tripwires for him politically. he was speaking out in favor of low-level protectionism that would maybe surprise some people, considering the danger of attracting the ire of the president. >> the fundamental principle of the fed is that it is independent.

he doesn't have to mind his peas and q's.s -- p's it is interesting to see that sort of intervention. going tohink you were find anything remotely and lightning or controversial in what he said -- enlightening or controversial in what he said. it is useful to have that restated. it will be interesting to see what happens next. we are closing the first chapter of this trade story. we are back in two are about to turn the page on to the next =-- about to turn the page onto the next. the timing is as interesting as what he said. do you think that what he

managed to do is get a little bit of a two-way risk? i had a look at what he was saying. -- said a, a couple couple years ago, the fed is on hold until the data will improve. now he said it is on hold until the data weakens. the new era is hike as she goes on till the data changes. -- untill the data changes. changes.the data it is self-evident the fed is data dependent. the fact that he didn't have to say it is implicit. it, what is the hidden message?

this is the first time we have had a can't at what be short-term ceiling of -- hint of what the short-term ceiling of interest rates may be. this is beginning to turn into may of what these rates be. i am not sure if this is until the data weakens. we have had in mind a real interest rate target. one,at plus quarter, half, probably somewhere around there. and then they sit back and see how the data develops. >> this is the real fed funds rate still below neutral on a particular measure. this goes to your point about where the fed is. on the subject of trade, the

america-merrill lynch fund manager survey and have trade tensions are at the top trade tensionsow are at the top of that list. is there a discount in equity markets? i think there is that upside risks to markets. the downside risk is still there and present. maybe we haven't run on growth and growth is already -- have it run on growth and growth is already weakening. there is an element of upside risk. where would it come from? the quickest and easiest way is some easing of trade tensions. such at time we saw clear consensus about the risks to markets was that survey back in 2011.

.t was the eurozone debt crisis that liberty eventually and set up a grateful run to stock markets -- lowered eventually and a set up a great bullrun to stock markets. we know trade is dampening sentiment. >> you think we might see a change of tone? >> risk, back in the bond market. much.wyllie, thank you so coming up, may's whips play hardball. narrowly minister survives a defeat in the commons. >> later, we will bring you our interview with the european commissioner. what is the planning around google?

this is bloomberg. ♪

>> let's get you to the bloomberg business flash. liette: amazon has moved past a difficult start to its annual prime day sale. spending jumped 89% in the first on the website and app for amazon compared with the same time last year. it added four countries. the start of the promotion was plagued by technical glitches, which shoppers complained about

on social media. learn whether it faces a record fine over its android operating system. the european commission has mobile the tech giant's device strategy unfairly strengthened its dominance in the search engine market. the regulator can find up to $11 billion, more than 10% of its annual -- up to 10% of its annual revenue. we will bring you our interview with the european competition commissioner later on teh show. -- the show. jane munster has written an open letter to musk, saying his conduct over the last six months has been concerning. this is on top of his unhelpful perception of his leadership as "short-tempered." >> the line was crossed with the

tweet earlier this week. where it ispoint jeopardizing some of the confidences in investors. that is an important part of tesla's success. having investors that are the company with capital because it is a very capital-intensive business. brexit continues to dominate the u.k. front pages after theresa may want a key --e by the skin of her teeth won a key vote by the skin of her teeth. a crunch votens rebels.ro-e.u. warnedereng

they would face a summit general election if they defeated theresa may. scotsman -- scotland newspaper, there is a call for a rewrite of the european union referendum. brexit story, always newsworthy. they don't always move markets, but the pound was weakening yesterday. managed to get it's crucial piece of legislation through the commons. manus: it is fascinating the times carried this out. no one really wants the job of the glue binding the stories.

let's bring it to our chief investment officer still with us. the theater of brexit is hugely important. these risks are rising. how much of the tail risk of the new election is moving through to the barbell in the middle? >> it is a good question. are not sterling, we quite at that point. we were scratching our heads when the pound was rowling pretty hard. -- rallying pretty hard. now we are back down at 131, 132 . that is the way of the range, sincebrexit theresa may initially fleshed

brexit division, we are in this territory, this middle ground, and no one is really taking position. poundlatility of the versus the euro, it has completely collapsed. that is something nobody is prepared to take up a position as yet. i think this rather distant prospect is beginning to take shape. i wouldn't mind there being another democratic event, should we call it. >> this range of options could be follow us. thank you very much -- befall us . thank you very much. anna: up next, we have an earnings season on the way.

the latest numbers from novartis. this is bloomberg. ♪ this isn't just any moving day.

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this is bloomberg daybreak: europe. the move on the 113 is where we trade. session, up equity 2/10 of a percent. this comes amid jay powell comments yesterday. earnings stories aplenty this morning. notes say thiswo could be the bottom of the cycle. let's see where the net numbers actually say that.

this is the critical point, 36.7. paribas says the second-quarter numbers will mark the bottom of the cycle. it is likely to accelerate from here. krone in thewedish market. this comes amid sales on operating profits. we like more detail on italy. deal was lost because of sanctions. that is one of the things bolstering these numbers. let's go to the first word news with juliette saly. juliette: u.s. president donald russians said

interfered with the presidential election. the retreat over his comments made yesterday comes amid a backlash from republicans. said the meddling in the 2016 election "could be other people. " for realize there is a need some clarification. i would like to clarify. in a key sentence in my remarks, "would" instead of "wouldn't." should have been, i don't see any reason why it wouldn't be russia. in the g20 summit, they are set to discuss the negative impact of the ongoing trade war, but it is not likely to be in the

meeting's final communique, to avoid the type of fiasco when it donald trump was true -- withdrew from the final statement at the g20 summit amid a flurry of insults last month. david solomon will take over lloyd blankfein's role at goldman sachs. solomon will be the oldest new leader of the firm in almost half a century. >> i will be stepping down as ceo at the end of september. as chairman, i will retire from the firm at the end of the year. juliette: global news on air, 24 hours a day and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. you can find more stories on the bloomberg at tocgo. let's get a look at market action. maria: i want to look at asian equities.

it is pretty much green across the board. this is a reaction to what we heard from jerome powell yesterday. when it comes to rate hikes, there is still room to maneuver. all of this may have an impact on asia equities. -- on asian equities. the yen is trading at its lowest level since january. see is the first time we gains this week in hong kong after three days of declines. i want to move on to my next chart, sticking with the yuan. we are seeing a new report which suggests the weakening in the currency will continue. a decline of 4% this year against the dollar. i want to move onto my final

chart, which is all about oil. it has be a terrible weak if you were in the long end of the trade. it is a bigger decline. we haven't seen these levels since early last year. manus: maria, thank you. we have just gotten our first round of european bank earning financials. they are up against u.s. counterparts who have seen the benefits of lower taxes. wilit is ally -- about the m&a activity for them. krieg is our senior european strategist at bloomberg intelligence. billies have raised the iron ore

output. arabs in the margins. for the region in europe, how are we set up? tim: it is going to be interesting going into the quarter. number one,things, the market has been in a sell sort of mentality. stocks are off, there is not the momentum we saw back at the end of last year. this is a full reporting period, the middle of the year as opposed to the first quarter. we only have a sliver of companies that really report. the financials you mentioned have been a real drag. since the market rally started at the end of march, financials across europe are down, a negative contribution to the

overall region index. expectations of no growth, no revenue growth. if we get indications companies are seeing better business, setups for the financials are quite significant into the second half of the year. we don't anticipate a lot of that. there is the possibility. the flip side is true for energy. that has been the sector that had been on fire. we saw the biggest positive revisions over the course of the last quarter, following big surprises in q1. a must really rams backup and hits new highs -- unless poil really ramps back up and hits highs, this would appear to be in the cards. let's talk about other

financials, tim. tim: if you go back to the end of march, where we started to see markets rebound from the first quarter trade concerns, it is about midway in that chart. you can see in the u.k. bounceback, the bluish line bounceback more significantly than the amber line in the top panel. the interesting thing to think about, the tower relates to the bottom half, which is earnings. earnings expectations ramped up big for the u.k., the rapidly what isine versus relatively stable for the rest of europe. pricing u.k. stocks has been all about earnings and not valuation. that goes back to what we were referring to, energy.

it is much larger and more significant for the u.k. than the rest of the region. thatere is risk in energy, creates a top set up for the tough set up for the u.k. market. for those issues we are thinking about, -- those are the issues we are thinking about versus a more diverse story, that has multiple legs playing through for the rest of the region. manus: tim, our senior european strategist from bloomberg intelligence, thanks. let's go to our chief investment officer, still wtih us -- with us. just listening to what tim is setting up for this quarter. we still have those tailwinds of synchronized growth in january. the expectation is still for a strong quarter.

you?ullish are >> we are sitting on the fence at the moment. over the next two months, we are starting to get more clarity weget there was a broader -- are starting to get more clarity. wereger commodity prices alongside the steepening yield curve. that starts to break down over the last few months. another way this expressed itself was all markets going on the broad front, including emerging markets. be explainedan about the correlations to the dollar and rising interest rates. everything is in a complete model right now. now.ddle right as i've already said, it is not

a one way bet. we've tended to think there are more downside than upside risks. but there is upside risks. we should not forget that. that comes from teh fed on -- the fed on hold. we have an earnings story continuing to go. there could be the headroom in the markets. we have other warnings signs coming through with regard to credit spreads, particularly in the states. a weaker chinese currency for emerging markets. will have a, we clear idea of what the next by correctional move is in markets. -- directional move is in markets. anna: listening to tim talk about the outside focus this is

to be-- that is going on guidance statements from companies, the ceo does not know where it is going to be any more than anyone else. one of the -- has been one of the trading scenes in the run-up to this earnings season. is that something that will continue? people keep forgetting about currency. currency is a massive factor. this has a lot to do with the currency. now that the pound has weakened we started to see a earnings translation. a big factor for the u.k., u.s., and global investors. one of the things behind the small-cap performance in the

states in the last few months is this insulation from the trade story, from stronger dollar. massively important. chris, let's leave it there for the moment. fascinating to see. chris, our chief investment ley,cer at connor broad stays with us. if you are a bloomberg user, you can interact with all the charts .gtb go -- gtv up, amazon prime day. did the company recover from technical glitches? how much money did it make yesterday? this is bloomberg. ♪

>> good morning, everybody. this is "bloomberg daybreak: london." s&p futures are pretty flat. futures look flat this morning. perhaps asia is running out of steam. let's go to juliette saly. eonstruments' c resigns for violating the company code of conduct. the company says his behavior was not consistent with the ethics and values of the firm. his departure is not related to the business strategy operations or financial reporting. this company says it sees a

four-year high for output, topping estimates at 241 million times-250 million times. -- 241 million tons - 250 million tons. estimates beat previously downgraded guidance. that is your bloomberg business flash. >> google is facing another showdown with the european union, this time over the of the's control android-mobile operating system. the european commission is expected to announce and an antitrustnd -- fund today. fined last year for shopping rivals on its search service. we have more. when you buy shoppers --

smart from's from lg, samsung's, or sony, you were also getting the android operating system. many of these operating systems come preloaded with browsers, apps, and emails. of europeanng 70% smart phones, there are claims google is siphoning competition. the basic idea is users stick with the default option on their phone and may be less likely to seek out other products from somebody like -- companies like microsoft or mozilla. fined ar, google was record $2.8 billion for breaching antitrust laws. the size of this penalty for the us latest headline -- this could influence remove apps from its

browsers. being argues it is anticompetitive and argues the real loser would be considered -- consumers. its actions to prevent multiple versions of android insurers apps work across all phones. ensures apps work across all phones. that was bloomberg's ed ludlow with insights into what is at stake for google. let's get more on our editor that joins us from tokyo. how is this going to make ripples across the industry? google is the model that everyone aspires to. they have tremendous reach with their search application, not

just in advertising revenue. virtually every business that exists in the digital spirit -- sphere. it is a powerful platform. when you see the eu cracking down, all other businesses have to be along the same lines. there are attacks not just on anticompetitive practices, but also in how data is being handled. ripples are pretty big for those across the industry. this is something that google and its competitors will be keeping an eye on. for smaller competitors of google, at makers who have rival apps that can take google on, they are happy to see something like this that could have an impact for them. in the previous reports mentioned, they have a search function that works well, they

believe, and actions like this could make it more likely android phones will be installed with that out from the get-go -- with that app from the get-go. this android operating system has about a 7% market share on mobile phones in europe -- 70% share of the market on mobile phones in europe and a 97% share on search. if that dominant position weakens, there rivals will be in a good position. one of their rivals is amazon. it was prime day yesterday. have a look at this. bezos keeps getting richer. another $1.7 billion. how important has prime day become?

>> it is not just the money, although we certainly love to talk about that. it is very large, the amount of money being generated. they don't give figures on the actual revenue, but in the first of hours, they said it was 89% above the previous year -- twelve hours, they said it was 89% above the previous year. cash, this is a chance for them to showcase the breath of their platform and how it reaches in to so many different sectors. have big huge brands like calloway, they are offering their products at a 50% discount in order to compete.

all of that is to amazon's benefit as a place to shop. it allows them to sell more advertising as these brands compete with each other. the buy ads on amazon through amazon's system. traditional advertising agencies hate us because it reaches into that business and shows what to be strengths of the amazon platform really -- the strengths of the amazon platforms really are. anna: thank you. our chief investment officer at connor broadley still here. which accidents will befall the tech sector? i am sorry to be a stick in valuations, there is an awful lot in the price for us. -- prize for us.

amazon, it is the guerrilla in the jungle. if you even bother to look at valuations, this will give you pod's, but that is probably not the greatest concern. this is classic late-cycle behavior. later, people will return to the valuation and there will be an awful lot of price risk. other things could face financial difficulties. the companies are starting to take on leverage. spending $8 billion on content and $4 billion for financing out of debt. what could go wrong? manus: you say in your notes what is going to be the smoking gun. netflix drop on

tuesday a smoking gun? army underpricing regulation risk -- are we underpricing regulation risk? could be. the comment about the smoking gun was that you don't know until you have your back on it. there happened to be a legal ruling on microsoft. wasn't it something in which the come?ad to you get the straw that breaks the camel's back. the markets were prompted. these things no really happened ese things normally happen in spring or autumn, so it is a bit early for netflix to be that. anna: thank you for joining us. chris will be joining the

bloomberg radio team from 7:30 a.m. u.k. time. for more on that google story, don't miss the european competition commissioner at 12:30 a.m. u.k. time. this is bloomberg. ♪

>> good morning. this is bloomberg daybreak: europe. anna: these are today's top stories. manus: stocks across asia get a boost from the u.s. fed chairman againstlks about going protectionism. he says the fed will continue to hike gradually for now. president trump goes back against his denial in helsinki. is his about-face enough to counter the backlash within his party? may's victory. the prime minister wins a post-brexit by a

six vote margin. dollar.low against the ♪ anna: 7:00 in london. manus with me. breaking news. let's get to the banking story this morning in europe. we have the ongoing investigation. result, net profits of 9.1 billion danish krone looking to be be low the estimate -- be below the estimate of 9.4 billion. the 2018 thatg will be at the lower end of the 18-20 billion range.

look for downside movements. we have allegations against k, a year and a half worth of investigations by a newspaper about the role of the bank in estonia and the weight the move -- the way the money moves from russia to western europe. hiring a chief compliance officer to get out in front of this and a point someone new -- appoint someone new. they say they have failed to live up to their own standards. bank says it will donate should from's -- says it not benefit from suspicious transactions and will donate profits to charity. over at thenges bank in the face of these allegations. manus: when it comes to getting

out of the house, these are the guys that do it for you around the world. 1.35 swedish krona. when the u.s. markets are being talked about, the guidance they gave in terms of the u.s. demand will expand between 0-2%. bloomberg intelligence has done the analytics. have a stronger dollar potentially impacting electrolux. rising in the second quarter. there was the view they would spend more on research and development in this quarter and that may have an impact for them. prices are going to be a big issue for the likes of electrolux. north america seems to be the critical issue.

through tolate this the markets this morning. in the had a nice move equity markets in asia. earnings of plenty. ace is going to play out, raising iron or production targets. -- ore production targets. arabs saw the margins in their business expand. profitability rising, margins rising, banks doing nicely. the dax is called up 27 points. it is a backdrop to the powell comments. the caveat he used is that the fed will continue the course for now. sign that fedthe

hikes may not necessarily be on autopilot. coil may drag some of these markets back below $68 -- oil may track some of these markets back below $68. the earnings story is certainly in the mix. change from worrying about geopolitics and trade tensions. i have a mixed picture on earnings at the moment. it is a bit gloomy and terms of the numbers being delivered. this company is not impressing against efforts. asml, talking about the second half being better than the first. this is the picture in asia. are coming down on the asian equity section. the fact that jay powell was saying the fed will continue to increase rates for now, equity markets went higher.

the bloomberg dollar index, concentrated on the fact rates were going higher. this price down this morning, firmly below the $68 a barrel, because of the u.s. data. this is about inventory for the united states. oil prices are coming down because of a surprise increase in u.s. crude inventory. onus: just a continuation what you mentioned, you danske will donate profits to the interest of societies. the amount the bank may donate connectedlion krone, to its laundering case.

the lowest on estimates. this is the state of play in the bond markets. bond prices are dropping. markets,ion for the down seven points on bunds. this is on a whole host of things. the bond market survey, the kurds is on a one-way trip to inversion in the opinion -- curve is on a one-way trip to inversion in the opinion of bank of america-merrill lynch. you do get the feeling that this is one of those spend of 70 crowded trades -- those magnificently crowded trades. do you invert and does it

matter? kashkari, notl for now. channeling jay powell is a different story. let's go to juliette saly. juliette: u.s. president donald trump has said he accepts the conclusion i american intelligence agencies that russia interfered in the presidential election. the retreat over comments made came amid a backlash from republicans. even with a prepared statement, he introduced doubt, looking up from the text and said the meddling in the 2016 election "could be other people. " >> i realize there is a need for some clarification. in ald like to clarify, key sentence in my remarks, i ofd the word "would" instead "wouldn't."

the sens should have been, i don't see any reason why it wouldn't be russia. >> the european commission is reportedly encouraging eu management -- member states to increase the pressure for a no deal brexit. the 15 page document will be presented at a meeting in brussels as the government yesterday prevented a beta by conservative rebels to create a customs union within the eu if a trade deal fails. later appear at parliament and address a meeting of tory mps. g20 meeting this weekend looks to discuss the negative impact of the ongoing trade war. it is unlikely to be included in the meeting's final communique seenoid the type of fiasco at the g7 meeting in canada last month when donald trump withdrew from the final statement amid a flurry of insults. global news on air, 24 hours a day and at tictoc on twitter,

powered by more than 2700 journalists and analysts in over 120 countries. you can find more stories on the bloomberg at tocgo. that initial rally behind in markets in asia has faded somewhat. there is a 12 month low against the dollar. dollar strength is playing into markets. the nikkei and the topix heading fore topix its best four-day advance since february. the australian market is higher by around 6/10 of 1%. stocks,ve a look at most of that strength coming through the sydney market. it came through with record annual iron or output. -- iorron ore outpot. -- output. stocks in focus after the

nasdaq hit the record high. taipei looking strong. good news coming through in the indian market. record high, a want oil players doing quite well in that market -- a loto of oil players doing quite well in that market. manus: the fed is raising interest rates gradually for now. this is confirmed during jerome fedll's testimony to the yesterday. he warned against protectionism amid rising trade tensions. joining us now is the chairman of the international chamber of commerce of the upa. great to have you this morning. theare the chair of international commerce for the u.k.. you have lived through many business cycles. listen to the trade trump andchatter and

the disruption that comes from all of these pieces of rhetoric, do you think board rooms should hold, ortment on deliberate? give me a sense of what happens in the board room when these pieces of political theater go on. most people have been looking at the imf. most economies and europe and across the world have been growing on the back of low interest rates. therly the fear is that rhetoric -- will it really lead to a trade war or will common sense prevailed? the general feeling is the common sense will prevail. the last time this introduced -- george w.uced was the bush administration. tariffs had to be withdrawn because jobs were disappearing and inflation was rising.

trade war stonework in the kind don'tld we have -- wars work in the kind of field we have. the assumption is that markets will prevail. not quite a positive view. if we do see the ongoing trade war ratcheting up, the continuation of these tit-for-tat tariffs in the united states in china, what is at stake? mike: this has had some impact on markets. people are concerned and people will start to worry about it. if we don't get that and if we really do implement serious tariffs that have an impact, this will have a big impact on trade. it will be quickest in terms of the impact this is going to have. it'll hurt the american economy and chinese economy and european

economy, and some emerging markets are already coming under tension. it is a lose, lose, lose scenario. merkel,you see angela the europeans and chinese ,etting so close to one another we have pretty interesting memories in terms of some of the issues people have been thinking about. is it good that china and japan and japan and europe are coming together? >> they are absolutely good things. the international chamber of commerce started in the concept of peace, trade. it is something that mitigates against war if you can increase the standard of living through open markets -- that is what we need. treaty is a great

success. it has been seven or eight years in the making. it seems quite broad and will encourage this at the time amid protectionism and trade war's from the united states. this is a great sign the way and wills sensible prevail around the world and create new markets. mike, things very much. we will talk more about the brexit story shortly. coming up, theresa may prevents an attempt by conservative rebels to create a customs union within the eu. if a deal fails, what does this mean for post--britain brexit? this is bloomberg. ♪

awayst over 32 minutes

from the start of trading. watch the best profit in three years. you are looking at strong numbers. the earnings season has started. treasuries, 2.87%. the bank of america-merrill lynch survey says we will invert. 28.12 --e goes, 2812.75. another day of bank results to come. juliette? juliette: google will learn whether it faces a fine over its european operating system. the eu has said its mobile threatensategy

competition in its search engine market. it could be fined more than $11 billion. we will bring you our interview with the european competition commissioner at 12:30 p.m. u.k. time. this company has reported its highest profit in three years as the market rebounds. operating profits rose to $628 million, beating analyst expectations. mgm is suing the victims of last year's mass shooting in las vegas in an attempt to block potential compensation claims. the owner of the mandalay bay says a federal statute even races liability for a company that adopted antiterrorism technology which mgm says it did. it wants to establish the be held liable

for the deaths of 58 people and the wounding of hundreds more. anna: thank you. the u.k. government has fought off an attempt by conservative rebels to form a customs union in the european union if the trade deal fails. face a meeting -- prime minister theresa may will later face a meeting of tory mps later on today. the chairman of the international chamber of commerce u.k. is still with us. mike, in terms of the brexit story, where do you think this ends politically? this referendum is something that is being talked about in a number of different guises. is this wishful thinking, or something that might happen? mike: i will give you my view as a citizen.

we have a parliament that is completely divided, two major parties completely divided, clearly significant issues that have arisen. we find the electoral law has been broken. what are the choices we have? it is critical for the country we find a solution to brexit. it seems to me you end up with having to at least consider going back to the people for advice. does britain watch that? britain wants to not get into the political debate. wants is tos recognize however much you disagree, to recognize this parliaments made by

on the basis of an advisory vote. needs to be as close as possible to the european union, to manufacture goods portrayed according to standards. that is what is important to investors. mutual recognition would have been the best way forward. was this approach dropped before even making it to the negotiation table? has the city been thrown under the bus? element in thean original agreement. most businesses thought this was a step in the right direction. it is a recognition of the huge short-term damage to manufacturing, not having some form of union in place.

the feeling was we could come back to try and engage services, 50% of our economy. with financial services, there is a frustration, we seek opportunity with the passport. this will have an application on the financial services industry. it will be strong, but not as strong as it was. we will lose some of the keep ability we have -- capability we have. anna: what can be made to work? >> it will take time. this is hugely complex. we have an integrated economy. the u.k. is extremely strong. people in europe don't want to lose that. we have to be willing to engage in sensible discussions with our partners in europe, understanding the biggest market

in terms of manufacturing and exports and services. we have to get real in terms of engagement with them. it has been two years since the referendum. we have a long way to go in a very short time without a sensible agreement. the e.u. in japan -- and japan have done a trade deal. canada and japan. is there a delusion that the u.k. cable get fast, rapid trade deals -- will get fast, rapid trade deals done? a lack of reality? >> yes. export 10 times more than we do to china. indeed shows you clearly

such treaties are very complex in the details. they take years to negotiate. that is not to say there won't be some goodwill to see if we can be on the backs of some existing treaties, but that would be in compliance with the european standards. anna: no deal could be a financial stability event. >> i think the bank of england was clear. there is a point at which damage could lead to not a reduction of interest rates, but an increase to protect the pound. anna: thank you for your time this morning. the chairman of the international chamber of commerce u.k. joining us. the european open is up next. manus: they have the novartis

ceo. estimates, $1.26 on second-quarter earnings. this is bloomberg. ♪

guy: welcome, you are watching bloomberg markets. this is the european open. matt: we see asian stocks advancing together. chinese markets up and japanese markets up after an upbeat assessment of the european economy. the dollar climbs to a six-month high against the yen. the cash trade is less than 30 minutes away. ♪