>> america's biggest metal producers says it is being hit by trump, adding concerns about their impact on growth. u.s.e powell says the maybe shock of full employment as concerns over low employment. and sales are dragged down by a trucker strike in brazil. nejra: welcome to "surveillance." the stoxx 600 off by 3/10 of a percent after asian equities

struggled for direction. and we did see chinese equities underperform, the yuan hitting a 6.79.ar low trading at the 10 year yield, interestingly, is up a basis point. a little higher earlier even. the monthg because in of july, we have seen a range and has moved just some seven basis points, the tightest range since 1973. coming up, we are joined by david page, he will have views on that yield. later, we talk brexit. day, david othe sullivan, eu ambassador to the u.s. joins us. for now, let's get the first word news. trump is sending

mixed signals over russian meddling. conference, he suggested the kremlin is not currently targeting america and told cbs news he believes his director of national intelligence when he says the threat from moscow is ongoing. an expert. this is what he does, he has been doing a good job. i have faith in dan coats. i would accept that. i would tell you, it better not be. it better not be. taylor: president trump's top economic advisers blame china for delay talks on the escalating trade fight. says china does not appear to want to make a deal and has no intention of following through on earlier agreements. the chairman of the u.s. federal reserve says he sees no sign in the bond market, or otherwise, that an economic downturn is looming.

his comments came in second day of testimony before congress. not see any evidence that a recession is imminent. we are not forecasting a recession, and so, i do not think we see one coming. and u.k. police reportedly believe they have identified a suspect of the gas attack on the former spy and his daughter. pressing to the association, officers think several russians were involved in the attempted murder and say they are looking for more than one suspect. they say investigators were quote sure the suspects were russian. global news, 24 hours a day. powered by more than 2,700 journalists in more than 120 countries. this is bloomberg. nejra: thank you, taylor. and the effects of a trade war are being felt this earnings season. america's biggest aluminum maker has cut its profit forecast due

to the impact. in ennis was an interview, japan's trade minister watch tariffs on his country to be widely felt. japan will not take the same approach to handling u.s. tariffs that it took for steel and aluminum tariffs. say the damage would be huge, not only to the japanese economy, but the u.s. and global economy. nejra: joining us this morning anddam cole at rbc europe sharon bell from goldman sachs. sharon, let me start with you. we are starting to see a feed through in some part of the u.s. earnings season. what are you expecting for europe in terms of the impact of trade wars? sharon: i do not think you will see much this season. you might see a little for the most impacted sectors.

but i think, generally, you will not see much. and earnings will probably be boosted by the weaker euro. i just think you will see it yet, but in sentiment. speaking of sentiment, let you bring you in. we're speaking to a gas and he said the dollar-yen was his golden compass. we have seen weakness, despite these trade tensions. is the end going to pick up trade wars intensify? adam: it would if markets went to risk off. can see those cross asset correlations reestablish themselves when risk appetites moves strongly. our worst case is that he does not play have portrayed. strong, and the dollar-yen remains strong. primarily by the

view on u.s. rates. the world is still, for us, a conventional place driven by i would tend to agree with david's view that the dollar is going higher. nejra: when it comes to hedging and you look across european equities, are you positive on defensive? sharon: it is interesting. there is a lot of risk out there. trade talks, for example. risk about u.s. interest rates rising, etc.. i think that has pushed people towards defense. but i think, adam has said, we see a more conventional environment. we do not see a time, and we think moving completely is a mistake, given that they have underperformed.

so we see the risks as lower. nejra: what sectors will outperform for the rest of the year? sharon: in the context of europe, we still like oil. we also expect that medium-term they will rise. so they have lots of dividends and buybacks. i think that oil companies still look good over the next year. autos are an interesting place. nejra: worth buying? sharon: it is half evaluation, and that is where drops. -- troughs. it is risky, but i would not say we avoid them. health care as well looks interesting. i think there are a few interesting pockets. nejra: two pivots on sharon's comment about oil, are

commodities going to begin if we see the trade war intensified? -- intensify? adam: i think that would be the case. anything that hurts a global growth tends to hurt on the qe. again, that is not a central scenario. by forecasts are goaded broad dollar strength. my markets play principally through weakness in commodity currencies, strengthen the yen, but that is not our central expectation. nejra: the yuan has weakened to its lowest in the year. we are seeing both offshore and onshore weakened paths. some were seeing that as a line in the sand, is it for the pboc? adam: in terms of dollar rates,

i don't think so. the important thing is to look at it in broader terms. when our markets are dominated by dollar direction, as they happen, and we think the authorities are monitoring the n over ar a -- yua broader mother currencies, it will spill over. more probably, it is falling, but at a moderate place. and it is consistent with the of holding it stable. so i would worry less about the dollar rates when the dollar is dominating and tend to look more at a broader range where it is falling a lot less. nejra: sure. do not think the pboc would use the yuan as a tool in a trade war, what would be a effective tool?

services, perhaps? adam: it is a possibility. china runs a services deficits with the u.s., so it is possibly a route they can go down. it is not say they will never use it as a weapon. things get a lot worse before we saw a rapid devaluation in response to policy, so all signs are that they are prepared to play a long-term game. that is not to say it could never happen. it still is something markets will worry about. nejra: adam cole from rbc and sharon cole from -- sharon down from goldman sachs. is the u.s. at full employment, not according to drop how. and the s&p close to a record high. we discussed the start of earnings season. this is bloomberg. ♪

nejra: economics, finance, and politics. this is "bloomberg surveillance." i'm nejra cehic in london. let's get the bloomberg business flash. taylor: u.s. aluminum tariffs are taking a bite out of earnings as the nation's largest producer. alcoa has been hit with millions on material it produces mostly in canada. cited higher energy costs and lower aluminum prices for the cut. >> we are reducing our outlook to reflect the recent market prices, tariffs on imports, increased energy, and operational impact. still: unilever is

feeling the effects of a strike in brazil that held back sales. underlying has said sales grew one point 9%, compared with analyst estimates of 2.2%. the maker cited the effects of a labor dispute in the latin american country, where truckers walked off the jobs earlier this year to protest rising fuel prices. what we say is that the first half is a little slower. the second half a little faster. sidequarter, on the low because we have to deal with this enormous truckers strike in brazil. but we run the business for a little longer than a few weeks. the nordic region's biggest bank has reported profits exceeding estimates and committed to a forecast that it will make more money in 2018 about it did last year. 1.9 saw income growth to billion euros, beating estimates. in line withas

market expectations, coming in at 800 million euros. >> of course, the environment is always there. shape and are in good we know what we are doing. the de-risking we have done, the big projects, they are now largely behind us. i think we are in good shape to drive customer businesses forward. taylor: that is your business flash. nejra: thank you so much. stocks were a little mixed in asia. after we got comments from jerome powell on his second day of testimony before congress. he said the u.s. economy may not have yet reached full employment, but concerns remain about weaker prices. >> may be worried about lower inflation still. but we are below target. reached the about

2% objective, so it is very close. from this point forward, the risks are roughly balanced. cole: sharon bell and adam are still with us. how much direction are european equities taking from the fed? sharon: i think they are obviously crucial. there are all sorts of inputs going in. moment,. rates, at the when they initially rose it was a good thing. it meant u.s. rose, global growth, really. now, the concern is that as rates start to rise, it is difficult for european valuations to rise. class, u.s.set short-term cash, giving you reasonable yield. so there is a another competitor asset.

the only thing that can push up european equities are earnings, so you need them to come through. havehey happen next-- been mixed. rates have been slightly negative from here. they are combined with reasonable global growth and that offsets it. adam, i want to ask you about the 10 year treasury yield. the range has been the lowest since 1973, around seven basis points. why have they been in such a range? adam: because markets are at thinking we are at the end of the fed tightening cycle. hikesforward curve has to , the fed is guiding us towards pricing beyond that. that is where i think we diverge from the forward curve. our own view is closer to their plot, where as we go into next

, the fed is more likely to tighten policy at roughly the pace it has been. if that is the case, that will put pressure on interest rates. what is capping rates at the viewt is that the markets of the fed is that we are in the endgame of the cycle. we generally do not agree with that. nejra: what does that mean for dollar strength? does attract what rates do or does it become disconnected? say, i think we are in a conventional world. monetary policy is driving markets and policy is diverging in favor of the dollar. that is true going forward. there are risks to that, but the .orst-case scenario

for us, h2 plays out the same as h one, the dollar outperforming versus all the major currencies, rather than underperforming. which is still the expectation. nejra: given what adam has just said, do you see further weakness for the euro? sharon: i think there is a bit of a balance here. we hold the same view as adam, really. that the market is to dovish on the fed and he will need to see more rate rises that is currently priced. having said that, if global good that would be bearish. so we do not expect a big move in the eurodollar. for the euro, you have got other issues as well. you have political risk, and that could have an impact. it would not be helpful for european equities, so it is a balance. nejra: right. adam cole, thanks for joining

us. and sharon bell stays with us. earnings season is in full swing. focusing on sap, it is betting big on its cloud business. and the strategy is paying off. the software giant raised its outlook for this year and 2020, citing accelerating cloud sales. it is a rarely watched metric. it grew faster in the second quarter than in the previous. -- period. we had an extremely positive performance in order to -- q2. in a. of time in which there is growing uncertainty, companies across all industries are turning towards software providers like sap to help them. whether the become more efficient, to have transparency around their supply chain.

and you see that from our results in our cloud business of 40%, as well as the strong, resilient core license business we have, up 3%. from that perspective, we believe we will do well for the remainder of the year, despite any uncertainty that the macro environment mike brey -- might bring. >> is the rate exchange in the pickup changing? is the delta moving? give us a sense of what is going on there. it is a accelerating, guy, great question. 40% cloud subscription growth. and what is actually the biggest growth rate we have enjoyed in quite a few years. even if you discount the latest acquisition have been doing, closing this cloud, which makes us now a strong player in the fast-growing market.

we would have been growing in the mid-30's, so that organic machine is definitely accelerating. and we see great prospects for the remainder of the year. that is why we have raised our cloud guidance by 100 million at the low end and 50 million at the low end, that high-end. high-end. sap.: that was the ceo of chargestanley led the posting its biggest second-quarter revenue increase. joining us now is a dani burger and sharon bell. bloomberg news describes morgan stanley as almost flawless. [laughter] dani: what a note to end things on, right? it was indicative of the share prices we saw. investors really happy about

what they are seeing and a bright spot was there investment banking unit. i love this, both morgan stanley and goldman sachs had in their press releases that they were the top firm when it came to an m&a advisory.-- for what it's worth, they both get a peace of the ground. nejra: is this as good as it gets? dani: good question. it is difficult to keep it up, of course. theirey have taxes in favor, a regulatory environment moving in their favor. executives say they have deals in the pipeline, as well as being committed to reducing share count. all of those ingredients make for success going forward. the big question is do we get the yield curve inverted, traders taking risk off the table because they are scared of trade wars? if that happens, we might not see it continue, but for now that seems contained.

nejra: negative surprises? dani: trading was a definite one. goldman, for example, coming under when it comes to equity trading. falling behind when it comes to bonds. in june, we saw a pickup and volatility in some capture that, others did not. sharon, looking at european financials, are they a value proposition? sharon: definitely if you look at these things. they are all pretty low. price for value, many are trading below book. you also have yields of 4-5% in many cases. and i think dividends will grow. the problem is the risks way on them. as you were saying, the trade risks, the fact you are not seeing interest rates rise, meaning they have hit margins. so there are risk, but there is value there.

investor, theerm potential for dividends to grow. regulationat new means they have had to increase tier one. they do not have as much exposure as before. it is unlikely that any to increase capital your some positives, but also negatives. nejra: does that mean you take a neutral view on banks? would be slightly positive, particularly on the euro area banks. the u.k. mortgage banks, there is a lot of competition in that space. the housing market is not strong, political risks high. super risk of their as well. but there is also value proposition. nejra: all right. dani burger, thank you so much. and sharon bell, from goldman sachs, stays with us. thank you to you both.

up next, just six days left until the u.k. lawmakers lee parliament for the summer recess. has theresa may not enough to secure her leadership until september? we discuss that next, as well as sterling coming under pressure. but some of that could be down to broad-based dollar strength we have been seeing. at markets more probably, european equities on offer. 4/10an see the dax up by of the percent, just the ftse trading sideways. this is bloomberg. ♪ retail.

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said her plans for leaving the eu strengthens the position of manufacturers and protect jobs. create -- faces pressure. she also revealed the president of america advisor to take the eu to court. they're also in disarray after she infuriated tories by bowing to pressure from eurosceptic colleagues. how majority was cut to just three votes after she adopted a brexiteer amendment, and the proposals were narrowly voted through comments. -- members of the government reportedly quit to vote against her. is urgingmission members to increase preparations for a no deal brexit. the dailyto telegraph, a 15 page document was presented at an evening in brussels. they will meet the chief negotiator for the first time.

the former foreign secretary boris johnson has criticized theresa may's dithering over brexit negotiations. he tore apart the strategy, describing it as miserable, while praising her courage and resilience. making a statement in the comments, he went on to say it is not too late to save brexit. of the euumbling out could cost the pound dearly. sterling could slump as much as 8% against the dollar. if they do not clinch a deal by march 29 when the nation is slated to leave the block. the 8.1% dropror it saw on june 24 of 2016, the day after britain voted to leave the union. a no deal brexit is still regarded as a somewhat low are onlyty, with polls a 20% chance.

global news, 24 hours a day. powered by more than 2,700 journalists in more than 120 countries. this is bloomberg. thanks. we have got data coming through. retail sales and auto fuel posting a surprise decline, down 0.5%. the expectation was for a 0.2% increase. was lower earlier, but extending its decline hitting a fresh low. let's get more on sterling slide. it is had a rough week as theresa may about to keep her party onside. and there is a long way to go before they leave the eu. a lot can happen in eight months. joining us now is the fx strategist at commerzbank. bell from goldman sachs is still with us. charlotte, let me start with you. you have written a great story

about what would happen to cable if we got a no deal scenario. as we said, we are looking to losses similar to the brexit vote itself. when they see the pound slipping two 120 -- 1.2 would fall to it 1.15, a level we have not seen in a while. nejra: what is the actual likelihood of that's no deal scenario? i would say, generally, people see it as a tail risk. about 20% probability. but we do have one bank say 40-50%. nejra: in terms of the outlook, generally. isn't bearish or are people more positive? charlotte: you have people making a positive out of a

negative. for example, one of the banks in that survey said they do see the pound falling to 1.15, but they think it would be a great buying opportunity, because over the next 18 months, the pound would rally once again. in, fxlet me bring you strategist at commerzbank. in the event that we get this in no deal scenario, could you see cable falling to 1.2 or even lower? >> yes, i could. the reason being i could imagine that market reaction, at least at this point, would be even greater than it was with the brexit referendum. looking at options markets, for example, i think the market is still underestimating the risk becausedeal situation yes, heading prices have

increased in the last couple of days due to the political developments we have seen. but they are nowhere near the levels we saw prior to the referendum, and that tells me the market is not prepared for a no deal situation. what point if sterling falls do you see a buying opportunity? what is your entry point? point, muchthis depends on the political developments and also on monetary policy. actually, i would be quite reserved about pound drops at the moment. despite the political developments, i think uncertainty over monetary policy outlook is relatively high in the short-term. we are still waiting on how the brexit uncertainty is going to impact the economy now that inflation has disappointed recently. with the economy weakening, there is a great chance that it

would not further hike interest rates. which was an essential support for the pound this year. see it as anou opportunity to buy volatility on the table or eurosterling, because of volatility levels have been suppressed on the uncertainty? thu lan: indeed, i think so. that was surprising, i would have expected volatility to , asease this year obviously, the deadline for brexit is getting nearer and the eu already wants an exit negotiated by on -- autum. and there is no conclusion inside. and the market has been extremely call about this. so if anything, it would be recommended to buy volatility and hedge against a pound collapse.

they are at extremely cheap levels. we talked a lot about table, i want to ask you about eurosterling. that has traded at a range since last year. we are at 8930 three right now, past 90?as 90 -- thu lan: political uncertainty is a factor. it looksas of now, like theresa may will be able to remain prime minister at least over the summer. the summer recess of parliament is already going to start in less than a week. so as long as risks on the front remain subdued, i think we will not break out of the range, at least for the moment. therefore, i believe we will maybe touch upon the 90, but not above it.

also, because i do not see significant euro strength in the pipeline either. because it is in that the ecb is in a neutral stance. what about european equities? sharon: they have not move much on this news. part of the reason is that the sterling has weakened. and this is great for the ftse 100 companies, big dollar earners. think that provides a big cushion for u.k. equities. having said that, a no deal scenario, something worse than we are what currently envisioning, one of the lower probability events, i think you would see a fall in sterling and that would be a negative hits as well. there are areas of the u.k. market that surround very well and tend to be more international. the ftse 250, someone

pointed out to me that it is not a home highest as we necessarily sink -- home a biased as we think. absolutely. it is about 70%. for the ftse 250, it is about 250, pretty high. for these companies, they are very global, and advantage by sterling falling. no doubt about that. having said that, they have hope exposure as well. and i worry they would be more sensitive if you saw some bad political outcomes happening. so i feel they are more vulnerable, some a little more secure. on the other hand, they have a lot more exposure. so a mixture of things. to trade these problems the u.k. is facing, you want to design a more the spoke domestic, rather than the 250,

which as you say, is a broad index. nejra: good insight. thank you so much to our guests. great to have you all joining us. stay with surveillance, plenty coming up. eu's chief brexit negotiator means the uk's new brexit secretary for the first time today. credit market shift in the relationship between london and brussels? and making up for lost ground, unilever sees a bounce back in ales growth after a brazilian trucker strike earlier in the year. we speak to their ceo. this is bloomberg. ♪

nejra: this is the weekly brexit show. brexit secretary is meeting the eu's chief negotiator for the first time today. britain's controversial white paper will no doubt be the focus of talks. theresa may side -- survived a tory rebellion this week. is a seniorow professor of cambridge law -- of law at cambridge university david, let me ask you first. you had some headlines say the banks are confident they can withstand the struggles. how is this approach different?

it is an attempt to reset the clock, i suppose. but this is not changing. he white paper that has been agreed at checkers, we saw a lot of fight about it over the last few days, but the position remains. they won that house, as you mentioned, so the proposal stands. he is taking that paper. he is off to meet at brussels tonight. what we have not heard is any sort of proper response. they said they are looking at it, that is possibly a starting point. is it something we think they can negotiate on? our reports have been that the europeans have held back, they have seen what a wobbly week ms.may hass had -- had. for a will have to wait formal response.

i'm not sure brexit secretary will take that. nejra: thanks catherine heard great to have you here. does look like a plan that the eu can stomach? they have been careful, as we have heard. there are some stories that brussels has said this customs plan is going to work, because it is unique. nobody has tried it before. in essence, what she is pushing for is that the u.k. act as customs collectors for the eu. and that will require an awful lot of trust, trust in sort supply at the moment. nejra: you have written recently about this option. what's that until? -- entail? option, asthe jersey it suggests, was originally part of the protocol to the eu.

goods,enjoys access to customs, but is not part of the single market. what you're seeing in the brexit paper published last week is something not so dissimilar to what you are seeing in the jersey option. the problem is it sacrifices services, 80% of our economy. nejra: also, what sacrifice the u.k. being able to trade freely? catherine: it makes it more difficult. at the moment, they are covered by the free trade deals that the u.k. has got. but they got the deals through the eu. what the u.k. is hoping out of its white paper is a to have its cake and eat it. that means that they are free to do our own trade deals, but we collect tariffs for eu goods, so that creates a frictionless border.

is, as borisnd johnson has said, the tail wagging the negotiating donald -- dog. see thatthey did not theresa may's speech was by saying coming out of the union, the single market, that means there has got to be a hard border with northern ireland. a hard border between the north and south. she has alsoime, gone on to say that we will have a frictionless border. it matters because there is that there it is any border posts, they become the targets for terrorist attacks? --. in terms of theresa may's position, she got is both with a thin majority. and i know we have some resource -- recess.

doesn't look like the boats will be on a knife edge? david: that was a take away. it was not just the results, it was the way they got there. there was a lot of bitterness across the house of commons with how they got people over the line. but now we have got a long summer break. -- sure she can breeze breathe a huge summer break -- sigh of relief. she left the committee quipping that she is still going to be around. she will survive the summer. it is hard for them to plot to oust are what they are scattered amongst the mediterranean, rather than westminster. it looks like she has her summer to contemplate what the next move is. but we do have a big deadline coming up in on -- autum. they said they want an agreement. you need a few months for it to

be ratified by parliament. that is looking unlikely at this stage. she will have to come back with some sort of agreement. we have lots of the negotiations to take time. it is a stretch to think we will close these gaps. and the ones cap are just mentioned about northern ireland , the conundrum is still not solved. that is what is holding things up, and we do not have an answer. nejra: and the markets are feeling jitters at the prospects of a no deal. is there a possibility we do not get brexit? brexit, in name only. catherine: brexit will happen. the chaosopes that will lead to a decision not to leave i think it is unlikely. lee is on the levers side -- avers side. that clock is ticking.

if there is no deal, we fall outside the eu. confusion, i can understand why people are modeled. there are essentially three phases. there is the article 50 divorce, the withdrawal agreement. and that has the backstop for northern ireland. then there is transition, which is meant to take us from the end of march to the end of december. and then, we are in the world of the new free-trade deal. what the white paper is about is the future of the trade deal. is odd, because the eu has said we are not negotiating until after you have left. of the packaget of measures they're trying to put in place before the 29th will be a political declaration as to what the future might look like. course, sorting out the norther ireland border issue has

implications for the divorce. the future. the trouble is, the eu is fighting to keep those issues separate, and the is bringing them together. nejra: what is the future for financial services? what they work in practice? the eu is skeptical about what is being proposed. the white paper has very little on services. , they'rein the city saying the white paper has sold the city down the river in favor of goods. and while goods, people understand very much, they understand the job losses associated with carmen captured, the fact is, it is a relatively small part compared with services. in respect to services, the u.k. wants to have its cake and eat it. it recognizes it will lose part .f these valuable results

it can provide services elsewhere. but they want to have some sort of equivalents mechanism, which you find in the u.s.. for example, banks benefit. but the thing is, it can be turned off very quickly. if you're going to make a significant investment, you want to be sure the investment will pay off. and that equivalents is not turned up overnight. and that is what they want to play with. we want something more robust. the white paper, as it stands, is not a form of cherry picking? catherine: yes, but in a sense all trade agreements are. the canadian free-trade agreement, it is cherry picking. they are picking large parts of the rules of free movement of goods. i think the language of cherry picking can be opened up. much tohank you so

catherine barnyard. -- barnard. answer david miller. you levers says they expect sales growth to bounce back. that is asked represent brazil walked off the job to protest fuel prices. the ceo.o contesting we think there are good results. growth.2.7% you see now this quarter of sequential growth. lots of people have concerns if you can actually grow volume. that is ahead of our operating profit. we see strong improvements driven by the expansion of growth margins. we are pleased that that.

earnings per share is on a constant basis of 18%. >> you are not worried about sales? >> first half is a little slow, second half a little fast. this quarter, a little bit on the lower side because we have to deal with an enormous trucker strike. but we run the business for a little longer than a few weeks. >> how you ramp up? >> we think there is more pricing coming in. it is at the low side, and that will help. and then we had innovations and initiatives in the second half. so we think the guidance we have given to the markets, between the 3-5% rates,. i want to ask you what is happening politically with the trade escalations. how worried are you about this potential of a trade war? >> not a good thing and nobody is served by this. these numbers have been created

by globalizing wealth. fortunately, we haven't always taken care about people who suffered. we need to work on what people call eight just transition, so it spreade can see across the population. but what you now see is that nobody is served by that war. we are very concerned. and we are continuing to work with the countries. at the same time, we're seeing good signs from increased bilateral agreement between other countries. we have a trade pact in the far east, africa expanding their trade. the same in latin america. so we need to focus on that when we deal with the challenges in certain parts of the world. was unilever's ceo speaking to bloomberg. the marketst how

are doing. we saw a mixed session in asia with chinese equities coming under pressure. the yuan has been under focus, basically if you take a look at offshore and onshore, we have 6-7 points people saw as a line in the sand for the pboc. we have seen european equities come under pressure. if i take a look, we are unchanged after losses earlier. and the 10 year yield pretty steady. "surveillance. oh continues in the next hour. this is bloomberg. ♪

♪ tom: this morning, ever and ever stronger dollar.

emerging-market economies will and must adapt. will the strong dollar diminish u.s. exports? official,ior pentagon frantic to learn what president trump is promising, in the one-on-one in helsinki with vladimir putin. may turnover the ambassador to the russians? so much for the super commodity cycle. gold it cannot find a bid this morning. this is "bloomberg surveillance," i'm tom keene in new york, nejra is in london. give me a brexit update. we have left london. his visit for a couple weeks? everyone goes on holiday. may and hersa colleagues will probably be on holiday. she has a reprieve. the new brexit secretary in brussels today -- we have heard headlines.

cable under pressure. how far it can fall if we get a no deal. tom: we do that with a strong dollar, commodity struggling today. here is taylor riggs. taylor: european union preparing to strike back against american tariffs. list to hitparing a with protective measures. visit failed to persuade president trump. the pound it could be hit hard, there is no brexit deal. falling as 80% against the dollar if the u.k. doesn't reach an agreement with the eu by the time it leaves next march. only a 20%y there is chance of a no deal brexit. the federal reserve says economic growth in the u.s. is holding up. a survey says manufacturers are

concerned about tariffs, some it's a new trade policies have led to higher producer prices and supply disruptions. employers are concerned that the inability to find workers is holding back growth. unilever feeling the impact of a trucker strike in brazil. growth,orted sales missing estimates. the ceo. >> what we say to the market is, first half is a slower. second half, faster. this quarter, little on the lower side because we have to deal with an enormous trucker strike in brazil. we run the business longer. taylor: global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs, this is bloomberg. tom: thanks. equities, bonds, currencies, commodities, a subtle day.

equities, when. futures, negative five. euro weakness, crude oil cannot find a bid. activity, 30t year yield, higher yield back to 3%. , grinding weaker against a stronger dollar, commodities troubled. 43, down. $12 talking about a stronger dollar, you can see that reflected with the euro and cable. cable has hit a fresh ten-month low. european equities off. i'm showing the offshore. whatever happened to that line in the sand of 6.7? the experts tell me you want to

look for that yuan spread. tom: this chart matters. the pacific rim currencies without japan. this is a teacher course chart. this is a gorgeous chart, the way this moving average, the way this kisses off the moving average, beyond elegant, well contained. this is gorgeous, how it stays on the second moving average. this is an extremely well contained drift, signaling adsy, signaling stronger dollar. nejra: the 10 year treasury yield is up 1.5 basis points in this session because the range in july has been so tight. slumberers, is the name

of my chart, smallest ranges since 1973. tom: lots to talk about. is every day there seems to be a theme in foreign policy of the united states of america, ramifications on europe as well. yesterday was about the double negative, that seems engine history -- ancient history. the president drove forward the debate on cbs. >> i would because he is in charge of the country, just like i consider myself to be responsible for things that happen in this country. as the leader of a country, you would have to hold him responsible, yes. tom: the president of the united states. joining us in london, stephanie baker. it was wonderful to speak to her on the london desk. in moscow, the russian

government editor. tony, what is the response of moscow to what we are living in washington? reporter: increasing concern. russia came away from the summit on monday extremely pleased. dour as theormally foreign minister called it better than super. there watching the spinning and the machination and the blowback that trump has received in words,ton for his warm they feel in fact it will be difficult now for russia to make any progress in improving the relationship. they see the kind of response it is getting in washington. even in a press conference. helsinki, michael in he was there with nbc. he wrote anker,

important poster for foreign affairs published yesterday. let's look in to the ambassador's essay. equivalency to violating an election and the completely invented allegations against u.s. officials. conceptual work for devising such a grand strategy needs to , even if the product of such strategizing might become usable only after the trump administration." let me read about the script. this is simple. are we in such confusion that the diplomacy community is moving beyond the trump administration? reporter: it has, in some respects, for the past year or so, where you see the rhetoric soft on vladimir putin and the administration be much harder in terms of sanctions. i would like to focus on the

mcfaul situation. we don't know what trump discussed with vladimir putin. there are so many reversals it is hard to know what he believes or what they discussed. what we do know, trump entertained the prospect of russian officials interrogating michael mcfaul and bill broader, and sarah sanders took a question on this yesterday. it is his batting it down immediately, said they were discussing it, it has caused outrage understandably, that a former u.s. diplomat could be under consideration by the current u.s. government for interrogation by the russian state. that is beyond the pale. tom: would you explain what secretary pompeo does? a guy like nick brady, or someone who serves both parties, they have a voice outside official duties. what does the secretary of state we have not seen this even

with thomas jefferson a million years ago? reporter: in this case, there have been calls for resignations in the wake of this summit. there have been -- other people saying -- people like jim mattis and mike pompeo are the ones controlling trump from going further. you have to think that in a situation like this, someone like mike pompeo would step in and not allow the u.s. government to interrogate a former u.s. ambassador to russia. there is a dilemma they are facing. duty of service versus am i going to stick with this administration that is so damaging? nejra: in terms of sticking, general support as well among republicans, i want to talk about polling. i loved susan collins comment walk back of the

walk back of the walk back>" this is dizzying. are we seeing any signs in the polls? reporter: it is too soon to see how voters are reacting. are willing tos give him the benefit of the doubt and believe him and take his views unfiltered. there may be cracks on the edges but we have seen this time and time again that trump support has remained consistent throughout. nejra: donate, back to you. what -- tony, what should we look out for from russia in the coming days and weeks? reporter: this focus on other regimens that the putin wants to question is a big win for the kremlin because it deflects attention from the original accusation against the russian agents and the mueller probe.

there are reasons why the russians want to speak to the former ambassador and the others and they hope trump will cooperate and that will intensify pressure on the white house about what they discussed during the summit. nejra: thank you stephanie baker, and tony. -- that eu commissioner is speaking in brussels. a car deal is one of many options when it comes to trade. brexit secretary in brussels today, we have had some lines coming. this is bloomberg. ♪ >> yes, please. then i will go right. ♪

♪ taylor: this is "bloomberg surveillance," let's get the

bloomberg business flash. investors worried online marketplace ebay is losing momentum. the company gave a lackluster sales forecast for third quarter, lowering revenue forecast for the year. ebay is trying to find its place in the shadow of amazon, plus brick and mortar retailers like walmart are improving online shopping options. second-quarter profit rose more than expected for volvo. 10%,ruck orders rose soaring 63% in north america. the demand has led to problems getting components. business, the cloud paying off. a german software giant raises the outlook for this year and next. sap cited accelerating cloud sales and booking rose faster in the second quarter.

we spoke with the cfo. >> we have a great amount of gas in the tank to accelerate, actually one of the reasons we have even raised the 2020 ambition and a cloud -- in the cloud up to 7 billion euros, is the momentum we have from this broad portfolio. we believe we will not stop in terms of growing in 2020, we will consistently continue that march past. taylor: that is your bloomberg business flash. nejra: thanks. the effects of the trade war being felt this earnings season. the biggest aluminum producer in america has cut the 2018 profit forecast due to the impacts of tariffs. japan won't take the same

approach to handling u.s. tariffs on cars that it took for steel and aluminum tariffs. the damage would be huge, to not only the japanese economy but to the u.s. and global economies. nejra: this comes as u.s. president donald trump may prioritize a bilateral trade deal with mexico, over canada. david page,ow, great to have you on set. are you seeing any kind of potential impact on global growth from the trade war? it depends how much is implemented. we have seen that this expectation is it will all be bluster, and at very least we will see an implementation above that.

china, weillion on have seen that. you do start to see impact. around .5% off gdp over the next couple years, possibly a quarter in each year. there is uncertainty. it is hard to judge how businesses will react, how global supply chains can react. are you seeing any evidence that the earnings seasons could be impacted? michael: not really. we have focused on u.s. equities, becoming more cautious elsewhere. we take our exposure in the emerging markets down to neutral, moderate, overweight in the u.s. but with the lack of visibility on the trade front, it makes sense to focus on the u.s. where there is less exposure to trade concerns and the economy is booming. that is higher uncertainty outside the u.s. tom: maybe you think this is tangential but i'm wondering if this is linked.

this is a chart, i have overlaid what the pros look at, it is hard to see on television and harder to see on radio. this is the constituencies of the bloomberg commodity index, gold with 11% constituency, cattle with 4%, soybeans at 2%, on and on. what you get is this plunge in commodities. david. are these linked? where starting to correlate. we have strong dollar, weak ye n. commodities off a cliff. is there correlation? david: you are right. the retaliation is hitting things like soybeans. we're seeing adjustments in the specific commodities. there is the broader concern what we're going to see in trade will hit u.s. growth and global growth. global growth slows and that has an impact. there is another story. the slowdown from china.

we are seeing a deceleration from infrastructure spending. that is not trade. that is a chinese economy story. that is having a marked impact. you're getting the double whammy. tom: we are going to do commodities in the next half hour. it is such an important story. with this helsinki confusion" it is stuff, we cannot not do commodities. nejra: particularly oil. there is a push and pull and confusion over supply and demand. we will talk more about that with david page and michael bell , both staying with us. coming up, the head of market strategy for u.s. trust at 6 a.m. in new york. don't miss it. marketstalk across the with joseph. this is bloomberg. ♪

♪ tom: what you need to know now. looking at market action away from the international relations and politics. simple. dollar complex. huge nuance this morning. riley, bring up the chart. dxy, the original trading partners, think downton abbey, has broken out to new dollar strength. here is what has not happened yet. this is the modern map of the bloomberg dollar index. it is not broken yet.

it is on the way up. we have not broken out yet. that would be the second shoe to drop in stronger dollar. with us, michael bell and david page. mike, when the strong dollar become strong dollar? when does it actually affect the cross asset world? michael: for the emerging markets, the dollar continues to strengthen and we would expect them to struggle to perform, given the uncertainty about the dollar in the near-term. we had taken the emerging markets down to neutral. the dollar could go either way. on the one hand, current account deficit likely to widen, fiscal spending widening in the u.s. on the other hand, rates will go faster in the u.s. push me, pull me in both ways.

uncertain on the direction. what about the 10 year treasury ield, tightest range since 1973. what will make it breakout? michael: with u.s. growth looking as strong as it is, retail strength, new orders above 60%, that suggests rates will go well and you see bond also threeg higher, rises next year. tom: within the dollar strength, the differential between emerging markets and developed economies. which developed pair are you looking at most in your economics? david: we have concentrated on the dollar as a group. we see strength in the short term. fiscal drivers dominate this year. then you get to a point, where

you see structural features come out. we think you are seeing a pickup through the trade side. tariffs should boost the dollar. when you look at the dollar picking up, that was when the trade wars saw a theme. the market gets to the point where they digest the implications of a trade war and look through, whether or not this will have a material impact and get more sentiment, then you should see dollar softening. nejra: david page and michael bell, staying with us. next, we talk brexit with nina schnick, global director of data. this is bloomberg. ♪ two, down and back up.

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remain banned for up to one year after the drug becomes legal. on bloomberg.com, tumbling out of the european union could cost the pound dearly without a deal, tumbling as much as 8%. deal is a taleno risk, they could take sterling to 1.20. other stores on the bloomberg terminal, theresa may set to catch a summer break after months of crises over brexit. imminentve inversion and other see it as a long way off. .25 handle. let's get the first world news. u.s. may make a

separate trade deal with mexico and have separate talks with canada later. president trump says he is building a good relationship president-elect, they are getting close to reaching an agreement, he says. administration reviewing a plan, allowing drugmakers to offer rebates blamed for keeping drug prices high. rebates were offered to managers, the pharmaceutical industry has urged middlemen to pass along savings the patient's. identifiedice have persons in the attack on a former russian spy. officers think several russians were involved. they were identified through security camera video. earlier this month a woman died

after coming into contact with the same nerve agent used in the attack. in thailand, the soccer team that was rescued is getting future help against misfortunes. they attended a buddhist ceremony meant to protect life from danger and were released from the hospital yesterday. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs, this is bloomberg. nejra: thanks so much. unilever feeling the effects of a strike in brazil, holding back sales growth globally. this comes as the company looks for a new ceo and prepares to consolidate in the netherlands. we spoke with the ceo on the latest earnings release and trade tensions. >> we think there are good results if you look over six months, because we do not run the is this on a 90 day basis, 2.7% growth, most of that is volume.

the fourth quarter of sequential volume growth. people have concerns in this market if you can grow volume ahead of the markets, and that drives our operating profit. we've seen a strong improvement in underlying operating profit of basis points, by the extension of gross margin by 60 basis points. we are pleased. earnings per share, of 18%. reporter: you are not worried about sales? >> the first half is slower. the second half is faster. this quarter, little bit on the lower side because we have to deal with a trucker strike in brazil. business longer than a few weeks. business longer than a few weeks. reporter: how what you ramp up for the second half of the year? >> we think there is more pricing coming in, because pricing is at the low side and that will help. we have innovations and initiatives that come through in the second half. we think the guidance you have

given to the market, between 3% and 5% range, we will hold that. reporter: i want to ask you about what is happening politically with the trade escalation. how worried are you about the potential of a full out trade war? >> it is not a good thing. enormous wealth has been created over the last decade by globalization. within that, we probably have not taking care enough about people that suffer in the transition. we need to work on what many transition"a "just so that people can see the benefits of this globalization. what you are seeing in this war, nobody is happy. i have taken on the chairmanship of the international chamber of commerce and we are concerned, and we are continuing to work with countries. at the same time, we are seeing good signs from increased bilateral agreements between other countries. we have trade pacts in the far

east, africa is extending, the same in latin america. we need to focus on that when we deal with challenges in certain parts of the world. nejra: that was the unilever ceo. future trade deals continue to be a crucial part of brexit. meetsw exit secretary, michel barnier for the first time in brussels today. of jpmorgan and david page, still with us. nina, great to see you. are you expecting anything different from negotiations with dominic raab? nina: absolutely not. this will be fractured. time is running out. the u.k. has still not the proposals on the table acceptable for that eu. though the recent set of

proposals, theresa may has been begging the eu not to shoot them down. that is something. dominic is not going to change of mood music of rex it, -- brexit. the number one issue that will be highlighted today, there is still no solution for northern ireland and the border issue. both sides will be talking about stepping up contingencies for a no deal brexit. that is alarming. i do not know of markets have realized the risk that these talks could break down with no deal at the end. deal, the prospect of no we have been talking about that in relation to cable. arere we get to that -- there any sort of steps along the way where we could see cause for hope? proposal, by may's the way, much of her own party is ripping it to shreds, is a basis for negotiation.

if that is to be constructed into a deal, the u.k. will have to make further concessions on money, on the jurisdiction of the european court of justice and further concessions on free movement, even though they might not call it that. what you might see is, such a paralysis and the domestic circle in the u.k., with hard, and, soft and those who want no deal, that the british government is unable to move. this is eight months before the u.k. is due to leave. as no deal option is seen such a nuclear option that it was not seen as remotely viable. because of lack of time, it could happen. tom: i have asked this a couple times over the past couple days. you are with rasmussen. what is the power or position of

the tangential countries in continental europe? it is all about germany, the netherlands, france, they won the world cup and that helps. what about the denmark's of the world? did they have a real voice in brussels and the brexit debate? nina: what has happened in talk so far, the u.k. was hoping countries like denmark and the countries that tend to stand with the u.k. on european issues, would stand up for the u.k. they have a lot to lose if there is a no deal brexit. we have seen a remarkable unity in the eu 27. why? the single market, it has brought so much wealth to eu nations. all of their interests, economically or geopolitically or strategically, are aligned. that has surprised the u.k. going in, they hoped to divide

and conquer. that has not happened. the british cabinet unable to unite. the 27 are united. tom: this is what we have seen. i love this divide and conquer has not happened. how does prime minister may adapt given domestic politics to the failure of divide and conquer? politics areestic so far away from the reality of the negotiating position on the european union, sometimes they cannot believe theresa may is able to wake up every day and do the job again. what you have seen with theresa may, she has been mugged by reality. throughout the course of her speeches on brexit, you are seeing the u.k. do exactly what sir richard did in 2015 when they had the negotiation with europe. they promised the electric company it was impossible and then had to capitulate.

that is what theresa may is in the position of doing now. whether or not her own party will accept that -- is it so unacceptable that they would rather trigger the hardest brexit or a no deal brexit -- it would be very damaging -- that is the prospect we are facing. nejra: back to the white paper, a basis for negotiations -- it puts forward a deal on goods but not on services. is that not to some extent the deal on goods, a solution to the irish border? nina: it is a solution to the irish border. fouru has said, the freedoms are indivisible. giving the u.k. a special deal on goods, is cherry picking. why should they give the u.k. that? it is interesting how theresa may, before she presented the lot ofaper, there was a

talking to eu leaders behind the scene saying, please do not shoot this down. just recognize that as a first opening, then we can negotiate. this deal is the basis for negotiations but we will have to see the u.k. moving more. fundamentally from the eu perspective, it is still to cherry picky. tom: i love what you are doing their. nina, with rasmussen, global director of data and falling from berlin today. with dollar strength, all sorts of stories. 6.8% tohose, weakness the dollar. 6.8031%. we will come back and discuss the nuance of yuan weakness.

this is bloomberg. ♪ ♪

♪ morning, "bloomberg surveillance," i saw this and i thought that was memphis, the mississippi river sunrise. jfkit is new york, past this morning, a spectacular sunrise. much going on. with us on commodities, will kennedy. commodities, much more than oil and gold. i was struck within the bloomberg commodity index, the 12%.ting of gold at is that normal within a blended index? >> it is.

it remains one of the most traded commodities. that doesn't quite behave the same way as others. it is more of a financial instrument than a raw material. that makes up a large part of the index. mr. candidate would not appear with us unless he put up the chart. this is way cool. let me explain this. gold,s london gold, spot back to 1947. in $2018.ld we are taken the value of gold 2018 dollars, we have readjusted the price is based on inflation. . is the china boom. -- here is the china boom. will that break support? >> the commodities index is under rusher.

-- pressure. it is down 10%. we have seen a reversal. level,oes stay at that people will be worried it may fall further. the discussions are -- are these commodity prices showing a nervousness about the impact of the trade war and an indication that the global economy may be slowing earlier than some had thought? nejra: we talked about gold but i want to talk about copper. the row deepening as the price $600 by metric ton for the first time this year. are commodities the canary in the coal mine for global growth? >> i don't think so. i think growth will hold up well, throughout the rest of this year and into 2019. with fiscal stimulus in the u.s., it is hard to get a material weakening u.s. growth.

risk to me comes from higher monetary policy in the u.s., starting to bite as the fiscal stimulus fades at the end of 2019 and in 2020. the risks start to build materially. for now, growth looks good. nejra: i want to ask you about oil, david page, still with us. we have seen push and pull with a mix of entries from the u.s., inventories versus gasoline storage. what direction do you see? david: that as the other thing that is changing for markets. a huge supply increase, up over 10% from the start of the year and producing oil in record times, you have that story against concerns more traditional producers raining it in. then we have doubts about saudi arabia, perhaps libya will come on the rise. we will see oil be rangy for a

while. u.s. supply story is important. equally there will be concerned. we will see trading flat over the rest of the year with global demand holding. this, it iss, i get massively idiosyncratic up china -- off china. this is a mess of a chart that i will explain. this is the soybean trend, a regression across and down become with a massive trade decline and soybeans. , to, 3, 4, 5, 6, 7, 8, deviations. this is an elegant chart. how do soybeans find a bid? now: the soybean market really illustrates the dangers from policies.

this trade war has totally upended the soybean market, as that chart indicates. there was something that was not factored into anyone's thinking. as long as those remain in place, it will be tough. tom: are the charts ok? will: they are terrific. tv .y are on g nejra: when you get the stamp of approval from will kennedy, it is a good day. thank you so much. michael bell of jpmorgan and david page stay with us. if you have not yet had your head ofmodity fix, commodity market strategy joins bloomberg tv at 8:30 a.m. in new york, 1:30 p.m. in london. this is bloomberg. ♪

♪ taylor: this is "bloomberg surveillance," i'm taylor riggs,

let's get the bloomberg business flash. battle between airbus and boeing, heating up. the brazilian train maker creating a joint company with boeing, upped the commitment with boeing. airbus, the deal has paid off. jets this 120 week. vowing to keep the company together. speculation of a split intensified after a ceo of the german conglomerate quit this month. the complex structure has been criticized. now there are demands a new ceo from outside the appointed. new orders rose by more than expected in the second quarter. attemptked up the ceo's to turn around the company by

not giving into activists. >> it is my responsibility to have a constructive and open dialogue with all shareholders. we have invested significant capital. i see an open and active dialogue there. very active with the transformation and also with portfolio management, i would not say our portfolio is not carved in stone. taylor: that is your bloomberg business flash. nejra: thank you so much. -- u.n. hovering, offshore yuan hovering offshore. and with us, michael david. .7% being about 6 line in the sand. seeing a change in

global situation with trade war's, providing direct headwind to the chinese economy. suggests you need to see easing monetary policy and a natural corollary is that we should see it ease more. we look for modest depreciation from here. they don't want to encourage it too fast. a natural softening is likely. have: does the yuan catching up to do with the weakness in other emerging-market currencies? michael: it is not in the chinese interest to have a material devaluation. important, there is focus on the bad news surrounding trade and what impact that could have on china. the domestic slowdown has been intentional.

they have been trying to slow credit creation, that has come down a lot over the last couple years. to de-lever the corporate sector in china, now they have been hit with an unwelcome concern on the trade front. their stimulating the economy by cutting the reserve ratio. tom: this has been a smart our. -- hour. michael bell and david page with us, special thanks to will kennedy for making us smarter on commodities. in the next hour, kevin cirilli back in washington. and we are honored to bring you french hill and his fractured republican party. this is bloomberg. ♪

♪ tom: this morning, a stronger dollar. em must adapt.

reigns.n most senior pentagon officials frantic to learn what was promised with putin. president may turn over ambassador mcfaul to the russians. the superduper commodity cycle. gold cannot find a bid. good morning everyone. this is "bloomberg surveillance." we are live. in for francine. about the absolute confusion we are seeing in washington. pictures.have we are looking at russian president 10 at the russian

foreign ministry meeting with ambassadors. it will be interesting if any mood music comes out of this. interesting,is is pay attention to moscow, the ballet of london and moscow. here is taylor riggs. the european union preparing to strike back against american tariffs. to block is preparing a list hit with protective measures. they would be imposed if the mission to washington fails to persuade president trump to raise car tariffs. if pound could we hit hard there is a no brexit deal. sterling could fall 8% against the dollar if the u.k. does not reach an agreement with the eu by the time it leaves the block. 20%ysts say there is only chance of the no deal brexit. the federal reserve says

economic growth in the u.s. is holding up. a survey said manufacturers are concerned about tariffs, and policies have led to disruptions. suppliers are concerned about the inability to find workers. unilver reported sales growth of that missed estimates. here is the company's ceo. slowert half is a little faster. half a little flask we are dealing with an enormous trucker strike in brazil, but we run the business a little bit longer than a few weeks. >> global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. tom: thank you so much. this is an odd day.

equities don't show us much. weaker within that tight range. then it gets interesting. next screen. , 12.37, still buoyant. 30 year bond back to 3%. gold down $11. commodities ugly to say the least. nejra: absolutely. ist has been interesting that gold has not always performed like that safe haven asset. the stoxx 600 struggling. dollar strength is a lot of the story, but cable extending losses following softer retail sales data. you have the onshore yuan weakening pass to 6.8 for the

first time in the session. tom: thank you so much. you 8, 9, 10 snapshots of the last 48 hours. i think we have excellent people in the agencies. when they tell me something, it means a lot. yesterday's phrase was double negative. the word of the day is confusion. we go with confusion to kevin cirilli home in washington. doing? general mattis that lead to know what happened in a one-on-one. how does general mattis learn

what trump gave away? at 11:30 today, president trump freeseas his daily -- receives his a daily briefing. set to testify next week on capitol hill. the sources on the hill tell me there are a lot of of questions they want answered. want to know what went down in helsinki. at senate square in helsinki. i saw ambassador mcfaul. i did not speak to him. was mcfaul doing what mcfaul does come and all of the sudden he is the front and center story. dot does secretary pompeo within the confusion of handing over the ambassador to russians for questioning. of state willry

get some tough questions next week on capitol hill. let's focus on republicans for a second. the statement following that meeting in helsinki, you have paul ryan questioning what this tragedy is. , president putin continues onward, meeting with foreign diplomats today. this shifting debate comes at a time when the eu is threatening to increase tariffs of their own. susan collins of maine has described this as dizzying. have we had any clarity from sarah huckabee sanders? she taking a

hard-line approach to russia than the president has. disagree with me on that assessment, but if you look at the comments the president has made come up what he said next to president putin versus tweets, public comments, and cbs interview, it appears to be a walk back, but i think many republicans will have unanswered questions. look up this word in miriam webster. here is a must read bloomberg opinion. this is like boxing. , and mr., feldman wilkinson and others together.

it is not a word i use, but i don't think treason is out of bounds. i would reserve the word treason for the constitutional term for situation described in the constitution. evidence trump is being blackmailed, he should share this information. one word, fundraising. he goes right to what this is about. casts some steen on treason , charity and grace are important in the presence he is owed a great deal of respect. wilkinson using the word registers that the politics is way beyond abnormal. senate censure is not treason come is it? , i don't hear any talk of that.

the column is spot on. one could make the case that democrats are seizing on this in some cases to make an opportunity of fundraising. also somewhatl skeptical of the past 72 hours and how the president has communicated with regards to russia. finally, the eurasia group has said treason is out of bounds. not my job to have an opinion on that. here are the facts. there is no hard-line evidence. nothing has come out in the investigation. very quickly, there is legislation making its way to rein in the president with regards to policy on issues like trade, the usage of section 232 to somee, and then extent these hearings on capitol hill.

that is a way to spotlight the secretary of state next week. tom: thank you for the briefing. we will look at capitol hill now. the gentleman from little rock on been with this many times his republican party. a member of the house financial services committee. congressman, we are thrilled you are with us today. . want to go to what i hear resignations? the is the gop demanding resignations to suggest to the president that this is unacceptable? >> good morning. thank you for having me. republicans on the hill were deeply disappointed by the president's press conference with president putin. the executive and legislative branch have put the toughest sanctions on russia for their behavior in the ukraine, the crimea. we have put pressure on russia

because of their coddling of bashar al-assad in syria. we have increased our military budget and commitment to nato, so it is frustrating when we see this kind of mixed message sent in helsinki. nejra: good morning, representative hill. are you disappointed in the walking back and general handling of four happened in helsinki with president putin? >> i'm glad he walked it back, itempted to clarify, re-instituted his confidence and the fun worked on by american intelligence and officials of doing the best they can with the information they have to provide us as policymakers the so i wason we need, pleased he made the effort to clarify his position and walk it back. , you won yourll district with the 55% vote.

today confusion, will this affect marginal voters in arkansas, and nationwide does this threaten the republican majority in the house to see this diplomacy confusion? >> my concern right now between the executive and legislative branch and how it relates to politics is where we are going on trade. i think trade is a double-edged sword. thers in arkansas are proud president is pushing back on prohibitive tariffs against american goods and services, nontariff barriers in china, subsidized dumping of steel and aluminum, and they appreciate that come about how are we coordinating that effort between the house, senate, and executive branch? when we work on tax reform

between the executive and legislative branch, we are at our best. i feel we are uncoordinated on trade and trade policy, and that is accounting for for what could disgruntled investors, particularly ag country this fall. tom: you have an interesting district. on tariffs right district? your i'm sure the phone is lighting up. what are you hearing from your interesting constituents? >> thanks. let's talk about steel and aluminum first. we have a lot of intermediate good producers in central arkansas hurt by the steel and aluminum tariffs. i don't agree with this section 230 to use here. steel belted radial tires, something both bush and obama knew about. belts in theteel

second congressional district. the steel rod is not made in the united states. that puts these manufactures at a terrible this advantage. speaking with french hill, mechanical engineer from vanderbilt, on the technology of tires. save us here nejra:. nejra:i will move it to agriculture. is it fair the agricultural industry might suffer because of the actions and the threats taken on trade by president trump? >> people are nervous in ag country. soybean prices are down 13% this a time 10 year low, at when farm incomes are down anyway. again, farmers, ranchers are excited president trump is pushing back to try to improve

market access in asia and europe, but are nervous about where we are in the cycle. i'm hearing from farmers at home , we appreciate the pushback, but we hope we get a result soon. nejra: we are expecting president trump to meet jean-claude juncker next week. tariffss preparing ahead of those talks. how should the president respond to that? >> i would hope the president would take the opportunity to come together and make an intermediate deal with the eu on cars. i believe the president could make the statement that is an improvement on trade. it is important to keep the supply chain on a good track, then use that opening to get the eu and u.s. working together to improve the mercantilistic trade policies in china.

ofether we are a third two-way trade with china. we are stronger together than negotiating with china. tom: thank you very much. lovely talk on engineering. that vanderbilt engineering degree really help out. he is from little rock, arkansas. synthesizewe will all this market turmoil in washington. is the head of market strategy for u.s. trust. we will do that next. the sunrises on general mattis and secretary pompeo's washington. ♪

>> this is "bloomberg surveillance." i am taylor riggs. let's get the bloomberg is this

flash. investors are worried ebay is losing momentum. a lacklusterave sales forecast for the third quarter and lowered its revenue forecast for the year. to find its place in the shadow of amazon, but brick and mortar retailers like walmart are improving their own. second quarter rose more than expected a blue bell. 10% and storeose 63% in north america. as the combat on the cloud business is paying off, raising its outlook for this year and next, sap cited accelerating cloud sales and said bookings were faster and the second quarter than first. we spoke with the s.a.p. cfo.

>> i think we half a great amount of gas in the tank to further accelerate. one of the reasons why we have raised our 2020 ambition in the --ud up to 8.7 billion vix euros in revenue is the momentum we have from this portfolio. we believe we will not stop in terms of growing in 2020 and will consistently continue that march past 2020. >> that is your bloomberg business flash. nejra: thank you so much. let's talk treasuries and the yield curve. the 10 year yield heading higher by two basis points. and10 year yield has been arrange for july. did 2-10 on a 26 handle steepening in this session. joining us now is joseph quinlan

, head of market strategy for u.s. trust. we keep talking about the yield curve. the two-tens, what is that tell you about how we should do that? >> we are still biased towards equities. we see good growth, good earnings, continuation of this will market inequities. class, shortert duration, but dividend payers. we think the economy has a good head of steam into 2019, so we have a bias for small-cap equities in the united states. nejra: is that to do with your views on the dollar? >> the dollar is range bound. maybe not so much emerging-market currencies. some weakness there. front of the rest of the world, so dollar has a

good bid. adon't think we will see breakout on either side of the dollar in the next couple of weeks. everybody is calm right economicsou take the and what do you actually do? let me show you a chart that is interesting. we just had this in the news from taylor riggs. here,s ebay down normalized to a small company out in seattle. come on. stock selection matters. are we all idiots to be doing the index etf? if i don't own amazon, i am death. >> if you look at the broad s&p 500, nice move up since the crisis.

amazon, it you can hit a home run. were looking for singles, to grow capital preservation. , one of thethat themes today is the idea we are all linked. commodities linked into the dollar, interest rates. all linked, are we back to where yield is a competition for dividend growth? >> i think we are getting there. there is no doubt this economy has broken out a secular stagnation. the yield is more in competition with the dividend. have no younger people idea what this is. we are just babbling away on a thursday. nejra: what you seeing in terms of flows into u.s. assets? robust, whether

securities, treasuries, real estate. it has slowed down a little bit, from russia come from china. particularly since the united states has broken out ahead of the rest of the world when it comes to growth. interesttes a foreign in bid for u.s. dollars-denominated assets. nejra: with the u.s. breaking out in terms of growth, what does that mean for the 10 year yield? does this bread with the rest of the world continue to widen? do we stay range bound? >> the bias is towards higher rates. is the dragissue from overseas. how week is europe? how aggressive can the ecb be relative to the fed? that is a big issue. tom: on fund flows, i think this

is exceptional. analysis we dollar all learned in school, yet everything is a jumble now, starting with central bank balance sheets. what do you see inflows involved with the research and dollar -- the resurgent dollar? >> were seeing capital from europe, middle east into the united states. there is a bid on u.s. assets. if you are sitting in europe, the dollar is getting stronger. you want to be inside that fortress, not outside. tom: let's go to pebble beach golf course. when do we start lathering up about this? >> i don't think we are there just yet. receiving a cooler real estate market in los angeles and new york.

that is good. interesting farmland, timber. tom: unbelievable. i'm going to tear up. it is cross analysis and upon on bloomberg. nejra: across asset, global, everything. joseph quinlan stays with this. kkr, head of global macro and asset allocation. it is to much. that is 10:30 a.m. in new york. look at what we give you on bloomberg. this is bloomberg. ♪

with tomam nejra cehic keene in new york. let's get the first word news. may make a separate

trade deal with mexico and have separate talks with canada later. he isent trump said building good rapport with mexico's president and the two countries are getting closer to reaching an agreement. on rewriting the three-way trade deal with mexico and canada. china is firing back at the trump administration over trade. beijing is rejecting the claim by larry cobo that the chinese president is blocking trade talks. china calls the accusation shocking. month, president trump imposed tariffs on $34 billion worth of goods with another $16 billion to follow suit. the trump administration is reviewing a plan to curb kickback protections. drugmakers offer rebates to insurance and pharmacy

benefit managers. they want to make sure that pass along the savings to patients. in thailand, the boys soccer team rescued is getting help against future misfortunes. they attended a buddhist ceremony meant to protect life from danger. the boys and their coach were released yesterday. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. tom: we would like to begin a set of discussions with joseph quinlan of u.s. trust. martin schenker is the head of all content for bloomberg news, and elaine joins us from brookings. marty, i want to begin with you. last night, we had the story on michael muller fall, which was

inflammatory when you were on the gulf stream over to london. would you explain to me what mr. pompeo does in response to the idea that mr. mcfaul would be questioned by the russians? >> it is a rather unprecedented notion that vladimir putin, who has been vehemently exercised over what he believes is financial malfeasance among some people in moscow wanted to interview the former ambassador under president obama. now he enjoys absolute immunity from any prosecution, so it was thather extraordinary idea would even be entertained by a sitting president. tom: you have written about this, historical actions by

presidents and such. everyone is shocked by the lack of resignations. george will writing about it and others. why is it so hard for people to resign?is at the pixie dust of the white house ? >> it has a big part in it. there is something else going on we have not seen before. some patriotsare in this white house and administration who feel that they have a president who is from time to time at least totally out of control, somewhat disconnected from reality, and that they need to stay around to control to the extent that they can the damage this president could do. nejra: great to speak to you. what would make this a constitutional crisis? is getting awfully close

to a constitutional crisis, but what would make it a crisis is clear evidence of what the constitution says is high crimes and misdemeanors. yesterday, the former spymaster brennan said the president had committed treason and he was definitely in high crimes and misdemeanors territory. i think that may have been an overstatement, but nevertheless, there is an enormous amount of suspicion that somehow vladimir putin has something on donald trump. the is a devastating indictment of a sitting president. seem toident can't clear this up. he can't get rid of the clout that is hanging over his deepdency, and the suspicion that somehow he owes something to a foreign power. that is a constitutional crisis. fascinatinghat is a insight. i have been asking myself to

pick through all the confusion where this goes next. you have members of the president's party calling this dizzying, how do expect the rest of the world to understand where this goes from here. maine.n collins of this turningion of into a constitutional crisis is thet premature, as long as gop leadership -- and they have been critical of mr. trump performance in moscow -- but they have not taken any concrete reaction to restrain him on on childn tariffs, reunification, all issues that key has been perceived to been mistaken on. until the gop leadership decides it is not in their interest to back this president, i don't

think you will have a constitutional crisis. mr. mcfaul published last night for foreign affairs magazine. essayished a brief talking about one idea. he said, beyond the trump administration. in washington, republicans and democrats, whatever, are people trying to get beyond a one term or two term trump administration? no, i think the people are trying to cope with the fallout in this administration. it is clear donald trump is not building a sustained policy agenda or legacy. things that is so unusual about this president is the lack of depth in his policy pronouncements, which is why you see the president saying one thing and the government actually ignoring it or doing quite the opposite.

let me go back to the issue of the constitutional crisis. a constitutional crisis is not a disagreement over policy, immigration, tariffs, or anything like that. consistsutional crisis of a president who has committed treason, or a president guilty of some crimes that are crimes against the state, so you have got to look at this in two ways. are a lot of policy things the republicans have not checked of this president on. that is not a constitutional crisis. that is their right to go along with his policy. a constitutional crisis consists of a president who would be throes of ay in the debt to a foreign leader. that is a constitutional crisis. this politicalf noise acceptable? >> sure it is.

if you are sitting at home and looking at what is happening in washington, the uncertainty, you cash, but io be in would look at the fundamentals, earnings, growth outlook. trade is something we have to watch carefully. what is investable? don't forget the private sector, good earnings, good companies, and the long return. in good companies, large or small mid-cap, you want to be participating. marty? go ahead, please. nejra: i wanted to ask what potential opportunities you see in terms of the escalation of the trade war? >> look at the farm sector right now, a lot of pain they are. material costs are rising. this could be the opportunity to put some money to work, some

investor concern around markets, trade. stepmight be the time to in on riskier assets if you have a longer-term perspective. months, you want to avoid some of these assets. some of these asset classes are being discounted too much when you talk long-term. was around schenker for the advent of movable type. marty has been doing this for years. how is the press doing on this? how did the press due in helsinki and on the trip? >> as a member of the press, i'm talking my own game, but i thought the press did what the press is supposed to do, speak truth to power and not be afraid of the consequences. those two questions asked at the press conference were spot on. measure of some

that donald trump as president has had to do with for the last three days, so i think it was one of the bright moments in the history of coverage this president. tom: very good. we will continue. , lots of conversations themes, including the markets. morningberg radio, your karen,ing, bob and coast-to-coast. area,oast, the bay washington, london as well. good morning, radio london. this is bloomberg. ♪ ♪

>> this is "bloomberg surveillance." the battle between airbus and boeing in the smaller jet market is heating up. the brazilian plane maker creating a joint venture with boeing had ordered commitments for 300 planes. to takesion by airbus control of the smaller line of pains has paid off. it sold 120 of the jets this week. vowing to keep the company together, speculation of a split intensified after the ceo quit this month. haveist investors criticized the complex structure, but eliot said it never demanded the company be broken up. whysays new orders rose

more than expected in the second attempts byking up the ceo to turn out the company with al giving into investors. >> it is my responsibility to have a constructive dialogue with all the shareholders. significant capital has been invested in the company. been very active with our transformation and active portfolio management, but i would not say our portfolio is now cast in stone. ilver feeling the impact of a truckers strike. it reported sales growth missed estimates. here is the ceo. >> the market first half is a little slower, first half a little faster, this quarter on the lower side. we have an enormous truckers

, but we havezil run the business for more than a few weeks. thank you so much. the effects of the trade war are being felt this earnings season. alcoa has cut its 2018 profit forecast due to the impact tariffs are having on the sector. japan's trade minister warned any metals tariffs in the country would be -- >> japan will take the same approach to handling tariffs that it took for steel and aluminum tariffs. the damage would be huge to not only the japanese economy, but the u.s. and global economy. this comes as donald trump says he may prioritize a bilateral trade deal with mexico over canada. still with us are marty andnker, joseph quinlan,

elaine of brookings. we have this meeting between president trump and jean-claude juncker next week. we could see some retaliation from the eu ahead of that on the alto tariffs. what would you expect president trump's response to be on that? >> i would expect it to be belligerent. been an interesting strategy. he has threatened terrorist, then made indications it will all be fine in the end, but what we are not seeing her concrete negotiations between the u.s. and europe and u.s. and china specifically. until we see some movement there, i think the sides will get further apart. question as to a whether president trump will pull back from the brink as we approach that august 30 deadline for the biggest amount of tariffs on china to be

implemented. given the affect on the u.s. economy so far has not been that great, is what is needed for president trump to pull back from the brink a meaningful correction in u.s. equities? >> i hope it does not come to that. he is attuned to the markets. he is listening to a lot of ceos in the u.s. saying we will invest less, higher less people, earnings will be heard. i think that narrative is getting out there. there is the hope we can avoid the worst case scenario when it comes to trade. we have some time to work this out. tom: i want to rip up the script. we just had published the first poll coming off the putin-trump press conference. it shows 79% of republicans

supported the president in his actions at the press conference. , this is called a reaffirmation of the national drama. callshows the massive troll-political divide that covers all of this, doesn't it? >> it really does. big surprisenot a the base will not be critical of the president. that is what they expect and want. even though that intellectually they may realize it does not really work in terms of his explanation of his relationship with putin, it does not matter. they will still back cam. a shoutant to give out to my colleague on mentioning his popularity. how do the democrats coalesced

around an electable set of candidates in november, and a 2020? candidate in how did they do this, respond to what the poll shows? ways.two first, there is evidence that donald trump has a secure lock on an ever shrinking base of republican identifiers. but mr. sanders from vermont and the senator from massachusetts are not going to get it done. ofre is the middle ground democrats to pull marginal republican voters away? there is nodterms one candidate. everyone nominated so far in the midterm elections have been strong candidates. there was a chart published a few days ago showing democrats in swing districts have more money in the bank than

republicans do. we have nominated a lot of veterans and strong candidates, so in the midterms, there is a decent chance that despite the numbers that you cited, democrats would take back control of the house of representatives and take up a seat or two in the senate. for 2020, we will have a nominee. i don't know who it will be. a lot of people are throwing their hats in the ring, but the party will coalesce around a nominee and you will see how strong this republican base is. the democrats one the popular vote in 2016. int number will only grow 2020. nejra: thank you so much. us is marty schenker and joseph quinlan.

users can enter act with all the charts we have shown using gtv . have a look at how it is king dollar most ways you swing it. you can look at my 10 year yield in a range chart. download them for future reference. this is bloomberg. ♪ . ♪

tom: we move beyond helsinki and mr. putin speaking to assembled foreign ambassadors and russia. i'm sure there'll be some messaging and no double negatives as well. single best chart and commodities. up we go. commodity boom, off a cliff. what is a commodity depression tell you? pointing to some pressures related to soybeans, the farm complex, oil prices

called back a little, maybe a slowdown in china. coming outslowdown inchina, but nothing to bad terms of going back to a global recession. boyle is up year to date, whereas metals are down. do you buy metals as an opportunity because they are cheap? cobalt,ous metals, anything used in cell phones, , any pullbackev's in those metals, you want to be lying now. tom: are you buying shares every day? >> yes. on the pullbacks. tom: do you have an enthusiasm for equities? >> we do. we are looking longer-term. i don't want to discount the noise from washington.

the economy is in pretty good shape. we will rollover at some point. we like the small-cap stocks as well. tom: thank you so much. title.that we will drive the conversation forward. afteron speaking terms francine and i crushed him in the world cup poll, bloomberg radio worldwide. good morning, radio london. thrilled you are with us. we are watching a stronger dollar and weaker commodity prices today. this is bloomberg. ♪ today. this is bloomberg. ♪ retail.

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forecast. the trade affects the start to ripple through earnings. king dollar. the yuan hits a one year low. the fallout from the dollar rally. car trouble. more than 40 people had to the commerce department for a public hearing on auto tariffs. the eu stands by to retaliate. welcome to "bloomberg daybreak." perfect timing. zeroing in on that. >> my favorite part of the quarter. it is a beat on the bottom line. eps at $.90. the estimates was $.74. slightly down from last quarter. they were $450 billion or