presidentthe u.s. counterparts,his warning consequences if tehran continues to threaten america. the central bank takes actions to raise yields. ca's new head. mike manley in charge as a health crisis prevents sergio marchionne from coming back to work.

good morning, everyone, and welcome to "bloomberg surveillance." i am francine lacqua here in london. these are the markets. you see stoxx 600 down a touch, down about 5%. this as a lot of investors are trying to and just ingest warnings. if you look at dollar-yen, $1.1096. sliding on speculation about the bank of japan stimulus. 731.-dollar $1.1 let's take a look at fiat shares, news over the weekend that sergio marchionne a was going to step down. shares of fiat chrysler down. coming up, we talked trade war

global growth with bob sinche. let's get to first word news with taylor riggs. taylor: engines of leading economies fall out of sync. g20 finance ministers and central bankers said at a statement published at the end of their two-day summit that global growth remains robust and emerging-market economies are better prepared, but risk to the global economy has increased. steve mnuchin moved to calm his counterparts' concerns. : this is very important set of communiqués, but don't over analyze one sentence and be concerned. we understand what the trade

issues are, and we are trying to productively deal with them. presidentxico's new includes president trump to a range of issues, including trade, migration, and security. he added that prolonged uncertainty about a new nafta could hurt investment in the medium-term and long-term. yields debt market saw surge on media reports of possible changes, the ultra-loose monetary policy that spurred the central bank's offer out of operation. produced as much as six basis points in early trading, its biggest increase in almost two years, holding higher end -- higher.the yen japan offer to buy back securities at a fixed rate of

.1%, though there were no sellers at that level. headingeremy hunt is out to warn they need to do their part. that comes a day after britain's new chief brexit negotiator said the government must step up planning for his talks with the eu collapses. unt: i think they have got to make sure that they have preparations in place in case they do not reach a positive outcome. donald trump lashed out at twitter, saying to the president of iran "never, ever threaten the u.s. again or you will face consequences that you -- ofever seen before which few throughout history

have ever suffered before. we are no longer a country that will stand for your demented words of violence and death. be cautious." >> americans say they will not allow iran to sell even a drop of oil. weak? think iran is that you cannot do such a thing. we are a people of resistance. the entire iranian nation will resist. president trump, do not play with the lion's tail. you will regret it. taylor: global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am taylor riggs. this is bloomberg. francine? thanks sotaylor, much. let's get to our top stories. fiat chrysler has named a new chief executive as a health crisis has left sergio marchionne unable to return to work. mike manley replaces him. reports are that marchione's

condition is irreversible. you wrote a very personal account of following mr. marchionne for the last decade. what do we know about new chief executive mike manley? manley was the head of the most profitable and bigger unit of cheap. -- of jeep. the decision to appoint manley clearly shows how orton jeep will be in the future of cr chrysler to buyers. fiat chrysler to buyers. analysts include more than jones. has a market rate of over $30 billion. unit ofe most important

the group, so it makes a lot of sense. francine: what are the biggest challenges of the new chief executive will face? it iso: i mean, you know, going to be difficult to replace sergio marchionne, especially some of the impacts with investors, with analysts, the way he managed to break some roles in the industry. of fiat success toysler -- he was going resign at the end of this year, so somehow the company was prepared for a successor. are highere chances at ferrari. by another replaced member of the group. the chairman of philip morris international was an independent director in ferrari's board, so it is not about the management

of the company, and ferrari is set to present a new business plan in october that is set to double the profits of the group. for what we can see right now. the sharetommaso, prices of fiat chrysler automobiles is down. want to heartors from the new chief executive? mean, clearly the new plan for the next five years was presented in june by sergio marchionne, and it was meant to be his last plan. they want to be sure that this plan will be implemented. numerous,here are very different strategic questions to be made to mike manley. mike this morning is meeting aat executives, as far as

group, which was carried before, to be led by sergio marchionne. , and then fiat is going to report the second quarter with that. mikee first time when manley is going to speak with investors. it is going to be very interesting. francine: tommaso ebhardt, senior writer, joining us from milan. guests, including simon french. the person who will replace sergio marchionne, sergio marchionne is somewhat of a rock star. evolving rapidly industry. what will be the number one challenge for the person in charge of fiat chrysler? anwe know mike manley is

operating manager running aground successfully. you mentioned trade, politics, it is such a complex job to be ceo of a large company. reassured that manley has the skills to do that. i would think that someone like sergio marchionne has chosen mike manley carefully, you would have the skills to do that, as the market would be felt. francine: how difficult is it to fill the place, the space that marchionne had? field chrysler, and he is much more than a fixture of the auto industry. philippe: absolutely. we cannot overstate how important sergio marchionne has --n in lansing the way

influencing the way the industry thinks. his discussion of the obsession of the capital junkie. out, he was definitely at the forefront of industry thinking. it is not clear to me along the current ceo's that i see in the auto industry who is going to pick up that position, leaving the industry thinking. we will see. who is going to replace sergio marchionne. withine: how do they deal the supply chain and the pricing crunches? on aluminum and steel that the white house said they will impose. philippe: it is an industry that the whole -- it is an issue that the whole industry has dealt with. higher prices for steel, higher prices for aluminum, changing the rule of nafta. many of thecing

same issues that ford and gm and others are facing as well. for a long time, it was unclear viable business, and what sergio has put together is a business that has been streamlined. they have separated business with different dynamics like ferrari and cnhi. certain things that did not issue a few years ago. marchionne ismr. getting into the hands of mike manley, certainly much manageable and viable than it would have been a few years ago. francine: they rekindled speculation. first, i want to bring in simon's french -- simon french on these tariffs. are fiat chrysler, do you have any firepower to fight against these ms. bonino:? -- t hese tariffs?

simon: not a lot, actually. they are being bilaterally imposed, and it is not so much the aluminum tariffs but a ramp-up of tariffs on autos in the eu, which is one of the looming challenges for the group, so i actually think fiat chrysler under that stewardship is actually a small voice in the competitive macro environment, independent of the auto sector. francine: going back to the auto sector, do you think their way more speculation that the automaker will split off or sell parts of his health -- of itself? philippe: we are convinced -- for about 20, 30 years, the auto industry has worked toward building large, conglomerate brands. marchionnes, sergio went, in regards to that direction, focusing on brands where returns can be improved.

we think that trend will continue in the auto industry. we think we will see, to some thent, further undoing of past 2, 3 decades. francine: thank you so much, chois of jeffrey's equity research, and simon french stays with us. coming up, possible changes because of monetary policy. could kuroda change the playbook for the first time since 2016? and finance bankers are threatening global growth. we will wrap up the meeting. this is bloomberg. ♪ is bloomberg. ♪

de-nuking economics, finance, politics. good morning. this is "bloomberg surveillance." i am francine lacqua in london. here is taylor riggs. taylor: francine, pushing the sustained growth rates achieved by his predecessor. switzerland's third-largest wealth manager added about $15 billion of net new money in the first six months, in line with the company's growth market at julius baer. >> we will be within 46% this year. 2017 was a nice ordinary year, and the market pointed one way. i am very happy with the five went one and i can come from that i feel comfortable to land within the 4% to 6%. taylor: ryanair posted a drop in first-quarter office and warns

that threat of walkouts by unions are starting to make customers hesitate to book flights. the company's cfo told bloomberg he recommends oil prices at the current level but warns that some may feel pain. neil: i think it is good for our industry. it helps lead to consolidation within the sector. carriers areeaker going to see pressure on their cost base and indeed on their cash generation, which will lead to more consolidations and failures within the sector. taylor: and that is your bloomberg business flash, francine. francine: taylor, thank you so much. fears of a currency war are easing after treasury secretary steve mnuchin spoke. he said the u.s. is not turning

into a down market. meanwhile, the french finance traderr said progress on unlikely as long as duties are used as leverage, saying "we refuse to negotiate with a gun to the head." french fromsimon us,ure gordon is still with and we have an additional guest. does it count? it counts if you are looking at short-term fx markets. i wouldfirst time in, say, probably 30 years, you have a strong dollar. i see was steve mnuchin says, but he was quite guarded in his words. he did not dismiss the idea that

pressure forgh competitive devaluation, but he was just saying there was no interventions in the market. is not exactly clear, not unless they rip up the rulebook between the treasury and the fomc. so i do not think there were any new measurements. , but i think the g20 is about the key cost rates about what is the policy going forward. you are looking for the communiqués to provide clarity. >> in the long term, but it is great for the short span. it is relatively strong dynamics for the u.s. dollar, but the rest of the world has slowed down. inflation has slowed down, places like japan, for example. in the short-term, the dollar should do well in this environment. the long-term trade is when buy, andeally start to

it could slow down into full, and the next round on china and perhaps even on the eu. francine: simon, you have the president weighin in on interest rates. what do you do with the? -- that? you try to work out the degree to which is him just stating the obvious, which is an environmental where he has a mercantilist outlook, a strong dollar does not help him. the words were, at least by the president's standards, quite reserved that he would rather a lower interest rate, but you then try to understand the response function from the fomc. do they respond to those signals coming out of the white house treasury with a strong path in 2019, order they actually go that this is a president and administration that is really concerned with a fiscal stimulus, its attack on trade,

we expect inflationary environment given the path through rhetoric to delivery? and then we have a more aggressive monetary policy. it creates an interesting market for the dollar. i slightly disagree. i think the u.s. dollar longer-term has more legs in this rally. areas are hit, the japan, the eurozone that will be hit the most, global trade will have to respond in terms of loosening their monetary policy. jordan: they are already loose. they have ramped up qe, they have made it stronger. how do you see that working out? simon: it is a great question. there is no limit on how loose you can go. for monetary policy, it is political. if you look at japan, you have to look at the change in governorship of the ecb. you will not get forward guidance in the near-term going into the new governor's term, but inflation is weak, and

the policy environment will remain completely benign. offer to the boj securities, and it will discuss possible changes next week to discuss monetary policies. any changes would be the first since 2016 with the boj introduced yield curve control. what do you make of governor kuroda t changing tack, or is he saying i made control at the market? jordan: the market went from a week ago being relatively sanguine to very uncertain. we have a problem in japan, which is inflation is rolling over. you have to look at the core measures, including energy and fresh food. they have already loosened to the extent where we have a very flat yield curve. we have banks, insurance companies talking about it

house is impacting profit. nobody puts baby in a corner. they have to be loose. the most hawkish outcome is expected -- we get talk of the meeting coming up in july, but that is not going to raise it. i am a bit more cautious on that. i think they should do something like the ecb, after it up is this risk, some sort of data-dependent, strong forward guidance where volatility comes back in the market, banks can make more money off of that volatility, and so we have the best of both words -- looser trade policy but steeper and more volatile yield curve. that is what the bank of japan is trying to get. it is basically trying to have its cake and eat it, too. francine: i love that phrase. simon, let me bring you to my chart, a chart looking at the 10-year bond yield, at about 0.1%.

they are trying to cap it, but it is not stuck at exactly 0.1%. simon: are they too complacent? the move overnight shows you that they were too complacent going into this meeting. a core inflationary problem in japan, and the last time kuroda spoke publicly, as your colleague found, i did not sense from him that there was a move away from a commitment to a credible path to 2%, which, quite frankly, the bank of japan's health thinks will take 2019 -- takel year place in fiscal year 2019. i think it is an extension once we get through the volatility to a very gradual path of normalization. it continues to be the playbook for the bank of japan, because bank one they have to 2%, and i did not see that and kuroda's eyes. francine: quickly, what is your take on the pound? crashing out of the eu?

jordan: i think the chances of a hard brexit, no deal are extremely slim, but it can always surprise you. the 10thnth hour, hour, even the 11th hour, there will be a deal made. even if that deal is just to kick the can down the road, we have seen it all the time in politics. when we get to the pound, it might drift higher, because --i there is not going because there is not a lot going on. francine: jordan rochester, thank you so much. simon french stays with us. any regret as it threatens tehran oil exports? this is bloomberg. ♪ this is bloomberg. ♪ this isn't just any moving day.

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simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. economic, finance, and politics, this is "bloomberg surveillance." let us check in on what is

trending across the bloomberg universe. access for millions of users in cities like new york and miami could be impacted as sea levels rise. head to twitter for more on that. on bloomberg.com, labor strikes are starting to weigh on ryanair. the airline posted a 20% drop in first-quarter profit. estimates are being put off. on the bloomberg terminal -- in third place, a speculation that a policy change will occur with the bank of japan. -- the devaluation is catching a lot of people's attention. head to the terminal for more and that story. let us get to the bloomberg first word news with taylor riggs. top financeworld's chiefs warn that trade tensions are threatening global growth. g 20 finance ministers and central bankers said in a

statement published at the end of their two-day summit that global growth remains robust and many emerging market countries are better prepared to face crises that risks to the world economies have increased. steve mnuchin moved to calm the concerns of his counterparts. >> this was a very productive set of meetings. are important to look at the message we are sending but do not overanalyze one sentence and be concerned. we understand what the trade issues are and we are trying to productively deal with them. taylor: mexico's new president-elect called on donald trump to pursue new nafta talks and aim for a final deal that includes all three countries. he says that the three sides should work together on a range of issues including trade, migration, and security. he added that prolonged

uncertainty regarding nafta could harm investment. u.k. foreign secretary jeremy hunt is headed to berlin today to warn that the european union needs to do its part to avoid a chaotic scenario. that comes a day after britain's new chief brexit negotiator said the government must step up planning for the possibility that talks with the eu collapse. >> any responsible government would have to make sure that you have the planning and preparation in place in the event of negotiations not reaching a positive outcome. taylor: labor strikes are starting to weigh on ryanair that posted a 20% drop in first-quarter profit. warnedcount airline also that sporadic walkouts from trade unions as well as air traffic control strikes are starting to make customers hesitant to book flights. the cfo told bloomberg that he welcomed oil prices at their current level that warned smaller rivals may pick -- may

feel some pain later in the year. >> this is good for our industry. towill help lead consolidation within the sector. as we get into the winter, the weaker hedged terriers will see pressure on their space as well cash generation which will lead to more consolidations and failures within the sector. cfo of fiat chrysler will be replaced because of deteriorating health. he is in serious health. unexpected-old decline comes after complications from shoulder surgery. he has been succeeded at ceo by mike who was previously head of the company's jeep and ram division. firing ao, a man handgun into restaurants and cafes shot 14 people killing one of them. police say one of the injured is

a nine-year-old in critical condition. authorities confirmed that the was killed after an exchange of gunfire with officers. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. i am taylor riggs and this is bloomberg. francine. francine: t why so much, taylor. donald trump has lashed out warning of unspecified consequences if president rouhani continues threatening america. in a tweet, president trump said -- never ever threaten the united states again or you will suffer consequences unlike any in history have ever suffered before. be cautious. earlier, president rouhani warned the u.s. president not to oilaten his nation's experts saying america would be sorry if it reimposed sanctions.

let us keep our discussion on oil. simon, the problem is i am not sure what to do with this. you are and oil analyst. let me show you this chart of iran's crude outputs. simon: if you look at the materiality of what sanctions 1.5 millionabout barrels per day. at a time when coal is over and above what the iaea expected, the problem is we just do not know if the diplomatic playbook of threatening a foreign leader which seemingly has worked in north korea in terms of bringing them to the negotiating table, whether it will work with iran where there are very different dynamics. francine: how does that work for the petrodollars?

reporter: the rise and fall we saw earlier this year was not appreciated in norway or canada. canada is with nafta and the trade talks and the fdi outlook. -- ifs mean that if oil the sanctions come into play, then we could start to see those currencies ticket back in but the global macro picture is much more important for the time being. -- had the u.s. with gross with growth. that is weighing on sterling. francine: let us cross over to iran -- tehran. how are iranians going to react to this? the u.s. seems to be threatening iran but i am not sure if the residence tweet is foreign

policy -- i am not sure if the president's tweet is foreign policy. fromter: we have not heard president rouhani. seen nowe have reference to donald trump. we had a military commander, the head of paramilitary forces here, react to president trump's comments. we are not sure if that is precisely a reaction to the tweets from this morning but he said this was part of a warfare. i think iranians, ordinary iranians here will look at this in the same way that they have been reacting in general to what donald trump done. a combination of frustration and bafflement. at this stage, the comments have

been regular and there is a sense that they are slightly repetitive. i think the iranians have gone slightly numb. one person i spoke with this morning said -- this is the same thing we have heard before, just stronger. is trying toation prompt iran to have a reaction. run -- withinin a rouhani getresident pressure from more extreme parties to go harder on the u.s.? what he hasthink tried to do in the past few weeks is try to give the impression that hardline and moderate factions within iran are standing united since donald trump withdrew from the nuclear

deal. i think he will allow the military apparatus to make their statement and he will make his statement. i think they will definitely be coordinated. and they will have a very similar tone. that is my prediction. that is what i think will happen. francine: t why so much. -- t why so much. golnar is on the ground for us. theopec dynamics given sanctions on iran -- if there was to be a shock on oil prices, first of all, is there a scenario where that could happen? what does that mean for global growth? reporter: take the opec dynamic. we have seen in the last 12 months has been driven outside of the headlines. nigeria and elsewhere that are

off the geopolitical radar but has been material in the undershoot of opec projections. the question is where does opec see it's strategic target for oil prices? it will start to get uncomfortable with not just the short-term incentives for members to cheat, but the longer-term incentives to .echnological change these things always occur with more of a lag then we realize. i was taken with the ryanair ceo clip you had a moment ago. there will be some shakeout with higher cost issues. and ag with hedging series of other ways that behavioral decisions are made means it will be much longer before you see material impact inactivity. francine: where do you see at

all going? ,> in terms of the oil story opec is raising production. they are hoping russia will come to the rescue. theundershirt has -- undershoot has been all of these countries. they're trying to have a positive message of higher production. usually come at you see much higher levels of production going into these meetings. we did not see that. they are materially struggling to do it. it is hard not to be optimistic. the differences we have already had a relatively big move. at us not forget that higher oil -- nobody wants a higher oil price. if we had an oil crisis sort of story, that would be extremely negative. we are not going to see it, i don't think.

francine: gentlemen, t why so much -- they do so much. stay with us on bloomberg surveillance. ukraine is trying to unfreeze year.s after more than a we will speak to the finance minister, oksana markova. we will bring you our exclusive --erview with our exclusive with bernard hold letter -- hodler.

you're watching bloomberg surveillance. i am francine lacqua in london. let us get straight to earnings. hostedbaer has the --

net new money. shares are trading lower today. we meet with bernard hodler. he has stepped up hiring. he spoke with bloomberg daybreak anchor, manus cranny exclusively in zurich. bernard: we will be between 4% and 6%. that is my guidance. in january i said that 2017 was an extraordinary year. markets went one way. i can confirm that i feel comfortable to land within the 4%-6%. manus: you have a different presence as you come into this room. what has been the biggest challenge in the last six months? have notthe markets been easy and volatility has come back. it is good for julius baer because we have more interaction with our clients and i feel very comfortable in my seat.

this time last year asia yielded the best inflows ever. how is asia holding up given the china market meltdown we have seen on the equity side of the business? asia is holding up nicely. a quarter of our assets are managed in china, 100 billion. we have seen a bit of deleveraging in asia in some areas, ainley in the fixed income areas. clients leveraged in fixed income and leveraged with loans are more cautious. the tone i hear from the clients is a bit more cautious. they are also looking at the geopolitical situation and the trade tensions but overall things are holding up quite nicely. target was to make asia 30% of the business over a five-year carrier road of time.

are you still sticking to that target? currently, it is about 25%. of course, it depends on how nicely we grow in other areas ourdefinitely it is one of most promising growth areas we have and we continue to invest into asia. inbe you saw the transaction march where we did quite an interesting venture in thailand with the number one commercial bank there. we see opportunities there, not only in china. there are other interesting markets as well. manus: in terms of defections. i wonder about retention. that are any pockets getting harder to retain? is the competitor taking any of your bankers? bernard: the answer is no. of course, we respect our are a lot but there

of other competitors as well. it really has to do with our strategic repositioning. in january iember also talked about focusing on the key markets. and argentina, are key in the latin market for us. we make sure we can invest in these markets and do a little less in the other markets. anus: if you had to choose geography with the next acquisition, where are you drawn to what the next serious growth spurt? bernard: i would say we -- we continue to look at the opportunities in the growth market have a asia and latin. i am quite sure that in the next also findhs, we will opportunities in europe and switzerland. manus: both acquisitions? bernard: in the last two or

three years, everyone was doing well and everyone was a buyer. now, that the market is getting more difficult, we will see more opportunity because the competitors will realize it is quite difficult out there. francine: that was bernard hodler speaking in zurich. ukraine's central bank is expanding by 3.4% this year because of internal demand investments and favorable trade conditions. $17.5rmination of the ims billion bailout which has been frozen for more than a year. amendedalso recently anticorruption legislation. any delay could -- how close is the government to accessing those funds? --ning us now is oaks on a

is oaks on a mark over. first of all, what are the current stages of talks with the imf? are they improving or restarting anytime soon? min. markova: as soon as i was appointed, that was one of the key priorities. move actively with the imf on our talks. we are having very good discussions at the moment. as you said, the anticorruption court was adopted in the format soon be whatefully we need for the program. , we are the budget having very constructive discussions which i hope to constructively and soon. francine: how close are we to a deal? what is the soonest you can expect to deal with the imf and are they ready to compromise? min. markova: i would not talk

about compromise because we stay true to the principles we have discussed it together. explaining and finding solutions especially for the budget. when we had discussions earlier, we only had first-quarter results. now, we have six months of results which are better than we had in the first quarter. i think we are well-positioned in some to the imf that numbers, our position was a correct one and discuss mitigating measures. francine: how quickly can you get the next -- min. markova: we are doing everything possible from our side to do this quicker. we are doing everything possible to do it in the quickest possible time. i would not want to name a date right now but i hope it will be soon. francine: minister, what are

your latest plans for selling eurobonds? min. markova: we are the market closely. there were some negative developments with the em earlier. now. are improvements we hope to come back to the market as soon as the market is ready to see us there. tothe budget, we have plans come back to the market this year. we will be doing it this year, the exact months, we will see. the market will tell us. francine: you are here in london to meet with other investors. what is the question you get asked the most? our people worried that trade tensions will hurt ukraine? some tensions are actually opportunities for ukraine. with a number of agreements we have signed in the last two years, i think we are well-positioned to increase our

wealth. i think we are well positioned to help other countries with expanding in the area where ukraine present's very well as a good place to invest. with the new privatization especially. we have urgent to investors and we are seeing a very good response to the new rules we are providing to participate. although the world is a volatile place, it is presenting a good opportunity for ukraine. francine: you do not expect ukraine to be engulfed i the uncertainty that is engulfing other countries? min. markova: one of my goals in this position is to work inside the three-year budget in the ukraine. i think this has been a major tool that we can give to that we will have an

anchor in our budget. the budget is something that is adopted and provides a clear indication where ukraine is going this year and then in the next three years. francine: two issa much, minister. we will look at some of the market moves. uncertaintyg some when it comes to what happens with the euro-dollar. stocks dropping. to figureare trying out exactly what the warnings from the g20 mean. there was a concern about the impact of protectionism and what it means for world growth. when you look at the unique situation, minister, of ukraine, will ukraine be hurt by the trade tensions between the u.s. and china? min. markova: again, we were not included in the global market. this becomes a very good

opportunity. we see a big interest from investors in both -- in the u.s., china, and europe in ukraine. in infrastructure projects. and into all other kinds of projects that we have ready for the investors. francine: tom and i were in helsinki covering the helsinki summit between president vladimir putin and president trump. you get asked about that? we are asked about the security situation in general. the most important thing is that our international partners -- that they stand behind us. even though there could be some questions about how it will develop, we do see a firm support for ukraine. we see a firm position on supporting the ukraine and i think that is very important.

also for investors it is very important to come and see. we bring investors. the minister for investment. if they are brave enough, they can come and see with their own eyes that ukraine is open for investment. minister, thank you so much for doing the interview today. bloomberg surveillance continues in the next hour. tom keene will join me out of new york and we will talk fx and trade. this is bloomberg. ♪ retail.

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near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. francine: romney versus from. the u.s. president lashes out warning consequences if tehran

continues to threaten america. the boj steps in. movespanese central bank on speculations that it may be changing policy. as amanley is in charge health crisis leaves marchione unable to come back to work. good morning, everyone. this is "bloomberg surveillance ." tom, i have a lot of charts looking at oil. one of the main stories is a run -- iran but to also look at the banks. francine, i am really interested not only in the earnings ballet with ubs and exxon mobil and the oil business but i will tell you, this story of fiat with the tragedy of mr.

bechionne's illness will interesting for finance and business people but for me, it is almost the cultural fabric of italy and it will be fascinating to see how this plays out in the coming days and weeks. francine: he was really considered a rockstar. tom: absolutely. francine: i came back yesterday and no one could talk about anything else but the fact that marchionne was out. and it is difficult to fill his shoes. tom: and a very likable guy. we wish him well in his eldest. very difficult. -- we wish him well in his illness. very difficult. francine: we will get back to those implications. taylor: president trump has launched a new attack against iran. on twitter, president trump told president rouhani to never

threaten the u.s. again. earlier, the iranian leader warned president trump. world'schief of the largest economies -- finance economiesthe world's met over the weekend and one of harvey's. their statement said growth remains robust and many emerging market countries remain well-prepared for crises. inhas been a dramatic day japan's debt market. yields surged on media reports. offered to japan purchase unlimited number of bonds. stimulus wouldoj be the first since 2016. as you are just mentioning, the ceo of fiat chrysler has does days to prepare for his first turn in the spotlight.

mike manley will present the company's first quarter reports on wednesday. ceo onunexpectedly named saturday replacing sergio marchionne kos health suddenly -- whose health suddenly declined after shoulder surgery. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. i am taylor riggs. this is bloomberg. francine, tom. tom: in the summer, when you do we were not just bouncing around. futures are low. statements for the yield curve. for the -- strength from thursday and friday. showing the indeterminate nature. 30 year buying gets my attention. 2.96%.

a higher yield. i don't know what to make of this. francine, what do you make of this? make of it is i that there is a lot of volatility. investors in the marketplace are trying to figure out what they just heard from the g20. i am also looking at the yen rising. bonds also rising on the bank of stimulus. what thelook at finance chiefs warned yesterday, tensionss that trade are threatening expansion. you could see an impact on treasury -- treasuries. the dollar held its decline from friday. tom: let me look at the chart on the bloomberg. where are we nine days before a fed meeting?

2009. we are getting a little bit of pullback. a little bit of a pullback. i don't even know if this is a pullback. i guess that is february and its agony. it in a longerg perspective. i would love to change the world. francine. francine: this is what i am looking at. i almost, almost did a china devaluation chart. iran oils at production. this was after president trump warned iran to not threaten the u.s. to iran warned the not threaten oil exports. blue circle come in eu bans. when sanctions

were lifted. we will push this out on social media. good morning. bloomberg, when you look of the escalation come there is a tweet. president trump writing in capital letters -- threatening president rouhani. president rouhani, seen as a moderate, is feeling a lot of pressure from people less moderate, to react. reporter: i am not sure about that. presidentat ronnie has been trying to do is give to have -- i think what the iranian president is trying to do is show a united front. on hisbeen quite tough own as it is. i don't think he needs that kind

of pressure. he gave a speech yesterday in isch president trump's tweet apparently in reaction to. in some segments, according to what has been shown on state tv, he was even thumping the television saying we will never surrender to anyone with no ethics or to corn. he was extremely strong in that speech yesterday. i am not sure really frankly whether he is going to come out thananything much stronger what he has already said in response to this. and so far, we have had only one official reaction from a military commander. iran. i get the sense that the cabinet is still trying to decide what to say, what to do, and what

kind of reaction to show. i suspect they will take a moral high ground from their point of view and make light of it. , it seemsin the tone the u.s. president is saying -- is taking a harsh tone similar to what he took against north korea. iran, therethink in is the idea that there is an analogy between north korea and iran, that is anathema. to the iranian people. from a proliferation perspective, iran and north korea are not on the same level has never managed to obtain a nuclear warhead whereas north korea has shown off about testing them. and from an economic point of view, by world bank standards,

north korea is a very different kind of economy and a very different kind of administrative structure. i think a lot of iranians do not even see themselves -- they do not even compare themselves to north korea in that sense. and i think that the strategy -- honestly, it it does not seem from my point of view as a for fivet based here years, i cannot see the iranian government or the wider iranian leadership and establishment looking at itself in the context of north korea. i honestly don't think that will happen but i could be wrong. golnar, thank you so much. in light of these escalating tensions, let us speak to yi anos.

you always make us smarter. , is you look at this tweet it foreign policy? economic policy? or as a researcher, do you just need to cut out the noise from the u.s. administration? what is reality and what is rhetoric? you have toeality, pay attention to them but in the backdrop, you have to force yourself to ignore them. this is potentially creating a backdrop by which people will judge subsequent moves but it does not necessarily indicate imminent moves. if anything, if you go back and the more lengthy tweets related to policy, they ended up being backward looking in essence. i am making sure that everyone knows that i initiated x policy. mentioned the nostalgia

of the president and other people as well. ubs, global at macro, what is the single item you are looking forward to? what is the single item you're focused on? yianos: i think there are a couple but if i were to just pick one, it would be the non-us growth numbers. i think that is a critical aspect here that will determine a lot of asset price movements and across different assets obviously. so you need to have the expectation of the rest of the catching up to the u.s. and the u.s. catching up to the rest of the world. that will determine the most important factor for global macro in the coming months. u.s. seemsut the strong and if you believe the numbers it is getting stronger almost by the day.

if you were to start a trade war or a currency war at this time, would this be the right time to do that? thing, the interesting francine, is typically trade wars with the u.s. start at weaker points in the u.s. cycle. one could construct a scenario you're thinking this is not likely here. number probably question one. the second question is a lot of the things that have been priced ofin response to the threat an escalated or full-fledged trade war, are likely to be reversed with respect to what we should truly be expecting macro eyes. the issue of symmetry is that china will have a much bigger growth impact and that is reflected on a much more to thee i guess damage market versus the u.s. which is showing very much close to nothing. the realities from the exercise our we did involving all of

economists and strategists indicated that at the end of the day in an escalation scenario, the impact on u.s. growth is much larger than that on china and definitely in your. the element -- element number one. element number two, you have enter market pricing fairly aggressively at the short end of the curve. if we are moving to some sort of different scenario, even by q4 we should take something back. things will happen in september. the is almost baked in cake. meanwhile, on the chinese side, we have monetary loosening which means that at some point you will get some positive growth kick back at some point in the second half. which is certainly not being priced into the markets. tom: let us come back. yanis can topless is with us.

.- yianos kontopoulos we will do that in the 6:00 hour. please stay with us. on fiat and on the president regarding iran. this is bloomberg. ♪

tom: good morning, everyone. "bloomberg surveillance." let us go back to or three or four news cycles which is hard to do these days. ,or those of us just joining us there was a midnight treat from the president. let us look at currency manipulations. usnos kontopoulos is with and now joining us from frankfurt, esther reichel joins us, and fx strategist from

commerzbank. it depends on how you see it. anyt now, we do not see indication of direct intervention. aboutnot hear anything any suspicious activity from chinese banks. but yes, clearly, the central bank is leaning towards easing monetary policy and this is reflected in a weaker currency. we do not think that right now it is clear that the chinese authorities are manipulating the renminbi. francine: do you think at some point they could manipulate the renminbi in a currency war? esther: they have a history of currency manipulation. in recent years, particularly earlier, they intervened against

a weaker renminbi. they trade war escalates, they will try to find other ways to reduce the competitive disadvantages of the trade war. but right now, we are not there at this point in time. monetary policy is leaning towards supporting the economy and there is not that much hope on the trade war. francine: do you think they are manipulating the trade -- the currency? trend and so is a forth but at the end of the day, they are not hiding it. manipulation is a loaded word. if you look at the perspective from the u.s. side, they are really concerned that the chinese are maintaining the currency to week. the "manipulation" is to make sure it does not get to week. there is a hidden inconsistency.

the elements that are problematic at this stage. having said that, it is the right question to ask. hairierings get experiencedhat we as a mini version of this in 2015. not by design but a good trade waron of what a will look like. tom: where does commerzbank think there is any potential alpha in the fall? esther: right now, we heard about the japanese yen. we are looking at the boj meeting next week. this is something that could be very interesting as the japanese yen is still seen as a big safe haven and now there are some it is possible that the

boj will try to find further ways to ease monetary policy. this might be something that the market is not prepared for. tom: within that, what is your call for the yen then? see downside risks to the japanese yen because it should be clear that it will be very difficult for the bank of japan although there is no room for the bank of japan to reduce easing. however, the big obstacle will be whether they succeed with their communication. they clearly do not want to reduce the degree of monetary policy extension however they went to reduce the negative impact of this ultra-easy mode -- monetary policy. if they do not get this perfectly right, there is a risk of a temporary move of the yen. francine: looking at the japanese yield curve -- a pretty dramatic day for japan today. are they -- is this a

significant shift in policy for the boj? yianos: not yet. it is within the parameters they discussed -- they described to us in the past. the problem is what esther mentioned earlier. have greater difficulties communicating. and i think the main reasons -- you find yourselves in unconventional monetary policy land. and explaining how you extricate yourself out of this is nearly impossible. it main implication is that will happen much more slowly than most people expect including policymakers themselves. it is quite possible that they want to extricate themselves today that they found repeatedly that it will take much longer for us to get the signals. francine: esther, what do you think investors mostly misunderstand about what governor kuroda is trying to do? esther: for investors -- we have

seen the japanese yen appreciating on these rumors. the important thing to understand is that this is not the point when the bank of japan an extension of the monetary policy. looking at the u.s., the fed, and the eu -- those are central banks moving towards tighter monetary policies. in the long run, the yen is at a disadvantage on the monetary side. tom: what could be the outcome of the president's tweet. i think ites ago but was two business days ago. of currency manipulation. i get the idea that he is not a foreign exchange strategist like you that can the president affect a change at foreign exchange levels? esther: i think what we have heard from the u.s. over the recent days with respect to

currencies is a worrying development. in a currency war, no side can win. like there are fromantial costs interventions in a currency war. what is important to is arentiate is that there monetary policy in europe that targets the inflation rate. it will have side effects to the euro but as i said, there is currently no currency manipulation. francine: thank you so much. esther reichelt from frankfurt. let us move to a corporate story. if you have named a new ceo after a health crisis has left sergio marchionne so unable to return to work. justew tv executive has

days to prepare for the automaker's quarterly results. a presentation that investors will use to consider his plan. joining us is our reporter from milan. he has a great story out. fill sergio marchionne's shoes? he was a rock star. reporter: a rock star. , he was criticized by unions for example because essentially he moved away from italy the center of fiat chrysler. it was the only way that the company could survive.

it will be difficult for the new executive who does not speak italian -- for him to fill the job. he was though the best candidate. he has been leading the incredible boost of jeep in the last decade. i will give you vwo numbers which show -- i will give you two numbers which will show you how he has done. obama gave fiat chrysler the chance to purchase chrysler. sell 2ar, jeep will million cars globally. the plan is to get to 3.5 million cars. jeep is by far the most important unit of the group and part of the success is obviously due to the leader, mike manley. much fork you so

joining us from italy. we will try to do more on this in the next hour as well. we continue with yianos from ubs as well. a lot to talk about. let us remember, a federal reserve meeting is nine days away. this is an important conversation. lot that a gold company can do. we will talk to the chief executive officer. we have not done much on gold recently. the nexto that in hour. francine lacqua in london and i am tom keene in new york. this is bloomberg. ♪

francine: this is bloomberg surveillance. let's check in on what is trending across the bloomberg universe on tictoc. climate change could threaten internet liability and access

for millions of users as sea levels rise over the next 15 years. head to twitter for more on that. bloomberg.com, labor strikes are starting to weigh on ryanair. unions are trade starting to put all customers. speculation of a policy change at the boj roiling asian markets. tensions between the u.s. and iran escalate and china's stealthy evaluation is catching -- stealthy you want evaluation is catching president trump's attention. now to taylor riggs for the "first word news." has a: president trump warning for the iranian president. he promised iran would suffer consequences.

earlier, he had warned the u.s. against threatening the nation's oil exports. he said a battle with iran would be the mother of all wars. the president-elect of mexico once president trump to try to reach a deal on nafta. afterte to the president mr. trump said he may prioritize a trade deal only with mexico. canada havexico and failed to come up with a deal to rewrite nafta after almost a year of talks. the u.k. says the european union must help on brexit to avoiding no deal by accident. jeremy hunt is warning that the eu must do its part. over the weekend, the chief brexit negotiator said they must step up the possibility that talks with the eu may collapse. in toronto, at least one person was killed when a gunman shot 14 people. police killed the gunman in a

shootout. place ink took toronto's greektown neighborhood. global news, 24 hours a day, on air and at tick toc on twitter, powered by over 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. francine: thank you so much. european bank earnings season is in full swing. this follows a quarter of tensions between the u.k. and the eu. these -- how he sees these trade tensions playing out. >> would do not have a trade war right now. we have trade tensions and everyone is positioning. if it goes to the full monty as you mentioned, it will be bad

for the market. will fullyxpect it escalate. >> will fully escalate. >> you think it will step back. >> we think the discussion will continue for many months. we think that some of the trade u.s., and sohe their parameters like china and europe, but we don't expect things will go out of control. with us now to drive -- are this discussion we a mercantile world? plurals this new word, ateral. i don't know what that means. are we dancing around a mercantilist world? >> it is always in the back of

the portion of our leaders and it never fails to come up from time to time. means that it is not quite multilateral so it is more than two but not that many .eing involved in a deal the interesting twits -- twist i noticed is reflected mostly of president trump, he tends to put more -- feel more comfortable negotiating with one party at a time, but the realities of the trade organization almost imply that you need to have more than two parties on the table and i think either will play in chapters or all of us will learn to live with it. tom: how would you suggest at ubs that the chinese respond to

these different spheres of influence? how does china handle a unilateral trump and a pluralateral outcome? yianos: that is touching to the likely solution and we are seeing elements of both of those dimensions taking place. is china is quickly trying to move in terms of creating something interesting. whether that is the european union, those efforts will intensify and i think that is by definition, something we will see in the next few quarters. how do you deal with unilateral action? and are already retaliating in my opinion, the most effective retaliation started in april. those signals are getting more significant and more palatable in terms of their actions.

what are economists getting wrong? symmetry between foreign policy, you cannot figure out what is policy or what his rhetoric or what the president is tweeting and thedterm elections impact this is having on the new world order and world growth longer-term. is that where there is a vacuum? is it how we measure inflation or productivity? yianos: there is one twist i would like to mention, is the fact that most of the economist are not keen on thinking of the positive scenarios and i think that is what the market is doing. it is not that the market is not looking at the possibility of a trade war, but it is dancing the probability were you could have some interesting trade deals taking place in the course of the next few months.

i am not saying whether it is likely or not. francine: talking about a good trade deal and if you look the events of the weekend, brexit and the possibility of the u.k. crashing out of the eu, have those odds increased? yianos: if anything, the odds of something taking place at the end of the cycle, meaning toward subsequent conferences of the eu in october have increased. it makes it more complicated for us to have a deal, especially with respect to the europeans. les, that about striking a deal with a party that has not figured it out yet. if anything, it increases the chance of going through more tension with the remainder of this year. yianos, to switch to

brexit, where brussels basically says no to the city. why should the eu even respond to the soap opera in london? why should the eu adapt and adjust to the frexit -- to the fractured nature of the u.k.? yianos: because it is in their interest and because you could get a worse soap opera. necessarilyt mean they close the deal anytime soon , but i don't think you want to be too extreme in your postulations either and the europeans are well-known in terms of being relatively tactful when they mean business. there are incentives not to rock the boat too much. ofncine: yianos kontopoulos

ubs stays with us. exclusive interviews with the chief executive of -- and there is the chief financial officer. well so have a couple oil majors coming to speak with us. that is coming up this week. this is bloomberg. ♪

francine: this is bloomberg surveillance. a huge week for quarterly earnings in the tech world. later today, google's paring company reports followed by facebook and amazon on wednesday and then on thursday, we will get to alex webb in just a

second. i can see him on the outskirts of the studio. it is an interesting conversation because it is about data protection and it engulfs everything we do today. you wonder where it goes next. and the -- wer have some other big names as well, this nominal gdp pop. from a 4%d a huge pop or 5% crisis nominal gdp out to new numbers like 6% or 7%. you wonder what that does to the technology pop. francine: it also has huge implications on the way society works and kind of the way our economy is structured. let's get to our european tech columnist. yianos kontopoulos of ubs is

still with us. look at facebook and technology stocks, what are you most excited about? alex: i want to know what the impact of gdp is going to be. anecdotally that they manage to got a lot more market share. i got a million emails in the last few months. alex: the general data protection regulation which is the european commission big crackdown on -- giving european citizens control over how tech companies can use their data. it rolled out on may the 25th. google because a control so much of the advertising ecosystem is able to say we are compliant across the board. other companies which are are at greater risk of losing to the big dogs. tom: what is the persistency of

their revenue growth? everything is hinged on keeping it going, all the valuations and hopes and dreams. 15% or dare risk to i say 20% plus revenue pop year after year? alex: analysts are expecting revenue to jump this year. they are probably going to book the fine they had to pay in the european union for the way they approach mobile operating systems. they know that is a one-off and not an operational issue. the growth is continuing to tear along at a fair pace. tom: amazon, i am looking it up on the bloomberg and basically it is 30% growth. let me get my pen. these are 30% numbers and down

we go out. we just presume a revenue shortfall out 18 years -- 18 months or two years. is that valid or is that cya securities analysis? has: that is why amazon this insane valuation because they are investing in the growth opportunities and that is really about cloud. amazon web services is the biggest player in the webspace -- in the cloud space. we saw it already with microsoft last week. the other player the benefits is intel -- that benefits is intel. the question i like to see answered is how the market share is developing. what do i do with

payment services? there is a story that softbank is looking at rolling out payment services. the bank of japan and alibaba also looking. are those big things? alex: payment services do not want to become banks because they would require deeper regulation but they want to be able to have better insight into people's buying patterns. reallyhese sorts of granular inferences they can take based on people's buying behavior. they will be tiptoeing up to it but they don't want to become a bank themselves. francine: how is this changing our economies and the way we operate? there is always excitement as new technology comes in. we have seen this in a few cycles. component,nteresting we might have more confidence is

you clearly have technology as the leader in terms of performance for this very good phase that tom mentioned in the stock market since the crisis. ifthat likely to continue you have policy becoming a bit more aggressive in the course of the next few quarters? what history teaches us is that even to the point you get to inversion of the yield curve, leadership typically continues with whomever is your early leader. you can think of staples in the 96 and's, technology in 2001. technology tends to react fairly positively to tighter regulation. -- there is still room. not only is there room all the

way to the inversion and even after, but it is quite likely that technology will be the leader in that particular phase. alex: a really interesting piece in the economist talks about the biggest companies in the world from thelly ranging east india company to standard oil and the tech era saying a portion of their profit reaches an inflection point and when regulator start to crackdown and that is the point they are at now. and alex, thank you so much of course we will have our team in print, television and radio looking at this binning -- at this busy earnings week. coming up, we will continue with yianos kontopoulos. grab tv . you have a possible meeting with alex webb. you need to dazzle them with your long-term view of the equity market. there are pages and pages. i would love to change the chart world. ♪

taylor: this is bloomberg surveillance. let's get to the bloomberg business flash.

labor problems are starting to have an impact on ryanair's bottom line. the airline posted a 20% drop in quarterly profit. ryanair warned that walkouts by trade unions and regional air traffic strikes are making customers reluctant to book flights. we spoke with their cfo. we are seeing lower fares over the last couple of weeks. the heat wave in northern europe , the world cup which is now over and uncertainty around strike action. taylor: the papa john's pizza chain is trying to sort a possible takeover by the ousted founder. a stockholder writes the plan

would be triggered if any investor acquires 15% or more. there could be a delay for the world's biggest ipo. the state owned oil company says it may take a stake in saudi basic industries. aramco would buy the shares from the saudi sovereign wealth fund. shares of phillips are falling in europe. the dutch electronics company posted compare -- comparable sales that missed estimates. an increase in profit was driven by their diagnostics unit. we asked their ceo about the impact of a possible trade war. >> with the initial list as published, the effect is quite manageable. we are able to absorb it. if this trade rhetoric escalates, then i think we need to be very careful about how the

world will leave all. evolve.he world will taylor: and that is your bloomberg business flash. tom: yianos kontopoulos, you studied at columbia. bring up the chart here and here a flip dxy which is strong dollar. the idea is real simple. this is an incredibly elegant chart. i cannot say enough about how contained this vector is. what does it signal to you about the inertial force of strong dollar? oomphoes it say about the of a strong dollar? yianos: we have to remind ourselves there are many different dollars out there or counterparts to the dollar and the striking element of the chart you just showed us is that

almost overnight, asian currencies came from the protected safe haven element of the counterpart of the dollar to suddenly becoming the one that is facing most of the adjustment. mostly out of the reaction of the chinese finally adjusting to the dollar itself and i think this is something we need to keep in the back of our minds that nobody is immune to a strong movement in the dollar. we have to answer the question whether this continues or not. we at ubs say probably not in the second half but asian effects for the second half of the year -- francine: i don't know whether story or into a turkey whether it is part of the emerging -- the broader emerging-market story. yianos: like with a number of emerging-market stories, we impetusy have a strong

from the u.s. monetary policy. side on the external kicking in, but a number of interesting idiosyncratic stories, most of the negative. turkey has been one of those. the currency has moved a lot. i don't necessarily think, given the work that our team has done that they are new. tom: that is good. we greatly appreciate it. coming up, looking at banking, american banking. michaud ofed -- tom kbw. ♪

tom: this morning, the dollar weaker, yields higher. there is a fed meeting in nine

days. in this hour, john silvia of wells fargo. just before midnight, president trump said that iran will suffer consequences the likes of which few throughout history have ever suffered before. no word on their response from beijing, moscow, general mattis at the pentagon. is seriouslyhionne ill. can the italians continue? good morning everyone. i am tom keene with francine lacqua in london. this is a huge cultural change for the family. they had a crisis

meeting over on saturday and that is all anyone was talking about. this was a man who was considered a turnaround, who was always going to step down in 2019 but he was meant to stay on as chairman of ferrari and now you have a british person as head of fiat chrysler who does not speak italian and has very big shoes to fill. so. 29% ownership or it is really an amazing story for the family and for all of italy as well. your monday "first word news briefing -- "first word news" briefing. taylor: president trump has launched a new attack against iran and its president. he told him to never threaten the u.s. again or quote, he will suffer consequences, the likes of which few throughout history have ever suffered before.

the iranian president threaten theu.s. against -- warned u.s. against threatening their oil reserves. trade tensions threaten global growth. finance ministers and central bankers met over the weekend and when us at his. atweekend at when us eras -- buenos aires. trade and tariffs dominated discussion. it has been a dramatic day in japan's debt market. possible changes to the country's altra loose monetary policy that led to the bank of japan offering to buy a limited amount of bonds. as we were mentioning, the new ceo of fiat chrysler has days to prepare for his first turn in the spotlight. the --nley will show

unexpectedly named ceo on saturday. he replaces sergio marchionne. marchionne's health suddenly declined after shoulder surgery. he is given credit for saving fiat chrysler. global news, 24 hours a day, on air and at tick toc on twitter, powered by over 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. tom: a quick data check. futures negative. yield curves have evened out a little bit. i almost did one screen but why not two? i am killing it on this data check. francine: you are always killing it. european stocks holding on to the climb we had on friday.

investors trying to digest warnings from the financial ministers gathered in buenos a ires. looking at the yen, one of our other big stories. the bank of japan may alter its extraordinary program. tom: this is what we do at surveillance. we like to have a cross-sectional conversation. we will get to a discussion with an expert on the international affairs and mystic realities for iran. andt we go to kevin cirilli we are joined from tehran. back?s the president's who has his political support? is it domestic or is it beijing? >> it is a good question. i think it is unclear right now

what china's position is going to be. ians would be very interesting to see what beijing would do in the coming months, particularly with the deadline of the sanctions coming up. , those very aware here that keep tabs on the news at , that this trade war that trump has engaged beijing in, they are waiting to see what china will do. china has already come out and it wants to support the nuclear deal and it has even gone further than that, to say they cannot force them -- to say that trump cannot force them to not buy iranian oil. the iranian president is under a huge amount of pressure. domestically, people are frustrated with the government

the u.s. i think that and trump specifically is waging an economic war on the country. francine: the tweet of president trump came hours after president rouhani warned the u.s. against threatening the nation's oil exports. does this get escalated and if it does, do we find out this week or could it escalate in the next couple of months? >> i don't know. because of the sanctions deadlines, there are quite a lot of unanswered questions in one of the big things we don't know yet is what the europeans have managed to do and the rescue package and mechanisms they have tried to secure in order to

salvage and save the nuclear deal. that remains the big question here. we have to see whether iran is going to accept it and whether it is going to be enough. and i think the escalations will start from their. i have a feeling because rouhani 's comment yesterday was quite they have been tense because of trump's actions that they have been more tense than usual -- but they have been more tense than usual. i think iran will take what it sees as the moral high ground in response to this tweet. tom: thank you. we now move to washington and our kevin cirilli. suffer consequences the likes of which few throughout history have ever suffered before." i think it is a line greater than the lost ark or star wars. what does general mattis in the pentagon do to respond to these

words from the president? kevin: it would appear that they are all in lockstep because this tweet is reminiscent of how the president had escalated tensions against north korea dictator kim jong-un prior to their summit in singapore. tom: but i read over the weekend that we are going nowhere with north korea. that north korea is going just say no. what are the consequences the likes of which through -- you throughout history of ever suffered before, if iran or their allies say no to the president? first and foremost, the oil benchmark trade is slightly up following this news. the second point i would make is that the u.n. ambassador as well as secretary of state have both argued that this potentially, the pulling out of the iran nuclear disarmament deal would force iran to go through the united nations. whether or not that happens, we have to wait and see.

this tweet is the first step in an escalation of trying to get them to chat. , to make suchani an aggressive speech, president hisp responding via favorite medium, twitter. tom: is this going to be taken as a policy statement? i don't even know what to do with the all caps letter i saw. i'm not going to disparage the president by calling it a drunk tweet but you have been following these forever. what do you make of what we are observing? kevin: i think we have to observe this is a president who has said following when he pulled out of the iran disarmament deal that there would be a round two.

the folks who are interpreting this as an opening bid to get back to the drawing board. i'm not saying it is the right way or the wrong way, but this would be arguably their way to get to the drawing board of a round two bid. london withturn to sanam vakil. how does mr. rouhani respond to the all caps tweet of the president of united states? sanam: this tweet plays into the hands of president rouhani and his hardline opponents a cousin will force immediate unity inside the country, which is something that the elite has do do in coming up

with a response to the forthcoming sanctions. it will not specifically empower the hardliners who are looking to unseat the president, but the president can capitalize on this pressure to show that he is tough enough and able to withstand president trump ticky pressure as well. -- president trump's pressure as well. francine: is iran going to deescalate? or do they need to look like the tough guys as well? sanam:sanam: iran has definitely studied the north korea portfolio and perhaps members of the iranian political elite look at that playbook and think they could benefit from escalating slightly in a war of words with the president to then de-escalate and find an opportunity to come back to the table. the timing is very important. we know that the president has tried to reach out to iran had

numerous occasions and this is sort of the perfect opportunity to increase tensions and then perhaps look for a face-saving solution for both sides. be hard, it is going to because for this up -- because the supreme leader is deeply suspicious of the united states and deeply anti-american. it is going to be hard to convince him to get on board. francine: do you speak to iran like you speak to north korea? is that the president strategy -- is that the president's strategy? arem: the iranians different than north korea and the middle east is a very different environment. you look at the geopolitical landscape in the middle east, both israel, the united arab

emirates and saudi arabia are against any sort of negotiated solution with the islamic republic and they're looking at this president to continue to pressure the islamic republic, looking to weaken iran before coming to any sort of deal. the environment is very different. hard to compare and hard to see the outcomes. tom: i am sure that at johns hopkins, you are teaching the idea of filling the foreign policy vacuum. who will fill the vacuum in iran ? everyone is looking to china but is that too simple? sanam: it is. the islamic republic has a very diversified portfolio. they are very lonely in terms of having deep alliances. they have done it to themselves. it has not been imposed upon them. the ability to rely on their close neighbors of china and

russia and together, they realize that they can't completely put all of their eggs in beijing's basket or moscow's basket but they can have a diversified portfolio knowing full well that neither country fall in line and support president trump's policies against iran. with -- we very appreciate your work. tom michaud is coming up. spirits, thenimal nominal gdp of a boom economy. this is bloomberg. ♪

taylor: this is bloomberg surveillance. let's get to the bloomberg business flash. france's computer company has agreed to buy sentelle for about $3.4 billion in cash. that would give them access to large u.s. customers such as american express and state street. singtel is based in michigan. tesla is asking suppliers for refunds so i can turn a profit. electric car company asked the supplier to return what it called a meaningful amount of money from payments dating back to 2016. they confirmed that it is seeking price reduction. labor problems are starting to have an impact on ryanair dickey bottom line. the airline posted a 20% drop in quarterly profit. they warned sporadic walkouts by trade unions and regional air

traffic strikes are making customers reluctant to book flights. we spoke with ryanair's cfo. ,> we will be marginally ahead seeing lower fares over the last couple of weeks, particularly in light of the strong whether we have had in the u k and northern europe, the world cup which is now over and uncertainty around strike action. we are guiding our average fare only -- up only 1%. taylor: and that is your bloomberg business flash. ipo, i am looking at it on the bloomberg j street. that is always helpful. it is showing the resilient m&a economy that we've got. right now, we range over the two central banking -- over to central banking.

door, shocked at the 700 baseballs, john silvia of wells fargo is joining us. , is august and alive or dead meeting? john: august is a dead meeting and september is very much in a live meeting. tom: while we wasting time with a dead meeting? i don't get what we have fallen into here which is the wasting of a central bank meeting. at least it could inform. john: i agree very much. it is a comment i have made for several years or you have the situation where you only have press conferences quarterly which means the meetings in between become dead meetings and a think it is right for the fed to go ahead with having a press conference at every single fed fomc meeting. there is a possibility of

economic action at every meeting. francine: how should the fed deal with the president? john: i think you keep quiet. you listen to what the president has to say but you conduct policy based on the facts on the ground. that is way i think -- that is the way i think the fed will do it. michaud michaud, will this affect thinking at the margins? tom m: i think the fed is going to remain data-driven. it is never good that when the job owning potential of the chairman or the other fed numbers is weakened by anybody but i think their decisions are going to be data driven and i agree with the previous statement that we will see another 25 basis points this year. tom: let's bring this up right now. silvia doesn't care about this. economists would not go near

this. all of a sudden, keefe bruyette and woods stock. money for nothing. this is the dire straits chart. the death clock is next to zero. when does the party and? -- party end? when does the m&a juice end that keeps these transactions going? tom m: we still are in an easing environment. ae neutral rate is more like 275 federal -- 2.75 fed funds rate. we are on an orderly march back to a neutral fed funds rate which is a reasonable thing to do. michaud thinks this is an orderly march and you know that in history, that never happens. what is the biggest worry you need to tell him right now?

john: the biggest challenge is not getting tied to the dot plot, not thinking those linear projections are going to come to pass. as that data changes on the economy and inflation, the federal altar its policy but i sewer of -- but i sort of disparage that graph because it is too productive with too many assumptions -- predictive with too many assumptions. argue thatou could the u.s. has more tools than china. is it your assumption that trade tensions do not get worse from here? tom m: to be gated dependent, you have to look at the data right now. it still looks really good but there is no question when you look at the g20 communicate or anywhere else, the talk is

around the trade uncertainty and the market does not like uncertainty. commentss the dot plot earlier, in the past, they have been wrong. i think the primary feature is going to be data and to date, the trade tensions have not shown up but risks are rising. what matters to all of our listeners is the labor economy. let's talk to john silvia about his life work which has been a labor economy. wage growth is the great mystery. where is it? you're an expert on this. you were way out front on this. the atomization of the american labor economy. when do the people flat on their backs see it again? john: the atomize a shin is a key point -- analyze asian -- atomization is the key point.

when you talking -- when you are talking about nondurable manufacturing, when you are talking about wholesale retail, trade, a lot of those sectors have pricing challenges that will not allow employers to increase wages very much for their existing employees -- existing workers. francine: this is fiat ofysler's --, in charge europe for fiat chrysler. he is said to resign as the head of europe. this is on the back of a pretty dramatic weekend. fiat chrysler and ferrari with this dramatic and sudden leadership transition we heard about on saturday after the carmakers respectively appointed mike manley and --

tom michaud, when you look at the impact that some of these tariffs have uncertain industry groups, carmakers will be hit. how does that impact your view of the world? i think it all goes to uncertainty and uncertainty is continuing to build in the market has not had a lot of indigestion yet with this uncertainty but as of now, the data has been quite strong and we all need to stay on guard to see when it starts to show up. as we look at the wage growth before the fiat headline, we have to look at the real rate and financial repression. if michaud gets his linear nirvana, do we get back to actual returns for retired investors? john: we are already getting back that? . -- we are already getting back to that.

that cash opportunity is becoming more transparent and more valuable all the time. tom: john silvia, wells fargo, thank you. tom michaud of keefe bruyette and woods is with us as well. we are watching the generational change from mr. marchionne. the headline just out of -- he just flat out resigned. that happened moments ago and you can see the price change on fiat, negative 3%. this is bloomberg ♪ -- this is bloomberg. ♪ retail.

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near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. streaming must see tv has never been easier. paying for things is a breeze. and getting into new places is even simpler. with xfinity mobile, saving money is effortless too. it's the only network that combines america's largest, most reliable 4g lte with the most wi-fi hotspots. and it can be included with your internet. which could save you hundreds of dollars a year. plus, get $150 dollars when you bring in your own phone. its a new kind of network designed to save you money. click, call or visit a store today. francine: this is bloomberg surveillance. one of our biggest corporate stories that we have been following through the weekend is fiat chrysler. they have a new man at the top

and just moments ago, we understand that fiat chrysler's altavilla who is in charge of european sales but also the chief operating officer is said to resign. the company's success now depends on jeep which is why mike manley was put at top fiat atop fiat- put chrysler. tom: it has been fascinating to see. marchionne has done this great job of piecing together polar opposite end disparaging cultures. i do not know what the marchionne family does going forward. they have great representation on the board but i am fascinated by where this story is, seven and even 30 days from now. francine: we will follow it

closely. now to commodities, we are joined by a man with more than a quarter-century experience in the mining industry. he has led gold fields as chief executive for more than a decade and before that he was the chief executive officer. nick holland joins us on the line from johannesburg. thank you for joining us as always. when you look at the price of gold, a lot of it has to do with the dollar, with trade tensions. what do you think the price of gold will do from now on? nick: the one thing i have learned having been in this particular sector for over 20 years is never predict the price of gold because there are so many variables out there that one does not know what it is going to do.

i think it is going to be pretty moment. at the i think hold on for a bumpy ride. longer-term, the gold price will respond positively. francine: let me rephrase. what do you see influencing the price of gold? nick: we are certainly looking at a situation where at the moment with these trade wars, people are looking to the dollar as a safe haven. typically, that is not always good for gold. stock markets have been a recipient of a lot of inflows, particularly in the u.s.. stock markets may well plateau and move sideways and there may even be a correction which will be good for gold. also in the longer term, geopolitical risk will continue around the world. gold will continue to play the role it has always played of being a safe haven in times of

uncertainty and we are heading into times of uncertainty yet again. tom: where do you see evidence of that? $900 per ounce as your manufacturing cost. what is the delta you need to make the business work? nick: we can make it work at current prices. we have certainly structured our business to be breakeven or just over $1000 announce. ounce.0 an we have to predict some price that gives us an element of cushion. $200 ofitting at about cushion before we end up losing money. longer-term, given the fact that gold continues to be a small part of global portfolios, it is pretty much under wade -- underweighed.

tom: you have to deal with the big boys. what if you -- what have you learned as the mining businesses come out of eight years of real struggle? nick: will we have learned from that is that you have to prepare yourself for the downside, for prices to go down a couple hundred dollars, that you are still in the game and you should not over here the balance sheet because in the gold industry, we are price takers both in terms of exchange rates, in terms of the gold price and costs. you should not let the business get too big because you can lose management focus. keep it manageable and simple. francine: how do you see the future of south africa under the president and what impact will

that have on gold sales and gold-mining in south africa in general? nick: if you look at the gold industry, a lot of the gold industry is just breaking even at current prices or it is losing money. is minese challenges are getting deeper, getting further away from infrastructure. mining costs are likely to increase. discussions with the government on a new mining charter which imposes additional costs and burn it -- and burdens on the industry. it is tricky to find the balance between satisfying the needs of all the different stakeholders industry and at the same time keeping the industry alive. the next six months of negotiations will be pivotal to determine the future of gold-mining.

tom: mr. holland, thank you so much. gold fields, their chief executive officer. "first word news," the monday briefing. harris taylor riggs. taylor: president trump has threatened iran's president, rouhani. warned the u.s. against threatening the nation's oil exports. he said a battle with iran would be the mother of all wars. the president-elect of mexico once president trump to try to nafta. deal on he wrote to the president, after mr. trump said he may prioritize a trade deal only with mexico. nafta. the u.s., mexico and canada have failed to rewrite the nafta deal after almost a year of talks. the you cases the european union must help on brexit to avoid a no deal by accident.

to -- today tods warn -- the government must step up planning for the possibility that talks with the eu may collapse. toronto, at least one person was killed when a gunman shot 14 people. police later killed the gunman in a shootout. they say it is too early to say whether the shooting is terrorism. it happened in toronto's greektown neighborhood. global news, 24 hours a day, on air and at tick toc on twitter, powered by over 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. francine: thank you so much. we are getting some breaking news out of fiat. we understand that mr. altavilla , the chief operating officer and head of the european operations is said to resign after we saw a new person of the

top after sergio marchionne was said not to return to his role. that was on saturday after an emergency decision. joining us now is our bloomberg reporter who has been chasing sergio marchionne for over a decade. when you look at the latest -- that the chief operating officer is set to resign. are we going to see more resignations such as this? >> i don't think so. it is unexpected. was essentially one was- how freda -- alfredo essentially one of the three guys. -- was taken soon after he was not picked as ceo.

altavilla has been at fiat for forever. owned a dealership in the south city. he was really looking to get the job. this looks like he decided to go soon after he understood he would not get it. francine: how difficult will it be for mike manley to fill the shoes of sergio marchionne? how much will the focus be on jeep? appoint mikeon to manley points to how deep the future is on jeep. it is going to be difficult to replace marchionne but mike manley has been working with him since 2009 and is probably the right man from a operational

point of view. tom: what is the position of the chairman, john elkin? tell us the soap opera that is going to unfold. do they control the destiny of fiat chrysler? anymore,not so young he is 42. they control more than a both fiat, cnhn and ferrari. it is john elkin who decides who was going to succeed sergio marchionne. it is a turning point for john elkin now that marchionne wants to return for the job. he is clearly the head of the family, he has the power and he took this bold decision. tom: are you willing to say this is a family run company that happens to have shareholders?

-- is it fair to say this is a family run company that happens to have shareholders? >> yes, they control the company. they own more than 50% of the voting rights. francine: investors get to meet the new chief executive on the 25th when fiat chrysler releases earnings. what are the three questions they want to know from mike manley? do tot are you going to extract value? the you confirm that you will spin off -- or are you going to sell the car parts maker and finally, where and how would you managed to get -- would you manage to get this company and what are your plans going into 2022? francine: thank you very much. we will bring you a number of guests this week including the chief executive of ubs.

that is all coming up this week. this is bloomberg. ♪

francine: this is bloomberg surveillance. let's get to the bloomberg business flash. the pop at john's pizza chain is trying to thwart a possible takeover by the ousted founder. the board adopted a so-called poison pill defense. the plan would be triggered if any investor acquired 15% or more of papa john's shares without the board jakey approval. aramco is signaling that could

be another delay for the world's biggest ipo. the state owned oil company may take a stake in saudi basic industries. aramco would buy the shares from the saudi sovereign wealth fund. would's ceo said a deal affect the timetable for a public offering. shares of phillips are falling in europe. electronics company posted set -- second quarter comparable sales that missed estimates. an increase in profit was fueled by their diagnostic unit. we spoke to their ceo about the impact of a possible trade war. >> i think for now, with the initial risk -- list as published, the effect is quite manageable and we are able to absorb it, but if this trade rhetoric escalates, i think we need to be very careful about how the world will you call -- will evolve. taylor: and that is your bloomberg business flash. francine: -- after increases of

assets under management and failed to convince investors that growth plans are on track. we spoke exclusively with the chief executive in europe this morning. >> there is a good possibility that we would return some of the capital to the shareholders. opportunity -- expect a shareholder share buyback in 2018? you canan risk -- expect a share buyback or a return of capital to the shareholder if there is no large share acquisition. tom: very good. on to a chart of our global sense of the state of banking. tom michaud is a student at keefe bruyette and woods banking.

there is a huge anglo-american european difference. we see in the chart of jpmorgan, ubs and deutsche bank, maybe a little bit of a bounce. do you get a sense that the banking is migrating towards a more anglo-american framework? tom m: i think there are still headwinds for the european banks. they are in a lower for longer state which the american banks were able to leave several years ago. the american banks were also very quick to deal with any problem assets after the crisis. continue tobanks make that asset sales. they are still dealing with some of these issues many years after the problem. the cleanup is still underway and you can see it in the r.o.e.. bank -- , the american

tom: where are the american regionals? the regionals are better? tom m: correct, but there is an inflection coming. inflection an coming. they are 10.8 on equity. we think in 2019, they are going to earn 18% on equity. there is a big ramp and it is coming with tax reform, modest revenue growth, no expense growth and share repurchase. francine: these are the big banks. what happens to medium banks? is it winner take all? tom m: we think the regional bank outlook is still very bright. there are still issues on the horizon. the industry is in the process of reporting a good quarter.

some of the bigger topics being talked about our deposit betas which is how could the banking industry -- how quickly the banking industry has to react to rising interest rates. what you are seeing is a difference in performance and investors are very quick to reward the banks that have exceptional deposit bases. there are still some challenges in what is an improvement in -- improving environment for banks. francine: are you expecting consolidation? tom m: it is here, and it is right now. fewer banksarter than we had a time of the global financial crisis, about a decade ago. a number of bank mergers are not as big as they used to be during the heydays of consolidation but if you look at it on a -- percentage basis. the run rate is 5%

consolidation. tom: you cannot sustain this magical excellence in return on equity. financially, things change. we cannot sustain our too big to fail banks. is it just about scale and we're going to have a merger frenzy? working ine is now all of this talk of decades of scale working in consumer banking. the big four banks control 40% of the deposits in america. they cannot acquire companies because of the cap congress put on them. instead, they are going down the digital banking path. i have big respect for the company, but they are late. bank of america, jp morgan, wells fargo, they have been

doing it for a long time. the banking business is not an easy business. what is interesting is we see bank of america's return on equity pulling away from goldman over the next couple of years which is a bit of that -- that has not happened before. tom: tom michaud with some important comments. oil with a big lift. it is a hockey stick move off of the president's trophy. -- tweets. ♪

francine: this is bloomberg surveillance. we have been talking about u.s. financials. tomorrow, we have a number of european banks reporting today. increases in assets under management. -- failed to convince investors that they are on track for their growth plan. let's get back to tom michaud, president and chief executive of kbw and he is still with us. if you look at u.s. financials and the strength of u.s. , and you pit them against european banks, are the

u.s. banks going to continue taking the lunch? we think the american banks are very well we think thn banks are very well positioned in that thing for you are going to see a market share shift is in the area of investment banking. i think the american banks continue to make investments around the world. they seem to have the momentum in that business. what the european banks need is they need a catalyst to help them get going. it is going to be hard for them to do a lot of self-help in this environment because they are dealing with a lower for longer interest rate environment as well as negative rates on the short end of the curve and that is a very difficult operating environment. the operating environment would -- between the american and the european banks is quite different at the moment. francine: do you see the gap widening? tom m: i think it is likely to widen because the rest economy -- because the u.s. economy is undergoing very good growth and

the european economy is growing slower and the banking industry was not built for negative interest rates. that has been a grind on bank earnings in europe. francine: thank you so much. tom michaud, president and chief executive of kbw. by tom on bloomberg surveillance radio, coming up next. they will have extra data checks -- join my tom on bloomberg surveillance radio, coming up next. they will have extra data checks. what the value is a protection on data growth. sliding on data that the boj will change their program. this is bloomberg. ♪

new job, fiat appoints

mike manley as the new ceo and the european head of operations revised -- resigns as marchionne resigns. monetary policy at risk. the bank of japan reports changes and the boj to buy unlimited amounts of bonds. iran ire. the president and president trump trade threats. happy monday. welcome to "bloomberg daybreak." i'm alex westin. david westin -- i am alix steel. david westin is off today. the headlines suggest geopolitical and policy risk. s&p futures are off by about three points. the dollar-yen, the one to watch. down .3%. there were reports that