francine: boj back in the game. kuroda makes it clear he is in charge of long-term rates. will the bank signal a shift in policy tomorrow? mark carney says he spends half his time on the exit from the eu. faangs.out of love with bank of america recommends shorting the stoxx after -- stocks after social media giants slump. ♪

francine: welcome to bloomberg surveillance. these are your markets. be aftering at remnant .f you look at yen, it is from bojould hear tomorrow and where that leaves 10 year jgb. we will hear from my can of across, the galaxy digital chief executive. that is coming up on bloomberg surveillance. let's get straight to bloomberg first word news. hasn the u.s., charles koch voiced concern that donald trump's action on trade and tariffs puts america's economy at risk of recession.

he says protectionism is dangerous. the u.s. treasury secretary said the u.s. is on the path for four or five years of sustained growth. thatview is at odds with of many economists. >> i think we are well on this path for several years. i don't think this is a one or two year phenomenon. i think we are in a period of four or five years of sustained growth. >> donald trump has again floated the idea of shutting down the federal government if he does not get his way on immigration and the border wall. he said he is willing to halt.ashin bring washington toa actionrepublicans said

on immigration and the border wall can wait until after the midterm elections. fresh hope of striking a trade deal outside the u.k. the time prime minister said his u.k. --nt will back the the italian prime minister said his government will back the u.k. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am kailey leinz. this is bloomberg. francine: thank you so much. we get policy announcements from three of the world's biggest central banks this week. tomorrow, boj, earlier this morning we learned they are offering to buy 10-year notes at 0.10%. later this week, we hear from the boe, where is expected to

hike interest rates. let's focus on the bank of japan. thank you for joining us. learnedwhat have we about boj? >> clearly, the bank have been very active in the market, trying to limit some of the speculation regarding policy tweaking ahead of tomorrow's meeting. you could argue they are almost testing the water to see how the market will react. the fact we have not seen a substantial reaction in dollar-yen could suggest the market is reasonably sanguine. we will not see a change this week. it will be later in the year, possibly after the leadership elections. saying howve been

the market will react to any policy change. francine: do you agree? >> that is not our overview either. view either that you will get a change this week. they have been stepping away from some of the aggressive things they have done, not just because the crisis is several years away. also the focus on the negative aspects, the side effects of what they are doing is increasingly in focus. we know what some of those things are, the disruptions in financial markets, keeping zombie companies going. i think it is interesting that the market has not reacted particularly negatively to this trial balloon. market is now conditioned for central

banks to be stepping gradually away. francine: let me bring up the japanese 10-year bond yields. where does this go? >> i think it does gradually go higher. if you look at the labor market, you could argue the shape of the curve and the level of yields are a naturally low. i think over time we will see those fields moving higher. -- yields moving higher. i think that limitation in terms of that spread widening will have an application for dollar-yen overtime. we think dollar-yen will be trading below 1.05 over the next several months. move higher in yields. francine: what do you see in this chart? >> i don't think it is going to go over anytime soon. i think that this time next

year, as european central bank's, it is going to be harder for them to hold the line. we place most of the duration risk in her discretionary portfolios. we see significant mispricing and risk in a large amount of the global bond markets. francine: thank you. you will stay with us. stay with surveillance, coming up, mark carney. we will bring you an exclusive issue bloomberg markets. areinvestors becoming -- investors becoming disenchanted with faangs? we will discuss.

francine: economics, finance, politics. this is "bloomberg surveillance." i am francine lacqua in london. let's focus on heineken. shares are following after expanding in brazil. buys, best 16m buys, 116 holds. set toboard of cbs is meet later today to discuss the future of ceo les moonves.

it comes as he is accused of sexual harassment by six women in a new yorker article last week. he admits there are times decades ago that he may have made women uncomfortable due to his advances. bloomberg understands the deal could be worth up to $600 million. it is part of a push into the internet of things. a representative for treasure data did not immediately respond. after union leaders rejected a pay offer, workers at chp in c will reject with the company has said is its final and that is the bloomberg

business flash. francine: thank you. time for a bloomberg exclusive. the bank of england governor has told bloomberg he prepares half for brexit. timeys it takes 50% of his and contingency planning, but now it does crowd other things. we are living these stresses. you can read this in the latest edition of bloomberg markets. -- ing us now thank you both for staying around. he says it takes 50% of his time and mentions contingency plans. what do we know about what the planning?

>> we know they have been clear about making sure everything operates as normal even if there is hard brexit. can the european banks still operate in london? banksl, getting the strong enough to withstand shock. casebrexit is not the base unless something has changed dramatically we do not know about. they are very proud of how they reacted to the vote. in the room on that day, because they were ready and have capital in place. on thursday, we have policy reaction. what is priced in? what picture of a painting for the economy? >> what we expect in terms of a decision is being priced in

terms of i like. -- a hike. there are some that think they will do but probably should not do. there are real questions. when it comes to forecast coming in, and inflation, they will be pretty much as they were. what is interesting is we are getting a neutral rate forecast. we also don't know what we're going to get. will it be a range forecast? francine: lucy hit the nail on the head. a lot of people are expecting a rate hike. is this a credibility problem if they don't hike? >> i think the bank of england have been here on any number of occasions, promising markets only to drop back at the last minute.

there are many examples where forwardas used fo guidance and then dropped back. i think in the context of this week, markets are pricing a rate move. we have decided to hold fire. we expect no change because of underlying uncertainty. even the new speed limit they are working against is not generating sufficiently strong growth to generate higher borrowing costs at this juncture. view, weof the brexit would like monetary policy to be tighter, but it is not the case just yet. you could argue that if they do not hike this time, it is pushed back into 2019. i want to ask you about the pound forecast.

>> we have not seen these estimates before. they are forward difficulty. you look at the federal reserve. they had a whole list of different models. hike, but ating a dovish one. ampleecause they have had opportunities to talk this back and have not taken it and you are right that this may be the last window before brexit uncertainty becomes too great. what will the pound do? with think there is not enough priced into the forward space for the pound. we are advising both up and down because we don't know what will happen with the brexit outcome. we will advise as that occurs in plays out. the rate is no longer

singular tip. it is a really cool chart hillary clark did for us. back to the interview with mark carney. at the time, the offer talked about trade. >> it is a real risk. the u.k. is reconsidering its trading relationship with the entire world. it is a huge issue for the government. really, only 50% of the time. it is huge, and it has only gotten more interesting since june. now i think he would probably be more concerned. i imagine it is going to come up in the press conference on thursday. francine: we are getting your questions. please keep writing in if you like the program, don't like the program, if you have questions for our guests.

where do you think the new our rate should be? >> if we are looking at long-term equilibrium rates, i think the market has underestimated the impact this week. this could blow the market reaction in the immediate aftermath. somewhere in are the region of 2% to 2.5%. moderately above the neutral equilibrium inflation level. >> in nominal terms, 2.5%. after inflation, about 0.5%. slightly higher in america than it would be here. this is a must more art than science because of how difficult it is to estimate. more importantly, they are probably not going to give us a forward estimates because these models are enormous.

ranges are a better way to go for any central bank and probably any models as well. to's call down our ambitions nail this down to a single number. francine: thank you. david stops from jpmorgan. we stay with us. turbulence.hnology fanow the time to short the angs? we will discuss next. this is "bloomberg surveillance." ♪

francine: this is "bloomberg surveillance." i am francine lacqua in london. stocksime to short faang according to the bank of america. investors should consider betting against the tech darlings. did the week down. -- ended the week down. cibc. stretch from first of all, valuations too high, but if you get out of the stoxx, where do you put your money -- these stocks, where do you put your money? >> exactly. if you are a passive tech investor in the u.s. right now, you have increasing exposure to these stocks. we had a bespoke strategy focusing on made to -- mid to

small cap names. given the huge moves we saw in facebook and twitter last week, the derivative space is interesting. you can bet that they are going nowhere and cap a yield in the high single digits. we certainly want our clients to have some exposure to these things, but we want that done in a smart passion. francine: how overvalued are they? area?ey 2000.com >> we push back against the idea that tech now has anything to do it tech then. facebook alone has $46 billion cash on the balance sheets. look at google. this is a completely different world to 1997. that does not mean there are not risks.

they may not be the largest stocks today. francine: do you look at data protection as the fault line for the next level were these go down? >> there is a regulatory risk. these stocks have gone from being darlings in the u.s. to being pariahs. toryone has woken up different regulatory risks. that is why potentially the social networks specific names could be questioned vis-a-vis the main tech giants like microsoft or google. and we look at facebook in particular, this is facebook doing it to themselves. this is facebook and twitter. that is why they took down some of the user numbers. they are trying to clean up the platform. you could argue that is going to

be more valuable to advertisers going forward. the switch from mainstream advertising is still going on. francine: thank you so much. we will get back to jeremy stretch from cibc. we will talk about some of the currency moves. the u.s. president says he will consider closing down the government if he does not get his way on immigration and funding for the border wall. how serious is he? we will look at treasuries as we see a risk of treasury volatility in a busy week. this is bloomberg. ♪ . ♪

♪ . francine: economic finance and politics, this is "bloomberg surveillance," i am francine lacqua in london. gerard thomas has become the

first man to win -- the first welshman to win the tour de france. and "bloomberg markets" magazine markcourse, how is me carney some of the 53-year-old head of britain's's banks set down with bloomberg for an interview. trump said he is also open to shutting down the government. to get his wall. head of melvin capital management has made a massive short bet against nintendo. and come much and has shifted from a greenback detractor to a record borrow. now, let us get to the first bloomberg news, here is kailey leinz. hasritain's prime minister been given fresh hope of striking a brexit trade deal from outside the united kingdom. fireeye prime minister

says his government will back version negotiations that is accusing the european union of trying to swindle u.k. voters out of their decision to leave the block. the bank of england's governor as you mentioned, has told bloomberg that he has spent month and have has time preparing for the exit from the eu. he said "in terms of brexit specifically, it takes 50% of my timenow, we spent a lot of and contingency planning but now, and suddenly crowds out other things. you can read the rest of the interview in the last edition of "bloomberg markets." after the benchmark 10 year an 18 month to high, the 10 year yield advanced the advance after a move was announced by the boj, on speculation that they need to , as the impactcy

of bond purchases has seen yields rising in the past week. and greece, officials say the death toll to the greek 129.ires has risen to it is the most deadly wildfire 1900.ope since global news, 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in over 20 countries. i'm giving lines, this is bloomberg. francine? geely, thank you so much president trump has brought up the idea of shutting down the government if you does not get his way on immigration and his border wall. and a tweet yesterday, he said he is ready to bring washington to a halt if democrats do not budge on border security. joining us now for more is our city a writer, stephanie baker,

and of course, jeremy stretch. stephanie, this feels like a serious threat, it shouldn't be dismissed? and looks to me like a tweet just aimed at his base, he's trying to remind his base that he is trying to stick to his campaign promises. we got pushback on the idea of shutting down the government from mitch mcconnell, the leader of the republican senate, and various other republicans. nobody wants to look like they are shutting down the government and not doing their jobs better head of the midterms, and it doesn't play well for either you seem with why republicans and democrats working together in a bipartisan fashion on on appropriations bill. mitch mcconnell has told trump look, we're making progress, that as delay this. so, i don't see it happening. doug president trump also met with the publisher of the new york times, they talked about

news, and gave very different accounts of how the meeting went? stephanie: yes, that was remarkable. this was a meeting that trump requested with the publisher of the new york times, and sulzberger by his own accounts, told trump that he was word the language that trump was using about the media and journalists dangerous.visive and in particular his use of the term "enemy of the people" to describe journalists, was being used as a way of threatening journalists. trump however, tweeted out that they had agreed on the statement. so, it is typical to have presidents push back on the media, but this was supposed to be an awful record chat, -- off happensrd chat, which regularly, but it was trump who put the meeting on the record, getting his own account. giving his own account. that is the issue, trump is

publicly denigrating the media in a way that previous presidents have tried to push back sort of behind the scenes. it has been really damaging. we have seen other damaging moves by trump just this past week, barring the cnn reporter from a briefing, i think it is getting under control. even republicans i think, believe that the language he is using is dangerous ho. francine: does it play to them in terms because it solidifies his base, it is difficult to judge and put numbers on? stephanie: i think it is difficult to put numbers on. i think it solidifies part of his base, you even saw some of the comments he made at a rally he called on where them to turn around and call journalists standing behind them , "enemy of the people up your core they pushed back on that because and were disturbed by that

they actually issued a statement criticizing and saying that we believe in freedom of the media. this whole issue of first amendment rights, it is becoming front and center, and trump is making it part of the campaign. it is even becoming part of the confirmation process for brad cavanagh the supreme court, so brett kavanaugh on the supreme court. francine: thank you so much, stephanie, always keeping us up-to-date on the trump administration. jeremy stretch as hear from the ibc, is here. we will talk now about the secretary of the treasury, steve mnuchin. second-quarter growth came in a 2014.of expansion since mnuchin told fox that he expects several years of sustained growth. on the project a

couple years in the future but i think we are well on this offer several years. i don't think it is a one-year or to your phenomenon, we are definitely on a tim timeframe leastsustained growth, at . says, anycaulks one analyst says, any protection is it met any level is bad. what does this mean for marcus and investment? germany, he says he expects the dollar to go from strength to strength, how much of the president actually risk those figures to go on, with tariffs and trade was? jeremy: i think it is interesting that steve mnuchin has been going on the media to her over the weekend talking

about the growth projection over years.t four the question you can ask, is he talking about real or nominal growth? -- the latest activity levels come out on think there will be maintained over the medium to longer run. we are anticipating is a special deceleration in growth from 2018 to 2019. i think a lot of business investment has been brought forward. we have seen an increase in animal spirits which has had an impact on the u.s. economy, but we are not saying such immaterial change. i think over time -- such a much change. i think over time, that -- we have not seen such a material change. at current levels, it is not necessarily consistent with making a america great again, i specially it comes to exports, anyway. i think there is a need and a requirement for the u.s. dollar

to cheapen over time. francine: i have my treasury chart here, there may be more thetility to come, back, move index has been on a downward trend. do you expect that to stay there? jeremy: we have seen volatility in the fixed income space generally being compromised by the actions of central banks. and i think we are moving to a environment.ed the banks of japan, the ecb and so forth, i think there will be a realization of volatility starting to increase. i think we're going to see some in inflation as well, so that could mitigate against the longer-term trend since the great financial crisis. francine: at the same time we heard from the treasury secretary that rate rises are ok , after the president i talked to them. it is not going to change

central bank independence, but it might actually steer the conversation differently? jeremy: it is not comfortable for any central banker to be attacked by the most senior politician in the country. wouldn't think anything is going to shake the fed out of a september hike, the big question is as jeremy alluded to, what happens next year? the market is pricing on the 1 .02. to sustain growth is key. the figure was even stronger than was alluded to. real final sales are over 5%, that is exceptionally strong gdp growth. the fed could look at it in the -- a very lowious unemployment rate, which is not sustainable. the acceleration of productivity growth in the future, and the

participation of significantly. but it is certainly possible. we think of growth will slow to under 2% in 2020, so we are not acceleration. and certainly is possible, but if it was to continue, i would have implications on the neutral rate of the fed, discussing it in the bank of england context. francine: thank you both for joining us. us, of these staying with and up next, we talk about a big week for bank earnings. we will also bring interviews with a whole host of executives, including the chief executives of barclays. all of that and more coming up this week. this is bloomberg. ♪

♪ francine: this is bloomberg surveillance, i am francine lacqua hear from london. financial earnings, continue this week. some of the other big names will be hearing from will be rbs and barclays, reporting second-quarter numbers in the next few days. what should we be expecting from them? now, senior analyst at bloomberg intelligence, and jeremy stretch. david, how do you break them down? originally, what country they are exposed to? or what can the business they have? >> very much business. quarter, banks have been underperformers.

clearly, investment banking, important.ose are the u.s. delivered in fixed income because they have more commodities business. equity strength is what we are looking for, recovery for the french in the market. francine: i have a chart that i'm writing up, a chart looking at the european 600 banking index, and we ricky down in terms of performance of the shares in the past six months. some of them are down, is it because they were up to much before? in comparison, i think tate is one of the biggest risers? jeremy: that could be. jonathan: the market became more efensive, so the banks of the area, they became defensive. francine: we have barclays, what are you expecting from them? jonathan: yo ubs had bad net

new money, flat margins, we expect equities tending to be higher. ubs has very strong equities trading. thaty weak quarter, so might be misleading, but i would expect the numbers to go the right way for most of these banks for this quarter, it can bad is the first quarter, where some of these banks really disappointed in trading. bad, ifnumbers are not you look at the earnings and sales and in the majority of the companies in the u.s. eating, depending a little bit less, i andk -- beating estimates, in japan, a bit less, but if you look at where the credit cycle is in the u.s., that doesn't seem to be in a place that is going to power earnings going

forward. not as much as technology or health care. francine: and in europe, they also have an ecb that is staying put for the moment. >> yes, and they have an underlying microenvironment in europe which has this elevated from the momentum we saw in the fourth quarter of last year, but it is still consistent with growth. we think the macro market in europe is still effective and the other we have removed the political risks, as it took about the pressure in terms of italian banks in the second quarter, that provides a much more constructive outlook through the last second months of the year. francine: thank you both for joining us. from tomorrow, we will bring interviews with the ceos of top banks, including the chief executive of barclays, credit generale. societe

up next, could the latest central bank waiting lead to more emerging markets volatility? we take a look at that next. this is bloomberg. ♪ e a look at that next. this is bloomberg. ♪

♪ francine: economics, finance and

politics. this is "bloomberg surveillance," i am francine lacqua in london. now that is get to the bloomberg business flash. the world's second-largest bank says the margin will sink about 20 basis points and is also pointed to currency headwinds. costs ed operating rose past estimates. >> when you come back and do what you have done, the market is not going to be happy. that is a fact of life. i was say that the market will does.tever it what is very important is to take it one step further and understand that it is a good problem to have. the board of cbs is set to

meet later today to discuss the future of the ceo les monnves. as he was accused of sexual harassment by 60 women in in new york article published last week. he acknowledged that there were times decades ago were he might have made women uncomfortable my making advances but that he never used his position to harm any women's career. that is the latest business flash, francine. francine: thank you very much. now let us talk about volatility and em. global central banks are meeting this week and currency traders are racing for more turbulence. positioned.eople be jeremy, are there any currencies you like or anyone's that you would absolutely stay away from? jeremy: i think it comes down to looking at the structural backdrop. fec currencies that have structural rushers or credibility issues in terms of central ranks. -- if you see currencies that

ore structural pressures credibility issues, any structural headwinds, those are the currencies in the aem space that you want to stand aside from. i think those that still have really positive fundamentals such as a positive credibility standpoint, those still have value in the context of a rising rate environment. francine: do you agree with that ? the was with a positive credibility have already sold off, and we are starting to see surprises. ,ook at mexico, look at amlo and his comments about the fiscal regime come my investors are liking what they hear there. over all i think emerging markets do have current account service more, so there are some weaker links that have already been hurt. also, it is not clear if the

correlation between currency returns on equity returns is always positive. that relationship changes dramatically. you are focusing on the underlying consumption story, that is more important in getting their currency read on a tactical base. francine: i have two charts that we can go through pretty quickly. gases versustile e.g. seven since 2011, is that going to continue? jeremy: i think if a lovely is come i think we will see the elevated nature continuing in the near term. particularly in an environment where we are seeing banks gradually thinking growing back from emergency policies. francine: talk me through this chart, this is looking at stocks returns having lighter earnings 2018 so far, but if you bring it back to 2017, it is a different story. >> it is a great chart.

earnings are going up in the u.s., but that stock market is only applicable of percentage points. what is going on? we get asked that a lot. in 2017, valuations go of, in 2018, they go down. on the previous chart, the volatility is the developing economies, that is opening up a lot of opportunities in the options or derivative space. a key opportunity for clients looking at em currencies. francine: i imagine a lot of clients question how they position if the trade war escalates. how do you position that? >> the safe currencies would be the ones to go, the u.s. small caps. we like them for their tried? trade hedge. if you look at the country that is the rated the most in terms of valuation, it is a much

china. china equities compared to where havewere a year ago, they the trade war as well as the dollar debt in some parts of the u.s. equities space. if you can strip out those two risks, than the rest of the , there are some bargains been created, especially for long-term investments. francine: thank you so much for joining us, david stubbs, and jeremy stretch. "bloomberg surveillance continues in the next hour with tom keene joining me from new york. a little later, we also hear galaxy official founder and chief executive about the listing office cryptocurrency. this is bloomberg. ♪ ♪ this isn't just any moving day.

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boj is back in a game governed a kuroda makes it clear that he is in charge as he drives another fixed rate operation. but will it signal a shift in policy tomorrow. plus, mark carney tells bloomberg that he spends half his time in preparation for brexit. we will analyze his words. and, bank of america recommends shorting the stock after the social media giant, facebook's shares dropped. welcome, everybody, this is "bloomberg surveillance ." i have tom keene joining me from york. we will look at the banks, the boe and all of that rubbed together, we will see what that makes sense for treasuries. tom: a weaker renminbi this morning, that is front and center. you really wonder where we will be on friday after the major central banks report. justine: yes, and tom, we got some breaking news, consumer

confidence for the eurozone is pretty much as expect it, but lower than it was the previous month. i wonder whether trade wars and tariffs factor into that. we will have a look at that as well. now, that is get to the bloomberg first word news in new york city. >> president trump is again raising the specter of a government shutdown. he says he is willing to shut down the government if congress does not give him what he wants an immigration, including money on building the wall on the border with mexico. the shutdown would take place a little more than a month before the midterm election. onservative billionaire charles koch says that -- hit the president's policies could be hurting the economy. he told reporters at every nation that has prospered is one that does not engage in trade wars. consumer spending is recovering in japan after a poor first quarter.

retail sales rebounded last month rising 1.5%, they had fallen in may. spending that could boost inflation in japan has not kicks in. the world's second-largest beer maker thet forecasting a -- world's second-largest beer maker, heineken is forecasting a drop in profits this year. they say that higher raw material cost and currencies. are weighing on profits shares dropped the most in the last three years. global news, 24 hours a day, on air and at tic-toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am kailey leinz, this is bloomberg. francine, tom? tom: let us get started with a quiet look at the features, the euro is down, oil has a little lift. the week renminbi, the week turkish lira, that is all i have, francine tom, here is what i have.

european stocks are moving sideways, we're looking at the falling,,ating metals and i am also seeing a little bit of the yen studying of japan's 10 year benchmark, as the boj offered to purchase in the past week. tom: it is can am so glad you up.that i brought it up on the bloomberg to see, folks, that is a two standard deviation move to higher yields in a japanese 10 year. move that mr.upt kuroda has to deal with with this bank of japan meeting. bank go to the bank of england and the fed. this is the fed funds rate. adjusted for inflation. stan fischer down here, altra accommodative. this is the feds fund rate francine, showing rising

--liction, the vector is up rising inflation, the vector is of, and then it is not. the fed cannot get the fed funds target rate adjusted for inflation above 0%, it will not move. tom: yes, i like that chart a lot. going back to the boj and the 10 year, that is my short of the hour, this is why it matters. . when you look at japan's 10 year bond yields, they actually eased from the 18 month highs, after the boj offer to purchase and unlimited amounts of bonds to maintain the yield curve. that is something that we definitely to talk about a little more. standardlutely, that deviation. surge upwards in the japanese 10 year what a closing weekend in public policy, it's ramifications on finance and investment. it has to go to the sunday talk shows.

. lawrence kudlow is chairman of the president's council of economic advisers, we will listen to him but first, the secretary of the treasury. >> we can only project a couple of years in the future, but i think we are well on this path for several years. at a big it is a one year or two year phenomenon, i think we are in a period of 4% or 5% sustained growth of 3% at least. well, know, people say, trump was terrorists are damaging this, that and the other thing. i said, don't blame president trump -- president trump's tariffs are damaging this, better the other thing. he inherited an damage system, including the wto, and the situation with china. tom: good to see larry kudlow back after his illness. right now, we are joined by oec, merrill lynch

international chief european economist. u.s. bank of america analyst, do they think that he is right? >> on the impact of trade, no. es economies are much more concerned and nervous. we performed a simple got chelation, we look to vote happen if the rest of the world were to retaliate on any u.s. tariffs. since the share of exports in the u.s. economy is higher than the share of what the rest of the world exports through the u.s. as a percentage of their own gdp, if everybody retaliates and we got into an escalating trade war, in the end, the loser will be the u.s. economy. it is hard to forget this basic point. so far, what we have seen from .very and, is that these

economies have retaliated so as long as we are in this retaliatory escalation, it is hard to see have a net effect could be positive. tom: we are going to go to the bank of japan, the fed and then the bank of england. where do we want to be on friday? tell us how we want to feel good come friday. >> i think what you are likely to see tomorrow with the bank of japan is subtle signals that there will be i further assessment of policy, and quantitative easing policy. the bank of england though, i think they will be executing a policy error in putting rates up. i think there are missing the trick here, which is that the u.k. economy is going through a structural change, brexit, and not factoring that into their forecast, or their implicit assumption that the neutral rate 1.5%.e somewhere around i would say the neutral rate is pretty closer to .8%. francine: yes, and the boe is

set to give a forecast, guide us that.t comes to over all, central banks in the u.s., japan, u.k., brazil and india all meeting this week. on the part of the boe, how much do you worry about the boj? we saw the news in the? tenure today, what does that mean for governor kuroda? gilles: i think it is showing the most significant thing, the market move is significant, but look at the amount that the bank actually but today. it shows that there are -- the market is willing to sell for the first time to the boj. boj.arket is taking on the is suggest that you can buy a more of the 10 year jgbs

now, because the yield curve will be steepening up. francine: and again, this is bojcally also looking at market distortions, and the impact it is had on the kuroda era. gilles: there is a sense in the market that this has to stop, not just in the boj, but other markets. but when you look at the micro situation, not enough has changed in japan to actually weren't the tightening in policy. there is very little conversation on macro, on what is actually going on in japan right now. hasming inflation in japan moved back from .8 2.4. sinces at its lowest november 2016, so i understand what everyone is unit for

normalization in rates, but it is not the right time for the boj to trigger. i am like you, i am expecting better results. francine: retail sales are looking better, right? >> yes, but the bank days to focus on inflation. there was no shred of evidence right now that there are enough dynamics to warrant a change in policy. you.agree with the reason this appraisal of the correct stance of monetary policy, and the correct way of executing it is taking place, is because they acknowledge that the forecast will have to be readjusted. they will have to be in the market for longer. this is a way to make the execution sustainable. and because it will be in the market longer. tom: this sets up a few of the choice sets that these bankers will have. it will be a most interesting week, we will continue with mr. chadwell and mr. moec.

bitcoin, always a good time to speak with the galaxy digital founder, mr. novogratz on crypto, blockchain and more. look for that am bloomberg. stay with us. this is bloomberg. ♪

♪ francine: this is "bloomberg ," let us get the business flash. in an article in the magazine new york or, six women accuse the ceo executive of cbs of sexual harassment.

cvs is hiring a law firm to investigate the claims. profit rose 81% of the biggest patrick graham a close producer in the middle east. saudi arabia's company reported higher profits. and, invest in mark mobius projects that stocks have not hit rock bottom yet, especially in china. he tells bloomberg tv the chinese equities face multiple headwinds and also ones of the impact of rising interest rates. getinvestors fearful in the sea interest rates going up. i believe it is a problem with tech stocks, they have been flying high on the back of their income a very --. almost no interest rates at all if you look at the euro, you negativehave been in territory if you were saving in euro. so i will be a big test for the tech stocks.

>> that is your business flash, tom.s, front francine and "in termscarney said of brexit, specifically, let us be clear, it takes 50% of my time now. we spend of fairmont of time and contingency planning, but now, is certainly crowds other things. within nine months, we could have stress tests, and we are living these stress tests. you can read the rest of the interview in the latest edition of "bloomberg markets". jenning we now, we are joined by gilles moec and peter chatwell . interview,ok at his he basically says that there was brexit.ncy planning for is a backdrop strong enough to want to hike this thursday? >> it is a good question. the market is pretty much priced

for one, but people are saying, that there are a few questions over it. maybe it is not quite strong enough. we have seen an uptick since the first quarter, but again, the weak.quarter was so the boe said that that was because of the weather, and we were looking for proof of that, but we did not see that. but is the data strong enough, that is the question. always on the is horizon, you have had a lot of political maneuverings. will that affect people's decision? francine: we are expecting something to be published by the boe. how important is it, and what are we expecting them to announce in terms of the forecast? honest, we perfectly don't know. it could be a range, or could be a point forecast, lori could be discussion.

by doing this, they are possibly putting themselves out there, because some people might take that it is a promise, and it could move markets. they were clear by saying that it is not a promise. tom: lucy, i cannot figure out what the news flow is. everybody goes away on holiday. what are we staggering towards on brexit? what is the next next that really matters for our audience? lucy: i don't think the summer means a shutdown on brexit come i think it means more political maneuvering, which will have shockwaves onto the brexit negotiations, particularly now that terry's ma has taken charge -- teresa may has taken charge. tom: that will keep a simpler, to say the least. illes, what do you see

within the linkage of the economy of the united kingdom, governor carney and the silliness of the back-and-forth? what is the number one thing you all are focused on? gilles: we're honestly focused on brexit, because no matter how you look at the boj come out the kind of deals that we will get if any deal, will be absolutely central for policymaking in the next 45 years. i am really interested in knowing best in the next four or -- it will be absolutely central for policymaking for the next four years or five years. i don't know what the outcome of brexit is, and am much of a surprised to hear mr. carney saying that he is spending 50% of his time not thinking about brexit because that is all there is to it. i don't know how the bank can withstand such strong signals of the bank of england inching to hike.

we don't know if we are talking is supply-side shock, if we will spend another year in limbo -- i think it is much more important that whatever they say about where the pmi is or retail sales are at the moment. we don't have a clue as to what kind of economy will have in the united kingdom. i don't think we will make strong policymaking in those circumstances. francine: theater, i hear a growing number of people telling me that the boe will hike but that will be a mistake. is that the case? peter: that is actually my opinion, the boe could control the front end of the curve through setting the policy rate and on some degree, policy expectations. but i especially as the market will be phasing those expectations into a medium and longer on the curve. francine: how should we think of this? after the fact that a rate hike in may was rise to an governor

does thisn't do one, go back to credibility? now that the market is pricing in a hike on monday? peter:, that they should deliver i believe that is the case. credibility doesn't destroy the institution or the currency of credibility is lost. there has been so much commitment towards this. essentially, what they said is that they would have hiked in may, but conditions and out that we could have hiked in may, therefore, we need to hike in august. but i was discussing with a colleague today, is this the ecb ecb in 2011,the is it the kind of moment? tom: thank you so much, lucy, for joining us. peter chat will is with us, and -- peter chat will is here with

us, as well as gilles moec c. we have something else to talk about. forget about it in the end europe and all of that, what do we do with they're trying to figure out what to do with alitalia. and goes back to -- nothing ever changes in italy. they have been arguing about alitalia since i was like five years old. what has changed in the economy of italy given all the economic populism have seen? >> the? >> policy today's come i think it is making progress toward some kind of citizens income, that is the real headline measure they are trying to implement. on the other side, there'd attempting to implement a flat tax. i think you raise a point, what are the structural measures? is the bureaucracy around that isa business

slightly larger than a small business? is that going to change? the pension system, is it going to be dramatically cleaned up? if so, is anything going to materialize that will -- on a forward-looking basis -- dramatically decrease the debt to gdp ratio? it is not clear here with of the italian economic and become a higher growth economy going forward. but i think there are trying to implement a catalyst. illes, what i don't understand is how monetary authorities work when you are doing with zero, or one, or the.y 2% the models i of seeing off the bloomberg for the country or this country are really quite rapid. they limit dramatically what central bankers can do. ultimately, the

discussion is processing about what the maximum interest rate is that we could reach if we stay on the right side of the cycle. equilibrium interest rate in europe has fallen dramatically from 2008, that is obvious. this.cern goes beyond it is not so much how restricted we are in the final level of interest rates, it is the fact that we may miss a window opportunity to bring interest eurozone. zero in the because, if the cycle goes up too early, it will be very hard to justify any kind of move from where we are right now. i think we have a central bank that is worried about the stock in this current configuration. tom: francine, the bloomberg has italy's gdp at 1.4%. if you through a 1.4% -- a 1% beef later on that, that is 3%

nominal gdp. a really constraints what people can do. francine: yes, and the biggest problem is that it is not even creating jobs. if you have political populists strongge, a very anti-immigration stance with no jobs, are you probably more bearish on italy than any other european country? gilles: historically, i have been covering it today at from about 20 years, usually that market condition happens when you have the combination of complicated politics and bad economics. it is usually one factor alone that triggers the market reaction. in a way, we are lucky because the populist in power in rome, do not talk too much about the economy, they are focusing on immigration. if you go through the last two months of the year, and the economy really starts getting wobbly, my guess is that public opinion in italy will demand government.the

they will want other actual loosening in the fiscal policy, and we don't have space for this. the market is fairly quiet as far as they are concerned with this. but i, combination of a slowdown and a complicated wallace's situation that could make things happen- and that may exactly at the time when the ecb stops buying -- so we have a very complicated end of year i think, and italy. francine: what does that mean for the euro? gilles: is fairly ambiguous, but my guess in most case is that the market will start pricing out the possibility for the ecb to hike in 2019. they will push the first hikes further in 2019. am: is the european economy more successful economy than the u.s. economy? i know we have all the trump stimulus, but do you look at day after day at the european economy as more successful?

gilles: there are some indicators were i think the european economy is doing well n a way, better than the u.s. one thing that has really changed in europe in the last 10 years is that our participation rate has been rising. we are putting more and more people into the labor market, which is exactly the opposite of what is happening in the u.s.. that is very positive and unusual development. tom: thank you so much for being with us. bank of america merrill lynch, and petr cech well with mizuho. bying up, we will be joined leslie vinjamuri the stay with us, this is bloomberg. ♪

francine: this is bloomberg surveillance. let's check in on what is trending across the bloomberg universe.

the first welshman to win the tour de france. in bloomberg markets magazine, preparing for brexit. the head of britain's central bank sat down with bloomberg for an interview. trump says he is open to shutting down the government. a game over for nintendo. a massive short bet against the gaming giant. --na has let's get straight to the bloomberg. here is kailey leinz. president trump is reviving a threat to shut down the federal government if he does not get what he wants on immigration. he said he would support a shutdown if congress does not

give him money for a boardwalk -- for a border wall. choice of aump's supreme court will -- judge brett kavanaugh sided with the drop -- with the trump casino. he voted to set aside a national labor relations court order that would require the casino to bargain with workers. bloomberg has learned that the european union, canada, mexico, and japan will all take part in geneva. now, president trump has backed off is that of tariffs on cars from europe. a northern california wildfire has forced tens of thousands to flee their homes. six people have died in the fire. the decibel -- the death toll

has been raised in the fire in europe. killednesia, people were when an earthquake rocked a popular tourist island. electionwe, the first since 1990 that does not have robert mcgaughey on the ballot -- robert mugabe on the ballot. in 37 year rule ended december. global news, 24 hours a day, on air and on tic-toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. researchid a lot of over the weekend. one of our staff staying up the entire night to decide whether donald trump tweeted more than

leslie vinjamuri over the weekend. r.e president outdid d vinjamuri. let us begin with a serious one. that is, the president will shut down the government. the new york times says over the securityll and border in general. as the president saying if i do not get my wall, i will shut down my gut -- the government? >> he has come back to the wall for the last 18 months. he wants to see immigration reform. he is trying to put pressure on congress. he returns to the wall, which us is way -- which is his way of talking to his base.

it does not seem likely he will get the funds. tom: i am trying to learn italian. i was watching rei 24. i did not understand a word. rai 24 has on immigration involved. the president wants to be seen as tough on immigration. he has been tough on immigration. family separation was not well received. there is a debate going on over here on immigration. he is meeting the italian prime minister. italy taking a top position on immigration. the politics are difficult in both places. he is turning back to congress to his base and saying it is time to push forward with immigration. there is not been productive

movement. francine: we also hear the deputy prime minister in italy saying they hate me and this is a witchhunt. you see over the weekend the president's weeding about -- president tweeting about his meeting with the publisher of the new york times. >> that was even more problematic. it is the broader attack of not only fake news and fake media that we have been hearing, but it is a concern now. this concern that the new york that and other press have president trump is talking about the media as being the enemy of the people. that pushback from the new york times on this dimension has ignited the president. the fact that it has gone public. coming out ofere

the deputy prime minister in italy from trump are very similar. francine: does it matter for the midterms? newsf this talk about fake -- whether a change the minds. we hear republicans crying out against what the president is saying about the free press. >> for the midterm elections in the united states, it matters in the sense that it allows the president to reinforce the message that much of what people are hearing whether it is about cohen and the investigations looking into what the president did or did not know, it allows him to discredit. he continues to use this as a mechanism of discrediting the noise. turning the press into the background noise. tom: i thought it was historic over the weekend to see the new young publisher of the new york

times come out -- to make a long story short, the president talked about an off the record meeting he had with the publisher. he had to come out and make a statement that was different from what the president said. to me, it is almost a generational change that we are seeing in ownership of the media and representation. did you sense this weekend that this is a different twist that we saw? >> there are many things changing in the media. people are reading very different things. there is not the sense of national media and a unified a conversation. the pushback we are seeing from the publisher of the new york times is in direct response to the very different climate, which is the result of attacks by the president. not that presidents have been unhappy with the coverage and have turned to the new york

times or whatever paper it is and said, be more fair, but to take the next step and say it is not only the specific coverage that is unfair but that the press is the enemy of the people. this is when it gets very toxic and dangerous. we are seeing the press -- this was a very proactive step to say this was inflammatory language. attacking --le violence against the media. this is a significant move. francine: thanks so much. stay with us. coming up, the open. opinion columnist coming up and :00 a.m. in new york -- 9:00 in new york. this is bloomberg. ♪

francine: this is bloomberg surveillance. pressure on the chinese currency is not relenting. companies,as chinese banks, and the governments sold bonds at a record pace last year. isning us now from hong kong bloomberg's chief asian correspondent. i want to talk to you about trade. we have an interview from a chinese top diplomat mocking the u.s. for some perplexing trade. francine.rning,

we had some direct remarks from the foreign minister. pushing back against u.s. criticism of a trade deficit. u.s.de the analogy of paying $100 and then complaining they are short $100. it kind of speaks to the atmosphere of the u.s.-china trade story. unlike what we had with the u.s. and europe last week. on details to wait on the expected $16 billion worth of goods and the next phase. -- china next phase. -- in the next phase. we have a ways to go yet. francine: what do you see as the biggest risk to the chinese economy?

other concerns that china eases policy too much? >> there is absolutely a growing concern that this new focus china is putting on stimulus even though it is a targeted move on their part does take away some of the focused on deleveraging. the campaign to slow debt. it is happening at a time when china is facing pressure from the trade conflict with the u.s. tariffs ones push china, it is bound to have a material impact on growth. at a time when the yuan is falling as well. it is not a great mix for china right now. tom: we just saw the headline. i am going to turn to the bloomberg. china plans to ease limit on

foreign investment in a share companies. what does it mean? does it mean more money coming into china? >> it sounds like another step in that direction. they have been taking incremental measures to attract more stock market investors to free up channels for bond market investors. this could be another statement that proves this. they are opening up their financial markets. they are interested in liberalization. youign investors will tell that the capital account remains -- mark has ae broader longer way to go before it is .early as liberalized francine: thank you so much. chatwell back to peter

and leslie vinjamuri. is it manipulated? i think it is moving towards being a free moving market currency. by allowing it to get there without getting there too quickly and appreciating too quickly, -- depreciating to quickly, that is the challenge. what we have seen in the past few months are incremental steps towards allowing the currency to move more freely. i would also say the response we --e had to the trade war supporting -- it makes perfect sense. a small part of the economy will get hurt by the terrace. let's try to -- by the tariffs. reset on central banking. give us a reset of the trade

war. what is next? -- if you going back to the europe side, we have seen at least a temporary easing. one would expect this to continue. the unwise strategy on the part of the president is not to have been more thoughtful on what allies does he need if he is going to take a hard line on china? why take on europe at the same sign -- same time? why undermine that relationship with canada and other allies when this broad domestic support for pushing back against china ?n trade to cloud that with this pressure on europe has not been strategically wise. tom: do you have a level?

i get the grind to it. have a level where all of a sudden it matters? >> we do not have a threshold. i see no problem with over a two-year horizon going through seven. this would be consistent with fundamentals. it is about how it gets there. how much of that is driven by policy change. if it is not driven by policy change and is about capital flow, that would be a sustain that is reflected in fundamentals. markets: with emerging advancing and stimulus measures in china, there seems to be more agreement to spend the tariffs. em has gone through a difficult. buffeted -- through a difficult

period. going forward, the conditions are going to be much better now that there has been a correction in those dynamics. some of the volatility that has -- therehe em economy will be an impact. it will mean a slower -- francine: is there any insight into how will -- and how world leaders -- into how world leaders should deal with president trump? we saw a scaling back of the trade rhetoric saying we should sit down and talk. how should the chinese deal with president trump? junker. a win for i always thought that trump would dial it down. the overlying interest and the broader support was simply not

there within the united states for taking this line. on china, it is different. nota will undoubtedly succeed with a similar tactic. if you think about how trump is feeling in the run up to 100 days, playing the china card and pushing hard is not an unwise strategy so long as he has followthrough. i do not think the chinese would succeed with the same tactics. he might well received somebody and have a nice meeting. that does not always work. others that with they have not always gotten what they want. he has had a long-standing conviction on his attitudes toward china and trade. francine: thanks so much. to steal some of

constructs, go -- some of tom's charts, go on to gtv go. theman take them and reuse and deadlier boss. this is bloomberg. ♪

>> this is bloomberg surveillance. is trying to offset the costs of higher tariffs. the automaker is raising the price of sport utility vehicles in china by up to 7%. they are built in the bmw factory in south carolina. expect some conductors can -- conductors to go to deal hunting. the billion dollar build -- bid. politics.mes >> there was nothing about regulations or issues that cannot be resolved. it has to be political or some other reason. it is not about the transaction itself.

>> that is the bloomberg business flash. tom: all sorts of good things to talk about on charts. here is the yield. the yield on the bond. you have inflation underneath it. they both move at the same time. let's go to a chart with peter chatwell. this is the japanese 10 year. we have shifted from deflation. now to some substantial inflation. it is amazing to me the long-term trend. a good return here with huge deflation and now a little bit of inflation. we have ourselves a negative real yield. it is on the edge of the united states. >> it is a very good point. this highlights how it is possible that we could have the boj over a considerable.

-- over a considerable period. i would extend this into europe. we have had negative real interest rates in both of these areas for a considerable period. given what the central banks are forecasting suggesting they will meet their mandate over a medium-term horizon, we have got to be thinking that we could have gone past the peak easy from both of the central banks. that is significant because globally, monetary policy has been driven by these two. the fed has been moving towards tightly. the start of a convergence trade between u.s. rates and other developed develop -- non-dollar rates. the market has been talking about this for a couple of

years. the argument is that it has changed. it is only pricing into the forwards. not coming in said the market reality. francine: thanks very much. coming up tomorrow, i will be in zurich. at the get a look performance in the equity and fixed income units. surveillance continues. we will look for your markets. we will look at deutsche makes and the clearing -- deutsche bank's and the clearing. this is bloomberg. ♪ retail.

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come friday, everything will be great -- will be all right so says carney. in a weekend, the president says he will shut down the government over border security. the washington post reports on the off the record meeting with vanity of the people, the publisher of the new york times. this is bloomberg surveillance. we are live from new york. the leader of italy is going to meet with the leader of the united states. all of a sudden, this is really interesting on an immigration front. francine: it is. immigration is one of the points they have in common. if you look at immigration and what italy is doing, they are vastly different to what is going on in the u.k.

orchestrating is certainly the interior minister who really won the popular vote in italy. he sees himself as the brainchild of president trump with how he deals with immigration and the press. tom: i think this is going to be an interesting diplomatic event. here is kailey leinz. president trump is again raising the specter of a government shutdown. he says he is willing to shut down the government if congress does not get him what he wants on immigration. a shutdown could take place a little bit for the election -- before the election. tariffskoch says the could put the country at risk of a recession. he has long opposed protectionism. he says every nation that has

prospered did not engage in trade wars. there is a sign that consumer spending is recovering in japan after a poor fourth-quarter. read tale sales -- retail sales rebounded. in zimbabwe, it is the first election since 1980 it does not have robert mcgahn these -- robert mugabe's name on the ballot. the main opposition party is complaining the odds are stacked against it. the 37 year rule ended in december. the second largest beer maker heineken is forecasting a drop in profits. the brewery has been expanding more quickly in brazil. shares sold the mercy -- should -- shares sold the most in more than 30 years.

global news, 24 hours a day, on air and on tic-toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz. this is bloomberg. tom: equity bond currencies and ammodities, francine has great observation on the japanese yield. futures are negative to. that is all i have got, francine. francine: investors weighing earnings against some of the lost expectations. the concern over global trade playing out. the yen is studying after the jgb 10 year yield racing in advance. tom: room to move. real japanese the

10 year chart, which showed that rising inflation is adjusting. what you have here is chairman powelling -- chairman saying we cannot get the target rate up. you have the yield moving but also inflation moving higher. what do you have? francine: this is what i am looking at overall. it goes back to the 10 year jgb. you are talking about deviation. after the brutal move that you could say happened today, it puts into question what governor kuroda to do next. tom: very good. there was a piece that came out on friday. it is this report. the jpmorgan friday report. everyone would wait for it.

bruce kasman is with us. the president took a huge victory lap. did he deserve to take it? report isause the gdp a reflection of his policies. i think we should feel good about what it tells us about the u.s. economy. looking through the headline number that is distorted by a couple of things. we have a nice private sector recovery in demand. we have balanced income growth. we have a fiscal stimulus coming through. it suggests the economy is solid and will continue to grow at a solid pace. tweet, mr.th president would have been perfect. how much is the fiscal stimulus going to be? you have a number? 2019,think in 2018 and

fiscal stimulus is adding a half percent each year. tom: a lot more to come. francine: particularly -- >> particularly the spending side. we think the economy could probably hold growth at around a 3% pace. something we have not done during this expansion. that is a really good backdrop in the sense that so far we have not seen late cycle pressures build in. there is nothing really preventing us from continuing to generate solid growth. francine: what do you worry about? you worry about the fred -- about the fed -- you worry about something else? >> i think the late cycle dynamics in terms of wage pressure starting to put downward pressure on corporate margins is the central risk of the expansion. it is moving very slowly.

we do have to worry about whether this trade war turns into a war on trade. we step back from that last week with the european union meeting. my concern would be what is happening giving businesses the feeling that broader trade patterns are going to be affected permanently and begin to respond to that in terms of sentiment in their spending. francine: what do you wait to see? is there a danger that the u.s. economy is overheated? are we just not analyzing what some of the trade and tariffs could do? >> for the next six to nine months, the amount that tariffs are going to do to add to inflation is a small amount. the biggest question is sentiment. i think we have tight labor markets. i think we have an overheated economy in our future. i do not think it is there yet.

this is going to move pretty slowly. tom: i have a controversial chart. this is about linking politics to the gdp forecasting, which i think is baloney. we do it every day. i am going to make this bright red so you can see it. this is the 20 year average at 3.2%. the world is great. -- with a huge contraction we have, you come here down. the president has brought it up just a little bit. experience, boy do they run and hide when it is bad. growth really link gdp to public policy? >> there is a fiscal stimulus working through the system. if we want to champion that, and i would not champion it at this point into the cycle, it is supporting growth. , it isader story

something that has been brewing for two or three years. we are finally getting the healing in the post financial crisis period. it would be a mistake to tie economic performance to immediate policy changes. tom: good to have you here at the start of the week. we are going to look at the media business. we are going to look at fa -- fang stocks. we will move forward. stay with us. ♪

>> this is bloomberg surveillance. let's get the bloomberg business flash. biggestose 81% at the petrochemical producer in the middle is -- in the middle east. might buyco said it shares. investor mark mobius predicts that emerging market stocks have not hit bottom yet. mobius tells bloomberg tv chinese equities face headwinds. fearfultors get very when they see the interest rates moving up. this is the problem with the text stocks. the stocks that are flying high on the back of no interest rates. if you look at the euro, you have been an negative territory. it is going to become a big test

for the tech stocks. >> bloomberg has learned that the board of cbs will discuss the future of the embattled ceo. six women accuse him of sexual harassment. he admits that he may have made women uncomfortable by making advances. cbs is hiring a law firm to investigate the claim. that is the bloomberg business flash. kasman atus is bruce jpmorgan. we are thrilled to bring you a conversation with christopher marangi. must touch on -- how important business to move this to cbs -- the ceo to cbs? >> one of the questions is to you by assets are management? we had a great situation where we had both.

you want to buy the assets. tom: what do you do with cbs right now? you just wait out the soap opera? >> we think about it as a two by two matrix. what is the value of cbs with him and without him? the answer is that cbs is worth more in all those cases. it is an -- tom: after what we have been through with fox and disney, there is been all sorts of discussions of cbs combining with other networks. is that their future? they just have to find distribution? >> scale is critical in this business. comcast tried to us be -- try to achieve a bigger scale. eventually you will see cbs with somebody else. i do not know who it will be. tom: inform us as to what occurred last week.

we saw a separation and technology of google and amazon. facebook and twitter disappointing shareholders. >> what we learned last week is s do not go up all the time. facebook talked about deceleration and compression. growth investors do not want to see that. the stock is back to where it was at the beginning of the year. i am not terribly distressed by it. francine: overall, what is your biggest concern when it comes to faang stocks. this is different from the year 2000. >> it is clearly different from the late 1990's and early 2000's. valuations are rich. i do not think they are overly stretched. there are a lot of differences between members of the 2000's. facebook results make google's

results all the much better because they did a terrific job of navigating some of the changes and regulation. francine: what do you do with the snap? what do you do with twitter? >> those do not quite have the scale. twitter has been quite a platform. they oh the president quite a bit. their stock has done quite well. a lot of change their. overall, we are also expecting apple. ?ave you take advantage of ai if you look at the trends, do you go to a chipmaker in asian markets or to you go after some of these big tech stocks? >> we like recurring revenue businesses. apple is a part of that business. they have a global platform for music and entertainment. we like that aspect of the stock. you have warren buffett buying it.

when you filter through earnings, which is part of economics, what do you see going forward? are you going to tell marangi to shut up? >> you see a pretty healthy upturn in corporate profits. what is nice right now is we have a reasonably balanced income within the u.s. and globally with employment growing to a two decade high. that tight labor markets will upset the apple cart by creating a wage between wages and productivity. it is not happening now. --: do the savings revisions people have the disposable income to do media, don't they? >> they are saving money or at least some are by cutting the cord and keeping more money in

their pockets. tom: the money they are cutting the cord with i would suggest is going to other media sources. >> it is going to broadband. that is why we like the cable stocks. can't -- comcast is even more of a value today. tom: give me a longer answer. we do not want to work that hard. francine: if you look at consolidation, i do not know whether it is domestic or u.s. or whether you also see a possibility of an ad finder coming in. sprint and t-mobile trying to come together. if that happens, i think it will make a lot of sense for them to buy and infrastructure provider. i do not think comcast is for sale.

you have heard in the past about all sees -- altise. they are financially about allfs going to be financed if they come to fruition? it is almost the endit is almosa of cheap money. >> it is the end of the era of emergency heist money. we look at u.s. policy rates at the rate of inflation. that is not going to be moving anytime soon. it would be a mistake to say that -- it is a favorable environment for credit. it is improving in europe and in the emerging markets compared to where we were for the last three or four years. i do not think credit and

interest rates are an obstacle for deals or for the global economy to move forward. thank you so much. stay with us. coming up on bloomberg markets, the open. the bloomberg thank you so much. opinion columnist. as a 9:00 a.m. in new york -- that is at 9:00 a.m. in new york. this is bloomberg. ♪

francine: this is bloomberg

surveillance. deutsche bank has moved clearing activities to london. joining us now is bloomberg's finance minister. we are in the midst of a lot of earnings. we have barclays later this week. talk to me about deutsche bank. >> it has been well telegraphed. it is significant obviously. banks shifted business to the continent. that a heard for months combination of clients are asking -- everyone is very much concerned with what happens on march 29. if there is a brexit deal. the u.k. regulators have been warning quite strongly. francine: bloomberg news has

been at the forefront at the breaking news for quite some time. what does it mean for others? >> the banks have already had an established business in europe and are responding to clients and moving some of the businesses. we will have to see over the next few months what we see from the data in terms of how significant the ship has begin -- has been. tom: what i find interesting is -- we are togloom lose 100,000 jobs, buried above it is only a few hundred jobs have actually moved. >> from what we heard last week ourselves from the u.k. regulators that it will be short of 5000 jobs that are affected in the immediate aftermath of brexit. what remains uncertain is the longer-term erosion. where that will shift to. is it europe or elsewhere? tom: thank you so much.

we are looking at some of the banking stocks. as you look at the returns for all of these banking stocks the way at the bottom. zurich tomorrow. we will see the shape of the bank compared to ubs. this is bloomberg. it is not as sunny as it was last week. good morning. ♪ two, down and back up.

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>> president trump is threatening to shut down the government if he doesn't get what he was with the border wall , and make sweeping changes in the immigration law. a shutdown would take place on the more than a month before the midterm elections. meanwhile, president trump's choice for the supreme court once held a victory over organized labor in the casinos, he was cited with the trump hotel. he voted to set aside a national labor relations board order which would have required the casino to bargain with workers. major car producing nations plan to meet tomorrow without the u.s. to discuss the response to president trump's threats to tariffs. canada,learned that mexico, south korea japan and it meeting. in northern california, a deadly wildfire that has forced tens of thousands to flee their homes ramped up.

six people have died from fire. toll in fires the wildfires in greece has also reason to 129. a magnitude 6.4 earthquake has struck down the island of lombok in asia. global news, 24 hours a day, on air and at tic-toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am kailey leinz. this is bloomberg. ♪ tom: thank you so much. an interesting and diverse weekend for the president, 10 weeks, some of them very angry. we go to our bloomberg washington correspondent. bordershutdown issue on security, does the president have the ability to "shut down" government?

>> i think republicans want to see that happen, i don't think they view it as something that would hurt their chances in the midterms. i think most of the general thinking amongst the republican party is that it would highlight the contrast that immigration has on the election. tom: i read three articles this week and that said the president has exceeded in going from democratic house momentum come of the gop house momentum, pugin and other distractions. is that the reason? kevin: right now i read it as much more of a tossup. i look at the polls that suggested that the republican with base would stay in line with the president. we haven't seen the russian meeting or really anything else for that matter, including the mother probe, move the polls -- .he robert mueller probe , move the polls the biggest thing is how mobilizing and the enthusiasm gap is, between the democrats and republicans. you get the feel that democrats

are anxious and eager to get to the polls. francine: i don't know what they would call it a tweet storm, or whatever you would call it, this is -- a day in the life, in that life. paul manafort is facing charges tomorrow, how will that go? facing trial, intense allegations against him, and quite frankly, i think if you couple that injects the does that with the developments of michael cohen last week speaking out, watching him slip in real-time, it is really something that backs to question what will emerge. not only in the michael cohen saga, but also in the palm on the for trial we vote clearly be watching -- with the paul manafort . francine: when will robert mueller actually issue a report on his findings?

could it, head of the midterm elections? kevin: it could come up nobody knows when it will happen. that is the biggest question washington. and really come out the biggest political surprise. some would suggest that he would by october,ase it but of uber some people would suggest that. with jimt we saw comey, there was an element of the unknown command he has the forecast when that will be released. enemy ofk you so much, the people, chief washington correspondent for us, kevin cirilli. let us go to. what we are looking at. we are not struggling to find anything to talk about this monday. that turkish lira, we have a chart in the bloomberg showing a leg up on the 24th of july. it is another em test case, whether it is the turkish lira,

or the brazilian currency, they are all idiosyncratic until they are not. you and i remember on the third week of august in 1998, how close it is it until they are not? >> i think the point you're making is important, which is that we don't actually always place. interactions take as we look at the world right now, we don't see the big rise in global interest rates, we see a backdrop on groups that is pretty solid, we can recognize that the turkish story and the brazilian and argentine stories have very idiosyncratic elements. we don't think this will go over it, but i think any see the fed tightening or stress points here, we have to worry that there could be spillovers the were not appreciated. tom: are you strong dollar up? bruce: know, our call is that the dollar strength, given the trip story doesn't identify, the

dollar will weaken a bit in the year. half of the we feel better about global growth, particularly global growth outside the u.s., and we begin to see some modest weakening in the dollar off of that. tom: bruce, do you worry about the fact that despite terrorist and despite trade, there seems to be an interest central -- it seems to be an urge to start normalizing? is it a good time to do so in the economy? >> i have to emphasize, the ecb will not be raising rates for over a year. ecb is not moving policy rates up. the amount of tightening we are getting with mobile central banks is extremely small and coming from very easy levels. i think the easy question were asking ourselves now is if the fed is moving steadily in pushing up dollar interest rates, in a world in which dollar funding is very important--whether there is a

stress point on that,, not doing it because that is what other central banks are doing. but secretary mnuchin suggested yesterday that it is fine for the federal reserve to raise rates, even if president trump taxes them. this is like a central banks worst nightmare? bruce: there is definitely an issue about the independence of the fed, but i think the fed is pretty insulated here and understands what its role is. we don't think it will be responding to political pressure. we think there is a force in motion which will continue to move a quarter percent each quarter here for a while, and it still has another >> or three moves to get back to neutral. tom: getting back to the political forces out there, of course, bruce and i know, chairman powell is the enemy of the people let us talk to. christopher marangi

now. area, chris, it is really about the power of cable news, the whole dynamic that all of us are living every day. i have my own ax to grind in all of that, of course, but how do you as investors perceive the ,ower in cable news particularly into the presidential election of 2020? chris: it is a very valuable asset for fox, as well as for comcast. a bighas been called driver for growth in the company. perhaps to the detriment of other forms of entertainment, we saw that in the last election cycle, it would be will see it again. it was earth for fumble for those networks and broadcasters. tom: kenny you find any value in print? we have dust can you find any

value in print? can you find any value in print? chris: it is very hard to find any profitable print companies these days. you have rent exposure with the wall street journal, new york there are i think doing a very good job of moving to digital. tom: i saw the prime minister -- we don't hear prime minister may calling the journalists the enemies of the people. it is a very uniquely american energy right now. francine: yes, we had the president saying that lying,ists, the press is and what they are saying. bruce, i don't know whether it is difficult for markets to

understand the deep shifts that we are seeing culturally in our society. this feels like a bit question that could be the article, theological, whatever you want to call it. how does it play out in the ?arkets 5-10 years from now chris: i think that is a hard question to get around. there are certain things happening now reflected in trade policy and political outcomes, and reflected in events like onxit, which do come out of a commission of pressure points building over the last 5-10 years. and it will play out over the next five or 10 years. i don't have a crystal ball on how these things play out, but we have a demographic issue. we have slow underlying supply-side performance. i think there are pressure points here which will continue to build, and the political implications are hard to see come up at are worth some, i think.

tom: lots more to talk about here in the hour, we will do that with a trace of good charts as well. coming up, on bitcoin -- this is always fascinating. it blockchain,s call bitcoin, there are other big quintet from spirit we will talk with mike novogratz. this is bloomberg. ♪

k fish this is bloomberg

surveillance, i am kailey leinz. -- germans trying to automaker is raising the prices of midsize suvs in china by up to 7%. . they're built in the bmw factory in south carolina tesla has also raised prices in china. hedge fund manager. is putting a massive bet against nintendo. he has accumulated a $375 million short position on the toanese toymaker, and beating to nintendo stocks decline since may which have stunned analysts. the semiot expect conductors to go do hunting anytime soon. qualcomm withdrew is billion dollar bid to purchase nxp. politics. ceo blamed >> there was nothing about regulations or issues that china could identify that could be

associated with trade actions. and has to be political or some other reasons, not about the transaction it self. kailey: and that is the bloomberg business flash. tom, francine? francine: thank you sou s much. one investor consoled his loss on facebook holdings, saying that he felt vindicated watching the social media giant freefall. that investor is the president and chief executive of halliburton investments, john henry streur thank you so much for joining us. where will this all end up? when you look at privacy or regulations, will it be spearheaded but the european reaching across the channel and the u.s.? where does that end for a lot of these big tech companies? john: i think it ends in one

regulation and higher costs for these companies, which creates a significant amount of near-term certainty, in terms of how advertisers will respond to these changes. >> who will be the winners and who will be the losers. felt of that you indicated after he fell off facebook, but facebook a and morph into something else? john: i think that is possible, business model is change. and but if you look at facebook and twitter, those are their primary revenue sources. if you look at google or amazon or other platforms, there are showing us that they have significantly other opportunities to generate revenue, particularly cloud computing which really came through for google lately. facebook is dependent on its ability to expose a large number inputs, to all sorts of

and conduct this really large-scale psychological experiment and sell the information to advertisers. that is what is really coming under pressure, and facebook does not have a lot of options people invested at your fund, which at that time was absolutely revolutionary camera was -- let us not by tobacco, that is not why this or by that. what has changed in social investment now? you used to be odd, no you are the norm. int is your day like explaining to institutional money how to do social investment best? john: that is exactly right. i think what a strange today, is the amount of information we have to work with to understand both what to buy, as well as what you mentioned, not to buy. today, it is really about understanding what is financially material in terms of environmental performance, social impact, societal impact to companies. tom: put to rest the idea of

greater return, what is the tangible research you have, the tangible reality of greater returns -- internal rate of return or social investment, versus a blend of portfolios? john: social investing can do in anything finance social investing can do in terms of creating outcomes. there was nothing. to do with the returned string being different. tom: can he say that you will pick up 30 basis points with me? john: i think you can say that, it depends on who was really applying their research. as i said, we can do anything that you can do with nonsocial investing. we manufacture indexes at calvert which generally track the broad market. sometimes with slightly less measure, that is a big can we create an inventory of security is of replicating broad

market returns? from there, sure, you can outperform. especially if you add good step tactics into that equation. tom: thank you so much john , henry streur ceo of calvert investments. now, we continue with christopher marangi of gabelli funds. namesk at some of the big out there, i don't know if we are at the point of saying that some of them could not survive. when you look at. rings next snap, you say, we don't know how it will create value in the next five years. do thing they could repackage it and form it into something else? is important to the media industry as well as internet industry. these companies thrive on data and it is contentious, so i would agree with john, that the cost of complying with privacy laws will go up, which will further drive scale and consolidation in that industry.

francine: chris, again, what does that mean for the end consumer, what does it mean for regulation? is your seeming more and more regulation? chris: yes, i think that one of the reasons facebook is investing in the experience is in fact, to try to head off or delay regulations, because they such a big impact on the political discourse in this country and around the world. tom: i have a chart right now, chris, maybe you can just weigh as well.s i i am fascinated by the idea of -- you go from deflation to disinflation, to actual, tangible inflation in japan. we go down with the long-term real rate declined in japan, then we get improvement in

inflation, and even if they yield comes up a little, inflation squeeze is the real rate. what does that mean to the people of japan and the banks? chris: i want to be careful here, because all the information we have seen in the last year in japan, is energy prices. i think what is very troubling in japan right now, is that we have strong growth, we have the boj that is thinking about beginning to make an adjustment away from the control policy? bruce: underlying inflation has not moved anywhere closer to the boj is target and market measures of inflation effort visions are reflecting some loss of credibility in the boj. lot that comment sounds a like governor carney nine months ago, and i understand that scales are different, but it seems like all of these central banks this week and have the same problem. they are rationalizing a higher space. you are talking about enthusiasm of the, but the reality bruise,

is that inflation is just not there -- you are talking about enthusiasm of the gdp, but the reality, bruce, is just that inflation is just not there. >> i think what is unique about japan is, it is trying to dig itself out of over two decades of deflationary psychology. very different a place than where talking about the bank of england and the fed. tom: all we have been hearing this week is the inflation profile. they inflation makeup of this culture and country is different. almost industry has a different inflation profile. i mean, this is not cookie-cutter central bank, there are some real nuances in these readings, right? chris: the bank of england is a tough call, no doubt.

the boj is by far, i think, the most interesting one. what they were really struggling with is actually missing the inflation objective. the last readings are coming low, with the concern of financial stability and squeezing out -- and what they are doing with to squeeze out a bank profitability. tom: it is not an easy meeting, not a dead meeting, now. francine: they exclusive is that tom will not stop talking. [laughter] when you look at the boe, are a lot of people are saying that they may hike, but why would you hike when the uncertainty of brexit is looming large. you don't have any idea at this ?oint whether the, credibility >> i think that is a good one. a have the brexit problem hanging over your head, but what the central banks, you're certain to see growth starting to rebound, wages move higher,

and you are being frustrated by what is still a very slow moving supply-side. i think your kind of balancing it. what the bank of england is not doing is suggesting that we have a significant rate hike half i had. but there are looking like they are --. pathnificant rate hike ahead. francine: is intending too soon, or tightening too late? bruce: i think the biggest mistake would be for them to tighten right now, the boj. we do have this deep hole that we are digging ourselves are often terms of trying to get psychology right. when you look at the bank of thesed and the fed,, issues are on the margin but they will be big issues down the road at some point. tom: big issues down the road, i repair my 401(k). what shares, what sector of shares can you acquired this morning?

>> we talked about cable stocks, they are on sale after comcast fox.eft free to bid on >> it is all about the shift from video to broadband, that is being recognized as a driver of that. tom: is robert eisner fox's friend? >> we think long-term, 5g wireless will get more competitive with the wider rock band product. but that is not something i worry about today -- the wider broadband product. i think netflix, contrary to people's opinion is actually friend, because address broadband growth. tom: what about youtube tv? chris: you don't get quite as much as you do with the big handle. the breath of choice and the quality of content, the bundle is still probably your best bet

if you are going to get cable. tom: thank you so much rejoining , we appreciate the memo. france the income i think it is central bank week, we did not spend nearly enough time on the bank of england. interesting.ll be francine: yes, we are expecting them to introduce something new, something that would mirror the fed, and also misconstrue or be misunderstood by the markets. tom: we are going to have the most interesting central-bank week for you. please stay with us across all of our platforms. we continue. bloomberg surveillance on bloomberg radio. good morning. ♪

♪ >> short banks.

bank of america says the thatook selloff proves tightening may be happening. bank of japan buying and limited lawns, and traders bet on changes to its yield curve control policy. that boe and the fed are on deck. and, les moonves is under fire. his future will be discussed today after explicit sexual harassment charges, but who is really in charge. >> welcome to "bloomberg daybreak." the are here in a new york, a lovely weekend weather was. we hope you had a nice time. >> yes, there was a lot of tod lanter indoor play. a lot like july national a lot play.dler indoor how does that happen in gillette in the new york. >> any kind of shareholder it was all the