anna: good morning. this is bloomberg daybreak: europe and these are today's top stories. president trump pushing china for a better trade deal. >> we are talking to china. they want to talk. they are not able to give us levels that are acceptable so we're not going to do any deal until we get one that is fair to our country. readyhington says it is to slap turkey with more sanctions if a detained captor is not released. >> we are in the midst of a contagion phase that's impacting both strong and vulnerable economies. bloomberg has learned that

the world's largest shipping company is considering selling off its drilling units. and get with the ceo his first interview of the day. just after 7:00 a.m. u.k. time. anna: it has just on 6:00 here in london. let's get to the markets there. the picture looks like this, a positive one. a by 4/10 of a percent. this is the way the week has shaped up. we went down on the turkey story and now we're going up on the trade story. we are catching up on the positive vibes that the rest of the world was trading on yesterday in the asian equity session. this is the first time in eight

sessions that we have seen emerging markets starks in -- stocks in positive territory. the story of the week is turkey and the turkish lira. we put it into the risk radar. the dollar is a little bit stronger against the turkish currency. lack rock saying that they doubt that the necessary steps are going to be taken by the turkish government. we see a lot of response to that. steven mnuchin and saying there could be more sanctions on not release a do detained pastor. s&p futures pretty flat this hour. they were more positive just 20 minutes ago. yesterday was warmer with this positive results. winning the grocery worth is helping to boost u.s. stocks. nejra: we are talking about the boost overnight but also asian equities today on the resumption of these trade talks between u.s. and china. perhaps you also want to take a look at the respective yield

curve of the u.s. and china. if you look at the same curve in china, we are approaching 80 basis points. if those yield curve's anything about economic activity, what we are going to see is chinese equities looking well-positioned to outperform their american peers for the rest of 2018. some interesting dynamics. anna: quick word on those futures. this is what we see on u.s. futures right now. s&p futures and negative but not by much. let's tell you a little bit about something exciting that is coming up on the program. the ceo of guatemala mac is going to be joining the team for his first interview of the day. that will be just after 7:00 a.m. london time. we had the bloomberg school overnight talking about the

drilling unit of this business. could it actually be spun off rather than sold, are they unhappy with the amount of money that has been offered for that business. word go to bloomberg first news update with juliette saly. juliette: the u.s. treasury secretary says washington is ready to hit turkey with more sanctions if the president refuses the quick release of an american pastor. steven mnuchin's comments affects -- the lira gains following the dollar and japanese yen. , weecretary pompeo myself have put sanctions on some of their cabinet members. we have more that we are planning to do if they don't release him quickly. u.s. president donald trump has prodded china to offer more at the bargaining table as the two countries prepared for

the first major negotiation and more than two months. that is as they step up efforts to head off an all off -- all-out trade war. hasralia central bank chief set interest rates are likely to remain at a record low for a while yet. while limiting the local currencies resilience. he also noted the currencies resilience in recent years. he said policymakers had hoped the federal reserve would drive the u.s. dollar higher and it's all the counterpart lower. >> it's a very difficult thing to predict the currency. for some time, i have been saying that a lower exchange rate would be better than a higher one. the reason i have been saying that is that a lower exchange inflationlead -- get closer to the midpoint of the target and stimulate the economy. juliette: the world's wealthiest family just got $11.6 billion richer.

walmart reported its strongest sales and marketing decade yesterday, sending shares storing as much as 11% and boosting the fortunes. according to the bloomberg billionaires index, the ranking of the world's 500 richest people, they're worth is $153 billion. day onnews 24 hours a air, powered by more than 2700 journalists in more than 120 countries. on the find more stories bloomberg at top . anna: if you are an investor in asia, you are getting more bang for your buck today. we're seeing markets rise. it looks like these trade tops -- talks have given positive momentum to the market. japan stocks also looking good. still a little bit of a switch out from my land chinese stocks. we are weakness in the development stocks.

the main reason you are seeing this research coming through in this index is that we have finally seen a rebound in tencent, which disappointed the market earlier this week. on the an hour function, 51 buys on this stock despite the result. lenovo speaking to all hong kong stocks today, they beat estimates. this is on solid first-half earnings and expectations that they would do well. a lot of them coming through with their numbers next week. anna: thank you very much. must make a better offer, that was donald trump's warning ahead of trade talks next week. ofwelcomed the resumption face-to-face negotiations but said he won't do a deal that hurts america. we heard the comments in our headlines.

bank and the bloomberg managing editor, welcome to both of you this morning. how excited are you about talks on trade? >> not really that interested, to be honest. anna: something that the market excited yesterday and into detailed. -- into today. >> this is a guy so down in the system that he is not registered. this is trying the waters, trying to see if someone on the other side is going to take up the negotiation. for the chinese right now, the problem remains the same. there is no one in the u.s. administration with whom they can talk about china policy. they had some excellent nations they need to get through to the u.s. administration. china has nothing to give the u.s.. if you take the reexport of u.s. companies back into the u.s. into the equation of the current account, they run a deficit of $20 billion. chinese perspective,

they need to get this message across. nejra: does that mean that the yuan has to weekend? a lot ofis doing things the same time. keeping the current account balance open, having a fixed currency rate. currency rate needs to go. that's part of the solution. anna: we talk about china, i have lots of conversations about what it is that china -- chinese are doing with their currency. it is one of their tools they have. it as benigncribed neglect. how optimistic or cap is sick -- pessimistic are you about where the sense? >> it is very hard to say. in the u.s., there is not a china expert handling this.

you have a real political problem for the republican administration because the people who have been most vocal about being injured are farmers in the midwest to our core trump constituency. that's another wrinkle in this whole setup. nejra: what does this mean for the dollar? we have had comments from president trump about the dollar again yesterday. does it come down from your? >> -- here. the two main stories we are running, it is only the second or third of the derivative that really goes on the world. the monetary stimulus through credit has stopped. we have caused the engine of debt. the second derivative being the flow of credit, the monetary to gross hasve

collapsed. that creates a emerging market crisis and not goes into the chinese market area we really are chasing the in story. it means that the dollar growth is peaking. as you just showed with the 210 four for the chinese, they are spending. the rest of the world will pick up. china islus from incoming clearly because their growth numbers are not running at 6.5 as they are reporting. nejra: dollar and you want an weaker?yu some say that when we have seen dollar you want go so far, weakening that is overdone. contain theds to 700, which is what they are afraid of. the chinese in history have always been very sensitive to the technical ways the market trades.

the chinese currency will need to weaken. that is what they need to do. they are running a current account deficit. last time they had a fiscal stimulus, they had a huge current surplus. they run a current account deficit today. the chinese model is changing. the need to open a capital account. have arency will need to freer range of work in trade. in the cyclical aspect of the world, the u.s. is peaking of growth. we know that because of the tax and the like. the rest of the world will pick cap. -- pickup. the u.s. dollar is always driven by the difference of growth and the rest of the world in the u.s.. the past 12 months, u.s. growth has picked up relative to china. it will change it will apply that we shall weaker dollar going forward. anna: trump likes to talk about

the cherished dollar. we have a cherished dollar. how do you see all of this playing out into the midterms? you mentioned this is something that is guiding trump policy. some guests say this will be aligned line in the sand. others say it will be more of the same. >> what makes it so unpredictable is when you see an economy that is strong as you have in the u.s., it would be a huge boon to the party in power. hastrump administration created so much divisiveness, overnight a big military hero, the guy was in charge of the osama bin laden raid came out with a washington post editorial saying, please take away my security clearance so that i can be in solidarity with your administration's critics. unusualall sorts -- factors in play. anna: the economy is not

boosting him as much as he might've thought. >> exactly. nejra: thank you so much. this is according to bloomberg sources who said the separation would be instead of pursuing a sale after bids were deemed to be too low. the danish conglomerate has been shedding units in order to streamline its structure. we are joined by our asian deals reporter. thank you so much for joining us. just explain to us in more detail what this is all about. is a fantastic deal that we have been chasing for so long. finally it seems to come to fruition in the shape of a spinoff. it came for sale about a year ago and we actually reported at the time they were holding talks with other oil service companies

. those talks never materialized into a deal. we were actually wondering, what is going to happen with this unit? the company had actually told the market that it was defective for sale. it sounds likew, we might see an announcement today in which maersk may just andde to spin off the unit sell the shares in the market. that sounds like the most possible scenario. it feels like the bids that they had at the time for the unit did not meet expectations for the company you -- company. >> how does this fit into the overall strategy? this is just one part of a big stickingring story, with transportation and getting out of oil and gas. >> precisely. doing a bit of

restructuring over the past few months. like you mentioned, they are just going back to its core, going back to its roots in shipping. the world's largest shipping company, they are going back to transportation which is a core business for the company. as you mentioned, they have been shedding assets in the past. they announced a couple of big disposals last year in the oil services. this one seems to be coming next as well. it is like a streamlining of their portfolio and going back to their core business area -- business. nejra: thank you for joining us from hong kong. you can watch our interview with maersk ceo after 7:00 a.m. london time. anna: coming up, a veteran

investor has worn investors to reduce investments in turkey. he has some interesting comments. we will bring you all of the latest on turkey, this is bloomberg. ♪

anna: this is bloomberg daybreak: europe. it is 6:20 in the morning over london this morning. a break -- quick look at the pound against the dollar. economics line this morning say the euro should be in for a bounce. we'll keep an eye on the pound. let's go to the bloomberg business flash.

air canada has been smith is new ceo, casting aside objections. the new ceo will take the reins by the end of next month. john mark jend who quit earlier this year. the airline said it would announce details as soon as possible. tesla executives have reportedly been trying to recruit a coo or tother number two executive assume some of elon musk's day-to-day responsibilities. the surge hasn't testified in the wake of recent tweets. interview with the paper, he said the company approached facebook's sheryl sandberg but there is no active search right now.

a nine-month crypto gold rush is over. sales dried up faster than expected. investors ignored growth in its main markets and ditch the stocks, which fell in extended trading. mining have helped stoke demand. that was your bloomberg business flash. nejra: thank you so much. turkey's finance minister has said he won't impose capital controls and underscored the need to rein in inflation and narrow the worst current account deficit and years. contagion could hit emerging and developed markets. exposed to turkey, i would reduce exposure. i think turkey is trying to rewrite the crisis management chapter in the playbook for emerging markets. it is trying to go without interest rate hikes, it is

trying to do it without the imf. it is not impossible but it is hard. u.s. treasury secretary steven mnuchin and threatened more sanctions of the nation didn't release an american pastor. the cio of saxo bank is still with us. we have seen a big market reaction to what is happening in turkey, is that more of a distraction when the bigger story is china and the u.s.? >> now, it is a big story because turkey is the world's 16th largest economy. if they go for bankruptcy, it will be big. it's a big impact. they are not following the script. there are three options, jack up the rates, do some tightening of the fiscal policy, go to the international world and get a deal which they are not doing, controls.currency

he doesn't want that because he is that it isve all about the foreigners breaking the economy. we should keep the facts straight, since he came to power the turkish can by 60% of what they could buy into thousand two. in 2002. this is like the end of rome's peak. him: you are holding the -- to account for the movement in the currency. >> this guy has been around so long that it is difficult to not create a narrative that includes his policy. anna: how worried are you about european banks? i read analysis that said if you look at union credit, their problems are in latin america and in the late -- italy.

there are different layers of concern here. people who say that bba does not have exposure to this does -- have clearly not read on this. they are exposed in a severely exposed to this. does that mean that bba is under pressure long-term? exposedthey clearly are as one of the biggest banks in the world to the changes devaluation. as we said in early section, there is hopes in terms of weaker dollar. nejra: does that make you overall positive in em? i think there are a couple of things happening right now. the technology sector inside of emerging markets has repriced massively. a lot of the movements in

chinese stock markets have happened over the course of the year. if you look at the return profile of all of the markets right now, nasdaq is up 25%. msci is up 1%. emerging market is down 13%. i think there is a massive opportunity. being an old man, a veteran, one thing i know, everything reverses overtime. there is fundamental value but averaging.bout need to be buying china, trying emerging markets. there's a crisis in contagion but it is driven on the fact that we do not like deficit in a rising interest rate environment. anna: back to the 1980's in that regard. the cio of saxo bank stays with

us. angela merkel is meeting turkey this weekend in a surprise move that shows her foes and allies are shifting. look at be the outcome? this is bloomberg. -- what could be the outcome? this is bloomberg. ♪ xfinity mobile is a new wireless network

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markets with annmarie hordern. like asian shares are ending the week somewhat mixed. we had the s&p 500 and the dow climbed yesterday. south korea and australia, but china under pressure. the index shares are rising today. the first in eight sessions after being battered by turkey this week. they are on track to close the year down 19%, one of the worst weeks they have since a february selloff. i want to take a look at what oil is doing. it has had its longest losing streak in three years.

this is the weekly change for wti. this is a trade -- as trade tensions continue between china and the united states and experts say there are concerns about a possible decline in u.s. sales to china. this could increase u.s. stockpiles and end up creating a glut. thatould remember eight-week losing streaks in 2015 was one of the longest but an edit with prices jumping nearly 12%. keep that in mind. i want to look at one of the biggest seller weathers when it comes to global trade. .his is maersk all of these blue circles here and these arrows are there distributions worldwide. you can see that they are everywhere on the map. shows how much they could be impacted by any sort of

global trade war with how big they are in terms of shipping and exporting. bloomberg has an exclusive story up showing that it shipping is focused to transfer activities. maersk is planning to spin off its drilling unit, we can get more details about that today. maersk will be reporting earnings at the top of the hour. we're looking forward to that. anna: we look forward to that interview. thank you very much. some interesting functions around the shipping story. let's go to bloomberg first word news. donald trump has prodded china to offer mark the bargaining table as the two countries prepare for the first major negotiation where the two months. that's as they step up efforts to head off an all off -- paula

trade war. trade war. >> china is not able to give us a deal that is acceptable. we will not too many deals until we get when that is fair to our country. and italy, a family has vowed to fight the government seizure of its road toll assets in the wake of a deadly rich collapse area face major losses after the collapse left at least 39 people dead. the company said it would protect shareholders and bondholders. u.s., jurors at a trial of paul manafort ended the first day of deliberations by asking the judge the central question at the heart of every criminal trial, what is reasonable doubt? the panel asked three of your questions on the same note.

global news 24 hours a day on air and at tictoc on twitter, this is bloomberg. anna: thank you very much. let's take a look at what you should be watching out for today. day two of brexit talks between the u.k. and the european union and brussels. day two of this week. european closee yesterday, the s&p is due to updated sovereign rating for turkey. anna: second the be interesting given recent development. hostsay, angela merkel talk with vladimir putin in berlin. nejra: they weakness we get in a surprise move that analysts say how close and allies of the u.s. are shifting.

the meeting comes before america imposes new sanctions on russian next week. joining us here is our international government executive editor. great to have you with us. how is this meeting different between the two leaders? >> the interesting thing about this meeting is that it is happening in germany. is the first time she has to see her on her term in five years. normally she goes to see him. she is always said it is important to have the lines of dialogue open, but she is also been one of his toughest critics. she has been one of the strongest advocates to preserve russia overons on campaign. it is significant that she is saying, come see me. it is reflective of the shifting sands of the of the relationships going on. nejra: and not least of which, germany's most recent trip to the united states. that relationship is proving

tricky. more reason to reach out to russia and even turkey. >> we saw that recently at the g7 summit donald trump famously thrown star us candidate at angela merkel and said, don't say i never gave you anything. there are tensions over enron, climate change, differences between the u.s. and germany on that. >> -- nejra: what is vladimir putin going to get out of this? >> he gets the meeting in germany. it is a win for him either way. there don't have to be large tangibles from it. she has been -- he has been frozen out by her. no one expects that russia and germany are going to become best friends from this meeting or anything. nothing tangible will come out of it, necessarily. nejra: you wonder what happens to the g7 or g8.

your thoughts on this shifting of the sands? no surprise you that angela andel reaches out to putin early want given the deteriorating let's with the united states. >> this is because of the changing winds from the u.s., but underneath all of this is that she needs the gas. prices have been very high. is all about immigration, which people don't want to talk about. all of europe's immigration policy is based on a deal we pay the -- for the closing down of the borders. it is a moral disaster in my own opinion. there are so many components in this geopolitical game. 's very slowly realizing that she needs to play this from a different angel. anna: one of the things that keeps coming up is with the u.s. almost pushing for this

organization of the global order, there is no one to fill that vacuum. you agree with that? >> yes. merkel was the natural heir to this position. personality, she doesn't see germany stepping into that. it should of been the eu overall. i think that is a very difficult game to play. i think she is finally realizing that she needs to step up. i think it is against her nature. i will be interested to see how it plays out for her because she is the person in the room wants to wait until everybody is talked and wants to take a diplomatic solution. i don't think the world needs middle-of-the-road'solutions. what we need is a very clear best practice operation on the table. has stepped u.s. away from these global structures, china has tried to step in. many have been critical of some

parts of their policy. our you surprised to see the way that merkel is handling this? is very cautious. she tends to get all over ducks in a row before she proceeds. perhaps right now what germany and europe's needs -- europe needs is strong leadership. in turkey, there is concern about its future in nato. they are concerned about whether the migration deal will hold. that will power the conversation between the leaders today. she also needs to be careful to avoid early one drifting too closely into putin's orbit. the collapse of a 60-year-old highway bridge in northern italy this week has highlighted the tensions running through the country. after the disaster, a deputy pointed the finger at eu

restrictions, and take that prevented maintenance spending. the deputy prime minister focused on the private operators of the highway, autostrada. rome, our now from western european editor. what is likely to happen to atlantia now? we have seen criticism from the government, these moves to remove the contract. what's going to happen? >> yesterday, atlantia closed down 22% after a while day on the market. there were all sorts of conflicting statements from the government ministers as to exactly what would happen to atlantia. the latest we have is a report in a newspaper that says the italian market regulator has gone directly to the prime minister to say that the ministers should watch what they

are saying regarding this company because there are legal steps involved. kevin, we have had the benefit and family going to attempts to take with the road concession. how strongly is atlantia likely to defend their interests? >> i think quite strongly. we had a statement yesterday morning that made it clear that atlantia will defend the interests of its bondholders and shareholders. they really mean to put out some opposition to any precipitous government measures. anna: what is the government's latest position? which part of the government are we talking about? >> exactly. the latest that we have is that the government has backed off on a possible immediate revocation of the license for the highway operator. they will study things and after a study of a month-long work,

they will decide what to do regarding the license. anna: thank you so much to bloomberg's western european editor, joining us from rome. the cio of saxo bank is still with us. as kevin was saying, we have seen atlantia shares tumble in the past few days. how does this story fit into your wider thesis on italy and the relationship between the government and the markets? >> i think telling government -- the italian government is trying to get as much conflict impossible to get an election in italy. the end game for the prime minister is to create a situation where they can bank on. with the budget coming up, it is clearly a statement. way they can get a 3% projected deficit for next year. i think we will have an italian election by the end of the year.

i think that is the endgame for everything that goes, including this. this is a play for the constituents going on. that sounds like or italian debt concerns, bond market concerns can be back as a focus for us in the autumn. putting outs numbers yesterday, talking about the italian banks, concerned that they will not remain a steady source of demand that they have been. is that something that worries you? >> i find it interesting that the advisor to the government continues to say that this would guarantee the spread, which would imply that they should be buying infinite amounts of italian government bonds. banks doesn't have that capacity in money terms. unicredit downe 23% for the year.

there is renewed pressure. you measure that into your italian rates. nejra: is this a doom loop that worries you? use has been of ignited with a change in the political agenda. not because of who they are but it has it means there will be no changes to the dynamics of the italian economy. the result strong export center but the rest of the economy is not performing. nejra: you have seen u.s. growth peaking, china is going to outperform. is it going to turn around? >> the valuation of european equities? has to sell the u.s.. is europe the right place? i would prefer the more risking emerging markets. as we have seen with maersk, they have less earnings. that is why the u.s. stock market has outperformed. much to theyou so

cio of saxo bank. you will be continuing the conversation with us at 7:30 a.m. u.k. time. be sure to stay tuned. nejra: you can interact with any of the chart that we use here, she tv is the function. browse recent charts, use them in euro research. coming up, we will be spoken to the former u.s. pay -- u.k. sinus -- science minister. that is coming up shortly. this is bloomberg. ♪

nejra: 6:48 a.m. in london. 1:48 in the morning in new york.

the dow jumping by 400 points. we had strong earnings from walmart and some more progress in talks between the u.s. and china. we get have session today. s&p 500 futures struggling for direction. old guard companies like as of yet should be against low cross drivers. steven mnuchin says the united states is ready to slap askey with more sanctions, the president refuses to release the detained american pastor. that moved the libre in the end of the session yesterday. nejra: our read stories in the bloomberg terminal. malaysia central bank produces rules for exporters. nine-month crypto addresses over. trump pushes china for a better deal. that has been moving markets in

the session. we are ending the week on a positive session. anna: we were weighed down by turkey at the start, we by china at the end. the market opens here in london today. the health care technology company uses artificial intelligence to analyze clinical data. let's speak to somebody who knows a lot of big business, the ceo of ¢ health. he served as you kate science minister. he's also on the board of airbus. what kind of data are we talking about that your business is enabling companies to access and analyze? >> we analyze anonymized patient data in partnership with nhs trust. that allows us to ask questions of the data to help companies how to improve lyrical trials, how to understand the complexity of medicine to be able to

analyze digital patient records, to see the hidden patterns in that data. it leads to new discoveries to accelerate medical research. nejra: is this data and demand from pharmaceutical companies globally? >> yes. there is a growing recognition that the ability to get real-world evidence from digital patient records, once they have been anonymized, can be very useful in accelerating the pharmaceutical discovery process. that applies internationally. anna: there has been a lot of controversy some years ago about the use of data from nhs records , but it was made clear that it is all a anonymized. update us with where we are around that. has this all been dealt with? >> it is very important that the .urpose is clear

all of the analysis that we do is for delivering patient benefit. to be able to improve health care, to discover new medicines. we are not using the analysis for anything else. only using data once it has been anonymized is very important to maintain confidence in what is being done. nejra: could the blockchain feature at all in your business model in the future? >> potentially. the ability to use blockchain technology to be able to improve security is definitely there. it also slows down analysis. it is a balance between what stage of technology is pretty -- ready to be used in patient data management. anna: what products have been made using this kind of data? can you illustrate any examples? >> in the case of pregnancy and diabetes, a software application enables the pregnant woman to be thatto manage the diabetes

she has to get control of quickly during pregnancy. as well as being able to be a very effective tool, it improves outcomes for the woman and a baby, it reduces the proportions of women who have to have a c-section. it is also very useful in being able to collect information of thehe progress diabetes and pregnancy, which can be used for medical research. we can get a better understanding of diabetes. if your mom develops diabetes while you're in the will, you're my likely to develop it later in my. it is important for medical resort. nejra: what sort of conversations have you had with potential investors? what excites them the most about what you are doing? >> we have been delighted by the strong interest we have seen here in london for business and are ideal today. what excites investors is they

see that we have these two great strengths, you're one of the leading countries in the field butrtificial intelligence, also we have the nhs. it is a fully integrated health care system. everyone has an nhs number. this creates a wonderful asset here in the u.k.. you combine that with leading ai, which we have been able to work with in collaboration with oxford university, this gives the u.k. world's leading strength and the ability to build a very strong sector. anna: how big does that make the u.k.? how helpful is that data set and making the u.k. a big player in health check--- health tech? >> in is a huge difference. it looks after people from birth through death. all medical conditions. the quality of the data set and the ability to study all aspects of health care provides the u.k.

with a very strong advantage. it is potentially the best population health data set that there is. nejra: is this a good time to be ipo-ing with brexit so close? >> yes. i think that there are always issues about uncertainty. brexit certainly is one. it weighs heavily on the minds of ceos here in the u.k.. arrest, because we work in partnership with the nhs trust, in our company. it is important for us to be a public company. it is absolutely the right place for us to live. nejra: what worries you about brexit or excites you? you're on the board of airbus. what are your thoughts? >> the most challenging thing right now is the uncertainty that brexit causes.

whether it is for a biotechnology company grappling with issues about the uncertainty over future regulation or an aerospace company grappling with issues relating to the very complex logistics supply chain that are affected by the outcome of brexit. the most important thing is for negotiators on both sides to work together to get to clarity for business as soon as possible. , such aank you so much fascinating conversation. you some headlines coming we have this bloomberg school about the plans to spin off the drilling unit, maersk saying it plans to spin off the drilling unit. we have another headline coming uses --that same joint nejra: they are expecting to get their number shortly. nejra:a separate listing of maersk on the nasdaq.

it was not entirely clear what the structure was. now we know. we will speak to the ceo, coming up shortly in the next part of the program. this is bloomberg. ♪ retail.

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bloomberg'sing from european headquarters in the city of london. anna: this is "bloomberg daybreak: europe." has justler-maersk announced it will have a second ipl. anna: president trump pushes china for a better trade deal. >> we are talking to china. they very much want to talk. they are just not able to give us a deal that is acceptable, so we are not going to do any deal until we get one that is fair to our country. >> not budging on turkey. washington said it is ready to slap turkey with more sanctions. more contagion is ahead. only exposed to

turkey, i would reduce exposure. i think turkey is trying to rewrite the crisis management chapter in playbook for emerging markets. >> good morning, everybody. this is "bloomberg daybreak: europe." let's talk about shipping. shipping is increasingly the only story at the ap moller-maersk. we hear more about that restructuring this morning. ap moller-maersk planning to separate its drilling unit into a listing on the nasdaq. previously this man, soren skou, the ceo of ap moller-maersk, had previously been talking

about selling the business. they were not impressed with the bids they were getting for that driven business, so they have decided to list it on the nasdaq. they have sold 19.2 5 million shares in july. we will look for more details and we will also look for the numbers from ap moller-maersk coming through this morning. the world's biggest shipping company expected to put out its numbers. away from the restructuring story, spinning off parts of the business to do with oil and gas, focusing instead on transportation. they put out a profit warning on august the seventh, cutting there for your outlook -- their four year outlook. waiting for the second-quarter numbers to come through here. more breaking news. nejra: from rbs. we already knew that you and stephenson, the cfo was stepping down to move to hsbc.

rbs is naming an interim cfo. she was deputy group cfo before this. the search for a successor for stephenson is underweight is what we are hearing from rbs. she will be named the interim cfo on the first of october. down from will step the board on september 30. we have seen some gains in asia, a little bit of a relief rally at the end of the week. those incremental moves about talks between the u.s. and china. ftse 100 futures flat, dax futures off by a 10th of a percent. anna: yesterday's session in the united states was pretty strong. msci asia-pacific catching up with that more positive abide the around china test positive -- positive vibe around china.

it is the first time in eight sessions that we are positive on the emerging-market stocks. that is saying something considering where we started this week. we are very focused on turkey. we are flirting with the flatline on the dollar against the turkish lira. we have a little bit of a boost yesterday from some more of the conversation with the finance minister. although some financers remain skeptical as to the steps turkey is going to take to secure its economy. steven mnuchin and sing more measures will be taken against -- steven mnuchin saying more measures will be taken against turkey. what do you see in the bond markets? nejra: the turkey treasury yield not doing much in the markets. the yield curve is below 25 basis points. the curve hit a fresh cycle though, heading the 23 handle at one point this week.

the 10 year treasury yields are steady. in terms of how european bonds might move, we have the cash opening happening right now. at the opening at least it looks like we will be fairly steady on bonds and oat's in france. let's get the first word news with juliette saly. the u.s. a treasury secretary has said washington is ready to hit turkey with more sanctions if president erdogan refuses the quick release of an american has start -- american pastor. the lira 30 gains following the remarks while the dollar and japanese yen rallied. >> we have put sanctions on several of the cabinet members. working with you, we have more that we are planning to do. juliette: u.s. president donald trump has prodded china to offer more at the bargaining table, as the countries prepare for their

first major negotiation in more than two months. that is as the world's two biggest economies step up efforts to avoid a trade war. in the wake of the deadly bridge collapse in italy, investors and the infrastructure company controlled by the family face major losses after the disaster left 39 people dead and ignited a political firestorm. the company said it would protect shareholders and bondholders. the world wealthiest family just got $11.6 billion richer. walmart reported in strongest in more than a decade yesterday, sending the retailers shares soaring as much as 11%. according to the bloomberg billionaires index, the ranking of the world's 500 richest people, the collective net worth billion.over $160

president trump the military parade will probably not happen before next year. the pentagon said it was originally pegged for november the 10th. the statement gave no reason for the delay. the white house declined to comment, other than to refer reporters to the defense department's statements. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . >> there has been a bit of a mixed session in asia but things are looking brighter than they have for most of the week. the msci asia-pacific index up for the first time in three sessions. you can see some good movement coming through in india. we have been talking about emerging markets seeing their first gain in eight sessions. still a lot coming through in the mainland chinese stocks today. you have seen a rebound in tencent. you see the nikkei close higher

and australia's market also closed a touch higher. the aussie dollar has been focus after we heard from the rba governor testifying to congress -- to the house committee today. tencent up by about 2.4% in the late hong kong's -- 3.4% in the late hong kong session. lenovo seems to be happy with its numbers today. china vanke eight leading a rally -- china vanke eight leading a rally -- china vanke leading a rally. the regional index on track for its worst week since march. anna: thanks so much. china must make a better trade offer to the u.s.. that is president trump's warning ahead of talks next week. steven mnuchin says turkey

will face more sanctions of an american pastor is not released. with us is gregory perdon. thanks for joining us so early. which matters more to global markets? u.s.-china trade, turkey and possible contagion, or does none of it matter as long as u.s. growth remains robust? , igory: in terms of turkey can give you 3 million reasons why the turkey crisis will not happen. that is the number of refugees that sat there. angela merkel and company will come in and do whatever it takes to avoid that turning into a disaster. anna: that's where the help comes from. $15 billion from qatar. talks with the russians and talks with others in the region, we understand. you think at the end of the day, angela merkel's political future rests on erdogan, so she will

get the eu to spend more with turkey. gregory: she has a pretty big checkbook. anna: it would have to be an eu policy, wouldn't it? gregory: i think if there was another crisis, that would be another reason why the eu fabric might be at risk. behind the doors, angela merkel will do whatever it takes to of her a crisis. -- of her a crisis -- avert a crisis. anna: as all the talk of contagion being overdone at the moment? gregory: for us it is tempest in a teakettle. if you look at emerging markets today versus when i started in the industry in 1997, there are huge differences. firstly, if you look at the amount of debt, let's just look at e.m. corporate debt. the amount of debt going into the asian crisis back then was about 100% of gdp. today it is half of that. the fx exposure of that debt

back then was 40% and today is 80% and continues to climb. there is a paper out by the fed that made the case that the amount of risky debt in that amount -- that same universe today is only 15%. anna: today we see the fx for the taking. it's interesting. perspective onnd turkey seem to differ from the conversation we had in the last hour. he was much more concerned about it and said it is bigger than lehman. you say germany will just come in and fix it, make sure that -- but that did not happen with lehman. could it be systemic? gregory: the reason lehman went down is because the fed decided they did not want lehman to continue. it's very different. that was very much a decision that the fed made, so not sure the parallel is fair. anna: when it comes to european

banks, some people have said this a lot we have seen in european banks is more just muscle memory rather than it being the same at all. f european banks selloff, do you see that as a buying opportunity? gregory: there has been a lot of analysts that have made the case that staying in spanish banks, a lot of exposure to turkey, a lot of those banks actually have not lent to their subsidiaries. they actually only have equity exposure. if they take of a little bit of a negative mark to market, i don't see that as material. what material is when you start lending money to companies. anna: i was under the understanding that is the situation for some of the european banks. some of the banks have stakes and turkish banks -- in turkish banks. let's move on the conversation a little bit.

the latter part of the week dominated by hopes about what happens in china and these trade talks. caught up in all of that is what we have seen in metals over the last week. we have seen a big selloff in a metal prices over the last several days. the has been an increase in volatility. it is the highest since january 2017. it's a big spike on my chart in terms of the volatility here. do you see room to make money out there with metals? if you are fairly relaxed about this potential crisis, do you seek exposure to global growth in this way? gregory: for me, copper is very much a reflection of the quickest way to express either very bullish view or there he bearish view. copper is one of the most volatile investments. if you look at the china story, that very much coincides with copper price. in terms of investment perspective, probably a more elegant approach to gaining on

exposure would be via chinese equities as opposed to getting involved in speculative future trades. anna: i've got a chart. we all know about the u.s. yield curve and the relentless flattening. look at it versus china's yield curve. does this give a signal that chinese equities should be outperforming u.s. equities are the rest of 2018 or into 2019? gregory: the first point is in terms of the u.s. yield curve, and this is information coming from actually the fed, the fed makes the case that actually we are not even close to an inversion. if you put the bonds back in, you would have another 100 bids to the 10 year. if you add that on top of that, if you look at history through all the recessions that have taken place, the s&p 500 index tends to rally an additional 30% over the course of the coming 15 inversion.after the

getting nervous about the inversion in the u.s. is not bounded just yet. foundednded just yet -- just yet. anna: a steeper curve in china, flatter curve in the united states, and yet we sit in a trade war where lots of people have said china is going to lose. gregory: according to the u.s. labor department, there is a deficit of something like 36,000 truckers in america. i don't think growth in america is at risk. same thing with nurses, computer programmers. the concept that we are at this cusp of potentially u.s. growth slowing dramatically -- anna: that's not a block on growth, then? gregory: what i am suggesting is

there is no significant risk to u.s. growth at the minute. all we see is unemployment continue to come down. anna: what about china? are there risk to chinese growth or are they both going to continue? gregory: it's very different. the chinese centralized government has much more control over the road picture whereas the u.s. has less control. the number one weapon the chinese government has is less about talk about desktop and negotiation -- talk and negotiations with trump. ettrickl yet to -- the -- theatric. you have seen the pboc reduced their repo rate, reduce regulations in terms of social funding. what happened? the cn white sold off -- cny sold off. the u.s. does not want -- the chinese yuan sold off. the chart -- the u.s. does not

want to see the chinese want selloff. thea has more control of pboc come on like the u.s. u.s. government controlling the fed. anna: thank you very much. ofgory perdon, co-cio arbuthnot latham. thanks for joining us. let's get back to the situation at ap moller-maersk. the company has just announced it is planning a separate listing on the nasdaq copenhagen. ms. go live to copenhagen, where matt miller is joined by the company's ceo. good morning. with soren skou, the ceo of ap moller-maersk. you have announced the spinoff. how will this work? it will be a demerger and the

moller holding will still have a giant chunk of the shares? soren: we are not planning to raise any capital so we will disperse all the shares to our current shareholders. why: my first question is not sell it? this business is doing well. oil prices do not look toppy. private equity has $1.7 trillion of capital that we are always hearing about. why not sell it? soren: we have spent almost two years on working to find solutions for our oil related businesses. aerskund a solution for m oil and tankers. we believe this is the option that would create the most value for our shareholders. reality is that there are many great companies in the drilling sector, that there are not a lot of companies with very strong balance sheet.

all of the other possible transactions involved some kind of merger, which effectively would mean that we would probably end up having more exposure, rather than less. we think this is a good solution and it will allow our shareholders hopefully to remain invested in a company that is well-capitalized and will do well in the coming years in the driven sector. -- drilling sector. matt: what does this mean for the drilling unit? there are 4000 employees that are very closely tied culturally, obviously, still to you. how is the outlook for drilling? soren: i think our colleagues in maersk would take some comfort from the fact that they will still have the main shareholders that they have from today. they have also made commitments to continue as a major shareholder in that company, so

the will remain part of maersk family, if you will. matt: how does it affect the shipping business? soren: i think from a balance sheet perspective, this transaction will be more or less get neutral. i think what is most important for our containers and shipping the just ask business, -- and logistics business, --. we are in the process of integrating our business units. we are in the middle of integrating --. we are in an industry that is severely challenged by lower freight rates and lots of geopolitical risk and trade tensions. it is really a matter of being able to focus 100% on the future of the company.

matt: let's get to that, the freight rate and trade tensions. you put out essentially a profit warning a couple of weeks ago. it is one of the few times i can remember seeing the market that up shares on a company -- bid up shares on a company that sends out a profit warning. soren: we also disclosed the key numbers for the second quarter. in the second quarter we were able to deliver numbers that were significantly above consensus. probably most important a, we were able to demonstrate in that quarter that we have regained control of our unit cost. we had a very poor first-quarter, when it comes to managing our costs. it was very much impacted by the fact that we took over -- in december of last year. we got out of a lot of new capacity. wrestle outable to

of that quite as fast as we would have liked. in the same quarter, we regained control of a unit costs. i think that is very important for this business. matt: at the same time as you are trying to integrate this big purchase, you have got to deal with these flareups in global trade. how volatile does that make your business? soren: right now the reality is if you look at the second quarter, container shipping market growth around 4%. we grew about 4.3%. on the ground it's not like we can see an impact on the volumes as we speak. also, the start to this third quarter from eight volume perspective in global trade has been quite good. in fact, it's probably -- we see access growth in the u.s. right now. so no impact on volumes get, but for -- yet, but for a businessman whose main goal is

to facilitate global trade, all of this talk about trade war, trade barriers, cannot be seen as good news. matt: let's try to get into that in more detail. we have the china-u.s. tariffs just now going into effect. you have got u.s.-european tariffs going into effect. you have a doubling of turkey fuel tariffs. what does the beginning of the third quarter look like for you? soren: for container volumes, pretty much no impact. the tariffs on steel and aluminum are not really impacting us settle. what's -- us at all. what's important for us is what happens with consumer growth. it's really hard to judge what the eventual impact will be. global supply chains are truly fragmented and quantitative -- complicated.

there would be substitution effects. if tariffs go up from one --ntry, i think that import we would try to source this product from another origin. parts of the tariff increases can be passed on to consumers. other people we have seen speculate on impact on global .3%e are in the .1 to percentage points impacted in the next few months. i would say quite limited impact. if the situation escalates and we get to $200 billion or $500 billion worth of goods that are impacted between china and the west, of course it will have an impact on our business. matt: how stable our freight rates then? one of the things your investors took solis in on august 7 -- solace in on august 7 is that freight rates were coming back

and stabilizing. is it difficult to get business into the third quarter with this trade war on the horizon? halfwaye are kind of through the third quarter by now, so we have actually quite good visibility on the third quarter. freight rates have -- you know, where reasonable at the beginning of the year. they have kind of dropped off a cliff in march and bottomed out in april, and have actually gone up by 30% since then. what you see right now is that the freight rate levels are relatively high for the year, and we still believe that they will remain so during the third quarter. this quarter is traditionally the high season for our industry because it is the christmas freight. we can see that volumes are good and strong. freight rates are holding. matt: fascinating stuff.

thank you so much for your time. soren skou, the ceo of ap moller-maersk. anna: thank you very much. bloomberg's matt miller joins the ceo of ap moller-maersk lived for us and copenhagen -- live for us in copenhagen. no impact yet in terms of the trade war, according to soren .kou after that, it's hard to say. there is uncertainty about passing costs to consumers, lots of unknowns. nejra: definitely a stock we will be watching when european equities open. it is looking to be a flat friday. we saw all three benchmarks gaining. that is it for "bloomberg daybreak: europe." "bloomberg markets: european open." is up next. tune into bloomberg radio live on your mobile device and d a be digital -- dab digital in the london area.

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>> welcome to "bloomberg markets: european open." i am guy johnson in london. matt miller is an copenhagen at the ap moller-maersk hq. matt: chinese markets are down, while the rest of asia rallies. i just spoke to soren skou. he told me about the spinoff. the gas trade -- he will tell -- we will talk more about that. the cash trade is less than 30 minutes away. ♪ guy: