francine: last days of may, the prime minister is set to announce her departure timetable. president trump says huawei could be part of a trade plan, but tariffs on nations that manipulate currencies maybe next. increasing trade concerns drive treasury yields down to 2017 lows. ♪ francine: welcome to "bloomberg: surveillance." this, of course, is francine lacqua in london.

we did see a mixed trading day when it came to the asian markets in europe. -- stocks here up here are up some 0.5%. president trump said he would consider an arrangement with huawei. at the same time, we are looking at possible new tariffs the u.s. was talking about nations that manipulate currencies. i am looking at the pound. the fate we hear about of theresa may and the premiership of the country. the u.s. 10 year is steady after the rally yesterday. coming up, we are joined by rupert harrison them achieve macro strategist at black rock. so he has intimate knowledge of the conservative party and the crossover with what the markets are doing. let's get straight to bloomberg first word news. >> president donald trump says china's while way -- huawei

could be part of a trade pact after they were put on a blacklist. despite the positive tone, he also said the company was quote very dangerous. the white house is seeking to choke the assets by limiting the sale of vital components to chinese companies. the trump administration is proposing tariffs on countries found to have undervalued their current. -- currencies. this furthers the u.s. assault on global trading rules. currently, no country meets the has aia, but this plan much broader view of the meeting of undervaluation. deutsche bank's top leadership is feeling the heat of shareholder either -- ire. the chair bear -- bore the brunt of the backlash. the capital is down from 84% last year.

they have had a rough few years with shares hitting an all-time low before the agm. there has reportedly been a tentative settlement related to hollywood producer harvey weinstein's sexual misconduct. his former studio board members and the new york attorney general's office agreed on a $44 million deal. most of the money would go to alleged victims, former employees, and the studios creditors. billionaire investor george soros is building a 3% stake in gam. the motives behind buying the stakes are not clear, but they had previously attacked the attention of bargain hunters. gam is reportedly reviving efforts to sell itself. wikileaks is blasting the trump administration for charging founder julian assange with espionage. it the end ofs

national security journalism and the first amendment. conspired tonge obtain and disclose classified information and one of the biggest intelligence breaches in american history. he is serving an almost one year prison term in the u.k. for jumping bail. global news, 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine: thank you so much, that the on -- viviana. theresa may is set to announce her timetable to quit, stepping down on june the 10th, remaining as caretaker prime minister while her successor is chosen. the race to succeed her will take off after president trump's state visit to britain, bringing to an end her turbulent three-year premiership. first, let's talk to rupert harrison, asked chief of staff to former chancellor harrison

and currently working at blackrock. thank you for coming on. what are we expecting today? were you surprised that theresa may said it was her duty to stay on? rupert: if you have been watching her, i don't think anyone would be surprised. this is the official starting gun on a leadership contest. we will have a couple of months with that will be settled. the real focus is boris johnson going to win? front-runner clear and can he make it over the finish line? francine: the question is what we have a pro brexit prime minister? and does that change the outcome of a possible brexit? is the theresa may going trigger for a series of events that will be negative for the u.k..

the range of potential outcomes is extremely wide. i would say the probabilities at the extremes are higher than at the middle. it is hard to see how you would get a negotiated brexit. it is easier to see a root -- route to a no deal brexit or a pro brexit. prime have a new minister, they will attempt to renegotiate and i don't think anybody will be surprised to not see that generated very much. and you have a prime minister in direct conflict with the house of commons. there will be a procedural question about whether the house of commons can prevent a no deal. then, i think the main risk will either be an election or some attempt to avoid an election. francine: let's talk more about exactly what is happening today. let's get straight to anna

edwards. what is the timetable today? will she voluntarily set the timetable or will she be forced to go? , she isght, well meeting brady this morning. to her to confirm the timetable would have been reporting overnight. it seems she wants to not resign until june 10. visitingresident trump the u.k. and a small election in eastern england and an event celebrating 75 years since the d-day landing. that, she wants sustained as the caretaker prime minister whilst the competition to replace her is underway. let's remind ourselves, that is a two-stage competition. it starts in the house of commons and then moves to membership. so we expect the candidates to

try to appeal to those rather two different constituencies. it could take until the end of july or slightly beyond. francine: what are the chances of war stance -- of boris johnson not making it? the thing about these elections is the lead cap never gets the prize in the end. i think it is quite likely -- lead candidate never gets the prize in the end. i think it is quite likely he will. there are two things in the way, one is the scandals. he has not been shy about the scandals and does not seem to suffer, but it is possible something like that trips him up. the more substantial one is the risk of an election. there are a lot of conservative mps who do not want an election. they are worried about the prospect of a jeremy corbyn-led

government and the implications for brexit. behink other candidates will saying that if you choose boris, you are guaranteeing an election. francine: anna, what are the chances of a second referendum? anna: it is something that has been part of the conversation over recent days. just earlier this week, it was it was top of a second referendum that pushed theresa may into the spotlight. unpopular was the idea of a second referendum, and indeed, within parts of her cabinet. it is something that many will try to prevent. but as we are hearing now, it does seem as if chances of a no deal exit might increase. and does that happen through a second referendum? as you said, those tail risks are increasing. francine: what does it mean for the market? anna: i think it means two things -- quilvest i think it

means two things -- rupert: i think it means two things. we have had sterling testing lows against the dollar. come,is still downside to the market has clearly priced heard archer but not the prospect of a boris johnson premiership. that news flow is likely to be negative. longer-term, we need to think about volatility. the probability around these extremes has gone up. a very big moves to the upside, or in a no-deal to the scenario, big moves to the downside. there could be big moves on volatility. francine: we will look at a vix chart and the pound as well as euro-sterling. thank you very much, rupert harrison from blackrock stays with us. the most read story, latest salvos in the trade war. number two, traders swing in

overnight sessions. mayd, the latest on theresa as she is set to announce her departure. we will plenty more on all of those stories next. this is bloomberg. ♪ -- we will have plenty more on all of those stories next. this is bloomberg. ♪

francine: pictures of number 10 downing street, our reporters are on the ground, china to figure out what happens to's theresa may -- two theresa may next. theresa may next.

putting the future of brexit in doubt. tom is also worried about the cat, they are not attached to the prime minister. so just for tom keene, don't worry, the cap stays. -- the cat stays. what can investors expect from u.k. monetary policy? mark carney said that the current curve shows one rate hike over the next three years was unequal to the banks reading. investors can expect no hikes from now until 2020. we are back with rupert harrison from blackrock, also former chief of staff to osborne. -- rupert: markets are averaging out some very different possibilities. if we get some resolution of the

difficulties, then mark carney's warnings will start to the .riced by markets this is not look like an economy that deserves some sort of easing of a it will be over a two or three your horizon. if we get a no-deal brexit, all bets are off. we have seen the playbook before and we should focus -- and we look at the underlying economics . volatility in the pound is always hard understand with all of the underlying factors. is that through the summer or on a two october? october. rupert: we need time for a leadership election. it can be condensed -- francine: so, early august?

rupert: late july, august, yet -- yep. then we have a prime minister going to europe, to brussels to attempt a renegotiation. that process needs to be allowed to play out. my expectations would be very low for any substantive change. francine: first, there will be a new commission in place and a new infrastructure for the eu. that brings us to october? doert: the new commissioners not take their seats until the first of november, so we will have a discussion with the likely candidates and some of the leaders in europe. ironies is that if you get boris johnson, one of the first apps might be to go to the european union and ask for another extension. then we get into where the volatility starts to come from.

given that you are not going to get a renegotiation of any real substance, are you going to get a government that goes for no deal? through get a no deal without being blocked by the house of commons? that opens up these tail risks where you get a genuine no-deal were a referendum. year is when we could start to see volatility start to get priced because you get a wide range of outcomes. francine: i am literally doing the chart as rupert is talking. a lot of possibilities. let's say boris johnson says we want a no-deal, would you take -- would you take the risk of an election? rupert: there are two ways it can happen. first is the prime minister chooses to have an election, that is what happened in 2017. if they said they need an election, they would likely get the majority to do that.

there is also a scenario where it happens against the wishes of the prime minister, particularly if they have set them on a path to no deal. 8-10ou need is conservative mps to vote against the government to bring down the government. then you could get an accidental election. boris, havingfor finally become prime minister, do you really want to risk it all on an election? thecine: do think there is risk of a no deal brexit at all? no brexit cank only really happen as an outcome through some democratic event. election,we get an the labor-led government has a referendum. or a slightly strange scenario of a brexiteer conservative prime minister saying let's have a referendum. those the only ways i think you could get no brexit.

francine: thank you very much, rupert harrison from blackrock stays with us. up next, john smith, the exclusive interview of the year. i's founder and chief executive set down with tom mackenzie in a shenzhen -- in s henzhen. , theresa may plans to quit as tory leader. we are all over the story with on-the-ground reporting. you can see pictures of downing street them every time the door opens, rupert takes a breath -- downing street. every time the door opens, rupert takes a breath. this is bloomberg. ♪

francine: this is "bloomberg: surveillance." economics, finance, and politics. we are looking at pictures of downing street as theresa may plans to quit as tory leader. we understand an election to choose her replacement begins june 10. party bosses hope to have a leader in place by the end of july. the result will shape the direction of brexit. all options now seem to be back on the table, we are trying to figure out exactly what that means. let's focus on bonds. disappointing economic data helps drive the 10 year down to

its lowest level since 2017. still with us is rupert harrison from blackrock. when you look at the 10 year -0.1, what does this tell us about what is distorted out there in fixed income? rupert: it tells us we are in a new, lower range. if we go back a couple of weeks, i think we saw yields having because ofd rising an understanding that the global trade cycle was bottoming. some of the internals we have seen suggest that asian-european-global trade dynamic is starting to bottom. since it has come in, we have seen yields reset because they are factoring in more risks. i think the more likely ,irection of yields is that

because it is not justified by recent policy and has a missing about the direction of global .rowth do you think it is related to tariffs in the second half of the year? rupert: we agree with the fed about transitory pressures. cheap, we should see those rising as we get those effects coming up. it is inoned bunds, europe whether pricing looks most extreme. i do not think these are justified by fundamentals in europe. if we do see more evidence of a bottoming, we should see the yields rising. it will not be a v-shaped recovery, it will be a long, slow u shape. francine: this is a great

snapshot, looking at yields across the world. but the market does not believe european data is getting better. rupert: it doesn't, i think the market is looking in the rearview mirror when it comes to europe. understandably so, because we have seen six months where people have expected bottoming and have been consistently disappointed. alsoata yesterday was disappointing, even though the fundamentals are not too bad. francine: coming up, trump weaponize is american exports, blacklisting huawei. the beginning of what is to come in the u.s.-china trade were. we talk about that next -- war. we talk about that next. this is bloomberg. ♪

francine: the last days of may, the prime minister looks to the

future. huaweint trump says could be part of the china trade pact. an increasing trade concerns drive treasury yields down to 2017 lows. this is bloomberg surveillance. i'm francine lacqua. all of her brexit and the possible timetable of the resignation of theresa may. ofs is data for the month april. they are down 0.2% instead of down 0.5% we were expecting. the data does seem a lot better when it comes to retail sales for the month of april. if you look at retail sales including fuel, 5.2 instead of the 4.5.

pound at the moment seems to be focused a lot on what happens with brexit. barely budging. >> rallies plunging down nearly 42%. they really just opened at the end of the last hour. and now have about six months to come up with a plan, a restructuring of debt. many people are saying that this be bargain shopping. jpmorgan says now would be time to buy stocks. and we could see short covering for the stocks. and royal mail up

about 2.75%. goldman sachs has them on a buy. francine: those were some of the main movers in today's trading session. the holding makes the 88-year-old billionaire investor a top 10 shareholder. shares are up 9% this morning with the stock has lost about 75% of its value this year. patrick, great to speak to you this morning. this took me by surprise. does it take the market by surprise? patrick: it is definitely a not one. why is george soros investing in gam? we found out through a bare-bones statement that we don't have many more details so far.

but this company has been in trouble. the whole thing exploded when they suspended the staff fund manager last july. they can it seems like get control of the situation. things seem to be perking up for them. soros? approval from should people be comfortable about this? francine: you said this is a seal of approval and good for gam. but will he take a more active role giving advice? or is it just pure shareholder? patrick: it seems to be pure shareholding. there is nothing to suggest that he will take of rotc at this point in time. it seems like he's definitely bought the shares. he's not shorting them.

it is long investment. he's sitting there holding the shares. there have been rumors that gam is up for sale. and perhaps later in the year they find a match. francine: patrick winters, our financial reporter in zurich. now let's get to viviana hurtado. viviana: deutsche bank feeling the heat of shareholder ire. the brunt of the backlash, investors are still active with 72% of the share capital. it is down more than 84% last year. deutsche bank has had a rough few years with shares hitting an .ll-time low before facebook says it removed more than 2 billion fake accounts. shows the number

company is battling an avalanche of bad actors. majority are removed within minutes of being cabrini -- being created. they are not counted in the daily user metric. are toopeople ask if we big, a lot of them come from concerns about whether we are doing our part to be responsible about safety, privacy, and that is why we are showing people that we are being responsible. ecb projections see an upturn later in the year. a centralcording to banker. investors are generous about the next round of bank loans. >> i am quite confident that people are on the right track. that what is happening is in line with the curves.

60 star link satellites launched by spacex. the shock nine rocket that fromes them blasted off cape canaveral at 10 p.m. local time. this is a step in elon musk's vision to provide broadband services around the world. musk says this is an important for -- source of funding for spacex. global news 24 hours a day on-air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. the u.s. and china are going to toe in their fight over trade. president trump is swinging away with tariffs and blacklisting huawei. jingping is promising retaliation. to judgewe are going

who is winning between the u.s. and china, we might as well start with trumps metric. he says there is one that shows if the u.s. is winning or losing. he tweets and talked about it a lot. that's the trade deficit. by a.s. is still behind particular margin but it has definitely narrowed. there is debate about if this is a useful metric. turn to inflation. the trade war driven inflation showing their prices increased about 1.6% since last july compared to other categories and blue. blue.er categories in it doesn't have an effect on this picture because it impacts more industrial and not end-use products. china and the u.s., consumer confidence and retail sales did

something similar. consumer confidence rebounded. when you look at retail sales, you can see that they both weekend -- weakened. this is a draw. the yuan slumped in the last year versus the dollar. it gives them a cushion against tariffs. on -- a weaker yuan connotationsbad for the chinese economy. it is a draw, 3-3. we are still waiting to see who comes out on top of the trade war. great charts from dani burger who will bring us the next round of the trade war. fromt harrison is here blackrock. when did we find out this week?

you are expecting this to bottom out, for things not to get more ugly? the dollar macro impact even given the elevated trade risks will be relatively small. there are parts of the global macroeconomy where we know uncertainty hits investors. the cycle could be back. the broad sources of demand and the big drivers of global economy should not be directly affected by this. this is more of an issue for margins. that is why equity markets are trying to figure out the longer-term impacts. talk to me about the u.s. consumer. how much of a hit will they have? rupert: i think it is manageable. u.s., we'rein the 1.3% of gdp.to

it is a very large economy so it is a significant effect. it in the grand scheme of things, it is not that large. there is a prolonged uncertainty. it will have an impact on. -- on capex. there is the up and if they can do a deal. and then there is a longer track desireround the u.s.'s to separate technology and supply chains from china. that is something i think will be going on for a very long time. francine: the link to all this is what equities do. i brought it back five years. parte asking guests to be of the markets blog. 2700the s&p 500 trade at or 2950? up or down? rupert: on balance, up.

we are in a more volatile market for some time, driven by trade. and the supplych chain linkages will be particularly vulnerable to the longer-term concerns. still areentally, we in that moderate risk-on position. after a very deep pit to global trade, that would be on the sale for one-year horizon. when there is a recession that hits whether it is 18 months or 24 months from now, do central banks have the tools to deal with it? rupert: that is a very major concern. the next recession could be 18 months or several years if we get this repeated attempt by

central banks to prolong the cycle. in that context of a very long recession will be very difficult, particularly in europe. at blackat scares us rock, that we don't have a plan b from the ecb. we still have significant vulnerabilities, combining those with different political dynamics. i think that is a significant vulnerability. coming up, the second round in a clash between the world's largest economies. it is with the u.s. or china has chalked up more points in the trade war. and to the point that rupert was saying that if europe was really the most vulnerable. this is bloomberg. ♪

this is bloomberg surveillance. i'm francine lacqua in london. there he is, larry the cat. that will make tom happy. i don't know if he's been briefed right now as we speak. rupert: looking like you might be worried. tom: he's always worried. rupert: this is the treasury cat. francine: it's funny to watch. a trade war, the matchup between the u.s. and china. we are at a draw. president trump's trade deficit has begun to hit american consumers.

now we go to dani burger. dani: i want you i would be back. in this round, i would turn to markets. complex to talk about the u.s. equity market. in both the u.s. and china, equities have slumped over the past year. in china, it was definitely more extreme in the blue. slump, fourt a 25% times the decline as the u.s. this score goes to trump. then when we look at the economic picture, both economies showing signs of weakness. but we normalize it, china appears to be slowing more than the u.s. which is in the blue. but if tariffs begin to hit growth, xi has more firepower. this is a win for the u.s. but one worth watching because the picture could change. foreign investment is another

important category. the decline is really marginal. you can barely even notice it on the chart. if you look at china, this is more than an 80% slump. $5 billion last year compared to 29 billion in 2017. chalk one up for china. with all these charts, we have the u.s. five, china for. hina 4.u.s. 5, c but there is no clear winner. it seems that everyone pays the price when you have this kind of trade war. burger with the latest scorecard. let's get the latest on india reelecting prime minister modi. setnation's economy looks for a major boost to the party. they are handing out money to build roadways and

infrastructure, boosting manufacturing. how should investors be positioned? rupert, we are getting breaking news out of the u.k. u.k.derstand that the prime minister will make a statement around 10:05 a.m. u.k. time. in around 15 minutes, we expect the prime minister to make a statement. we don't know if she's met with the 1922 committee. rupert: this is it. she will set out her timetable. trying her, it is about to manage the exit in the most dignified way possible. francine: who does she listen to? rupert: there is the core group like the chief of staff. it is a very small group now. does the market react?

market react if she resigns today? or if she set the timetable for june 10. rupert: the markets have priced in theresa may so it will be more about what the candidates around no deally elections and referendums. francine: let's go back to emerging markets. we had this landslide win for modi. he is there for five years, he can do some much. what if he disappoints? rupert: look at the stock market, look at the currency. i think that the problem now looking forward is that there will be a bit of a hangover from some of the promises that we've made. there will be pressure on the

fiscal situation in india. there will be some nervousness around that. i think that people will be looking to see if he will change his style. and we see that from time to time, the prime minister we understand will give the speech in about 15 minutes from now. they are getting ready. we have our reporters on the live images.ing we will be back with rupert harrison and talk more about brexit. this is bloomberg. ♪

economics, finance, politics. it feels like we're doing a lot of politics. i am francine look in london. new set of downing street, we did see a little bit of lighthearted mood a larry fink at being brought inside. according to the daily mail, we

expect a statement from the prime minister at 10:05 a.m. local time. minutes. about 10 rupert harris it understands politics because he was right next-door at number 11 for many years. first, the lectern. because of the way it has been set up, this is the prime minister? when you have a lectern, does it have a government could of arms? if it does, it means that she is speaking is prime minister rather than party leader. she will talk about her position as prime minister and the timetable. we may have to wait until next week for that. secretarythe former was on bbc a couple of minutes ago wanting to allow the prime minister some time. if you were a pre-brexit candidate, do you want her to stay a little bit longer or do you want her to go today? thert: the expectation and

hope is that she will remain prime minister while the elections are going on. there has been a little bit of speculation that you have a caretaker prime minister who is said to be the deputy at the moment. she wants to go and had enough. francine: is the daily mail is right, we're hearing from theresa may making a statement around 10:00 a.m. is she going voluntarily? rupert: no. she wanted to deliver brexit. go back to the beginning of her premiership, she came in with aspirations around wanting this domestic agenda burning with the speech.

that has gradually fallen away as brexit consumed everything. she wanted to have the prime minister bring brexit through. that has been the guiding staff. francine: and we have a live blog going on the bloomberg terminal. week, nash at this point, she is referring to parliament where she hasn't had a majority since 2016. we're looking at downing street were the prime minister is about to give a speech. this is bloomberg. ♪

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the u.k. prime minister set to announce her departure timetable after backlash to her brexit plan grows. we are live at downing street with the prime minister speaking shortly. president trump says huawei could be part of the china trade pact but nations that manipulate their currencies may be next. go?low can they increasing trade concerns drive treasury yields down to 2017 lows. good morning, everyone. i'm francine lacqua in london. tom, we are a little bit distracted. we found out that prime minister theresa may will give a speech, coming up shortly. any moment, the prime minister could come out of number 10 and go to the lectern. harrison reminded me that she comes out as prime minister because you can see the coat of arms. tom, are you there? we are looking at brexit. tom: i thought you were going to

rupert, excuse me. francine: that timetable of what she has announced. but we are three years on from the referendum. still no clear path for what brexit actually means. no deal is back on the table and the prospect being abandoned, it is still back on the table. i urge everyone with a bloomberg terminal to go check out the fabulous blog by emmitt thomas. edwards let's go to an at 10 downing street. an extraordinary moment. what is the distinction and the moment at 10 downing? >> election has emerged, so that is the final clue that you need, really. the fact that the prime minister will make a speech shortly. she said out her timetable today. that she will be

leading the rank-and-file tory lawmakers. wanted to get an agreement to her timetable so as the international media gathers, we are waiting to hear if she will stay on. if she will stay on as caretaker through the process. tom: because it is so early in the morning, i will give you more united kingdom questions. . guess all of these presumptive prime minister's will be watching this moment. what will prime minister johnson be listening for as the prime minister speaks to the nation? >> they will be listening this morning just like everybody else is for the confirmation of the timetable. and when we know the timetable, we will be able to know how quickly we will find a new prime minister.

it might take some time to whittle that down. go toen we see the final the members of the conservative party for the final judgment. theresa may got her position much more quickly. the final members of theresa may's team together here in downing street. everybody waiting to get confirmation of the timetable here. how quickly will she be leaving? with the last days of may come in may or june? bring in rupert harrison who understands the way that politics works and the intricacies of the conservative party. we were just listening to steve baker on the bbc saying that there is no escaping it. may fail thata

this? is in the policy -- is it the policy? is it the parliament? is it the way she negotiates? rupert: she faces a parliament that does not add up. she faces a fundamental choice that the country has not really had a fully informed debate about. i think the second was the election in 2017. that is the key moment where ownership went wrong. it made her life much harder. if prime minister herself has failed to rise to the occasion. francine: there she is, the prime minister of the u.k. let's listen in as she talks. may: i have striven to make the united kingdom a country that works not just for the privileged few, but for everyone. and to honor the result of the

eu referendum. back in 2016, we gave the british people a choice. against all predictions, the british people voted to leave the european union. i feel a certain today as i did three years ago that in a democracy, if you give people a choice, you have a duty to implement what they decide. i have done my best to do that. i negotiated the terms of our exit and a new relationship with our closest neighbors that projects -- protects jobs, our security, and our union. i have done every thing i can to back that deal. sadly, i have not been able to do so. i tried three times. it is now clear to me than it is in the best interest of the country for a new prime minister to lead that effort.

i willnouncing that resign as leader of the conservative and unionist party so that a june 7 successor can be chosen. theree with the chairman of 1922 committee that the process for electing a new leader should begin in the following week. i have kept her majesty the queen fully informed of my intentions. as hercontinue to serve prime minister until the process has concluded. it is and will always remain a matter of deep regret to me that i have not been able to deliver brexit. it will be to my successor to honor the result of the referendum. succeed, he or she will have to find consensus in parliament where i have not. such a consensus can only be reached if those on all sides of the debate are willing to compromise.

for many years, the great humanitarian nicholas winton who saved the lives of hundreds of children by arranging their evacuation from nazi occupied czechoslovakia through the candor transport with my constituent in maidenhead. in the controversial years before his death, he took me aside and gave me a piece of advice. he said, never forget that compromise is not a dirty word. life depends on compromise. he was right. as we strive to find the , whether towe need deliver brexit or restore government in northern ireland, we muster member what brought us here. the referendum was not just a call to leave the eu, but for a profound change in our country. a call to make the united kingdom a country that truly

works for everyone. i am proud of the progress we have made over the last three years. the work thatted david cameron and george osborne started. the deficit is almost eliminated. the national debt is falling and we are bringing an end to austerity. my focuses on ensuring that the good jobs of the future will be created in communities across the whole country, not just in london and in the southeast. we have helped more people than ever enjoy the security of a job. we are building more homes in helping first-time buyers onto the housing market so that young people can enjoy the opportunities their parents did. and we are protecting the environment, a limiting plastic waste, tackling climate change, and improving air quality. this is what a decent, moderate,

and patriotic conservative government can achieve. even as we tackle the biggest peacetime challenge any government has faced. i know the conservative party can renew itself in the years ahead. that we can deliver brexit and serve the british people with policies inspired by our values. security, freedom, and opportunity. those values have guided me throughout my career. but the unique privilege of this office is to use this platform to give a voice to the voiceless. to fight the injustices that scar our society. it is why i am ending the lottery for survivors of domestic abuse. it is why the race disparity audit and gender pay reporting are shining a light on inequality so it has nowhere to hide.

is why i set up the independent public inquiry into to tragedy at grenfell tower search for the truth so that nothing like that can never happen again. so that the people that lost their lives that night are never .srgountry is a union not just a family of four nations, but a nation of people, all of us. whatever our background, the color of our skin, or who we love, we stand together. and together, we have a great future. politics may be under strain, but there is so much that is good about this country. so much to be proud of. so much to be optimistic about. i will shortly leave the job that has been the honor of my life to hold. the second female prime minister, but certainly not the last.

so was no ill will but with enormous and enduring gratitude to have had the opportunity to serve the country i love. francine: a very emotional prime minister in front of 10 downing street. a lot of the markets and people watching from the policy side will be taking that in. she is talking about a compromise. her voice breaking at the end as she was very emotional. one of the things that struck me was compromise. if you look at the leadership who will take over the conservative party, she really told the next person in charge that they will have to find a way of bringing them together when she has failed. while she was speaking, i went back and looked at david cameron's speech on june 24 in

2016. he went down in flames with the brexit vote. he talked about studying the ship. steadying the ship. you wonder how the ship is made steady as they stagger out of may and into june. francine: let's get straight to anna edwards who has been covering this from the very beginning and is the bloomberg anchor of the european open. it was so emotional at the end. distill the difficulty of her job at the difficulty of the person that will take over the tory party? anna: absolutely. you saw the emotion on her face at the end. reflecting ony some of the things that she planned to do and some of the things that she wanted to do away from the brexit agenda.

offer she was not able to -- to reflect the will of the people. she tried three times to get her deal through parliament and was not able to do so. we start talking about what it means. we have more details on the date. we knew that she wanted to resign on the 10th of june. it does not change the underlying story which is the search for a new prime minister goes on. to run in the background and slightly more in the foreground in the weeks ahead. we see this moment in the united kingdom and we have to on into the afternoon and the weekend. what happens to the dominant majority conservative party? what does johnson do or what does -- what did the others do? thing to the important

remember is that the house of commons doesn't really change. somewill come up against of the same difficult things that prime minister may did. one of her constituents advisor that compromise is not a dirty word. there is a question about to what extent parliament can find compromise here and get any kind of brexit through. theere talking about how extremes, either no brexit at all or a new deal brexit -- or a new deal brexit -- or a no deal brexit, if it can be delivered by the u.k. government. francine: how many contenders are there to lead the conservative party? anna: that is a very good question. they have not all come out of the woodwork i'm sure. boris johnson has said that he will stand up.

others have said that they might but boris johnson remains the front-runner. hunt, the foreign secretary. dominic rabb. the home secretary may stand. anybody in the party can stand. they just need to colleagues to nominate them and once they have done that, they hope that they went over the support of their colleagues. it'll give put to the membership of the tory party. prime minister may announce in her resignation, the date coming in from june 10 to june 7. with allsh pound and the anticipation, it really may not move all that much. that is a bit of a deceptive chart. we are hugely advantaged this

morning with the perspective of rupert harrison. osborne, far and away. he has an encyclopedic knowledge of the conservative parlay and labor politics. rupert, i find extraordinary the moment in the compare and contrast with david cameron walking out ages ago saying i am done, it's over. let's move on. prime minister may is done, but has she damaged the party and the nation by the long, drawn out process it took to get to this moment? rupert: the thing that unites is that they have been brought down by the question of europe. will the same thing happened to whoever takes over for theresa may? in terms of the damage being done, i think theresa may sort of has a patriotic duty to deliver on the outcome of the

referendum. the election she called in 2017 is really the moment where that job became effectively impossible. running down the clock against an impossible arithmetic. negotiate ane to exit agreement with the european union. that agreement still sits there as the central point now for any discussion around this process because that has shown what is negotiable. is that the choice? the speech that we heard just moments ago, the outburst of emotions was really quite uncharacteristic but let's talk about the rivals. boris johnson is the favorite so far? is, in a sense, holding the main base. -- ming vase.

he just needs to not be tripped up by some revelation. conservative mps will be talking about it a lot. , are wes decision heading for election? they are worried about seats. they are worried about jeremy corbyn. the question for brexit contenders is, how will you deliver on a no deal if you have a majority party against it? francine: let's go back to patrick armstrong who was listening to the speech with us. what does this mean for the markets? we are almost back to square one except we know what parliament thanks. that we i don't know are where we were because the soft brexit deal was a base case. the new referendum and remain are at an increasing probability. you will probably get a leader of the conservative party that

is a hard brexit. but how do you get that through parliament? and might be elected as leader of the conservative party and difficult to see how you get parliamentary agreement. rupert harrison, the smartest thing of heard in the last week was from terrestrial -- was from raf rafael that this was a minority government and she had the power of a minority government. does the new prime minister have a minority government or can they dream of a conservative majority? they inherit the same parliamentary arithmetic. the same arithmetic and the same state of play with the european union and the same sour national mood. those three things are not going to change. undoubtedly, all of the

candidates will say that i will go back to brussels and i will get a better deal. i don't think anybody expects anything to change in a deal. it is really about parliamentary tactics. does the prime minister set no deal as the explicit goal of government policy? tom: right. let's cut to the chase, dr. harrison. -- wolfgangh how has predicted the likelihood of a no deal. are we closer to a no deal with the prime minister's statement this morning? think we are. her statement around compromise was a call to arms and also a warning to her successor and everyone in parliament. mood is they the opposite of compromise. everything is about how do we deliver the no deal brexit.

i think the probability has definitely gone up. tom: francine and i were flabbergasted by the comments the other day, a giant of the and his courage in hong kong decades ago. he was scathing in his criticism of mr. johnson. what will happen day one of the government of prime minister johnson? rupert: those sentiments you will hear in private from a lot of conservative mps. any were not impressed by his performance as foreign secretary. bey of those same mps will voting for bastad to as leader because they want to back a winner. they're worried about nigel farage and the brexit party. if he becomes prime minister, he will make a play to reach across and build a government that unites the party.

ultimately, he faces a very difficult choice. it would be a challenge for any prime minister. will have to rise to the challenge. those communication skills are sorely needed. go back to anna edwards for the international audience to explain and put in context with the process is to elect a new conservative leader. parliament has the first say. then they whittle it down to two candidates? parliament goes first and they narrow it down to the final two. the eu has been emphasizing many of these candidates trying to bring a party together. they will be trying to walk that line and try to appeal to party membership. the partyat many in membership themselves are very pro-brexit.

some of them are pro-no deal. according to recent polling data, they are pro-no deal. many of these contestants are going to be really mindful of that. and how they sell that message, there could be a few things in the messaging that could spook the markets. francine: rupert, boris johnson's election was pretty decisive. how does he position himself? i have heard that he is an obvious leader for the conservative party because you don't know the policies he will go after. is that right? rupert: i certainly agree that the first stage of winning the np is about appealing to the center. the second stage will be appealing to the membership. at heart, he is still a one nation conservative. since he was talking about immigration and a hard brexit,

he will remind the party that he is still a centrist. environmentalist. he believes in bringing the country together. towill be looking to appeal centrists like amber riley -- amber rudd. then he can boris, show that as a strategy. a special edition, the resignation of the prime minister of the united kingdom. rupert harrison of blackrock, his public service to the nation. asrick armstrong with us well. we're thrilled he could join us today. let us listen, moments ago, to the prime minister. prime minister may: i am announcing i will be resigning as leader of the conservative and unionist party on friday, the seven of june to that a

successor can be chosen. at 10nd also with us downing street's anna edwards who has done a wonderful job the recent months, giving perspective. america,a phrase in lame-duck. define a lame-duck prime minister may. : that will be interesting from a transatlantic perspective. where she iseriod still prime minister. president trump will be here. a lame-duck prime minister at a time and the president of the united states visits. the president has made it clear who he wants to succeed. he likes boris johnson. he told us that last time he was in town. it will add an interesting dynamic. be staying onnly

through the seven of june, she will stay on as caretaker until a new prime minister has been found. it could take two july or longer. or longer.ough july francine: we're also hearing from folks saying that her departure will not solve brexit. the market is now starting to think about jeremy corbyn. if boris johnson does become , what about fresh elections? patrick: boris johnson is going from the conservative party to be elected and it will be about delivering his version of what brexit is. if you can't get that through parliament, if parliament keeps insisting that you need another

extension and you can't get that to go through, the conclusion is another general election. you hope to get your version of brexit through. i think it is becoming an increasingly likely possibility now. would boris johnson actually put a no deal brexit s policy? >> i think it is very likely. i think it will be an attempt for renegotiation. the parameters are likely to change. leadership election would put pressure on all the candidates to say yes, i will go for no deal. that is absolutely the mood of the party membership. i think that there is a procedural question about if block oft could really prime minister absolutely intent on no deal.

but there are no procedural ways for parliament to implement no deal. the speaker showed a willingness to find a way to allow parliament to have say. have no deal as policy in conflict with parliament, then the question for boris johnson is, having finally achieved his lifetime goal -- his ambition was to be world king. zero he really going to risk all that hewithin months callista jeremy corbyn or will he desperately try to find more extensions, more negotiations. tom: what did you learn from mayor johnson? it is wanting to talk about it or write in the telegraph.

about primewe know minister johnson from studying mayor johnson a few years ago? rupert: the thing that he will try to persuade the center part of the conservative party is that while he was mayor, his profile was someone who is liberal, internationalist, pro-immigration, a social liberal, someone the cared about inequality. is something he will be emphasizing to his fellow mps over the next few weeks. the other thing is sort of the manner of leadership. he is not a detailed guy, right? he is a big picture person. he had people that did the details for him. a milton and when he died, eddie lister took over. he provided the high-level guidance and that kind of

communication and entertainment. tom: i like the idea of a detailed person. let's go to anna edwards. is there anyone left in the cabinet? who has been advising prime minister may? anna: she was just getting ready and delivering that speech, and her husband was here. she has lost a number of cabinet members as you say. that has been one of the reasons why she has had to go, the amount of pressure through cabinet resignations and quiet words given to her. of orest johnson that was much more internationalist -- boris johnson that was much more internationalist when he was mayor, some in the party will find it hard to see him in the light -- that light, given

what he says about muslim women and iran. he has assembled quite a big war chest of cash to throw behind this leadership challenge. francine: a lot of people are quote,by theresa may's saying that compromise is not a dirty word. the prime minister leaving change the arithmetic in parliament? with such an emotional speech saying, i tried everything, it just did not work, when she get behind us what they get behind something similar to this withdrawal agreement? rupert: i think her statement about compromise was as much a warning, you are risking no deal and an election. it is hard to see the compromise emerging. it would need either the labour party saying, we will work with

you and maybe compromise on some of our redlines. i do not see that happening. hard-corehe 25 pro-brexit conservative mps who did not vote for theresa may's deal, will they vote for a similar deal because boris johnson is prime minister? hard to imagine. , andine: rupert harrison anna edwards live at downing street. we will be back with patrick armstrong and we will look at pound. tom: the pound moving fractionally higher, stronger pound over the last 12 hours or so after a really ugly set of days. weaker.1 days euro-sterling weaker, cable weaker. grinding lower yields across europe. the swiss 20 year comes in.

in the united states, futures up 16 this morning. special coverage of the political turmoil of the united kingdom, this is bloomberg. ♪

♪ tom: bloomberg "surveillance," not an ordinary friday. francine lacqua in a historic london, tom keene in new york. the president of the united states will visit a lame-duck theresa may when he travels to london on june 3 and fourth. she will resign. widely anticipated.

toing the date, june 10, up june 7, that is the one little surprise. francine: you could argue the prime minister, because of the power parliament has had dealing with brexit, has been a lame-duck for quite some time but now britain has a caretaker prime minister. this is different in terms of positioning off of parliament. we are expecting to have a lot of candidates, about 20, vying for the top job. we do not know what that means. emma ross thomas says the saga is just starting. caretaker, that is so much more graceful than lame-duck. we need to get smarter, patrick armstrong with us. this on the investment we see, sterling remarkably stable.

we are thrilled to bring you someone who has been thinking about the original power politics of the united kingdom, europeger in a changing initiative. thrilled to have you with us. "game ofu playoff thrones," but the idea of changing power comes when the ravens fly in with that piece of paper. andh ravens flew in today, how does that change the power for the people who want to replace prime minister may? alan: over the last couple of weeks, we have seen boris johnson increase his probability of becoming the next prime minister because the political dynamics swirling around the conservative party are favorable to a candidate that can be seen to unite the whole of the right of british politics. boris johnson is the only

candidate who can say with any strength or evidence behind him, that he can bring back those people who over the last few weeks has been moving towards nigel farage. tom: does he have a leg up, plus, because he has executive experience as the mayor of london? up because of leg that former administration scale? alan: it is seen as so long ago and a different sort of boris johnson, he has moved away from that previous role as mayor of london, a heavily remained area. he is now a heavily unpopular politician in the capital, and his strength is the ability to votect that brexit already , right of the conservative party. ifty members will decide

there is 100,000 people across the u.k. in the south of england who favor a no deal brexit, and that is a different boris johnson than the one that was in charge of london, bringing ian energy policy and cleaner air and all of these softer conservativeness. francine: we are focusing so much on boris johnson, who well should we be watching for? patrick: boris clearly in the lead. a list ofill be probably six or seven that will get down to three or four, and then two. francine: if there is a boris johnson against a remainder, boris johnson gets it? patrick: for the conservative party, you need to be a brexiteer. francine: he needs that support from parliament. patrick: i think the winning strategy in round one is being

very hard brexit, but that does not get your job done once you are prime minister. you have to change your rhetoric and try to move towards compromise once you are in as p.m. tom: we want to go to a european perspective. tadeo in the halls of the european union has seen the changes over the recent months, of a steadfastness out of europe. what will change from mr. uecker and mr. tesch mr. junker and mr. cker and mr.un barnier? maria: three years after the referendum, the u.k. does not know what kind of relationship at wants what the european union and they think it will not change with a new prime minister.

if we get a euro skeptic, the europeans have no intention to play ball. what happens to the halloween deadline? that was agreed with prime minister may. remember very quickly that emmanuel macron said there was no point extending this deadline because the u.k. will lead to a no deal brexit. tom: we need to be delicate with the european union elections, so we will tip lightly around the president -- present elections. oft is the coalescence europe now? brussels evenn remotely on the same page as they possibly address boris johnson is prime minister? in nationalnk

issues there are a lot of divisions, but the e.u. 27 unity is holding in brexit because everyone understands it is a long-term priority to stick together and get the right deal. this is depending on the election results. you could be in the position where michel barnier becomes the next commission president and he has no intention to rip up a deal he has negotiated and endorsed. on brexit, very much that unity holding. francine: let me bring in a tweet by boris johnson, who said a dignified statement from the prime minister and goes on to thank her for her services to the nation. let's bring the tweet up. he says -- it is time now to follow her urgings to come together and deliver brexit. if he becomes the next leader of the tory party, what does that

mean for u.k. assets? patrick: i don't know much, because there is a lot of twists and turns on how he has to go. i think we will proceed with a no deal brexit base case and anything we can do is better. -- weak sterling, close to 1.20. no brexit, probably 1.35. francine: a massive shout out to our brexit team covering this day and night. they put out a wonderful story looking at some of the tory rivals jostling to be the u.k. prime minister. they have boris johnson as rob, they callic him the mercurial brexiteer. depending on what kind of brexiteer, as it given it is a brexiteer? patrick: almost certainly. i do not see how it could happen

any other way. francine: depending on what kind of brexiteer we get, does that change the outcome? patrick: they are not incredibly different. the brexiteers are all relatively like-minded, different extremes on how they want to go. boris johnson will be the front runner. he is probably the one who can create the consensus and some unity within the conservative party. that is why the market is viewing him as a clear favorite. tom: is this about brussels, or is every nation for itself? july, is june and into it about the chancellor of germany, the leadership of italy and spain, or is it out of brussels? maria: a lot will depend on the election on sunday, and those big jobs will change. by the end of the year, everyone who worked on this deal from

donald tusk to jean claude juncker will be gone. , lot hinges on michel barnier the man who negotiated the deal. in the words of emmanuel macron, it is clear he wants him to stay. to key for the europeans is find out who replaces prime minister may. if we get a euro skeptic, the idea of a no deal brexit becomes a figure possibility. european officials will tell you a new prime minister cannot walk into brussels and changing deal in the making for two years. that will simply not happen and it is delusional to think someone can come here in one day and get a new and improved deal. tom: i want to go back to the power essay you wrote, a parliamentary power. explain to us the uniqueness of the british process and the

strength of the conservative party, or indeed their weaknesses as they move forward. alan: there weakness is our thatm is meant for parties have a majority in the house of commons and the conservative party doesn't. it looks unlikely anytime in the future they will have a majority, so any new leader is facing the same structural constraint that faced theresa may. maybe that is why you see this tweet from boris johnson, priming the ground for saying some kind of deal will have to get through, some sort of compromise. the two positions in the leadership race be those who say , we need a deal, and those who actively embrace no deal. to get boris johnson, we need to get this deal to try to unite the one nation conservatives to get a majority. francine: forget about having a

majority. there is like five conservative parties within the conservative party. how does he unite them? alan: his pitch as he was previously seen someone in the one nation weighing and he is in and he weighing -- wing ng, and thatg wi is difficult to see him getting to the final two is a hurdle. the mps decide and then it goes to the members. the members is where he is popular and the mps he is very unpopular. the base case is not inevitable that he will be prime minister. francine: what is jeremy corbyn thinking? patrick: he is probably loving it, because the path to a likely.election is more if there is another general

election, probably going to be a fragmented parliament regardless. francine: thank you both for being with us and thank you, maria tadeo. we will be back with alan wager of king's college london and patrick armstrong. tom: let's listen to the final comments of prime minister may. >> i will shortly leave the job that it has been the honor of my life to hold. the second female prime minister, but certainly not the last. i do so with no ill will, but with enormous and enduring gratitude to of had the opportunity to serve the country i love. ♪

♪ she has been a great prime minister, has been very nice to me. i think he thinks i am doing a great job. i am doing a great job, in case you haven't noticed. boris johnson would be a great prime minister. tom: talking up the former mayor

of london, boris johnson. i have learned that yes, boris johnson is clearly out front as the new prime minister, but not certain. there is a debate, isn't there? francine: we have had theresa may resigning over the last 50 minutes and she said she will take -- stay on as caretaker. we heard boris johnson tweeting out it was a dignified statement, and he is running for leadership of the tory party, also thanking her for her service to our country. the opposition labor leader issued a statement -- opposition party labour leader, saying theresa may was right to resign and has accepted what she has known -- a country has known for andh, she cannot govern unite a disintegrated party.

she said she will step aside june 7. that week, president trump comes to london for a state visit where he will meet with the queen. let's get straight to stephanie baker and patrick arm star. armstrong. withwill he want to do brexit? and he want to weigh in meet with boris and nigel farage? stephanie: i think he certainly will weigh in. he has voiced support for the likes of nigel farage, as we saw with boris johnson. his focus is with the royal family. britain without a prime minister, his focus will be meeting with the queen. he is bringing his whole family, and they will meet with other members of the royal family, so

this is a set piece. he will not be giving a speech to parliament and will not be staying at buckingham palace because it is being renovated. i would be surprised if he did not try to meet with orest johnson,of -- boris although that would be remarkable. francine: after the resignation areheresa may, many leaders issuing statements on twitter, the latest from emmanuel macron saying france is ready to work with the new u.k. prime minister. if boris johnson becomes the leader and goes to brussels and says, give me something more, what they give it to him? patrick: it is hard to they -- hard to see how they will. it will be interesting to see ireland's dynamics.

a no deal brexit would be the worst case scenario for the good friday agreement in place now. it may be a little bit of give at the last moment, but i do not know if we get to that point. fascinated, and in 10 days or so president trump will show up with family into. -- in tow. that felt unusual. what should he say or do? onphanie: he has come down one side of the brexit debate, basically encouraging the u.k. to leave without a deal. he has made various comments undermining the european union. whether or not he will be restrained and not weigh in on this debate in any direct way remains to be seen.

given his history, i do expect him to weigh in and encourage the u.k. to get on with it, which is what he has said previously, and lead the european union on whatever terms they can negotiate. if they cannot negotiate a deal, leave without a deal. tom: stephanie baker, thank you so much. patrick armstrong, thank you so much for perspective on relatively stable markets. this historic hour, which we will drive forward in conversation. francine lacqua and tom keene. the prime minister resigns. steven wieting of citibank. ♪

♪ tom: this morning, a rate cut or cuts is next for the fed.

yields continue to grind ever lower. the yen stronger, oil lower. outside 10 downing with a final emotion, prime minister may resigns. the conservative party must regroup. has anything changed for leave and remain? york,rom london and new tough cutbacks at deutsche bank. this is bloomberg "surveillance." live from queen victoria street in a different london, it has changed in the last hour. all of the united kingdom is different. francine: this was widely expected, but theresa may in front of the lectern at downing street an hour ago saying that she has resigned and will leave june 7. let's have a listen to the prime minister.

prime minister may: i am announcing i will resign as leader of the conservative and unionist party on friday, the seventh of june so a successor can be chosen. i will leave the job that it has been the honor of my life to hold. the second female prime minister, but certainly not the last. i do so with no ill will, but with enormous and enduring gratitude to have had the opportunity to serve the country i love. tom: the prime minister this morning, really quite emotional let the end. we are advantaged with anna edwards and maria tadeo as they look at a changed united kingdom. anna edwards, you have done such great work within your own show and all of the politics on the green. what has changed for the conservative party?

24th, where will we be in two or three days as the debate against? contest hasadership been going on in the background and now it moves more into the foreground. june 7 is the date she will resign, so we have more firmness on the timeline. the difficulty finding compromise has not changed and it seems theresa may has a message about compromise. she was pushing that today among the emotional words about how sorry she was not being able to deliver brexit, because she saw that as a personal responsibility. she was calling for the country to come together. tom: is there bargaining going on? in,r. johnson has so and so

does he say, i promise you the position for this if i have your vote? is it that bold and abrupt? anna: it could be. there is a group called the one nation tories and they are more on the remain side. there's talk of whether they might try to block a boris johnson premiership. perhaps.oo simplistic some of those could be won around by the promise of positions. boris johnson -- they want to back a winner and that could be a reason for backing him. maria tadeo in brussels. we have this leadership race for who will be the next tory leader and prime minister, and the other fact for a pro brexit prime minister.

they will probably go back to brussels and asked to renegotiate the withdrawal agreement. will be e.u. and brussels say yes? say,: the e.u. will likely we are ready to work with the next prime minister, but make it clear there will be no fundamental renegotiating. the deal is two years in the making and the europeans think there is nothing to change. it depends on the u.k. parliament, so they will likely u.k.sed today that this domestic political story, they need to come to a compromise and the europeans will not shift. the other question for the e.u. is what happens to the october deadline? that wasged minister but it is not clear that the new prime mister will feel the need to stick with it. it validates what emmanuel macron said a month ago, unless

there is a compromise in the u.k., a country is walking to a no deal brexit. francine: we are spending so much time on boris johnson because he is the favorite, but a great piece written by our bloomberg news team looking at favorites. we have boris johnson, dominic rob, patty moore donned. how many more people are you expecting to want the leadership? anna: there could be a lot, could be a long list. if you want to be leader of the conservative party, you have to find two people to nominate you. then you get on the list. we see the conservative mps spending weeks and weeks, maybe four to five weeks whittling down the list to the final two which goes to the membership. there could be many names

including the home secretary, secretary,tary -- many who were in the cabinet. we have heard from boris johnson in the last half hour or so. he put out a reaction to the emotional speech from theresa may, saying it was very dignified and thank you for your timece, and saying it is for the country to come together and deliver brexit. contenderthing any has to do is win over the mps and reach over dutch across a broad group -- across a broad group to start. tom: we will continue this discussion. all i want to know is what happens to lawrence the cat. maria tadeo and anna edwards. right now on this historic day

with the first word news and london, here is sebastian salek. maystian: president trump clear the way for a saudi arabia weapon sale. heldess wants the saudis accountable for the murder of jamal khashoggi and their role in yemen's civil war. charging is asking for julian assange -- the u.s. says of the conspired in one biggest intelligence breaches in the country. step --k created a key satellites from starling last night and says that will be a key source of funding for spacex.

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. salek.bastian this is bloomberg. tom: let's get through the data as we await roger bootle and emma ross thomas. futures 168., dow oil bouncing off a difficult thursday close. futures up 19. the two year yield -- this is the switzerland 20 year yield trying to go to a negative. the swiss 20 year yield really coming in. that comes up against the central bankers and where they are. francine: that is something we have to keep a close eye on. the stories of the moment -- story of the moment is brexit. pound has been rising after the

u.k. prime minister laid out her timetable to quit. that is the only story in town. herick armstrong was saying is expecting quite a lot of volatility on u.k. asset. i have a euro-sterling chart and it is amazing to see that range bound. we will come to the implications on the market. running us now, roger bootle. thomas.s thank you both for joining us. theresa may saying she will given, is that almost a that the next prime minister is boris johnson? emma: that is slightly jumping the gun. there is a lot of momentum behind boris johnson at the moment. people are lining up behind him. some high-profile people are

lining up behind him, and it is fair to say the next leader has to be a brexiteer. the next prime minister will be elected by 120,000 conservative members, a tiny fraction of the electorate, and they are pro brexit. two thirds of the tory membership are pro no deal brexit. what will be interesting as we will be listening to the leadership candidates and figuring out just how committed they are, or to what extent they are hedging whether they would pursue a no deal exit. there are some obstacles. the next let's say prime minister has no deal as policy. can parliament prevent that or can no deal become government policy? emma: there is a bit of debate at the moment. at the moment, there probably is not a clear mechanism for

parliament to block no deal, except the option of bringing down the government and triggering a vote of no-confidence. at the end of march, there was a vote in parliament on no deal and 400 mps voted against no deal. there is a wide margin against no deal. and then of course, what a leader say, we will take it to a general election? perhaps the referendum is back on the table. the other thing to think about is when we talk about a referendum, if theresa may's deal is dead, the e.u. will not renegotiate. not will the question be, deal versus remain? we are no closer today to what brexit actually means. we have a caretaker government

and all options are on the table. alsoemma ross thomas and joining us, roger bootle. l time,ly a most unnorma writing for the telegraph with a brexit cast. define no deal right now in political reality, not the no deal of hope and wishes on the side box -- sidewalks outside westminster green. what does it mean? roger: i think the chances of no deal are good, but i would doubt very much whoever takes over as leader will embrace that as a first best option. whoever it is will go back to brussels. say,o back to brussels and i am not theresa may, we know that does not wash, we know you have got to bend.

give us something. newkey difference is the leader and prime minister must be able to say to brussels, if you don't give me what i want, i am prepared to embrace a no deal exit. this is fascinating. well they get something? if they don't, the new prime minister may say we are on for no deal and i do not think parliament will stop them. tom: what is the best thing a prime minister johnson, prime minister gove, what is the bargaining chip a need for brussels? roger: their own political position will be completely transformed. those people who say there is not parliamentary arithmetic for a no deal brexit completely misunderstand. a new prime minister whoever it will be, will be in a different situation from theresa may, who

has been a lame-duck for quite some time. the european parliamentary a newons may empower conservative prime minister more through fear of disaster. person is also going to jimmy up to civil service. the british civil service has core andin-ish to the has not. may, there been a tough effort to bring brussels around. francine: if you look at the timeline, this is tricky. ofhave the deadline 31st october. a new parliament starting on july 2. a new commission not in place until october. do we assume the u.k. will have to ask for an extension if it

will try to renegotiate? renegotiate want to , i suppose politically it would be palatable to say we would ask for an extension to give it one last shot. certainly in brussels, the view is the extension to october 31 was the first extension rather than the last. the question i think we will see on monday, how the european elections have gone and how that changes in brussels. people have underestimated how serious the french were about wanting to just get on with this. you, thist to go to is important. roger bootle writing opinion for the telegraph around his capital economics, and i guess we know what the telegraph will be writing in the next coming days.

what would you presume i will read on the pages of "the guardian"? what will i read in the next coming days? emma: goodness. i don't really want to talk about the e.u. elections. tom: of course. emma: that will be what we are talking about. francine: electoral rules. we cannot talk about the e.u. elections. it is not america. what is "the guardian" going to write about? roger: the usual rubbish, i suppose. it will be interesting to see if they line up behind the other candidates for the conservative bid. francine: who do you think will be the next prime minister? roger: i really don't know. ed could be one of a series of people.

has ais the favorite but history of blowing it. you have to be careful and serious. he is clearly way out there. tom: we are going to come back. overross thomas, i will be in a couple of days and i promise i will visit you at newcastle after giving -- getting you in trouble for the e.u. vote, elections on sunday. roger bootle with us, please stay with us. so much to talk about within the markets and as history is made at 10 downing street. this is bloomberg. ♪

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bloomberg "surveillance," good morning. an important conversation from washington. the chief executive officer of huawei, an important conversation with bloomberg, look for that on monday. tom mackenzie with the gentleman from huawei. we will attempt normality with roger bootle with capital economics, writing for "the telegraph." wieting of, steven citigroup. i want to go to you on the tension of lower interest rates for the united kingdom. there is a tension and we gain rate cuts.

what is the global grind of interest rates meet for the united kingdom -- mean for the united kingdom? steven: it is symptomatic of what we have seen in all qe zones. thethe areas that had extraordiy monetary policy during the crisis years have found normalization will interrupt growth when you are this deep into a recovery. with asset prices rising and unemployment falling, not just in the united states but in the united kingdom, going to full consistent.t consistent.

tom: in the speech, the prime minister listing her mentionedments and the balanced-budget. his austerity in order? roger: i think this is an achievement for the government to what brought the deficit down so much. we were pushing 10% gdp at one point. this government has been obsessed with the deficit and now i think we will have to see debate about what the objectives of fiscal policy should be about what the objectives of fiscal policy should be, should we continue to be austere, there down on government spending? what is the appropriate level of the deficit? francine: should we think about mmp? roger: think about it, yes. francine: is it coming? roger: not under this government, no. we know that mr. corbyn's labour party has entertained those possibilities and if we have a radical labour government, something of that philosophy might play a part. francine: let me ask a question about bank of england's governor. appointmay was meant to the new governor and with her gone, how will it change the dynamics? roger: i don't think we really

know. i don't think who it is, is particularly important. , theore interesting important question, what happens to the bank of england if we get a labour government? they are radically, a new conservative -- theoretically, a new conservative prime minister could do the same thing. what you want to ask the bank of england to do, stick with the regime or try something else? wieting, oil coming up and all of a sudden it comes down with the interest rates, a direct correlation in the market. what is your stance on investment, steady as she goes, or is there an adjustment? steven: apart from this clear issue you are covering on the united kingdom, we have a period

of suspense ahead at minimum until the middle of june. you can see this with the need for an agreement between the united states and china, and thereafter the trade war can continue to other places in the world. we have a great deal of suspense about how much leverage the united states and china want to develop and get over each other, how willing they are to target as this disruptions across the seas, and how much impact it can have on confidence and the economies? at will have a large impact on corporate profits in the united states and china potentially. this is a bilateral issue, and others may come in to take some of that business away. that is possible. we are contingent on what happens with this, as we had the shock at the beginning of may, that all of the agreements, all

we were told would happen very quickly is off for the moment. francine: what does this trade war mean for the u.k.? roger: it is potentially bad news. i do not think it is that significant in restraining the growth of the world economy, but it could get significant or complicate britain's extrication from the e.u. francine: does the resignation of theresa may mean we will get a new chancellor? roger: almost certainly yes. i would be surprised if a new prime minister stuck with the current one. tom: roger bootle with short answers today, which is what you do when a prime minister resigns. we look forward to his essays in "the telegraph." steven wieting from citigroup with us as well. mr. macron with the statement,

ms. merkel as well. this morning as from the ruropean union where mr. junkce ways in, saying he will remain in touch with theresa may. i have no idea what that headline means. will remain in touch with theresa may. look for a christmas card. francine: on may 28, we know the leaders will discuss brexit. it is probably the transition. remember, we are also getting a new commission. theresa may saying she will resign and juncker leaving. ♪

at comcast, we didn't build the nation's largest gig-speed network just to make businesses run faster. we built it to help them go beyond. because beyond risk... welcome to the neighborhood, guys. there is reward. ♪ ♪ beyond work and life... who else could he be? there is the moment. beyond technology... there is human ingenuity.

♪ ♪ every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. take your business beyond. ♪ may: her majesty the queen asked me to form a new government and i accepted. do we have a plan for brexit?

we do. the united kingdoms representative to the e.u. handed a letter to invoke article 50. brexit means brexit. brexit does mean brexit. there should be no general election until 2020. we need a general election and we need one now. every vote for me as a vote for strong and stable leadership. strong and stable leadership. strong and stable leadership. i am working on an agreement parliament can support. it is clear the house does not support this deal. voting against leaving without a deal and for an extension does not solve the problem. we are at the moment of decision . i fear we are reaching the limit of the process. we will not leave on time with a

deal on the 29th of march. it is slipping away from us. we risk losing a great opportunity. i will shortly leave the job. well, but withel enormous and enduring gratitude but with thel, norm is an enduring gratitude to serve the country i love. tom: that should be bronzed and shown to every high school and college class until time. that was extraordinary to see the path of a short prime minister may 10 year, only a few only a few-- tenure, days left. francine: that was theresa may just over an hour ago, tearfully saying she will quit as tory leader on june 7. we have heard from the french, cker, and from

boris johnson. when nigel farage started tweeting moments ago, saying it is difficult not to feel for her but politically, she misjudged the mood of the country and her party. gone andleaders have his instincts are pro e.u. tom: what we are going to do is drop in with a little bit of washington politics with viviana hurtado. i want to keep it short and sweet. the president is off to japan. it is very much not a state visit, although he will meet with the emperor, and then he goes with family to the united kingdom, and shannon, ireland to catch up with the irish. is anyone taking him seriously on these trips abroad? viviana: it is important to

frame it more as anybody taking this president seriously, and the answer is yes as you look to presidentxi as this re-negotiates the economic trade policy and the national security of the united states. keep in mind, he will be in is seent just for what as a state visit. the u.s. and japan are renegotiating their own bilateral trade agreement. this is the way the president tradee likes to negotiate relationships with the united states and allies. tom: what is the thing you will be watching out of washington on friday as everybody escapes out of town? viviana: what will be interesting is not just what everybody will be watching, but what kind of headlines this president makes in japan?

what the extraordinary events on "surveillance," i will be interested to keep and i on what the u.k. and u.s. ilat relationship looks like. this has been worked on quietly and cannot go forward because the u.k. is in the e.u., but there has been a working group called the u.s.-u.k. investment working group. they have met half a dozen times to see what this relationship will be like, deepening the so-called special relationship between the u.s. and u.k. francine: president trump shows up on june 3. isthis why theresa may staying on until june 7? anna: that is one of the big reasons, certainly.

having a president of the united states arrive here in the middle of a conservative party leadership contest would look very messy. it does not look much better that she said she will resign, but at least we will have a sitting prime minister who is not really a caretaker, but every day that goes by she slips more into that role. gone is brexit means brexit, gone is strong and stable. we will find out the timetable. let's not lose sight of the fact that the members play a big role in they lean towards brexit. the members of the conservative party do not mind a no deal brexit, in contrast to mp's and risk assets. francine: the last time the president was here at was not on a state visit.

he gave a competitive -- combative interview on how he sided with the brexiteers. do we have any idea how we he will play to london? anna: we will say to what extent he chooses to weigh in, and even though the starting gun will not have fired, it does not take a will weighch that he in. he already has, that boris johnson will make a great prime minister. how will that complicate the conversations? that will be something to watch. when he does come, there will be protests in the street like last time. and vivianawards hurtado, thank you. we have steven wieting of citigroup with us and roger bootle of capital economics.

i mentioned ages ago the idea of rate cuts are to. does the fed catch up -- rate cut certitude. does the fed catch up? roger: we are talking about monetary policy -- steven: we are talking about monetary policy and this is politically contingent. we have issues between world leaders that will determine whether we see easing or tightening financial conditions in private markets, whether we have economic shocks to deal policymakers, you would hear from chairman powell they do not do trade policy. he is in a seat to respond only after. i seriously doubt the federal reserve will say, something might go wrong, let's ease ahead of it. then they are not in the drivers

seat, they are responding to shocks. tom: you mentioned 15 minutes ago with francine's question on mmt. inre is a fiscal variable the united states, united kingdom, and a jumble of fiscal combined policy in europe. that is critical now, at are we asking too much? fiscal policy drive this? roger: i think fiscal policy is coming back if it is not back already. that is partly because monetary policy has proved not that effective. politically, as you say in several countries, there is momentum behind this idea. i doubt whether we get inl-blown mmt anywhere, but the u.k. certainly there could be a move towards less austerity. we look at the u.s. for

inspiration and it has been quite striking. the disaster which many on the left forecast for the u.s. economy has not happened. the u.s. has been a strong economy and looks reasonably strong. that puts the wind in the sales for some people in the conservative party. francine: when will we see the next downturn leading to a recession? 18 months out? 24 months out? starting in the u.s. or china? seer: in the u.s., you can signs of a slowdown coming in at the end of the year, the fed will be cutting interest rates. i doubt if it will be a full-blown recession, that it will not be surprising to see the u.s. slowing down. francine: are you still willing to model what the next u.s. recession will look like and

when it will come? steven: everyone has been on recession watch for so long, and it is usually periods of economic confidence that the initial spark that sets off the downturn occurs. i think now with the yield curve inverted, with having come very close to creating a financial shock that would have ended this long economic expansion last year, economic policy that was inconsistency with natural conditions allowing the economy to grow, that is where we were. we swerved away from that cliff and we have an economy with low inflation and unemployment. will we take chances with additional shocks? that is the question. tom: i want to get out front of what the brexiteers will write. you write on economics for "the

telegraph." others right on politics. the will you look for in hours and coming days? what is the theme you will want to read? roger: i will be looking for their willingness to compromise. i do not think we will see much of it, because those people who want no deal have the wind in their sales. if it is boris johnson who emerges as the new prime minister, we will see to what extent he is willing to deal with the remainders -- remainers . i think they will all be tough in the approach to the negotiations with the e.u. tom: roger bootle, thank you so much. steven wieting of citigroup is with us. much to talk about. david westin on "balance of

power," a timely conversation from the democrat of colorado. arizona, interesting politics in the west. mr. bennett of colorado in the 12:00 hour. more on the resignation of prime minister may, this is bloomberg. ♪

theresa may. the person will have choices, either make the no deal policy part of government policy, or their first point obi, i want to go -- will be, i want to go back to the e.u. and renegotiate. we heard from jean claude juncker that nothing new will be negotiated but we will have a new commission on sunday so the dynamics might change significantly. tom: there could be any number of successors. we have lined them up, i think we have that shot now. that is 8000 candidates. to put the odds down below, the right not so certain. mr. corbin, maybe with an election. four.o the left are the you keep talking johnson, johnson, and a number of guests say maybe not. francine: roger bootle has been progress and has his ear to the

ground when it comes to the conservative party. he said someone who may also prove popular as dominic rob -- raab. he was saying do not . --restimate any mordant penny mordant. i am familiar with the single best chart, those trying to correlate what the market over the last 24 hours. as we are distracted by brexit, we need a snapshot of exactly where we are. the remarkable ideas that were barely rolled over, and yet we go into march and april and may really sitting on support, aren't we? steven: that is the s&p 500, isn't it? tom: maybe it is the dow. steven: i mentioned prior to the break that we had come close to

breaking the american economic recovery. in december, we had the weakest corporate borrowing. tom: can you say the fed blew it? steven: i say they were off course, and the signs were there and they responded. monetary policy is much less threatening than the outlook for the recovery, whether they will ease. tom: i have a pot of money into the weekend and i have asset allocators saying this and this. steven: you cannot and a allesale while -- way sell of your assets, pay your taxes, and begin again fresh. markets have responded very little to the risk event of trade negotiations, that china and the united states have offered each other things they

cannot turn onto. we will have a period of suspense that many areas in the market, semiconductors up 46%, down a smidgen, there are cyclical parts of the market where everyone feels horrible, but the reality is they have held most of the games since the selloff in december, that we want to be more cautious about the near term. midyear corrections are the norm. this is one of the rare times were hedging costs happen to be quite unusually low if you go beyond a month. this is a time where we want to focus clients in to not make long-term portfolio mistakes. if not for this trade issue, we would have a good outlook. tom: this is what we do when we are not getting ready for tv. this is the semiconductor index

and i want to parse out, the iskets down 3%, 4%, but this an 18% decline for semi conductors. semi--- is that them being volatile? big but18% looks really look how high the run-up was? we have a good long-term outlook , but this is cyclical technology. tom: what steven wieting just said is absolutely critical. when peopleket -- --eam about a bear market can we go greek letters today, beta? , thanke: steven wieting you so much for joining us. on monday, the huawei founder and chief executive sitting down for an extensive interview with

tom mackenzie at his company's headquarters in shenzhen. you can catch that on monday. ♪

♪ this is bloomberg

"surveillance," tom and francine from london and new york. let's talk about deutsche bank. yesterday they had an agm, the chairman under pressure, the chief executive under pressure as well but he still had shareholder support. joining us is matt miller, who has been following the deutsche bank story from the beginning. the agm was yesterday. what is the chief doing today? how much is it convincing the markets he can make the bank work? matt: he has not been doing a good job convincing the markets. the share price fell to an all-time low and it is down again because they are trading at dividend. the markets do not believe in the savings plan. he said he will make more cuts in the investment bank, but

almost 100,000 employees for a bank that analysts and regulators are saying should be focused on the german market and no longer trying to compete on the global level. tom: this is the three day intraday chart. it is a fancy touch fancy mathematical -- fancy mathematical function. these are ugly charts. what is the urgency to stop the share price decline, this lethargy? matt: the urgency so far has been evidenced in the chairman switching out ceos like it is a game of musical chairs. we have had five different ceos at deutsche bank over the past decade, certainly since he has been in charge. 72%erday, he only got support from shareholders in the 100%.d they typically get

grade.a failing tom: thank you so much, matt miller continuing coverage on deutsche bank. we focus in on brexit. we are getting some news from the spokesperson for the tory party saying the tory leadership contest results will happen before the parliamentary summer recess, and that is the u.k. parliament commenting. a two hours we have had with the prime minister resigning. tom: we will continue across the bloomberg. ♪

at comcast, we didn't build the nation's largest gig-speed network just to make businesses run faster. we built it to help them go beyond. because beyond risk... welcome to the neighborhood, guys. there is reward. ♪ ♪ beyond work and life... who else could he be? there is the moment. beyond technology... there is human ingenuity. ♪ ♪ every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. take your business beyond. ♪ pm may: i am today announcing

that i will resign as leader of the conservative and unionist party. david: prime minister may will leave june 7 without getting the brexit she sought. investors brace for what is next. global markets calm down today after running away from risk yesterday as investors come to term with a possible long-term trade standoff. opening the door a crack. president trump says huawei poses a danger to the united states, but an overall trade deal might take care of that problem. we talk about whether this move could reignite the dormant trade talks. "elcome to "bloomberg daybreak on this friday, may 2 any fourth. i'm david -- may 24. i'm david westin, here with lisa abramowicz. alix steel is off. you have