francine: fiat a drop -- abruptly withdraws its offer, shares in both sink. the mexican peso sink as president trump says not nearly enough progress has been made. and we hear from the ecb president as he is under pressure to rekindle stimulus. good morning, everyone, good afternoon if you are watching from asia. welcome to "bloomberg surveillance." in paris ate lacqua

the goldman sachs finance conference. we speak to many investors and executives from the banking sector, but first let's check in under markets. treasuries are rising, government bonds advancing. withve had discussion trump officials and mexican officials, there is some agreement that global trade will be on the agenda. at 19.69.n peso is we speak to bill winters, chief executive of standard chartered in paris, five minutes from. -- from now. but let's get bloomberg first word news. >> of the u.s. economy broadly expanded in recent weeks according to the federal reserve. it saw a solidly positive business outlook at a modest ,ace with trade uncertainties

trade tensions, rather, causing uncertainty. they say it is time for the central bank to start looking at policy. >> it would be prudent to take a look at our setting for monetary , andy, as we do every time as i said earlier, i am nervous about the low inflation rate. even though we expect it is temporary, i think it could be a reason for more accommodation. italy's government is uniting to defy the european union's budget rules. this rare detente comes as the block starts disciplinary proceedings against rome. it has prompted the italian prime minister to endorse calls from his deputies to change the eu's fiscal rules. denmark consume have its youngest ever prime minister. fredrickson would also only be the second woman to lead the

country, her central democrats winning the election after promising welfare paid by higher taxes. but she faces protracted government talks, this is following the ousting of a center-right government and the worst ever performance by denmark's nationalists. joe biden is breaking with many of his democratic rivals on the issue of abortion. he is maintaining support for a rule that prevents paying for abortions with federal funds. he has held a clear lead in the polls, despite holding positions that are more moderate than progressive activists are demanding. president donald trump reassured ireland has nothing to fear from brexit, telling the prime minister the border with northern ireland will quote be just fine. he said it will all work out and ireland's wall, with

the prime minister jumping in to explain they are hoping to avoid wall.er global news, 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. francine.oomberg. francine: thanks so much. the auto industry's most hotly anticipated merger is no more. fiat has scrapped the deal after the french carmakers board delayed a decision for a second time. vf blame for the french government, renault's biggest shareholder, saying the conditions for the deal do not exist. but get more from our bureau chief, a world expert when it comes to everything fiat. a rapidly moving story, but how abrupt was this? tommaso: the real surprise was last night, when we were all waiting for the board to give a green light.

throughout the night, we managed to get confirmation from sources that fiat decided to walk away from talks after the renault board asked more times. but it is not about the renault board, it is about the french government. the fight is between fiat chrysler and the french government. the renault management really wanted to do a deal. we are hearing from a source close to fiat chrysler who essentially said that the french government agreed to have a stake in the combined entity but wanted 100% control of the company. this, to fiat, was not acceptable in a private business. so there has been a decision to move away from talks. we will see what will happen, a nicearly, this was not

moment, it is clearly a strong move. francine: where do the players go from here? does fiat chrysler really need to buy something and would renault be the perfect fit? will we see them go back to try and get control? tommaso: it is difficult to understand. is gut feeling this morning that anything would happen after this very strong statement by fiat and what we heard a few minutes ago from a source. we really don't see them going back very soon and making peace with the french government, at this point. statement left a door open, saying that currently there are no conditions to make a deal. so if the political conditions

changes -- change, renault is one of the best fits. they would become one of the largest carmakers, and with nissan on board, they would be the biggest in a time when we are seeing a technological revolution. you need to consolidate. francine: thank you so much, tommaso. the milan bureau chief of and of course, he just wrote a book on sergio marchionne. president trump says not enough progress has been made with mexico. this raises likelihood that washington will follow through with tariffs. mexico's foreign minister says they did not talk about tariffs but focused on migration. trump spoke about the issue this morning. >> a lot of progress was made, but we have to make a lot of progress. next ago has been making hundreds of billions of dollars, an absolute fortune on the

united states. they have to step up to the plate and perhaps they will. they could solve the problem. thecine: joining us now is deputy head of global macro strategy at ubs. great to have you on the program, even if you are in london, and i'm in paris. give me a sense of how trade concerns could escalate. >> it is important to understand where we are in terms of market pricing. that thers tell us market is somewhere between and the mood of last year, so not price for trade escalation as that -- at all. but both sides seem to be digging their heels in, and i do not think that is priced in.

i think bonds across the world are telling us that markets are beginning to understand how crucial it is that this is result. growths are just about rebounding. in may, you get the resurrection of the trade war. this is a very dangerous time for the global economy and the rate market understands that slightly better than the other markets to. francine: you put it very simply, basically that there are differing signals from rates and volatility. but essentially, why are the markets not more worried? bhanu: i think there is a little bit of inertia from earlier this year. earlier, everybody was thinking about the 2016 trade. that central banks are easing together, and that is usually very positive for risk assets. there's also the element of it being a tweet-based markets. you can hardly move your position based on social media

post, and that is what people are hoping things will get resolved. i think the risks are much higher in terms of growth. if things do not get resolved, you will see a significant downturn. that is not being priced in. every time markets tried to buy volatility, think france in the election, they have lost money. i think that kind of pavlovian response is that now we are going to react after, not before. this time, the risks may be real, i am afraid. francine: so how do you hedge? >> volatility is cheaper, especially in fx. quite is quite quite -- -- quiet. this might sound counterintuitive, but we have found asian markets have played -- paid a lesser price. equities. a lesser on

we are buying dollars against emerging-market currencies. we are defensive on european credit. and we think that if you want to look at volatility protection, we think markets like germany offer decent protection. we are not buying protection in the u.s. because we think that has paid a higher penalty for the trade war than asian markets. i know that sounds strange, but asian markets have other things that have taken them down. china, given the limited and different stimulus, which is a bigger story than the trade war. francine: thank you so much. i'll try to figure out exactly what the catalysts could be. bhanu from ubs stays with us. coming up, we have plenty more from the goldman sachs conference in paris. we also speak to bill winters from standard chartered. that is a few minutes from now.

this is bloomberg. ♪

francine: economics, finance, politics, this is "bloomberg surveillance." i am in paris at the goldman sachs conference. asia makes up more than two thirds of revenue for london-based bank standard chartered. but with trade tensions rising, how are they weathering the storm? we are pleased to be welcoming the group's chief executive, bill winters. great to have you, as always. it looks a little bit like the studio. tell me more about how the trade tensions affect your business. bill: so far, not so much a must

and we are hopeful that continues. for us, the u.s.-china trade is a small proportion of our income. but keep in mind, the trade has not reduced very materially and trade within the asian region is still strong. we did say the more tensions go up about the more trade between china and the rest of the region will increase. both because chinese goods will find an outlet, but also because of supply chains are being reconfigured. so more of the investment from international companies who are eventually exporting back to the u.s. is being diverted outside of china. but also, chinese companies are moving outside to avoid the impact of sanctions overall. given that we operate in every asian country, every southeast asian country, and 11 countries in africa, across the middle east and 15 countries across the markets.hese are the

and as the supply chain reconfigures, this is a good thing. in the short term, we are all concerned about how this escalates. francine: when you will be able to deliver growth. bill: we are. francine: so does not impact anything right now. bill: we will closely watch the impact. cyclical, some of it is on the back of concerns that these tensions could become much more severe. so the economic impact is real. in terms of the flow of trade, it is going to change on the back of this escalation. but not necessarily in a bad way. francine: how do you see the world economy right now? do you worry about a downturn? bill: we are always worried, we are paid to worry.

but i do worry about the heaviness. we are seeing downgrades consistently. various estimations about the impact of further escalation. at -- you are looking at global growth that is below potential for the first time in a few years. chinese growth is feeling pressure and u.s. growth is showing signs. consumers are strong, the u.s. economy is still strong, but there is pressure. it was not there even two or three months ago. francine: how does that change your job? bill: we are building for the long-term. we are well capitalized, very liquid, and investing heavily. we are betting on the ongoing opening up of china, which is happening day-to-day. it may be directed more at asia and less at the u.s., but we are still hopeful there is resolution to the tension.

but on the assumption there is not, which is the base case, i think we have to say, we are on the middle east and africa, our core markets. francine: if you look at the revenue stream, you have a dominant position in transaction banking. to you see a lot of interest keep being part of that. how do you maintain clients? bill: the reason we are gaining ,hare in transaction banking these areas are court us. -- core to us. people come to us because of our global network. it is impossible to net -- to tolicate, nobody has tried rip they a network like standard chartered across africa, the , with east, asia important nodes in europe and the u.s..

that network is the true differentiator. we have focused on how to make that network available to our clients has led to increasing market share and improving profits. francine: what do clients ask you the most? bill: they ask us what will happen what will happen with the u.s. and china, exactly where we started. they focus on the fact that quality service in difficult-to-access market. but once we have the relationship with the clients, they are part really happy to deal with us in china, india, ,ong kong, singapore, or brazil where there are plenty of making alternatives to standard chartered. so we feel we are in a good spot. because your clients are worried, today invest less,

do they want less cash? bill: we see different kind of investments. there is investment in diversifying supply chains. everyone is aware now that you do not want to be dependent on one supplier. that is american and european companies, but also asian companies. they are investing but in different ways. broadly, discretionary investment has reduced. anxieties are higher and people pull back a little bit. i am afraid that will carry on. francine: a little bit is how much? 10%? what could be the catalyst for more anxiousness? bill: with each further ratcheting of trade tensions, we see two things happen. one is the immediate impact on global equity markets -- francine: which is muted, isn't it? bill: it is, but given the underlying strength of the

economy, you can feel it in at the markets. you saw how substantial it could be in the fourth quarter of concerns are high. there is still hope that we can have a breakthrough. i am not counting on it, but there is some hope. i think the equity markets are reflecting some, but not a huge amount of anxiety. -- second order affect effect is what we see in investment capex. francine: which is what, chief executives being too nervous? bill: just saying to wait a little bit, let's see how things develop. but the flipside, the consumer, has remained robust. but the consumer is often a lagging indicator. francine: could you have a recessionary environment where the consumer is still strong, but because of a lack of investments, there is a downward spiral? bill: that is often the cycle.

corporate confidence wanes earlier that consumer confidence. this is not prescribed, it is not necessary. there is a trade deal to be done. i have to think there is a technology and security deal that can be done. obviously, it is a controversial matter between the u.s. and its allies taking different views on things like huawei. but there do appear to be deals to be done, something that a couple shows the objective of opening of china, making sure we have a level playing field. but we have to prepare for the other alternative, and we are about most are -- we are, most are. francine: where do you see opportunities in the next 24 months? bill: china. china is continuing to open up.

we got a license to be a local fund custodian. this is a big deal so we will invest heavily. the rules in china have changed. we can take a higher ownership in security companies and banks, although we own 100% today. we have invested heavily in digital across africa. we have rolled out a digital banks in nine countries in africa. we will roll out that capability in the middle east and south asia. francine: does that make a difference? if you roll out technology, how fast do you get returns? individually, each investment is not very material in terms of the bottom line. but what we are trying to do is to position standard chartered as the leading bank from a customer service and quality perspective, and increasingly in terms of market share.

the markets are growing quite quickly. francine: this is brand recognition? bill: it is new customers, also brand recognition. it is being identified as a bank that is innovative. as we go and talk to corporate customers about things we can do together, they say they want to deal with a bank that is able to help us innovate by being innovative themselves. there is branding and there are new customers. we want to many new customers and clients and the best and most effective way is through digital channels. francine: how will that change? if we look at the pace of change in the digital channel, is it going to double and how will you stay ahead of that? bill: out digital penetration rates is only about 50%. half of our clients, existing clients, are not accessing us through a digital channel. that is consistent with the

global banking benchmarks. will get 50% here much closer to 100% and the demographics will pull us that way. but also, to take the millions of people who are under banked today and bring them on board. it could be people in remote locations where people that will have their first savings, their first smartphone, and access financial markets in a way they could not before. francine: are we going to see m&a in europe anytime soon? how will that change review of the world? bill: it does not change our view much. the european banking sector is over dispersed, too fragmented. and one way forward is to combine. i don't think that is a field in which we will necessarily play given our focus, but we are a european bank.

so we see very closely how fragmented the banking market is how much opportunity there is for better customer service. francine: bill winters, thanks so much, the chief executive of standard chartered joining us for this exclusive interview. in the meantime, we are seeing pictures of air force one as the president of the 11 states of america has just landed in normandy. we know that he will be meeting with emmanuel macron. i don't know if trade tensions will come up, but it will be interesting to see these world leaders meet for d-day commemorations. ♪

air force one touching down in the north of france for celebrations of d-day. the stateen following

visit of trump to the u.k.. this marks the 75th anniversary of d-day. we are looking at pictures of the prime minister, theresa may, one of her last engagements before she steps down as head of the conservative party tomorrow, of course with emmanuel macron of france. this is the second day of events. we have been hearing from trump, talking about d-day. we have heard him talk about how conversations with mexico have not been going as well as he hoped they would. the european is set to decide if the euro area needs more stimulus. the meeting takes place against the backdrop of a dovish mood around the world. joining us now is maria. how dovish will mario draghi sound?

elements are in place for a dovish mario draghi. down.uch tilted do is to he could change the forward guidance. bank willan central keep rates low. the question is whether that moves to 2020. bankse seen many central hint the next move will be easing. another crucial move will be the fresh round for banks to focus on the terms and conditions. the last time it was priced and as -0.4%. francine: thank you. banhu.et back to

program started the with you telling me the markets or complacent about the risks out there. are they complacent with the ecb and the fact they may not have a toolkit to deal with the next downturn? banhu: i don't think the markets are complacent. what is priced into europe, you see the first hike coming in october, 10 basis points, the rate going to zero as of 2023. i do not think that is complacent. equities, valuation is lower in the u.s.. credit markets where the ecb is most focused on. market is aedit

policy tool, they have done a good job. is whether low growth will harm the credit markets. francine: we are looking at live pictures of trump descending the steps of air force one with his wife. how risky is it the trump administration, after being in a trade war with china, going after mexico, goes after europe, germany in particular, because of the surplus? possibility.s a i don't think auto tariffs have been off the table forever. is possible we are in a situation in six months, where we talk about a trade problem between europe and the u.s.

well before that, if u.s. and china were to continue, i think europe suffers. april data coming into the trade war, we saw data rebounding for the first time in a long time. if the trade war continues, europe will also suffer. perhaps not as hard a hit, but a very big hit on the markets. expectations, one the ecb onlyks at, looks at inflation. this is not a situation in which ecb can do too much. beon't think parameters will ones that are satisfied. you see a rebound in credit growth. we are out of monetary space.

it is too early to declare this a liquidity trap. europe has these problems, japan has these problems. the fed is arguing, let's think about things preemptively so this problem does not come to the shores of the u.s. francine: what is your take on can beish mario draghi in the press conference? does he tie the hands of his successors? bhanu: it is likely he will be dovish. how heifficult to see can sound confident. economic growth has been ok. the numbers were better, there is no doubt about that. i cannot see how he does not address inflation and the risk ahead. inflation is at a low level. with rising risks ahead, you can't help think they will be dovish.

the front end is priced dovishly. it may matter for the euro in that it is difficult to see how the euro can rise aggressively at a time when growth is not picking up and the central bank is saying we cannot hike rates soon. prices are going to zero by 2023. this does not matter for the front end, but it may mean the tens can steepen between and 13's. we are covering the st. petersburg economic forum. stephanie sat down with the governor of russia's central bank today and talks about the trade war, oil prices, and rates ahead of next week's decision. stated should the

situation develop in line with forecast,ase reduction of the second and third quarter, the data we theived, they confirmed better thanvolved we expected. are down.expectations admittedly, external positions, we will take into consideration all these. stephanie: domestic conditions for a rate cut have been met in

your views. elvira: in general, yes. the debate is not favorable about economy growth. details toave enough judge this data. stephanie: the nearest future is the phrase you used. that sounds very near. the next board meeting is next week. we will consider alternatives, including the possibility of reduction. stephanie: what would be the other alternatives to cutting rates? elvira: two keeping the rate unchanged. stephanie: it doesn't sound like you have many alternatives if you want to ease policy, which you do. elvira: we will correct our forecast.

every three months, we reconsider our forecast. forecastingk of the is underway. it is early to make decisions. stephanie: how is your forecast developed -- affected by developments in the global trade war, particularly in the u.s., the comments about mexico and the negotiations with china? elvira: they are unfavorable. the talks and the risk of a national trade war. economicption of and globalinvestors economic slowdown, they exist. it can influence the russian economy through oil prices, through the demand of oil and other commodities. financial commodities, we will

consider this in our decision. stephanie: there is discussion around opec. the opec plus deal, how do you feel it has affected the outlook for the russian economy and what do you expect for the oil price and the next few months? elvira: quite conservative in forecasting. is forecast for this year $60 per barrel and $50 per barrel for 2020 onward. high inil prices are the first month of this year. forecast,consider the but oil prices are moved by a complex set of factors. are you thinking

about the impact of the oil pipeline issue? how does that affect the economy? it affects negatively to the oil markets. companies maybe. i don't think it will influence oil price level directly. that was the governor of the russian central bank speaking to stephanie. we will have more from markets, plenty more from the st. petersburg economic forum. we bring you live pictures of the d-day commemorations. airport.iving at the we have been trying to figure out some of the hidden messages from european union yes --

hidden messages from european leaders are not so hidden. we heard from the queen of england, the british prime minister, and the german prime minister, all stressing the need to maintain alliances. we will have more from paris and more from normandy. this is bloomberg. ♪

♪ francine: this is "bloomberg surveillance." . live pictures over in normandy,

the d-day celebrations. is our whiter more house reporter who has been traveling with the president. messages, orden maybe not so hidden from european leaders trying to -- by showing the commemorations of the anniversary of d-day, trying embraceim onboard to multilateralism? >> d-day was largely a success because of alliances. this is a moment where the importance of alliances is highlighted. in large part, this state visit in the u.k., ireland, and france has been for ceremonial

purposes. experts say they hope politics will remain out of it and today is simple a -- is simply a somber day commemorating an important event. francine: how have the discussions on huawei gone? the secretary of state, mike pompeo has warned u.s. allies that because of espionage concerns, the use of huawei equipment in 5g networks could leave the u.s. not sharing as much intelligence with them. in conversations with prime , theter theresa may an conversations have taken a softer tone. abouthas encouraged them the importance of the intelligence sharing partnership with our allies. trump says he values those

partnerships. when asked about whether or not he would limit such relationships, trump said no, because he believes an agreement will be reached, denying such relationships would be limited is a break with what pompeo has said and represents a new message that the u.s. is taking on huawei. francine: thank you. our white house reporter, alyza. we were talking about trade tensions and you thought it was 100% priced in to the markets. is there need to be a catalyst the market is looking for that could make it reprice itself? bhanu: other than stating the obvious, the market is hoping for better news at the g20. -- may notmay not be get great news out there.

it does not seem we are getting low level meetings going on even if that takes place. i do not think there is a particular data point, except one, the market needs to know china is going to be able to give liquidity to the rest of the world and support growth for the rest of the world. the biggest factor driving markets has been the fact china tried to find economic religion by keeping credit to gdp constant. that does not get headlines in bloomberg, that was a bigger factor driving markets. they are going to postpone reform and are going to give a massive amount of liquidity. .he market could look different we could be in for a tough summer for that to happen. the next few numbers and china

are the most crucial. francine: we will talk about european stocks and assets, but what is your take on emerging markets? bhanu: we find emerging markets have not paid as much price of the trade penalty as have developed markets. certainly, the u.s. that is because other things have been going on. we live in a massively multi-variant world. tech has been coming down independently. that has had a major impact on emerging markets. korea and taiwan have been impacted. about,oke to you earlier china is being limited, but much was important than it previously. even if the trade war was

righted, you get better trades then you do emerging markets. developed markets in general like to outperform. the fundal -- the fundamental issue, equities pays the price per the fx is the weakest link. that is why we have a reasonably conservative view on currencies. we want to hold develop market equities as a structural view. thank you. bhanu stays with us. we talk about italy's government. they come together to defy eu budget rules. we will have more on that. we are looking at live pictures

of the d-day celebration, 75 years since d-day. thement to think about history of our ancestors. we will keep a close eye on this imagery coming from normandy. this is bloomberg. ♪

this is "bloomberg surveillance." marine one,ng at the helicopter of the president of the united states just arriving in normandy, france. it was about 30 minutes ago where we saw trump with the first lady of the united states getting off the steps of air force one. the president has a full schedule. we expect to hear from the french president, emmanuel macron. we expect trump to say a couple of words in the next hour and participate in viewing the normandy american cemetery and the omaha beach briefing and then they will depart.

italy's government has come together to define the european budget rules. it comes as the block starts disciplinary proceedings against rome. how much tension could the italy and italian situation create for the euro zone? think the bond markets not much. spreads came in yesterday. this is an event the markets ignored. i am surprised they have. of leveesamounts would be small, penalties would be small, the point is the executive arm of europe and italy might be going at loggerheads and more important, all parties are unified in ules is atopean r fault. this is not being priced in the bond markets. we would rather be in the cleanest part of the spectrum,

which is the ig space. they have different credit profiles, but in terms of pricing, they are pricing in good news. spreads would rather be in ig credit. it is important not just to focus on what is happening with the reform in italy, but also the global economy if we do see global downdraft, italy will also pay the price. francine: thank you. we are looking at live pictures of trump in normandy. ♪

francine: keeping up the pressure of trump, the u.s.

imposes duties on another 300 billion of chinese goods. walking away, -- turns positive, erasing earlier declines. mario draghi, we hear from the ecb president as he is under pressure to rekindle stimulus after sacking inflation. good afternoon. tom keene is in london. to kick us off, i am going to give you a quote, the best thing about london is paris. we look at markets as the commemorations of d-day in normandy. tom: it is going to be an interesting day. francine: i am looking forward to draghi.

will bring you exclusive conversations with top executives. these are some of the chief executives we will be speaking to. by unicredit'sed jean pierre. olivia: trump is turning up the heat on mexico over tariffs. talks have not gone far enough. the president has threatened to impose tariffs if mexico does not do more to stop the flow of migrants and illegal drugs. >> a lot of progress was made. we have to make a lot of progress. mexico has been making it for many years, hundreds of billions of dollars, they have been

making a fortune on the united states. they have to step up and step up to the plate and perhaps they will. we are going to see. they can solve the problem. could adde president another 300 billion dollars of chinese goods hit with a tariff. he says china wants to make a deal badly. the european central bank decides if there needs to be more stimulus. central banks around the world forth a looser policy. thea chrysler is blaming french government for breakdown in talks for renault. it has become clear the political conditions in france do not currently exist. the french government is a renault's biggest shareholder.

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. this is bloomberg. equities, bonds, currencies, commodities, a nuanced take on this thursday. futures up seven. a rally continues. a huge day off of jerome powell. euro does not do much. oil finally gets the bid. goodix with better than equity markets. it is remarkable, showing the resiliency. in europe, they are extraordinary. three basis points in on the 10-year yield, rather. i want to make clear, the

lower,c set shows negative yields, greater yet -- greater negative yields as we go to mr. draghi. i also have mexican peso in my data check. the appetite for risk is tempered. i look at some of the stops, they are off because they are focusing on the prospect of easier monetary policy. i am looking at the non-merger iat and renault and fe the fact that it faltered. i am also looking at bellwether and what mario draghi said. is an interesting hour on the backend of the president's trip to europe. we will have much of the murder remembrance of -- we will have much of the remembrance of omaha beach. emotional, the 75th

anniversary of the heroism of d-day. we turn to the heroism of the markets, to try to understand trade theory. i do not get it, you do not get it. andrea suter has a passing understanding. she could not get to us yesterday because of the trump festivities. wonderful day to have the two of you here. the backdrop is chinese angst in this immediacy to mexico. let's talk about mexico. it is a small tariff. what is the so what of a small tariff? trump weaponizing tariffs. that is new and different. he is using it as leverage to get non-trade goals. his package, trade and immigration, if you do not change your policies on immigration, i am going to impose tariffs.

tom: let's go back to immigration 101. eft's d.r. said we cannot make it like -- churchill make itsaid we cannot like world war i again. are we getting towards the tensions of a regional block? stephanie: we see a ratcheting up of tensions. trump is playing up to his base. they care about immigration, identity politics, then about trade, peace, and globalization. that is what is dangerous now. tell us: what does that about what the president of the united states of america could do next if he is weaponizing tariffs to get foreign policy, can --migration, what can he weaponize tariffs to get something out of germany? stephanie: absolutely.

what is dangerous is we see him undermining the credibility of u.s. trade negotiators. imagine you are europe and you're watching what is happening with mexico. mexico, the u.s., canada, they sat down and agreed to an updated modern version of nafta. not later, trump says i am going mexico.e tariffs on if you are europe, you are worried about the credit of the u.s. negotiators and to sit down and agree with you on something trump will actually sustain. andrea, it is a great to have you. what do all of these tensions mean? i am not sure if you could put judgment on that. the issue we have is on the one hand, tariffs are bad.

-- tom said i have a passing understanding of trade. what i have learned is the applied tariffs. was if we all along have trade wars, we would get the markets shook up. that happened in q4 when it was coupled with a normalization of the yield curve. central bankers and politics have led that to be somewhat muted. we have discontinued issued that the market has been grappling with for a long time. we have qe, driving up asset prices. investors have little choice goallonger periods than for risk. you have mounting political and economic friction and risk around trade issues. very difficult to predict where that is going to go. catalyst -- there a

is the market believing trump put theirent xi will differences aside and come to some kind of agreement? andreas: that is what it means. the markets have taken the view since the start of the year that if monetary policy normalization is off the books for now in most of the world, asset prices will ,o up and we better believe particularly if trump wants to get reelected, there will be some sort of agreement. at the end of the day, when the electoral cycle kicks off in the united states, will there be a calming of the trade tensions and that is why the markets are going up? hallmark,morning's interest rates. we have real yields that are nonexistent. ay-to-day, you are living in

negative interest rate experiment. how is that experiment going? andreas: depends on who you are. on debt, it isng wonderful. you probably have risk. if you are a recipient of toments that are not indexed inflation, that is not a good thing. that is why we see this discussion around inequality and so on. it is are allianz, challenging, but not insurmountable. maturities is the answer. play the liquidity premiums. all of that. have a are going to four-hour conversation here. i want to go to the timeline of negative interest rates. let me go to the timeline of trade.

this is getting old. it is a multilateral set of trade disasters. it is getting old. stephanie: it is. trump is trying to fight a trade war on multiple fronts and it is ratcheting up day by day. he said i can impose more tariffs on china. mexicaning to take the tariffs from 5% to 25%. we see constant aggravation and a change in the sentiment there is tension and concern. tom: a bundle of news this morning. it is a wide set. thank you. have the european central bank meeting today with new low yields. much more going on. the european -- the chinese, rather, central bank governor looking for that tomorrow as

well. therance, the president of republic of france and the president of the united states above omaha beach at the national cemetery. stay with us. this is bloomberg. ♪

would be prudent to look at our setting for monetary policy as we do each and every time. i am nervous about the low inflation rate. even though we expect it is

temporary, that could be a reason for more accommodation. we will have to look at how things are evolving. be vigilanting to about understanding heightened trade tensions, see if they feed through to the economy, see if they persist. it is too soon to make a judgment as to whether we might or might not take action. i would rather be patient and let events unfold. tom: good morning. another busy day of international relations. we are focused above omaha beach. we will go there and a bit. we are focused on the important issues of economics, finance, and investment. one is to look at the european central bank. we have set up challenges and mr. draghi says it is a complex set of challenges. i would focus on gdp, quarter over quarter. there are other joys as well. with us, andreas, of allianz.

he has a wonderful prism of asset management and an understanding of how this is intertwined. what do the markets want to hear from mr. draghi? want to see we are not making changes. the markets are comfortable with the positioning of the ecb and the rate expectations. they are on hold. they are expected to remain on tradentil the global environment, political environment columns down and we can see some normalization in the growth expectations. does the ecb still have the toolkit to deal with it or are they reaching the limit? theeas: the ecb is reaching limit. both in terms of the toolkit and in terms of the politics of it. this is where fiscal policy

needs to take over because, as we have seen and discussed many times on this program, the quantitative easing policies inequality in the united states, u.k., and continental europe. that is understood by the public now. it is heavily criticized in germany and as the race for the next ecb president heats up, the ecb will have to be careful not to be seen to be playing politics here. did they do with italy? what did they do with the concerns we have seen on budget rules? is there anything they can and should do in the immediate term? andreas: they cannot do anything about italy. the commission is trying to step into look at the italian deficit. it is an italian political situation with political implications for the euro zone.

it is not the ecb's job to deal with italy. read, marvin, jackson hole a few years ago, on the amplitude of negative interest rates. at thoseknow if we are levels, but what i know as a vector, it is not good for deutsche bank, et cetera. i am looking at a screen different than three weeks ago. record0 year, a new negative interest rate. how does mario draghi unfold this experiment besides hoping and waiting for economic growth? andreas: it is interesting. tom: no one knows. andreas: nobody knows is the answer. we may be in this for a long time and that may not be a bad thing. a lot of people talk about

negative japanese experience over the past 30 years. had involvings i global bond mandates in the early 1990's and clients were saying when japanese 10 year yields were into percent or whatever it was at the time, we are going to ask you to take the japanese out of the benchmark because it is obvious you should be short them because there is only one way they can go is up. here we are 25 years later and they are much lower. people are saying this is bad, but i maintain may be the growth model the nominal growth the world has been following is not applicable to economy such as japan or continental europe, where we have a demographic deficit and different policies might apply. a study came out a few days ago. it was reported on bloomberg. deutsche bank said the japanese experience may be heading towards europe but that may not be a bad thing. tom: if you get me going, we are

going to have to cancel commercials. andreas is upsetting me, francine. -- andreas dresse all fired up, tom all fired up. we will have more from the goldman sachs conference. we will speak to the unicredit the chiefutive and executive officer of goldman sachs. this is bloomberg. ♪

tom: it is extraordinary.

we are in paris and london. the president of the republican , -- the president of the republic of france and the president of the united states. the american flag flies above omaha beach. it is extraordinary. you think of 9/11, all of the sacrifices, 9388 burials above omaha beach, including, whoonly general roosevelt, omar bradley said he was the greatest hero he saw in the war, but his younger brother who was on the border of france and hisany and reburied next to brother. it has been an extraordinary trip for trump. some successes, always some controversy when any president travels.

let's listen in for a second. your the rise for emmanuelf president macron and donald j trump. [applause] >> [speaking french] will see this through the day. the french government will be honoring five veterans with their legion of honor. , of of the festivities course, the president overnight in ireland. there was controversy about flying to his golf course after meeting with the prime minister of ireland at the shannon airport. this is at omaha beach, surrounded to the west by utah

beach and to the east by a less fractured gold beach. let's listen in as we go to break. today, from paris, london, and normandy, this is bloomberg. ♪

>> we are looking at commemoration of the 75th anniversary of d-day.

flanked by his wife and the president of the united states and his wife. the last time the french president hosted donald trump in france it turned into what many call the diplomatic fiasco. awkward andvery long handshake. we will see if this time is different. extremely important commemoration there as leaders try to reflect on the piece we have had for the last 75 years. we will get back to the leaders in normandy. let's get to the first word news in london. >> president trump is pushing for trade concessions from china . the president spoke in ireland before heading to france a day. or $250e getting 25%

anotherand i can go up $300 billion and i will do that at the right time. i think china wants to make a deal badly. i think mexico wants to make a deal badly. >> president trump threatening to impose tariffs on mexico next week. saying then he to slow down the flow of drugs and undocumented immigrants. the president says there is not been enough progress in talks between the countries. says speaker nancy pelosi she does not want to see him impeached she wants to see him imprisoned. she rebuffed jerry nadler's request to begin impeachment requiring. tellingquoted as democrats she wants to see the president defeated next year. ballooning oil industries in the u.s. is raising concerns of a supply glut. there was word that american oil stock prices -- opec is

promising to maintain its quantity of producing supplies. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. >> olivia, thank you. this comes on the prospect of using monetary policy from the ecb and the fed. appetites tempered by government us is a chiefng executive. how do these trade tensions affect you? have you seen any chinese companies that were going to list in europe deciding that is not the place for them? >> there are a number of chinese companies considering in europe --

what is really impacting the markets is the uncertainty unexpectedthis negative developments. >> we have seen chinese companies that want to list in new york deciding they are not going to go to new york. we have an ambition to do international listing but i do not expect that to be significant. we are not talking about many chinese companies looking for that type of listing approach. it is not a huge opportunity. >> you don't see it as a game changer even if the trade war takes place for the next five to 10 years? the trade warof on listings will be minimal the real impact will be the amount of uncertainty it creates. worse than volatility is when people wait and see. >> i know that your industry is

going through a big consolidation. as you try to move away from an overreliance on equities the see more mna? twoext is diversifying and -- in two directions we are for allo be a home single liquidity pools -- >> are you buying anything? we bought last year and we are about to compete in a few weeks time. we are in the process of doing this sort of thing. to the expansion we are looking for opportunities to diversify on the top line and get into more non-volume driven businesses. we have started to take steps in this direction. >> you now own 61% of the oslo stock exchange, how do you

progress there? through a 61% combination of commitments and the shares we owned directly. this is evolving in the next few hours and days. more shoulders have been released -- that 61% is ant bedrock. >> is there anything else you would be interested in acquiring? >> we would look at any situations where we can deploy the euro next model. it is up to them to decide whether they want to be part of a european group which has skill and is united in diversity. identity in terms

regulators and at the same time we scale what needs to be scaled in terms of liquidity and technology. >> how much have you been asked about the high fees that euro next asks for clients for high , are you being asked by regulators to justify them? is not as fierce as it is in the u.s.. there is a transparent dialogue with the regulators to try to find the right solutions. there is clearly a connection between the trading and the production. seriousthe most producingn terms of -- if yougating data ask asset managers they would probably say bloomberg is a big

problem in terms of price making. that is not the most fundamental issue. i think the dialogue we are and weis very productive are in image -- we will end up at a mutually satisfactory solution. tom, i will send it back to you. we will have plenty more from goldman sachs throughout the day. will ask stephen chair of goldman sachs about the trading he has seen so far. that is coming up later. tom: thank you, francine. we are watching normandy and the cemetery there. we are awaiting president macron 's speech and president trump. off of that interview the challenge for me is to look at chinese equity markets and the state of em.

we want to reach out opportunistically to be in em, i guess china is part of em, is china a legitimate stock market? >> absolutely. it is a legitimate stock market in the sense that it is providing capital to firms, providing opportunities to deploy the capital in a risky manner but it is not a mature stock market. maybe like the u.s. stock market was many decades ago. tom: where in the continuum of em:tier economy over to where does china fit in? >> at the more solid and. economy is very conscious of the fact that it needs a functioning's financial system. to experts in out

the rest of the world to help them to achieve that, they have --ig challenge, how to how do we attract capital and allow chinese capital to leave china? tom: whether it is through market investment or direct foreign investment, how do they develop the confidence to bring in new or capital? >> they do. our group has been granted a , the firstng license insurance company to have been given this license that covers insurance and asset management. part of our group has set up. the legislative environment has changed and the regulatory environment has changed which means we have access to chinese clients. tom: this is so important what you are discussing. d.c. a social safety net developing and china?

>> they know that if they want to be successful i guess it will be a multi-decade program of shifting reliance of the economy away from the foreign sector to the domestic sector. i never know what i'm going to talk to you about. about 18 themes to go today. on goldmaning day wall street and goldman and paris. above omaha beach, the president of the united states supporting remembrance of 75 years. it has been extraordinary to see acron and mr. trump shake the hands of the many veterans of the day. this is bloomberg. --veterans of the day there d-day.

this is bloomberg. ♪

francine: -- >> this is bloomberg surveillance. fiat chrysler is blaming the french government for breakdowns with talks. they withdrew their offer after the car company's board withdrew their offer -- it has been clear that political conditions in france to make a deal do not currently exist. the french government is the biggest shareholder. let's go to our bloomberg bureau chief. he has been the authority on fiat for several years.

be a withdrawal that was aggressive and out of the blue. do you have insight on whether fiat chrysler got fed up with it and whether they will go after renault, do they need renault? >> it looks like this is a proper fight between fiat chrysler and the french government. whenl happened last night we were all waiting for on approval by the renault board. there was a story they were going to create a third-biggest carmaker with fiat chrysler. we broke the news that fiat withdrew its proposal. this happened because the french government asked to delay a decision while the board of renault was almost ready to go with a majority in favor of the deal. formind behind this deal

fiat chrysler, this was a clear sign that the french government wants to have full control of fiat and renault and that was enough for them. this is why they decided to walk away. says youatement fiat never know, this is quite strong at the moment. at the moment we do not see fiat coming back immediately to discuss with renault. officialsf french have been speaking to the press after this ended and they say wasfrench government coherent and firm in these talks. what does this mean bigger picture? that french companies are closed for business or that they wanted a better deal, how difficult is

it to understand the nuances? is thatis clear here the government and politicians have a great influence over renault. wasr you are no board mostly in favor of the deal and then the representative of the french government asked to them not to vote and postpone a decision after speaking with the french government that somehow means that the french government is in the driver seat. if you want to merge with the company you want to know who is in the driver's seat. this is why they said they could not pursue it with that combination. renault board and chairman was fully supporting this combination which in terms of synergy and the strategy of the deal makes a lot of sense. really a political deal

that at the moment has been halted as tentative. tom: thank you so much. on the interesting non-transaction of fiat chrysler and renault. thank you. before we get an update on the , these are live from theom normandy national cemetery, the american cemetery in france. this is the president of france. he was exceptionally elegant yesterday in portsmouth. providing support to general eisenhower's efforts. our bloomberg white house correspondent as we watch normandy, i need to go back to

when the tries it in -- president travels back and what he comes back to you. >> trump is traveling to normandy today and he is expected to give remarks about the somber occasion that he will be meeting with the french today is expected to largely be about alliances and shared interest given the nature of the occasion then he will return home to return to domestic affairs. to: he comes back home domestic affairs, what is number one on the table, mexican tariffs? >> we will have to see. there is that and the trade deal with china. there is the talks with huawei he has had. when he returns to washington we will see if he takes action on iran but mexican tariffs are obviously top of mind for

everyone watching especially given the domestic political side. tom: elise, appreciate it. these images from normandy are extraordinary. -- saw one that shows the distance from the channel. the goal of general bradley and general eisenhower was to move the front five miles. that did not happen, at the best they got in 1.6 miles with immense sacrifice. stay with us, president trump scheduled to speak.

>> trade is the big story right now. here four sitting weeks ago the expectation would be that a trade deal between the u.s. and china would not happen. i would not say that is dead yet, the presidents of meat and the g20 meeting and we will see what happens. >> we are hoping there is a

resolution to u.s. china tensions. not, that is the base case, we focus on this very important chinese economic machine directing all of asia. that was the goldman sachs vice chair bill winters -- the main theme throughout the is being more cautious because of what going up -- what is going on with trade talks. later on we will speak to steve rr, goldman sachs chief financial officer. tom: we are monitoring at ofmandy the 75th remembrance the day, extraordinary imagery as mr. macron is speaking. president trump scheduled to speak in a number of minutes. that is my favorite shot of the

french president looking over the channel. turning around and looking at the veterans. update on the oxygen which is fees. fidelity announcing because of competition they will lower fees on their target age product. it is tough out there isn't it? >> it is supertough and i am afraid if it is not -- if we are not careful it will be a race to the bottom. tom: how do you keep intellectual content given this? reshape them narrative of the asset management industry. it has been too technical and focused on fees and it is not focused on what asset management does in terms of providing capital to companies in terms of allowing infrastructure investment to go ahead. we need to rethink the strategies we offer to the market.

our performance and information ratios, to most people that is meaningless. we need to connect with stakeholders on an emotional level to understand the value they bring to the table. we talk about these all the time. tom: i think the next question is, do you need an all-american bear market to readjust with a respect for active versus passive? >> i think if we can get a bear market of the style we saw in the 70's or late 20's early 30's people will not want to invest at all. tom: we still have some of that. in the little time we have left, where do i capture yield? price up, yields down, do i go to cash? >> dividend stock. i believe that even in these markets that have melted up there is still value. , on equities

inflation-adjusted terms they are on the same level as 20 years ago. fixed income securities, u.s. dollar fixed-income securities have a yield of about 8%, that is not bad. tom: thank you so much. you have been great this morning. speaking at the american cemetery. this is french soil but it has been given in perpetuity to the united states of america. the american flag flies at the cemetery of 9388 dead. another hour of bloomberg surveillance. good morning. ♪

tom: the president of the

republic of france and the president of the u.s. speaking on french land that flies the american flag above omaha beach. 9000 are varied, the sacrifice of 75 years ago. will mexico see their economy to a trump the u of and out of the control country. in --illions this is bloomberg surveillance i am tom keene in london, francine is in paris. it is extraordinary to see the image of mr. macron speaking in front of three rows of age to veterans. is amazing for americans to see the path of these veterans from ronald reagan in 1984 on through the decades. and maybebrance today final remembrance at the day.

--d-day. francine: it has been unemotional in commemoration we have been following. you talk about the emotion for merrick -- americans and the french and the italians and the irish and british. at thencredible to look 75th anniversary of d-day and what it can teach the world for the next 75 years. here at the 23rd annual goldman sachs financial conference in paris so we have plenty of great guests coming up to talk about some deepions and concerns we have in the banking industry, negative interest rates, central-bank policy we with the conversations .oldman sachs cfo all of that starting in 30 minutes from now. from paris, francine.

i am tom keene in london. here is olivia. olivia: president trump is turning up the heat on mexico over tariffs. he says talks between the countries have not gone far enough and he has threatened to impose tariffs if mexico does not do more to stop the flow of undocumented migrants and illegal drugs. progress waslot of made yesterday but we have to make a lot of progress. for manys been making years hundreds of millions of dollars, they have been making a fortune off the united states. they have to step up to the plate and perhaps they will. president said he could add another $300 billion of chinese goods to the list of those affected by the 25% tariffs. he says china wants to make a deal. the european central bank decides to they whether the euro

needs more stimulus. policymakers are in with a when you and they are considering plunging expectations for inflation. australia cut rates on tuesday and the federal reserve signaled a willingness to easily necessary. fiat chrysler and the french government are blaming each other for the collapse of renault merger talks. both sides are keeping the door open. be ought says no deal is possible in the current political conditions. france says the deal is being rushed and they want to go to over renault's alliance. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in over this istries. bloomberg. equities bonds currencies and commodities, focusing on the ecb in lithuania today. the equity move over the last three days off of chairman powell's speech. and finally oil

with a bid. a 49 handle on west texas intermediate. resiliency in the equity markets, that is a stunning statistic of 16.09. the 10 year yield in the u.s. with a vengeance, mexican peso 19.69. francine? i think european markets are looking at two things. lingering concerns in global trade with discussions between the trump administration and mexican officials ending yesterday without an agreement. we are also looking at the european central bank. europe was up against the dollar. president draghi under pressure from the markets to provide more stimulus. francine, thank you, important conversations on finance today.

in normandy there are speeches and handshakes and real discussion with these many veterans. five of these veterans will be given the legion of honor by the president of france. you can see the gentle man to the left with the red ribbon going back to 1804 and napoleon and what is so extraordinary within french politics and french history is the continuity of the legion of honor, it has been one of the few things in french society that has been continuous since the french revolution. we will see this. president trump providing assistance and he will speak here in a moment. neil shearing is here with us and so is --

a fantastic book on the conservative philosophy of america. what is the philosophy right now of trade? a conservative history of trade, how mercantile are we? >> i think we are at the tail end of the process of globalization were aggregate growth rates seem to be lifting the whole world economy but the losers inside the democracies are increasingly in charge of the politics of the democracies. as they were the guardians of that order they are in a condition to control it. we are heading into a prolonged of a much more mercantilists self-interested set of policy. even among those who call themselves champions of the eu in free trade. quantify the drop in gdp that we are going to see with multiple festivities worldwide. >> how long do you have? tom: we have about 14 minutes at

until the president speaks. >> what you need to do is separate out the damage that has been done so far by tariffs by the direct and indirect effects. the direct effects are largely more important. the effect they have had on business confidence and so force. you may have shaved off 2% of the global gdp so it is not a big deal when you think about the fact that the global economy was growing at 4% at the back end of 2017. now it is growing at around 3%. the all and robin with us as we go above omaha beach to the cemetery and the president of the united states. trump: two distinguished guests, veterans, and my fellow americans we are gathered here on freedom

possible to her on -- freedom's altar on these bluffs and this day 75 years ago 10,000 men shed their blood and thousand sacrifice their lives for their , anders, for their country for the survival of liberty. fell we remember those who and we honor all who fought right here in normandy. they won back this ground for .ivilization for the veterans of the world war that join us today you are among the greatest americans who'll ever lived. you are the pride of our nation you are the glory of our republic and we thank you from

.he bottom of our hearts [applause] here with you are over 60 veterans who landed on d-day, our debt to you is everlasting. today we express our undying gratitude. when you were young these men enlisted their lives in a great , their mission is the

story of and the struggle within ofd and evil on the sixth june 1944 they joined a liberation force of awesome power and breathtaking scale. after months of planning for the allies had chosen this beach and coastline to mount their campaign to vanquish the wicked tyranny of the not see -- nazi empire from the face of the earth. the battle began in the skies above us in those tents midnight ense midnight hours, airplanes roared overhead with allied troops preparing to leave into the darkness beyond these trees. , the enemy who

had occupied these heights saw the largest naval armada in the history of the world. werea few miles offshore 7000 vessels bearing 130,000 warriors. they were the citizens of free and independent nations united by their duty to their compatriots. that is president trump talking at the 75th anniversary of the d-day commemoration. what difficult to imagine the men and women of the time went through when you look at the veterans in the crowd and the people watching this you have the heaviness of history of the last 75 years, the sacrifice in normandy. 75 years of european freedom and prosperity.

we will get back to the commemorations of the d-day landing where president trump is addressing the nations. we have to keep an i on monetary policy and what the ecb will do. whether mario draghi will put some extra stimulus. our guests are still with us. communication can president draghi show the markets without meeting his successor is stuck with dovishness at the market launch? >> the big challenge is he does not want to tie the hands of whoever may follow him. the market is looking for two things. the first is the sense that the ecb is pushing back the tightening they have. the second thing that we may get some clarity on is the details refinancinground of

operations and how generous they are. mostis the thing i suspect investors will be looking at. if you look at central banks around the world they sound more dovish, what can the ecb do? >> i think we have reached the limit of central-bank policy. there is lots more they can do. they can do more quantitative easing. the question is how effective it might be. there is lots of academic research and we know the most effective form of monetary positive --es from putting a big pressure on commercial banks in the eurozone. based with a weak backdrop in the macron economy i think we quickly move into a world of more quantitative easing,

something the market is not thinking about but it could happen. it puts more emphasis on the fiscal side of the equation, particularly in germany. set up a number of options that mr. draghi has here on the edge of a lame-duck presidency. i am assuming this is his last time in with the linea. , we have put up a set of issues from him. we going to help with dynamics. you can tell us about the germanic experience and as neil mentioned about a complete failure of a fiscal authority, it is not there. thet is not there because national governments have not been willing to make that fundamental step in their national politics. forget, the eu budget only accounts for 1% of eu gdp.

national governments account for 5%. they are not going to want to give up control over rising populism. even less chance after the european parliamentary elections. and robin knebel it with us shearing. this discussion made interesting by what is occurring in italy. the president's speech at the american cemetery in normandy coming up. we speak in london, this is bloomberg. ♪ >> of the 31 men -- ♪

>> the one solution to this is collins -- consolidation. europe still seems to struggle. example this year of two banks in a domestic market getting together. if you cannot get it done domestically across borders -- i think there will be growing pressure for consolidation across the making space. given the signal from different banking systems in europe and the treatment of different products and the fact that the banking union has not been completed, there are many

reasons why we believe that mna will not happen in europe in the near term. >> that was the goldman sachs the goldman sachs financial conference happening in paris. we have been looking at d-day commemorations with president trump still addressing the crowd gathered there. to put it in perspective it is really the sacrifice in the normandy landings that helped work at 75 years of european freedom and prosperity. neil sh h us is neilshear -- earing -- i want to look at the peace process that got the eurozone together, are you worried that populous forces could come to a head? >> extremely worried.

it is important to separate the but from anon economic perspective i worry about the eurozone. that is an incomplete project and there is no fiscal union or banking union backing it. atfavorite statistic is that the inception of the eurozone the german economy has grown 45% , spain is up 43%, italy has grown by 9% since the start of the eurozone. that is underlying all the problems in the italian debt market, the absence of growth and income that is generated from that growth. that is what is waiting to go off. that is what we need to work on over the next two years. tom: are we at a point where the modern european model could fall apart? elements of the modern model using the ecb and the to the modern-day could fall apart? >> it depends on what you mean

by fall apart. inertainly think that we are a world where the future of the eurozone is not immediately in doubt but is italy going to be part of the eurozone and 10 years? i don't know if i would bet on that. will there be some form of debt restructuring over the next five to 10 years, yes. tom: carl weinberg is an expert on this. we have just seen the president speak in normandy, grinning with mr. macron and -- greeting mr. macron and the veterans. , so much of this debate is a debt workout. you have to reduce the rate and extend maturity and if some form of the jargon forms a clampdown where someone takes a loss, why do we not want to take a loss? how did we get here? >> we got here because the idea

was a monetary union would be created without pain being caused. >> that was the textbook that we studied. >> it was meant to be the big answer to german unification. people were not even looking in terms of convergence criteria and elements of competitiveness, they used measurements that allow them to have a five -- a high figure. not want to see italian industry competing with german industry. in a way that great growth germany got is greater than italy. part of the challenge is italy is saying don't treat us like this, france is worse than we are. in a select few ways france is challenged for more challenge than italy. it is not just italy is it? >> italy stands out on several

fronts. one is the pilot government debt -- pile of government debt it sits on. the banks hold a lot of debt. the fundamental one is the growth rate. the fact that italy has proved over the last 20 years it cannot grow within a straitjacket. tom: for the 47 or 82 governments, this is absolutely crucial, they have to have the will to finally get to a better growth within the chaos for our global wall street audience, do you at chatham house see a will to finally get it fixed? >> not in the next year or two. you have sell beanie who is the junior partner in a coalition and has -- wills the 30 plus percent he is looking at is how do i gain off the european parliament

? he does not have a policy for the government yet. robin you said you and francine should be going to rome. is the immediacy in the united kingdom in italy, what is the immediacy economically for germany? >> i was in frankfurt yesterday. to political similarities what is happening in germany and the u.k. is quite striking. the decline of the two big parties and germany is mirroring the decline of the tory party and the labour party. it is interesting how these things are playing out in different parts of the common it -- continent. germany is stepping back from a disruption around diesel and weakening fundamental

of global trade, global manufacturing. germany is far more export dependent than any other eurozone or u.k. economy. tom: this morning on bloomberg conversation a three-hour conversation with neil shearing and robin niblett. this is a timely conversation. really looking forward to this discussion. please stay with us. speaking at the american cemetery above omaha beach. this is bloomberg. ♪

francine: this is bloomberg surveillance. 2019 has been a roller coaster

ride for european bank investors with rumors of m&a. i am pleased to be joining by , thank you for giving us a bit of your time. you are continuing to spearhead at unicredit.ls our shareholders lease with that? focusedve been very with our portfolio. we have increased by more than 50% and we have announced to run -- the part of npm we want to get rid of by 2021. about theare focused profile of the bank.

partnt to be at the upper -- we want to let our portfolio of government bond -- >> how much of a nightmare is it to run a business when there is negative rates out there? is a environment which little more difficult forces us to be more efficient. you always have to look at the positive side of things. we take advantage of more difficult situations to be more efficient. profileent of the risk and working on efficiency and transformation of the bank. >> is it the same for higher italian yields? does that help you drive costs down, how does the italian situation impact the bank? >> the italian situation is only

a part of the equation. the fundamentals of italy, when you look and see our clients are good. consumers are consuming and companies are investing. what has to be looked at is the environment in term of the overall european situation and banking environment. onunicredit today we focus the bank of the present and the bank of the future. the bank of the present is 51 generated of paper and we want to reduce that to zero. in italy we will be paperless by mid-2020. does the bank of the future involve a bigger presence in germany through an acquisition? we have a key presence in italy, germany and austria and 11 countries throughout central and eastern europe. i can see what you're going to. about toeen very clear

see what we do and we do what we see. we are based on organic assumption. mergers are very difficult in europe. i think the announcement this morning on renault and fiat is one illustration. we are focused on delivering our plan and working on another one. the other one will be about creating shareholder value and making sure we improve the profile of the bank in order to reduce costs. >> can unicredit take it vantage of concerns regarding deutsche bank? have a 4% market share on corporate lending and a 23% market share in terms of credit. sideee on the corporate german banks are not very active and we have a gross plan in

germany that is organic in order to develop more corporate activity. >> will you buy commerzbank? >> we never comment on rumors or speculation. if you hear what i say our management team is aced on best focusing on a plan based on organic consumption. where do you see your bank in five years? >> it should have a future. in europe growth of the top line is not going to exceed the middle growth of the economy -- cost will have to be controlled. for european banks going forward it is about getting efficiencies in terms of transformation. need --oning -- you

francine: i usually ask her on m&a if she will give me something. is there a plan based on organic growth? based onw plan will be the assumption that we will discuss in september. it is so important for us to create value for our shareholders and the value for the shareholders will come in terms of improving the profile --the bank francine: are investors too tough on european banks? --the european economy it is extremely important that we make sure that the financial sector is more attractive when all the efficiency and transformation. francine: if you look at your

growth plans and italy have will they change given the uncertainty about european and italian politics? will it spur consolidation? will that change anything? >> i don't think what other companies can do will change anything. it is a fragmented country that italy is a country with a lot of smaller cities. we need all these banks to finance the economy. they are important to support the smaller economies that are everywhere in italy. what we do in italy is grow organically. italian business delivers profitability higher than the cost of capital for the cycle is what is important.

to -- here francine: a theoretical question but in the next five years how can you -- what will make a difference between the winning banks and losing banks? >> in the next five years what will make a difference between the banks, the banks that are going to be able to transform and it is important to look at the bank of the present and the bank of the future. -- i make this difference is our clients are moving and transforming at a different speed by country and we have to make sure that we deliver services that are of higher quality and sufficient as's -- as efficient as possible. that is what we are doing. but ink of the future think that artificial intelligence is something that is much more important to the future >> thank you so much. the chief executive of

unicredit. the unicredit max scott -- mascot as well. we will bring you more from the goldman sachs conference here in paris. we will speak with the goldman sachs chief financial officer. is robin niblett of chatham house and neil shearing of capital economics. i'm trying to get through the show without talking about the united kingdom or brexit but i have to talk about it. what a mess, how should listeners worldwide or viewers worldwide get to october 31? do we shut it off and wait for the second week of october? >> you will have to watch very closely into who wins the conservative party leadership. boris johnson is putting a clear mark, the u.k. must under all circumstances leave the eu on october 31.

if he were to win the leadership by the end of july you would have a frantic summer of him trying to renegotiate a deal that would prevent britain from crashing out. >> any indication of an ability to renegotiate? >> boris johnson is absolutely single-minded on becoming prime minister of this country but is probably going to find a way to be flexible in how he does it which means he will try to get a deal. he doesn't want to go to a general election without delivering brexit. tom: what is the cost of no deal? opinions of what no deal actually means to business. >> part of the challenge is working out what that means. there are different types of no deal. do you have a no deal with side arrangements? the airport is open and capital flow is still moving or is it a hard no deal where the economy is crashing? my gut is if there is a no deal

there will be a sharp but short-lived hit to the economy. the bank of england will loosen policy in the chancellor will tear up fiscal rules. a weaker pound helps to some extent. we will have a short recession in the u.k. but one in which going into 2020 economy is starting to find its feet. but ia political mass think the economy we may just find a way through. >> thank you for joining us on this day of remembrance. we will go back to paris. >> thank you so much. let's bring you another interview from the goldman sachs financial conference. with the fed taking a dovish turn with trade tensions tank investors will be looking for a decision from the ecb. what does looser monetary policy mean for the biggest banks. i am pleased to be joined by the

chief financial officer of goldman sachs and the host of this hold conference. welcome to bloomberg. to go right to the matter because i know we have limited minutes. you have a business review how is that going? >> it is going well. we have been a new management team for about six months. a fairlyd in exhaustive front to back review of all of our businesses. we did what you would expect a new management team to do which is to underwrite our business, we are quite confident and quite pleased with our business. there are areas for improvement and we now have a plan and we are executing. itsome people hit are saying is an difficult for training, specifically equities. >> it has been a difficult market. trading more on political risk than it is on macro risk. that is a different -- difficult market for any trader.

he see it in your preamble in the context of what ecb and central banks are doing then there is the overlay of tariffs weather involves china or mexico. playing with a lot of political risk which is difficult to trade through. >> how do you adapt to this ever-changing policy? the unique to diversified or change business? -- do you need to diversify or change business? >> we don't need to change business, the market a good business is being agile and responding to different circumstances and be responsive to what clients want to do. we are intermediaries of risk and that changes based on political and economic circumstances. , theand ready as we have intermediate risk among our clients. >> talk about the credit card tie up with apple, will it make money? >> it will. it is an investment in terms of the build and a new product for goldman sachs.

over the long-term we view it as a very profitable business and the tie up with apple has had a number of different benefits for us in terms of accelerating our entry in the business. to theing ourselves rigor of technology build to a company like apple and the ability to face off against hundreds of millions of consumers is a very big move for us so the partnership with apple has been a benefit to us. >> is this the shift to a more consumer-oriented business? >> about three years ago we that a consumer business began in the u.s. with deposits and unsecured loans, all delivered in a way that is digital. we will not be a consumer bank rich with branches. we will engage with customers on a digital platform. ambition is to-

develop a relationship with consumers across a big business and work on behalf of our apple is a part of that. to see goldman become more relevant presence in the consumer business. is a benefit to the extent that it opens up a diversified funding source in , tos of retail deposit diversify away from a reliance on wholesale funding for the bank. >> when will we see a resolution of 1mdb? >> soon. it is difficult to know when a resolution will come. it is a big sprawling investigation, a portion of which involves goldman sachs. i would like to say we will be in a position to resolve this quickly but we will need to see how that plays in the constructive dialogue we are having with the department of justice in the u.s. and other regulators around the world.

>> 10 negotiations with the government started? >> we have been in an active dialogue with the doj since the beginning in a cooperative position. any of i would classify those as being negotiations so much as it has been. >> germany exploring a commerzbank ing deal with the netherlands. i have to look at whether you are looking at any bolt on acquisitions. >> we are always looking at fault on acquisitions. a 750 million dollars acquisition of an entity in the u.s. called united capital that irthers our entry into daresay we are not looking at transactions that would be as transformative as the one you are reporting on. active inchs will be acquisitions but i would

consider that more in the concepts of -- context of bolt on in specific businesses. >> in europe in terms of bolt on where do you see values? >> there is opportunity for us to grow our wealth management business more meeting only in europe. -- meaningfully in europe. think if there was an opportunity for us to look at an asset that could accelerate our entry into wealth management in europe we would look at it. nothing transformative in the context of what we are otherwise discussing. >> are trade tensions between the u.s. and china changing your business? our business in the way that they change our client business. those tensions have broad repercussions across the market well beyond the borders of the u.s. or china. we will need to watch that carefully. we are an organization that is responsive to the needs of our customers and clients and to the

extent that weighs on the way in which our customers and clients are engaged we should assume we will be agile and responsive in that regard. >> thank you so much for joining us. the chief financial officer of goldman sachs. tom, i will send it back to you. the delicacy of francine's questioning of the chief financial officer of banks and such moving forward, this has been somewhat expected. i would say that there is a stew of banks involved in the work out of a somewhat government owned commerzbank and a far more unfocused deutsche bank. fractionally elevated this morning. deutsche bank shares 6.1 four euros. we finish this hour with an exceptionally important conversation with the council general of the united kingdom. in normandy, photo opportunities

on a day of remembrance above omaha beach. this is bloomberg. ♪

tom: the soldiers went the other way. the president walking down to the cliffs. truly extraordinary. amazing is those of us with a collective memory of ronald reagan in 1984 and how time has moved on, truly extraordinary. as the president's try to understand the sacrifice, stay with us and joining us right now her honored to bring to you majesty's trade commissioner for north america and the former commission to singapore, anthony phillipson with us. to the east at gold beach where the british and montgomery leading the way, explain to us

what this moment means for the british. >> the emotion in your voice as you talk about walking the way the soldiers didn't go has been a constant theme of the commemorations this week. also over the last 75 years. the moment that struck me was when the queen was speaking in portsmouth talking about the sacrifice of the wartime generation, which she was part of as the president recognized in his remarks. she talked about the resilience. much has been written and much will be written about the special relationship between the u.k. and the u.s. and our other partners in that extraordinary endeavor 75 years ago today. we have seen the film and read the books. what important to remember happened on that day in the process that began the liberation of europe and that is what you are watching. tom: george wilson is in this new book club -- quoting abraham

lincoln, time slips away and that is what we see at normandy. the 85th -- >> the important thing is the queen said is that those soldiers who are dare today -- who are there today are 94 or 95. i tweeted about watching a 95-year-old former paratrooper repeating the jump. he is 95. this generation is passing away. this is why it is so important to tell their story. whether it is in the books, the people who lived it are passing away. we must keep the memory alive. tom: this wonderful first volume on the colonies leaving the -- united kingdom and you look at the shared history which goes to your true expertise in trade relations. what is the media getting wrong post-brexitne of

u.k. u.s. trade discussions? >> honestly i think we need to get behind the headlines and talk about the extraordinary relationship we are ready have between the u.k. and the u.s. whether it is in terms of trade or investment, then we need to look to the future and think about what we are going to do with this relationship and how the u.k. and u.s. will continue to build a transatlantic corridor as we leave the eu. it will be part of our global engagement with the eu and u.s. and other parts of the world. to ave a shared commitment system of global rules that are free and fair as the prime minister and the president talked about tuesday morning. that is the agenda we need to get to and that is why we need to start to map out. tom: let's talk elizabeth the first and elizabeth the second. elizabeth the second has an experience of global trade and a multilateral world and all we

learned at of world war ii. elizabeth the first was the mercantilism of another time and place. how do we get to dialogue on a bilateral basis and multilateral basis back to the good of the atlantic charter and forward? >> you start with the principles and values that underpin our relationship. think about the world we want to create versus the world we want to live in. whether it is climate change or how we deal with increasing global challenges around -- we talk about security. so important here is the belief of a president that for the u.s. to win we must take trade from europe. for a guy like you, you know that new trade can be added if upon present trade, how do we get to a trade agreement where good new american u.k. trade is

additive upon eu u.k. trade? >> we set out a comprehensive political agenda. if you look at the trade and thattment working group they have been pursuing since the summer of 2017 it includes talking about our bilateral relationship but it also talks about what we can do to help here and now and what we can do to address global challenges. we need to keep talking about what makes our lives better. >> thank you so much. anthony philipson of the united kingdom. please stay with us. as is bloomberg. ♪ -- this is bloomberg. ♪

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i think mexico wants to make a deal badly. alix: president trump says progress was made with mexico, but the country has to step up. china injects 5 billion u.n. into its economy -- 5 billion yuan into its economy. rates,ia and india cut putting pressure on mario draghi . fiat drives away from a deal. the car company withdraws its leaving thenault, french government in adverse conditions. david: welcome to this "bloomberg daybreak." we are watching as president trump has been with president macron and their respective wives. this is overlooking normandy beach, commemorating the 75th anniversary of the invasion on d-day. there's a fly from world war ii aircraft. they are bringing to a close