nejra: good morning from london. this is bloomberg daybreak: europe. these are today's top stories. president trump says he's the one holding up a trade deal with china as he threatens additional tariffs. beijing's inflation pressures continue to build. no backing down. a debate on hong kong's controversial extradition bill is delayed as thousands protest once again. we are live on the ground. followstanley's ceo citigroup's chief saying business is tough but demand isn't a problem for elon musk. tesla shares jumping after-hours. ♪

nejra: good morning. welcome to daybreak europe. let's take a look at how the u.s. equity market might look. futures pretty much flat after the may benchmark closed flat yesterday. the 10 year yield slipped a little. taking a look at how european equity markets might open in just under two hours. three days of gains for european equities. we are slipping on futures after the swiss market index hit a record in yesterday's session. oil on the back foot, plunging a bit after we got some signals on rises in inventories from the api data. the turkish lira slipping a touch of ahead of a rate decision today. bloomberg economics expects no change to that benchmark rate. let's get a check on the markets in asia.

juliette saly has more. we are seeing red on the msci asia-pacific index. what's going on below the surface. -- surface? juliette: the stock rally fizzled followed what we saw on wall street. have a look at hong kong. these protests continuing. down by 1.7% in the afternoon session. the hong kong dollar sword against the greenback. costs starting to push the hong kong dollar further against the greenback. the nikkei is flat there. australia's market has closed higher by 1/10 of 1%. it is holding onto december 2007 highs. certainly bucking the downward trend. let us look at the stocks we have been following. hong kong protests may have claimed the first casualty with golden financial pulling out of a $1.4 billion deal to buy land there.

shares higher today. pay in sydney is rising. nintendo in focus, down 3.5% because it delayed one of its title games, animal crossing. i'm not sure if you heard of that one. investors don't like to -- don't seem to like that news. nejra: thank you so much. from -- here.hear dubai metadata crossing the bloomberg now. let's turn back to our top story. president donald trump is a liberally delaying a deal with china and less beijing returns to terms negotiated earlier in the year. >> china is a major competitor. right now, china wants to make a deal very badly. it is me right now that is holding up the deal.

nejra: joining us now is the chief currency strategist at bny mellon. great to have you with us. how much do the trade negotiations from here have the potential to actually increase currency volatility? >> i think substantially so. we are it -- headed into that. -- into that time of liquidity over the summer. august has a history of higher market volatility. china has a history of making moves on currency policy, all the way from 2005 on's words. -- onwards. given the trade tensions, the fact that currency policy has come up as these trade tensions have increased. there is reason to expect that volatility will increase. not just in the local market but in markets from hong kong to

korea and outwards. nejra: on that point, if you look at dollars cmh, we have seen protection costs surging already. fixing.d that stronger what do you expect the policy on uan one to be from here -- y to be from here? are you seeing it slide toward seven? >> ultimately, yes. i don't think anything is get a happen before the g20 meeting. why would you rock the boat right now? we have seen a little bit of talk of support from cnh in terms of issuance of bills to try to provide support. beyond the g20 meeting, if nothing happens, given everything we are hearing right now, it doesn't sound like something is going to happen. three is going to be a ratcheting up of tensions.

when we heard from the pboc governor last week, that wasn't -- you don't suddenly start hearing him talking about a numerical number. me, for the renminbi to weaken slightly. those are not accidental comments. particularly when we had an indication before the end of may that that was one of the big issues in the trade talks. china wanted greater flexibility. this going to be more of a focus on that post g20 if it doesn't go well. by the looks of it, it won't. nejra: how would you advise clients to trade this? is it through the implied volatility? is it through proxy currencies elsewhere in asia? is it through the yen? >> you are always going to start to focus on proxy currencies. one of the things you always recognize with beijing and the

pboc is that they aren't totally comfortable with positions taken against the currency. there will always be an intensive squeeze. certainly they will lean into it to a group -- degree if they believe it is causing excess volatility. possibly there's a better way of approaching that. the australia dollar is an obvious one. the south korean you want as well. that's where that's going to start the play itself out. nejra: especially with china sending a warning signal to yuan bears before the g20 meeting. we have an mliv question. i'm going to put it to you. stimulus measures be a boost for stocks everywhere? >> i concede the argument.

if you start to see what's happening in chinese markets, you get a boost their. it normally does work its way through. though stimulus measures are thely an attempt to stop stock market from taking another turn lower. i would be supportive. i wouldn't see it as a major boost. nejra: let's translate this era. we saw the investors you of -- view of germany deteriorating among the trade war. how does everything we've talked about translate to your view on the euro? >> you could argue that the trade talks would exacerbate that. you would expect that to feedthrough into places where this -- there is significant demand from china. heavy industry, germany. germany's numbers are already relatively poor. you expect to see further stresses there. from that perspective, does it give further impetus for the ucb -- ecb to start talking about

being dovish? does it keep itself on the euro? it does. i think the euro goes up relative to the dollar. i'm not usually bullish because i think the euro gets flagged from the slowdown in china. nejra: when president trump his statements about trade yesterday, there were comments on the euro. does he have a point with purchasing power parity? historically,ack you would have argued that probably somewhere in the region of 120 seems to be a natural price for the euro against the dollar. these things are all somewhat nebulous. where did the euro launch? 118. the average price is 120. what is the price which the french government tells us they are no longer competitive? above 120.

114, it's hard to value its wildly undervalued. nejra: we are looking at a weaker dollar over the past couple of days. we will have a big discussion about the fed later. do you see prospects of dollar weakness from here? if you look at real effective exchange rates on the chart, japan and europe, you could say the charts say there is a free rising. >> right now, this is a market that believes there will be two and three rate cuts for the end of the year. it is hard to see what the fed can do to significantly shift the dial there. suspect -- i do think that you will see a little bit of dollar weakness continue to creep in. interest-rate differentials do start to narrow. there has been a massive downward move, given people's expectations already. nejra: the chief currency specialist at the ym mellon. great to have you with us. let's get the bloomberg first

word news with debra mao. hopeful joedential biden has cast president trump as an existential threat to the u.s.. he says he has weakened america's alliances and harmed u.s. workers with needless trade conflicts. trump attacked the former vice president, calling him a dummy and weak mentally. >> joe biden is a loser. exceptr got more than 1% obama took him off the trashy. now looks like he's failing. his friends from the left are going to overtake him pretty soon. investors who balked at cooper's first quarter loss will have to get used to it. focus on vowed to growth over profitability for the coming years. this is the world's largest ride-hailing company is adding new modes of transportation including bikes, scooters, and helicopters. the company faces the growing

tech backlash from regulators. >> the biggest challenge that we have is a common challenge that you see with some of the large technology companies out there which is, there is an increasing regulatory burden that is coming on some of the tech companies. some of it is deserved. becomingk that we are such an important part of everyday life. debra: britain is set to become the first major economy to legally adopt a target of zero fuel emissions by 2050. it has won backing from across the political spectrum. theresa may says the move is ambitious but crucial. global news 24 hours a day on air and on twitter, powered by more than 2700 journalists, in more than 120 countries. this is bloomberg. nejra: thank you so much.

let's turn back to hong kong. lawmakers have delayed a debate on a controversial bill that would allow extradition to mainland china. the decision came as tens of thousands of demonstrators protested outside the legislative council. let's get to our senior reporter in hong kong. great to have you with us. give us an update on what's happening. over the last seven hours, since about 6:30 this morning, we have been here. we've seen the crowds swell from a couple thousand to 10,000, 20,000. surely there are certainly more than 100,000 people surrounding the legislative council complex here in the central part of hong kong. if you look all the way beyond those trees and that elevated walkway, you can see that the crowd stretches onto an area which is hard court road. this is one of the central arteries that leads straight

into the central business district of hong kong. it looks as if they have taken 800 meters, maybe even a kilometer of that road. as much as the protesters did in for -- 2014 in the famous occupy central movement which lasted for three months. we don't know if they will continue to occupy be on this. it depends on how the government response. one of the leading opposition politicians here says that the extreme very size of this turnout, they were only expecting 50,000 tops. it may actually move the government to do something about withdrawing this extradition bill which is supposed to be going through the legislative council at the moment. we have not heard anything from the government about doing anything like that. it does seem as if there is pressure coming from the international community now. point, what has nancy pelosi had to say?

what is it matter -- why does it matter? democrat,elosi is a the speaker, the leader in the house. what she has been saying, if this extradition bill goes through and if it effectively removes that roadblock, that firewall between the hong kong judiciary which is independent and the judicial system in china, which is the holding to the chinese communist party, that completely changes the picture about whether hong kong is no economist region. -- and economist region. to continue with special trading relationship with hong kong, hong kong needs to be economists utonomous froma china. if nancy pelosi marks up with marco rubio, you would have a

bipartisan consensus within the united states congress to relocate hong kong's special trading status. if that is withdrawn, the future of hong kong as asia's premier financial center comes into question. that is disturbing even for young people i've spoken to here in hong kong. they are worried that the international community might begin to withdraw its investors. it's not just the bankers were worried. it's the entire population. we will be back with you to see how this entire thing plays out over the next week or so. the vote is set to take place next thursday evening. that is if the politicians can get inside this building to debate it. nejra: fantastic coverage. thank you so much. our viewer can catch up on the latest on tliv . we have seen the hang seng lower, the hong kong dollar strengthening. up, chutes and ladders.

is the slide in crude oil taking wti towards the $50 mark? ecuador is prepared for volatility. we speak with the cfo and see what that means, next. this is bloomberg. ♪

nejra: i'm in london. let's turn to oil and renewable energy. wti slipping deeper into a bear market due to concerns over demand. stockpile signals from api data overnight. ecuador is prepared for more volatility in the market. let's go to paris for an exclusive interview with the cfo. us.t to have you with how exactly are you prepared for more volatility? >> good morning. thanks for having me. when it comes to volatility, i'm prepared for it.

it has to do with how you set up your business and how you work your cost structure in such a way that you can make sure that, regardless of the oil price, you try to always remain reporting positive numbers. signalse have had some from saudi arabia and russia recently voicing concern that prices could fall below $40 a barrel. how prepared are you for a dip like that? we are already in a bear market. in 2014 when the price 27 ind from 109 down to the average for the year was $43.5. below 40 for a long time is hard to believe that that's going to happen. all the majors will struggle somewhat.

that theyeporting now are going to be cash flow positive below $50 per barrel. that is after tax and investment and dividend. nejra: ok. understood. the cash flow is positive below $50 per barrel in the 2019 half 2019-2021. had he would just if they go below that? long is dependent on how we first see that is going to happen. we have flexibility in our budgets. and it comes to investment other areas, we can always tune it down somewhat. we also have a strong balance sheet to better off situations where the oil price has been low for a long time. how long will the oil price stay low? what is your -- nejra: what is

your assumption this year for the bryan price? ent price?ice -- br we are assuming an average of $65 per barrel for this year. nejra: ok. at your first quarter earnings, you maintained the guidance for $11 billion of this year. the run rate spending has been lower. can you tell us more about whether the scope to reduce a bit compared to the guidance? >> it's around 11. that means it could be more or below. you are right. we had a low burn rate in the first quarter. that is seasonable. we expect the second and court -- third quarter to pick up based on more activity levels. they are more dependent on some

other windows. we have no reason to change that guidance as of today, no. nejra: no reason to change the guidance as of today. i wonder if you can give me any more guidance in terms of dividends and buybacks. you have said before that your priority remains cash dividends. the company is going to look to strengthen its balance sheet further before share buybacks come on the table. we've talked about the recent drop in oil prices. as that made the prospect of buybacks even less likely? we are saying that. , we will haverice accumulated positive client -- cash flow of $14 billion after

dividends and investments. that is a huge number. what we are going to do with that is a big question. it's a question i often get asked by investors and analysts. thise going to maneuver big company forward, take advantage of the opportunities we see to make bigger deals if it arises. dividend aser cash a means of returning cash to the shareholders. strengthen our balance sheet somewhat. forward, what we want to do with capital distribution. nejra: briefly, are buybacks less likely in the short-term? buybacks is in the toolbox. there is nothing new for us when it comes to share buybacks, no. thank you so much for joining us today.

the cfo of ecuador. have a great day. i need to get to some breaking news coming through from kkr and axel springer. basically, axel springer is seeing 2019 revenue down, low single-digit percentages. it's adjusting its 2019 guidance, basically. the kkr fund is launching a bid of 63 euros per share in cash for axel springer. , launching its bid of 63 euros per share in cash for axel springer. axel springer is an investment pact with kkr to support the long-term. springer, kkr and axel in talks about a strategic investment. we already know that. this is the latest we're bringing you now. coming up, elon musk mrs. shareholder concerns over consumer demand. tesla shares jump in extended trading later, a conversation

with philip handed -- hammond. this is bloomberg. ♪ we're the slowskys.

we like drip coffee, layovers- -and waiting on hold. what we don't like is relying on fancy technology for help. snail mail! we were invited to a y2k party... uh, didn't that happen, like, 20 years ago? oh, look, karolyn, we've got a mathematician on our hands! check it out! now you can schedule a callback or reschedule an appointment, even on nights and weekends. today's xfinity service. simple. easy. awesome. i'd rather not. nejra: here's a look at what you

should be watching today. japan's prime minister visits iran. this is the first trip to the islamic republic by an incumbent japanese leader since the revolution. the ecb president mario draghi will speak at a conference in frankfurt. they will comment on possible resilience in the face of global headwinds. we will get a rate decision from turkey. consensus is they will leave the rate unchanged. we will see how the u.s. is faring in the trade war. we are scheduled to get inflation data after chinese data this morning showed consumer inflation picked up in may.

renault's annual general meeting kicks off, all eyes are on any renewed possibility of a deal with via boards alliance with nissan. musk talked up the company's prospect in california. he says tesla could be set for a record second quarter. >> sales have far exceeded production. production has been good. we are actually doing well. we have a decent shot at a record quarter on every level. if not, it will be very close. we have a shot at a record quarter. for more, our global business editor. great to have you with us. we saw shares jump following what we heard from elon musk. what did he say to get investors such an optimistic view? did he convince them that demand was in such an issue? >> i think he did.

that's the key point for investors. there are production delays, but they seem to have moved past that. that has created concerns about demand. is the question for tesla whether they can make cars fast enough or whether they can seldom fast enough? musk was confident that consumer demand remains high and they can essentially sell them as fast as they make them. that has been an important point. shares did gain. there is some investors that are buying into it. not everybody was completely convinced. there were skeptics that said, of course he's positive. he's been positive before. was thatnsus clearly his view on the subject is valid. nejra: thank you so much for joining us. our global business editor in tokyo. let's check in on the markets around the world. .oining us from mumbai

let's kick it off with you. looking pretty flat today. anything standing out for you? yeah. unfortunately, indian automakers are not confident that elon musk is. markets started off lower. 0.5% apiece for the big and smart indices. -- benchmark indices. that is not to be unexpected. i'm sounding like a bloke in record. the index is under pressure. nonbanking companies are under pressure today. it is marked by more losers and gainers. maybe it's just one of those days and tomorrow could be a different one. no big news but for the fact that banks are under pressure. nejra: absolutely. we've actually turned more negative since i last checked. banks are summing that up. anne marie, what are you looking

at in the rest of the markets? u.s. futures pretty flat. weakness on the msci asian index. >> weakness across asia has risen. fragile ahead of the g20 meeting where people are weighing whether or not we will get some sort of trade agreement. saying,g intelligence no one knows how to price trade. we don't know where things are headed. hong kong leading shares, lower. csi down 9/10 of a percent. , the standoutge is the hong kong dollar. strengthening with protests we are seeing in the city. demonstrators seemed to be bringing the city to a standstill over this controversial bill that would allow extradition to mainland china. and commodities, wti crude down. brent crude as well down. that leads me nicely into my chart today.

where could see the next technical level for oil? look at the technical analysis. bloomberg took the october high and december low. look,e got is the next just shy of $50 a barrel. 3.5% lower than current levels. potentially we could see this dissent of oil continuing. if we two, potentially shy of $50 a barrel. nejra: thank you so much. great roundups. let's get the bloomberg first word news with debra mao in hong kong. president trump says he's personally delaying a trade deal with china. he says he won't complete the agreement unless beijing accepts the terms negotiated earlier in the year. he threatened to raise tariffs on china if the chinese president doesn't meet him at the g20 summit. hong kong's legislature has postponed debate on legislation

to allow extradition to china. this after thousands of protesters converged outside of the chambers demanding the government withdraw the bill. thechief executive says legislation is necessary to close a loophole that makes the city a refuge for criminals. opponents say it breaks down the wall intended to keep hong kong's justice system separate from china's. forest johnson will launch his campaign to become the next prime minister. he will promise to get britain out of the european union on october 31, come what may. he is the favorite to succeed theresa may. he is the most well-known out of the 10 candidates. residentfreed a u.s. in prison and on espionage charges. it is seen as a possible overture to the trump administration. international efforts to end the standoff between washington and tehran are gathering momentum. is set toime minister

arrive in iran today to try to cool tensions even further. its first day since its ipo. a positive rally that had rocketed the stock more than 500% higher. $10 billion enterprise value is now 27 times estimated 2020 sales. global news 24 hours a day on air and on twitter, powered by more than 2700 journalists in more than 120 countries. this is bloomberg. nejra: thank you so much. president trump has attacked the fed once again. he's slamming the central bank for high interest rates, also complaining the euro and other currencies are devalued against the dollar. trump has denounced tightening, tweeting that jerome powell don't have a clue. comments, week after the fomc's next policy meeting. guest is stillr

with us. we had a discussion about the potential of the euro being undervalued on a pbb basis. let me talk about the fed here. we have this crucial cpi data. how bad does it have to be to reaffirm or even increase expectations of fed rate cuts? >> at the moment, it's the oddest thing. we are going into a feed me -- fed meeting. there is some focus on the cpi meeting. just isn't that much of a focus on this. everybody has come to the conclusion that the messaging move from the fed going into the clear andas a unambiguous signal that they are getting ready to cut. fromis also clear is that the way the fed has behaved over the course of the last nine months, inflation hasn't been front and center.

it has been markets and market performance. haveu look at when you seen changes in rhetoric over the course of the last nine months, it has been when equity market is under pressure. last november, we saw the shift in rhetoric. suddenly, stocks were coming under pressure again. this idea that the fed is there is being driven by the fed's actions itself. nejra: we talk about the equity market. the s&p 500 is not far of a record. if the fed does not capitulate to the market, say we don't get much of a dovish signal in june, what will the fed say to justify that? >> the data has always been there to be able to justify. they are the first people to say, the numbers that are coming in actually right now would not support a heavy move by the fed. that has always been the case.

they have turned around and said, we have to listen to what the market is telling us. that seems to me to be wrong. if we are talking about a fed that should be focusing on the economy. behind all this is the trade story. behind all this is the pressure about the dollar. it seems really telling that these comments have been coming from the president when he is talking about the fed. he has been referencing specifically, what the central bank has been doing. the impact he has been having on currency. there's a sense that currency wars are coming back. it is increasingly there. i want to get to a point about the pricing around the fed rate cut. it's a brave man that might go against that trade. you have to economists, the deutsche bank chief economist and goldman saying, a 98% chance of an interest rate reduction by year-end seems high.

that has beenngs indicated is that inflation is at its nearest level -- highest level since 2012. if you look at the pdc trimmed mean. would you want to take the other side of the trade that is pricing in the fed rate cuts at the market -- that the market is pricing and right now? >> no. let me put it this way. number one to this will be the trade were -- more story. i don't believe it is going to go away. i may be would become more buoyant about what the fed is going to do. you also have the other problem, this market is pricing in 2-3 rate cuts. that starts to shift. think about what that is going to do to equity markets even if we become more positive about trade. it will be hard for the ped -- fed to fight back at this point. nejra: even the what they pointed out as well towards, the market is almost always wrong

about what the fed will do. our guest is with us. coming up, the emerging markets. the hot streak in the lira won't stop the turkish central banks holding rates. we will talk all things a.m., next. coming up, an exclusive conversation with philip hammond. don't miss that interview. this is bloomberg. ♪

nejra: this is bloomberg daybreak: europe in london. from rates to video games. the e3 conference is the global event for the industry. it comes at a time of slowing growth and a crackdown from china's regulators. if you are a big fan of red get -- red dead redemption two, you will be aware of the hype around cyber punk 27.

we have the details. >> a lack of console announcement has put streaming service is front and center at e3. google got a head start with a $10 monthly fee on their service which was announced earlier this year. microsoft upped the ante on tuesday, telling bloomberg that a portion of their streaming service will be given to users free, where they can stream video games from their existing console at home to their device on the go. fans at e3 wanted to know about the next generation of consoles. there was little to go on. microsoft gave limited details about its next-generation console, project scarlet. they say it will be the fastest ever console. sony, the market leader in video game consoles, wasn't present at e3. they missed it for the first time in 24 years. question, 70,000

or so fans gathered at e3, what the next big videogame title will be. thats polish developer stole headlines when they unveiled he on reeves as one of the main characters in cyberpunk 2077, coming out in april. the market is expected to generate sales of almost $150 billion. the single biggest market is china in terms of revenue and videogame players. the industry is facing challenges in that market. the first is new regulations from china's videogame regulator set an april. the effects of that are unknown. the expectation is that we will see fewer titles approved this year. the other one is trade war between the u.s. and china. we spoke to take two interactive ceo who says he is positive

about the video games industry in china. >> there's a great market opportunity in china. we are hopeful that trade talks will be resolved amicably in a way that is beneficial for the overall entertainment system. nejra: western game developers -- >> western game developers have a lot to gain from the trade war. if the u.s. makes breakthroughs when it comes to ip protection and how u.s. companies do business in china, what we could see is videogame developers relying less on local partners and being able to offer a more freely in the chinese market place. bloomberg, e3, los angeles. nejra: that was ed ludlow from the e3 gaming conference in l.a.. a less than stellar u.s. jobs , the impact- report is already being felt by the world's biggest emerging market economies. our policy makers caught between a rock and a hard place as rate cut euphoria and trade tensions face-off?

we will answer some of those questions. the turkish -- this despite a recent hot streak for the lira after a rocky start to the year. also on the docket is brief -- brazilians retail data for april. any disappointment could boost bets on more aggressive easing. in the reports inflation data with a -- a forecast that -- back to latin america, data out of argentina could show a second straight decline in inflation despite this, such a downtick would not be sufficient for substantial policy easing. on friday, russia could reduce rates for the first time in a year. , itgovernor told bloomberg is in no rush to undo the surprise hikes from late last year or make rapid moves. on friday, we will be keeping an

eye on china's may data on industrial production and retail sales. emerging world debt has been a bid -- big beneficiary of weakening dollars. it is experienced its longest winning streak. take a listen to what key policymakers have been saying. conditions, we will take into consideration all these. we think this auction -- >> our decision at the moment is driven by the growth concerns which are there and also the inflation concerns. inflation and growth. in that order. really ariffs are double-edged sword. it is actually hurting the chinese economy. it is also hurting the u.s. economy.

especially the u.s. consumers. >> we are hopeful that we can make progress. right now, we don't have a path. this entire issue between the united states and china is something that we hope will move forward. us now isning bloomberg's managing editor for global emerging markets. still with us is our guest. thanks for sticking around. great to have you with us. what a big week for emerging markets. looking ahead to turkey today, consensus is that they will be on hold. is it unthinkable that we could get a rate cut? >> not unthinkable. there are one or two voices out there that say we might get a cut today from the turkish central bank. the reasons for that are that the lira has had something of a strengthening trend in recent weeks.

on retrace really half of what it had in the past few months. that weighs against any cut earlier. inflation is starting to come back a little bit. of course, we have this backdrop of easing policy around the world which is also added to the argument for a rate cut. i think it would still be a surprise. i don't think the turkish central bank will go today. the language on the outlook on inflation. that is key to what happens. probably not today. they have half and i on the is on june 23.ion they may want to get that out of the way before they do anything. >> that makes -- nejra: that makes sense. pivoting to the dovish tilt we've had from the fed in the impact on emerging markets. we talk about a race to the bottom in developed markets.

are we seeing that in emerging markets at all? >> it is beginning to look that way. we just talked about turkey. we saw the surprise move from the chilean central bank on friday. we are hearing voices about maybe brazil going at some is braced for a few more rate cuts. we have russia as well on friday. we are seeing this move towards easing around the world. less of the same kind of trend in asia. the trade talks very much are weighing on the outlook there. asian central banks are waiting go and tothe fed will what degree the trade war is going to force the fed's hand before they actually move. nejra: let's turn to you simon. nevermind, don't fight the fed.

you were saying, don't fight the markets on the fed. given what justice has been saying, yes, the bloomberg dollar index has flow -- full and below its moving averages. with what the rest of the what world -- world is doing, does that provide support? >> maybe it does to a degree. the reality is, someone like china catches a cold, everywhere else feels it. i do think there is interest in nuances. exposedntries have been to dollar denominated. denmark is seeing a reprieve as to what is going on at the moment in turkey. argue that in worlds of declining oil prices, also clearly driven by the weaker china story, those should be net beneficiaries. it seems to me that actually you have a nuanced story going on

here for emerging markets coming yes. everybody is going to be under pressure. some are probably going to get more reprieve than others. what is your outlook for the dollar from here? do we recover from the greek -- weakness we have seen? >> it depends what you are looking at. we have talked against those china related currencies. i think they are going to suffer. i think the dollar will cumber -- come under pressure. so is the turkish lira. nejra: there's a little bit of a tug-of-war with emerging markets. you have the dovish fed on one side. you have the risk of the trade war on the other. what are you focusing on within that tug-of-war? if you look at the moment, the recent price action looks like the fed really is the main story at the moment. trade is not going away.

it's a very serious issue for markets. areome degree, markets assuming that that is going to be out there for a while yet. nothing much is going to happen before the g20 in osaka. we will see whether mr. trump meets president xi there. that's a crucial next like in the story. until then, it is the focus to what degree that uncertainty forces the fed's hand if the fed thinks this whole issue is going to weigh on u.s. growth and global growth in general. nejra: thank you so much. simon will be continuing the conversation with us on bloomberg radio. coming up, delaying tactics. trump is holding up a deal with china to get the best one possible. more, next. an exclusive interview with

philip hammond. don't miss that interview at 10:30 a.m. london time. switch onto radio if you are on the move. this is bloomberg. ♪

good morning. president trump says he is the one holding up a trade deal with china. meanwhile, inflation pressures building and made. a debate on the hong kong extradition bill is delayed. protest leaders say they will not leave until the bill is pulled. and kkr agrees to acquire axel springer, valuing the pledge --

publisher at 6.8 billion euros. welcome to daybreak europe. just under an hour from the start of cash equity trading. let's get to some breaking news. first quarter net income, 634 million euros. a slight mist on the estimate. bet -- ebitarter, e beating the earnings. again, that is a miss. missus on some of the numbers. like to like sales have seen increasing 4-6%.

a little bit of disappointment in the numbers there. expecting favorable foreign tailwinds to benefit for the first time in two years. that first quarter, net income, 734 million euros. up.s see how europe is set we have seen three days of gains. looks like we could snap that. we saw the swiss market index. futures all firmly in the red. market closedy flat. futures in the u.s. turned negative after being flat for much of the asian session. 10 year treasury yield lower by two basis points. we are in a 213 handle. widening.e spread

judging by the futures, we could see the same again today. more breaking news on the corporate front. ceo for september 1. an update on the leadership. the markets inon asia. great to have you with us. a little but of a week session. have had quite a few sessions of gains in asia but the stockmarket rally sizzling. led by what you are seeing in hong kong and china. the interbank lending rate soaring. pushing me hong kong dollar higher. the market down. the mainland and china. pork prices pushing up inflation. india as well.

australia, closed flat. the nikkei a little weaker, finishing off the session. at the currency moves. the hong kong dollar rising against the greenback. as we see these lending rates so war. .- soar the worst performing currency, also watching moves in bonds in korea as well. it looks like governor lee is starting to signal there could e.a. possible rate cut ahead. .dding to the dovish tone >> thank you so much. issident trump says he delaying a deal with china in list -- unless beijing returns

to terms. >> they want to make a deal very badly. it is me that is holding up the deal. global equities economist joins us. great to have you with us. g are looking ahead to the 20. >> it is a boring outlook, i guess. the trade talks have been ongoing for 13 months. the chinese made some concessions. donald trump once more and more. sense trump is prepared to compromise. trump willble xi and have a summit but i am not sure it will bring a lot. more.weeks

the tension, the underlying tension is not going to go away. inyou can see that reflected summa markets. protection costs have been surging. you look at dollars cnh volatility, you can see that spiking. where would you choose to express any concerns, trepidation, head of the g20? >> you should be looking at equities. over the course of a where you have seen the market men and station. we peaked last year. in the whole, we have had a shape. we seem to have reached a peak at the moment.

underlying weakness, geopolitical concerns will be reflected. not that far off of a record. are you saying we are not likely to hold at that level unless we get a number of benign forces plus the trade war going away? is what has given us the rally. few weeks, i thought the time was right for equities to maybe fall over a little bit. i think the market is overreacting. do expect that to be most pronounced in the u.s. or china? >> europe hasn't done

particularly well. rightdn't be favorable now. at some point, the u.s. market is going to soften. it is not of course just a trade war. it is concerns about the underlying state of the u.s. economy. payrolls were not particularly fantastic. that could be a one-off, we do not know. there was a sense the u.s. was almost poised to see the longest upturn on record. issome point, that market going to soften. theou talked about the fact rate is baked into the equity market. what about china? we saw chinese equities supported in some stimulus announced. the question is asking today will china stimulus measures be a boost for stocks everywhere?

>> my sense is probably not. they will primarily help china. spilloversee some effects to europe because europe has been badly affected i the chinese slowdown. get weaker.ill china will really be supported the local asian markets. i don't expect much at all. >> a quick final thought in terms of the fed. has the market gone too far and its pricing? >> i was thinking that. we have a point where markets have priced the rate cut so aggressively, it will be difficult for the market not to deliver. made these statements

over the past week or so, i think there is a strong sense will get a rate cut before the summer is out. pick up onpeak -- that and a second. let's get the first word news. presidential hopeful joe president trump as a existential threat to the u.s.. the former vice president, calling him a dummy and we can mentally. -- weak. firstn has become the economy to adopt a target of zero fossil fuel omissions by -- by 2050. britons would need to fly less, use cleaner cars, and eat less

meat. inn has freed u.s. resident espionage charges. it is seen as a possible overture to trump. shinzo abe is set to arrive in iran today to set to cool tensions further. elon musk the missed concerns about demand for electric vehicles. he said sales could hit record levels. but that pace the company is expanding that makes it hard to be profitable. questions have lingered after a disappointing first quarter. is financially insane. it is just nuts. ,> global news, 24 hours a day powered by more than 2700 journalists and analysts.

>> debra mao in hong kong. whereg with hong kong, lawmakers have delayed a controversial bill that would allow extradition to mainland china. let's get to our senior reporter in hong kong. great to have you with us again. we have had updates over the last hour. >> the crowd seemed to continue to swell. there are a couple of thousand people down by the lizza slate of gates -- legislative gates. than must be more 100,000 people out there right now. you can see a flood of people walkway,h that covered

elevated walkway. road.s hard court it leads past the legislative council. it is reminiscent of what happened here in 2014 when the occupy protests took over for three months. .reat swathes of hong kong bringing traffic to a standstill. the question is whether they are going to hang around so long to bid some organizers have said they are not going to go away, giving up those positions. until the government withdraws the bill. moment,rnment at the saying the government is going to stand firm and continue to see that extradition.

it is a bill that is for the good of hong kong people. fugitives -- it is not a place where fugitives can hide from justice. quiet's the pictures are extraordinary. -- >> the pictures are extraordinary. what does nancy pelosi have to say about this? it is very interesting pelosi , the democrat has joined some of the voices we are hearing out of the u.s. and other parts of the world. the state department has made a statement where they have said they are worried pushing this bill through, it is going to a road the tana me hong kong enjoys and has enjoyed since it was a former british colony. the real concern among the the bridgehere

between an independent judiciary, legal system here in hong kong will be eroded by this extradition bill. be attachedore will to china. we know china's legal system is beholden to the chinese communist party. there will not be the protections hong kong people have got. this is where the u.s. comes in. anyone coming through hong kong, yourself ifnd wanted by the chinese authorities under an extradition order. that is the main concern. nancy pelosi in particular concerned if this erodes hong kong autonomy, it might affect the trading relationship between the u.s. and hong kong which relies on self-governance.

>> david tweed on the ground in hong kong. with theatch up latest. attacking the fed. trump goes for the central bank once again, calling them clueless. and coming up, and exclusive conversation. aftermiss that interview 10:30 a.m.. if you are on the move, tune into bloomberg radio. this is bloomberg.

7:19 and in london. 40 minutes away from the start of cash equities trading. let's get a check in in the markets. all the focus in hong kong markets with protests happening

in the city. andttempt to stop extradition treaty with hong kong. we have seen the hong kong dollar reaching its highest level. also being squeezed by a surge in the cost of shorting the currency. the hang seng under pressure permit local property developers cede some of the worst -- worst when it comes to crude markets, plunging 2%. by twoyear yield, lower basis points. s&p futures in the back foot. downside, wee could snap three days of gains. ahead to the g20, still

concerns around trade. the business flash has is debra mao >> kkr agreed to a buyout valuing the german publisher at 6.8 billion euros. the widow of the company's founder owns the largest a stake in the company. she is supporting the move. they both plan to keep their holdings. investors who balked at uber's loss will have to get used to it. the chief executive has vowed to focus on growth over profitability for the coming years. this is the company is adding new modes of transportation including bikes, scooters, and helicopters. the company faces a growing tech backlash. is ae biggest challenge common challenge you see with

some technology companies out there. there is a regulatory burden that is coming in some of the tech company. i think we are becoming such an important part of everyday life. meat -- beyond>> meat had it's worth today since it's ipo. this caused the last bullish analyst to throw in the towel, saying the stock is too expensive. that is your bloomberg business flash. president trump attacking the fed. complaining the euro and other currencies devalued. tweeting jerome powell does not

have a clue. you were saying earlier we could see the fed capitulate before the summer is out. it is hard to take the other side of the trade in terms of what is being priced. economist hasank that seems high. they point out many times the market has been wrong. let me take you to a chart. at the highest level since 2012. we look ahead to u.s. cpi as well. if the fed goes against the market, can they justify it by the data? they can. the simple fact is i tend to

agree with the government. want to give myself on that front. politics surrounding the fed has gotten so intense, there was a possibility if the u.s. economy weakens, the fed will be forced to act. seen,mments you have just they do open up another front in against central banks. i think it is very dangerous. saying, the ability is limited. been political. perhaps even more so. the fed canson,

justify a rate cut. is not doingconomy as well as we thought. be actual inflation could higher. maybe giving by one rate cut. pacifyd that also president trump in the currency front by leading to a weaker dollar? moving average. if the fed does what you say, does it lead to a weaker dollar? our forecast is for a significant weakening. we do have three rate cuts. i think ultimately the dollar

will weaken. >> does that mean we will see a stronger euro? it is a little higher than we are now. not significantly so. >> thank you so much. really great to have you with us on the show. coming up, and exclusive conversation with the u.k. chancellor. do not miss that after 10:30 a.m. london time. bloomberg markets, the european open is next. we have had three days of gains for european equities. to a lower just

i will beinutes, tuning to radio. this is bloomberg. ♪

good morning. we are live from the european headquarters. na edwards. arehe markets say we feeling fragile. european futures drift low. ks met returns. the cash trade is less than 30 minutes away.