you can't have a nuclear weapon. alix: the president threatens iran with more sanctions instead of opting for war. trump and xi. it will be a two-way street. the to prepare to meet at the g20 this week. traders prep for another week of headline risk. upset inbul's stunning the redo of the mayoral elections. the lira climbs the most in the world. david: welcome to this monday,rg daybreak" on june 24. we had the president, mike pompeo, and others speaking out over the weekend on the run. alix: brian hook also talking in a telephone briefing. he's a guy you want to talk to. he says there is a clear diplomatic offramp for iran, i'm going to say if they choose to take it. david: there's a question of getting it to the table. president trump says he wants a

new deal. they say they won't talk about that unless you relief sanctions. what is left to sanction? alix: i really couldn't tell you. we are going to break that down and discuss more on that in the next couple of hours. in the markets, it is a little bit of just hanging out. the s&p had a record high thursday. now up by six points. we are just waiting for that g20. euro-dollar up by 2/10 of 1%. forget about the germany info index just bad. you are see but -- you are still seeing buying into the bond market. crude up by 7/10 of 1%. not as much as you would think compared to the geopolitical risk. david: absolutely. time now for the morning brief. secretary of state mike pompeo travels to india today in the midst of a growing dispute there

over tariffs. tuesday we get u.s. housing numbers and the treasury options $2 billion into your notes. wednesday is the first night of the democratic presidential debates. thursday, major u.s. banks get the final results of their stress tests. friday, g20 talks that underway in osaka, japan. it is a very busy week. let's turn to bloomberg first take. we are joined by mark cudmore and peggy collins. let's go back to president trump. he continues to talk a little on both sides of the issue. this is part of what he said. pres. trump: i'm not looking for war. if there is, it will be up alliteration like you've never seen before. i'm not looking to do that. what you can't have a nuclear weapon. otherwise, you can have a bad

economy. no preconditions. david: no preconditions, but no talks yet, either. what do investors do given this level of uncertainty? peggy: i think investors are looking at multiple fronts that are up in the air. we have iran tensions waiting on oil, but we have the focus on china and the u.s. and the ongoing tariff battle. i think investors are basically trying to weigh the political risk of all of this, which is really difficult to do. stocks hit another all-time high last week, so they are not too wary. alix: no. speaking of, i was covering oil during the arab spring, and i am shocked we are seeing oil at $65. mark: oil is still down over the last month, despite the fact that u.s. equities are at record highs. many other financial assets are expecting a slowdown in growth

from g20. oil and commodities markets aren't. commodities markets are where the real demand is. this is a great reason for a little bit of a bounce, but no one thinks this will lead to a sustainable bounce unless there is an escalation in the middle east. alix: or unless you get a good deal out of the g20, which is our next story. a compromise will be a two-way street. is it a two-way risk? mark: i think the main thing i would say is the perspective going into g20 is very different depending on what side of the globe you are on. over here it is assumed trump will decide whether there will be a deal. in asia, people think china will not find a deal unless there is complete capitulation by trump. in asia, everyone is expecting positive pallet to -- expecting positive platitudes over the weekend. over here, people are more

optimistic because they know trump would like a deal for the election. i support the asian perspective here. china is in no rush to make a deal. david: the question is, what happens to that 300 when he $5 billion of additional chinese imports? president trump says -- that $325 billion of additional chinese imports? president trump says he will go ahead with 25% tariffs. peggy: we've seen a lot of reporting by asian local news and our own reporting that china is ready for a long march, to dig in and basically say this is important for our country, and we are not going to back down either. the stakes are high for the face-off between xi and president trump. david: that exist to our third story. in turkey, we had this surprise come out of the election. around the a second go on the election for mayor.

a dodent erdogan wanted over because he lost the first, and lost even worse this time. peggy: it is interesting because our bloomberg reporting is saying that this win is really a big sign of erdogan losing some potential power going forward, and potentially even a new person rising in the ranks to potential he take him on. volatility do a lot for emerging markets, causing them to swing a lot. it is interesting to see how this election might be good for emerging markets, at least for the next few days. alix: sell into the news? mark: i don't think this is a game changer. never write off erdogan. he's very good at winning elections. there are signs there will be a

double-dip recession taylor: -- a double-dip recession. bloomberg rebalanced its euro index. year.h lira was 2.4% last it is now removed from the index. it is losing credibility as a serious financial asset. investors don't want to pour money into the country, so turkey is going to continue to struggle economically. david: my question is what is erdogan's next move? he will do something. mark: does he go the more nationalist route, or play to the kurdish group? i think erdogan has shown amazing flexibility in the past. whats an ability to know the electorate wants and changes view without people challenging that changing view. i think erdogan will ultimately come out of this. there is still a sign of some democracy in turkey, and that is good news, but this is not a game changer.

bloomberg's mark cudmore and peggy collins, thanks very much. a reminder, you can find all of the charts we are going to use at gtv on your terminal. browse features and check it out. coming up, more on how the u.n. should respond to iran. we will speak to former ambassador to the u.n. thomas pickering next. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." el dorado resorts is said to have agreed to buy caesars entertainment for a $7 billion in cash and stock. the deal is set to be worth more

than $17 billion. it values caesars at about $13 a share. the combined entity would be split equally -- almost equally, that is, between those companies' heads. today, shareholders and japan's biggest brokerage voted to keep their ceo. he's been under fire since employees leaked market sensitive information that prompted regulatory penalties. nomura sought to placate investors with a $4 billion stock buyback. today, bitcoin traded above $1000 for the first time in 15 months. creek -- the cryptocurrency recaptured facebook'stention on push into the space with its recently announced token libra. that is your bloomberg business flash.

david: thanks so much. the standoff between the united states and iran continued over the weekend, with secretary of saying theo u.s. would impose new sanctions today. c. pub pao -- sec. pompeo: we will continue to make it understood that we will deny fundthe resources to terror and build out their nuclear program. david: with us is former u.s. ambassador to the u.n. thomas pickering. let's start with the un security council. the united states was to take this issue to the un security council. is there anything reestablish thickly -- is there anything realistically we can expect? i think neither russia

nor china will join us. they have opposed the trump pressure campaign. everyone should go back to the fact that we walked out of the comprehensive plan of action, which has been limiting iran's capacity to move toward nuclear and opened the door for iran to do things, and then we increased the pressure by putting sanctions on, including one agreement the iranian in which iran is allowed to . uranium enriched david: let's go to that. you heard secretary pompeo saying we would stop them having nuclear weapons. is that doable you know i really -- is that doable unilaterally?

the success the obama administration had in using sanctions meant to that they were you in sanctions often -- they were un sanctions, often. it has the capacity to say to people, you do business with iran, you can do business with us. that has a pretty broad scattering of effectiveness. there is a very strong u.s. capacity here to put economic pressure on iran, and that is what it is doing. to say that it will be totally successful is very difficult in the absence of negotiations. the president seemingly has wanted negotiations with iran, as high a level he can get with he himself involved. that does not seem to be taken up by iran because they say how can we trust somebody who's walked out of an agreement with us to do a new agreement one way or another, and why should we ever negotiate with somebody like that? alix: the sanctions that were

put on a little bit aco have crippled the economy and exports. does the u.s. need europe going forward? how did they get them on board with this? thomas: i think the u.s. should have europe on board to achieve any effectiveness with sanctions. europe has made its own views clear, that it is going to continue in the agreement with iran, something that at least 50% of the time come the u.s. seems to want. they want to hold iran responsible for the obama agreement, and want to punish iran if it gets out of the agreement. this is all, in some ways, very confusing in terms of the strategy being pursued here. the europeans are under pressure to do two things, not to comply with the iran agreement with gotten out of on the one hand, and at the same time, being pressed not only to put sanctions in place, but

potentially join us in a war with iran should iran violate the obama agreement. to me, this raises a serious questions. are people in washington really think about what they are doing? david: you've seen a lot of sanctions imposed over the years. when have they worked, and when have they not? which category does this fall into? thomas: sanctions work both if they are universal and if they come in a situation, as it happened in the obama circumstances, where two prior steps had taken place. one is the iranians had badly screwed up their own economy. the second was this came after we started sanctions, that the oil price declined in the world, for reasons having to do with a lot of other factors, including u.s. fracking. that has been a situation in which sanctions have had some effect, and we know that. the iranians, however, have always responded to pressure by trying to find a way to up

pressure against us. in the obama days, it was to increase the number of centrifuges and enrichment of uranium they were engaging in. that is something they have said they are about to do june 27. is supposed to exceed the limits in the obama agreement by june 27, and that is another question because any violation of an agreement is a serious problem. david: ok, mr. investor. thank you for joining -- mr. ambassador. thank you for joining us. alix: geopolitical tensions playing out in the oil market. you got a three week high, though still subdued. joining us is superior strategies head of macro strategy. guest: i think there is a real risk of escalation, particularly in how iran operates.

continue with to a serious risk of miscalculation . that would help wti in the process. alix: where is the biggest upside? peter: i think it is both on the bond and high-yield side, and even on the equities side. -- in 23rdthe the etf is 20% below the start of the year. if we turn any part of our to domestic focus into energy infrastructure building, that could be good. i see a lot of upside, nothing a lot of the negatives have been priced in. alix: coming up, we are talking about the lira stronger against the dollar on a redo in

istanbul's mayoral race. more on what president erdogan's next move is and what you might see in the lira. this is bloomberg. ♪

david: president erdogan of turkey suffered a surprising setback sunday, when the opposition party had a resounding victory over his party in a second election of the mayor of istanbul. our correspondent in his temple. how did the mark -- in istanbul. how did the markets react over there? the opposition party had a landmark victory. the margin of the victory was definitely not expected. the turkish lira seems to have enjoyed the news. there is a rally on the news of the opposition victory that

began last night. david: so why the rally? do people expect economic policies will change for mr. everyone? -- mr. erdogan? r: not necessarily. the outlook hasn't changed dramatically, but the election redo was a source of uncertainty. now that has been removed and a somewhat smooth way. investors have a reason to sort of cheer, but we don't know how long it will last. investors will turn their focus on more pressing issues in the rally can come to an end. alix: where does president erdogan go from here? does he tackle the issue, or does he go more broad? onur: the landslide victory by the opposition infinitely leaves him weekend at home -- it leaves home.akened at over hising sanctions

decision to buy missiles from russia, which are expected to be delivered as early as the first week of july. alix: bloomberg's turkey bureau chief, thank you. onur ant joining us. ir of academic securities still with us. the lira is waffling here on the highs of the session. what do you do with turkey? peter: i still avoid it. he's been moving significantly more towards russia, engagement with china. that could be problematic, given the amount of debt that turkey has and how much their bank has outstanding. david: insofar as he had strong views on how to run the economy and the central bank, does he have to trim his sails a little bit? toer: either trim his sails relieve the pressure we are

feeling, or he doubles down, which we've seen in the past as well. that would be my concern, that he really embraces pressure and pushes us further away. alix: do you feel like the dollar has peaked? if it has come a what does that mean for emerging-market assets? that it has, what does mean for emerging-market assets? peter: we've essentially entered a currency war. i think that is going to take some dollar pressure off. alix: so what benefits? peter: most of e.m. will benefit. places like india are going to be really interesting. i think south america can rebound, especially if we can clean up what is going on in venezuela. i would just avoid turkey right now. david: why do we have a move to dollar as a safe haven? in general, it feels like people have been going into the dollar as the turmoil around the world increases. peter: i think the fed is trying to offset some of that. we had a very strong dollar rally, and the fed is saying we

are going to be more easy in terms of monetary policy. we are pushing people away, effectively. ago it was going to be a hiking cycle. how do you view the ecb versus the fed? we see different language coming out and how that plays in the currency market. peter: i think the ecb's hands are tied a little bit. i hate negative rates. i think negative rates are a bad thing. i think they are going to have to do something more like a itro, more qe, where as here think we will see the rate cuts. david: where do we see the biggest list for e.m. -- the biggest lift for em? peter: asia, maybe latin america. i don't see any progress in the middle east or eastern europe. -- alix: what:

you stay away from? peter: one, mostly turkey. i am staying slightly bullish. the fed said we are going to help markets, we are going to help chris ask at's -- we are going to help risk assets. i don't think it is the right trade longer-term, but right now i like energy. i think it benefits from the fed, and because it has underperformed, you might see some ketchup. alix: -- see some catch-up. alix: peter is staying with us. meetingp, trump and xi this week at the g20. how you traded. this is bloomberg. ♪

alix: this is "bloomberg daybreak." you made it to monday, and now you've got to make it to friday. markets in a holding pattern until we get to the g20.

1/10, but still at its best june so far since 1955. i feel like the statistic will really be on the g20. european stocks a little light, in part because auto stocks are really rolling over. you are buying stocks, some bonds, and fell on the dollar. euro-dollar up by 2/10 of 1%. yields are at -31 basis points, down by about three basis points. we are looking at another record for the bund yields. here in the u.s., 2.03 is where we print. i don't know how you interpret that. equities,nds and u.s. and sit and hold until the g20. david: now let's get into headlines outside the business world. viviana hurtado is here with first word news. viviana: boris johnson's biggest

conservative rival is accusing him of being a coward. jeremy hunt says johnson is ducking public scrutiny by not noteing to on a -- by agreeing to appear in a televised debate tomorrow. johnson is under pressure to address a do mystics butte -- to address a domestic dispute that led to police being called to his london home. a panel will vote on if tele and conway will testify this week -- if kellyanne conway will testify this week on alleged hatch act violation. hong kong protesters are planning another rally on wednesday ahead of the g20 quiet, as china seeks to any discussion of the

demonstrations. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. david: thanks so much. let's stay in asia with the g20. those meetings have everyone's attention, as trump is expected to meet president xi of china, and what that could mean for u.s./china trade relations. >> markets are clearly looking for the trade issue. it is really a lot of contingency on does trade get better or worse. >> japan is quite important because they have the ability to reset expectations. >> as long as there's not a lot

more negative news, we think that will be constructive. >> you could see in into the trade war. >> i think eventually -- you could see an end the trade war. >> i think we will eventually have a deal with china, but i don't ticket will come directly out of the g20. david: we welcome now shawn donnan from tokyo, over there for the osaka meeting. we appreciate your coming on with us this morning. set the stage for us. you heard a range of expectations. what should we be expecting? reporter: that range of expectations really speaks to the uncertainty. this is a pretty unique event if you think about the history of these g20 summits. they tend to be very dell, highly choreographed affairs. this one is anything but because of the high-stakes meeting at the center of it between trump and xi. it is a pretty binary thing. they either come out of this with a pause on tariffs and an

agreement to resume negotiations, or they go on towards a path of further escalation, which no one is going to like. david: it is actually not the g20 at all. it is really about this bilateral meeting. what do we know about it? has a time and a date been set? shawn: that is the fascinating thing. we do not yet know the time or the date of this meeting. what i heard from the administration is that they were still working out the details. we heard that again from the chinese today, who were saying they were still trying to work out the details. my sense is it is all going to come together fairly quickly toward the end of the week, when bob lighthizer and secretary steve mnuchin land here. they will go into a preparatory meeting a bubbly early on friday, possibly late on thursday -- meeting probably early on friday, possibly late

on thursday. alix: you mentioned the chinese response, the comers head talking about it being a two-way street. they have to come to the table as equals, all of that. is that something the u.s. has to buy into, and will they do that? shawn: that is a really interesting question, and it is hard to see the u.s. giving much ground here. both sides, when these talks broke down in the middle of may, have pointed the finger at each other, and have been doing that ever since. they really haven't talked much sense. the chinese were saying today that we need to meet halfway. there needs to become a vase on both sides. the trump administration -- there needs to be compromise on both sides. the trump administration has really been holding the line on this demands. one of the big differences we have between this meeting and the one at what is aires is there is -- and the one at one iresires -- at buenos a

last year, they really agree they need to start talking and make that room for compromise. it is not clear that either of them is ready to do that. donnan,loomberg's shawn thank you for joining us from tokyo. still with us is peter tchir of academic securities. s, treasuries,nd dollar-yen, gold. is this a trade for this week? peter: i think so. i think we will see some sort of extension. we will talk about negotiating. i don't think we are close to a deal, but i thing it will be enough to calm the markets. i don't think any disappointment is really going to push hard on markets, but i don't think we will have a big rally.

david: it is interesting geopolitics are negotiating down the price in the markets. maybe they won't put on the full 25%. we've really discounted the expectations already. peter: right. i think expectations are very low. if we get something really positive, i think we see equities rally. i just don't know that we can see treasuries selloff a lot given how dovish the fed was last week. alix: do you think what happens friday determines what happens at the fed in july? peter: possibly. how negative it comes away. , is it us is key is versus china or the world versus china? i would like to see a global effort to say we are going to work together. that would be highly encouraging towards a deal. i think we walk away with the of. as an island to the rest the world, and that is negative for markets. our team is saying it

could be a very substantial hit for the global economy. the u.s., thee is yellow is the chinese, but the blue is the global. i think it hits autos fairly heavily across the globe. as we saw from earnings out of germany, the market is having its own troubles. i thing it would be very bad to put on these full tariffs. i think the damage to markets would be too much. i think trump has to maybe put on some tariffs, maybe reduce the number of things we put tariffs on. if he goes along with what he said, i think we have problems. alix: what do you do in the market right now? peter: remain cautious, put yourself a little underweight. i think you look for assets that are underappreciated like the energy sector. alix: if you look at where we

saw corporate credit any money flowing in last week, it was bb and bbb's. do you think that continues? peter: i do. people got way too concerned about bbb last year. you've seen a big turnaround and some of the big market cap structures. i think people are realizing this was way overdone. we are the lowest all in yields on the bloomberg aggregate index. because peoplet are still cautious about the lower end of the yield. it will benefit a lot from the treasury rally. david: talk about the triple we -- the bbb's. if we have a trade war and it

diminishes global growth, that has really got to hurt corporations. peter: if you want to think really wonky, that credit is really a put the company, right now the strike is so far away, equities have to bear the bulk of that. i think credit is going to be fine. you could see a significant decrease in equities. we are so far away from that strike that they are going to behave very well. david: thank you so much for being with us today. coming up, bitcoin rises above $11,000 for the first time in 15 months. more on that next in today's wall street beat. alix: if you are heading out, make sure to tune into bloomberg xm radioard on sirius and the bloomberg radio app. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." coming up in the next hour, former congresswoman jane harman , wilson sister president and ceo -- wilson center president and ceo. here's your bloomberg business flash. agrees to sell a stake in its china unit for nearly $700 million in cash. is primarily an electronics retailer. lufthansa is investing its dividend policy a week after issuing a second profit warning this year. europe's biggest airline will

pay out a regular dividend of 20% to 40% of its adjusted net income, nearly double its previous range. lufthansa is struggling with the european fair war that has been -- european fare war that has been squeezing profits. financier george soros and facebook founder chris hughes are among those signing an online letter that supports narrowing the country's wealth gap by taxing the richest 1% of americans. u.s. federal reserve data shows over the last 30 years, that group saw its net worth grow by $21 trillion as the bottom 50% fell by $900 billion. that is your bloomberg business flash. alix: does that make a difference to politicians when they hear the billionaires sending a letter? david: it certainly doesn't discourage them. so has come out on this, and has elizabeth warren saying there should be an annual wealth tax. although, remember warren

buffett had one that went nowhere? wholealso, maybe the idea of get out in front meant cash in front of it -- idea of get out in front of it. they want all candidates to support a moderate wealth tax on the richest 1% of richest 1/10on the of the richest 1% of americans, not lower income americans. i like the moderate tax. david: i'm not sure you will get many republican candidates going along with that. alix: let's turn now to wall street beat. first up, malaysia takes goldman to court. the next pretrial hearings for the case is september 30.

natixis enters crisis mode. and bitcoin bounces back, trading at $11,000 for the first time in 15 months. david: we welcome now sally basak -- we welcome nelson ali-- we welcome now so and -- we welcome now sonali basak. >> does goldman offer a settlement amount? >> we did offer some composition. -- some compensation [laughter] that is not usual for governments. i think goldman sachs made quite a killing on this gift. david: it is interesting. he's seeing the whole thing was fraudulent, and goldman helped with that, but even overcharged us for the bonds that shouldn't

have been issued in the first place. sonali: it is interesting. trials and malaysia start 90 they get the complaints, but this is pushing it back quite a bit. it gives everyone a little time to prepare. it is a little longer than we initially expected. david: in fairness, what he said was that goldman offered $250 million. that is not nearly enough. sonali: and certainly not what they made on the deal. courts in malaysia will be quite --lic as well, so david: i'm not sure i would want to be goldman going to court in kuala lumpur. alix: our next story is in the texas -- is natixis. this goes back to last week when

there is outflow in one of their funds. sonali: in the middle of last a lotwe had a story about of liquid assets that were being baked into holdings that were losing money. after that, but investors started to realize this, and there's a lot of outflows and assets, we have not texas -- we -- we've seen nat ixis shares react quite positively. david: they were pretty aggressive in the markdown, saying we are going to take it way down so you know how bad it is. the shares are responding today. sonali: they are responding so far, and it shows that investors are applauding the fund managers

, rather than woodford, who has said don't worry about it. the ceo himself has tried to be patient with investors, and said we know what is here. don't worry about it so much. is is takingy natix a different view. david: our third story is bitcoin. safety.rush into gold, bonds, everything else. sonali: bitcoin is safety? [laughter] david: when it was first put out there, the idea was that it was for safety because it was uncorrelated. sonali: i was thinking about that. i was wondering how much it had to do with libra, the facebook stable coin, and whether those assets are correlated. i think fundamentally, what is happening here is the asset classes maturing, like everybody said. one of the things under report this morning was that people see

it less as a security risk, so people are less worried about love the activity that goes around bitcoin that could be criminal, and seeing it as something that could be a potential asset class. alix: what is interesting is where wall street is on bitcoin. sonali: mixed. everyone wants to see the institutions flow in. tensions have been opening up to the idea of it. the insurance industry is another that was talking about it a lot a year ago. they have virtually stopped talking about it now, at least in terms of bitcoin as a theency, and more as digital infrastructure itself. david: many thanks to bloomberg's sonali basak. coming outcome of the supreme court closes out its term this week, with three important decisions still to come. live from new york, this is bloomberg. ♪

david: here's what i'm watching today, the supreme court heading into its final week of decisions. the term will end this week. all eyes are on three court decisions, although there may be a fourth still to come. with us is our bloomberg port reporter. reporter.omberg court reporter: it is a doctrine that tos judges will defer regulatory agencies when interpreting their own regulations. businesses want that decision overturned. this a what happens now is that agencies are too unpredictable. let's say a shift in administration. an agency may change its interpretation of a regulation. they would rather have judges make the decisions on what those mean. they say it would provide more

consistency. we will probably see the conservatives siding with the businesses on this one. david: that is particularly interesting. what is more interesting is the census decision. we may know where it is going? reporter: the indication is that it was going to be another conservative-liberal split, where the conservatives were going to let the administration add a question about citizenship to the census. opponents say that would produce an undercount and mean that in specifically heavily hispanic areas, people would not respond to the census. .hey are hesitant the supreme court seemed like in arguments that the conservatives were willing to defer to the trump administration and let them add that question. david: which could mean a lot of

money two-state likes -- two states like new york, which have a big hispanic population. we have the gerrymandering question that asks, what it ever be so extreme that you get involved? reporter: and we are talking about partisan gerrymandering here. racial gerrymandering is something courts have been involved with for years. opponents say now we've got the case where the court should do that. case out of north carolina, where republicans explicitly designed the congressional map so that there would be 10 safe republican seats. there's also a case out of maryland where it was the democrats doing the gerrymandering. the problem for opponents is that you potentially have five votes who are going to say not only will we strike down these maps, but courts can never strike down maps. this is not something courts should be involved in. letill let, -- we will

politicians consider politics these lines.w alix: coming up on the program, we will speak to jane harman, former congresswoman and current wilson center president and ceo. in the markets, it is a little wait and see, with the exception of oil. it is all on china's meeting between president trump and president xi. s&p futures still up about 2/10 of 1%. european equities a little softer due to the auto industry, after daimler's triple warning on its profit forecast. bonds,oes into pauses on the dollar. this is bloomberg. ♪ hey! i'm bill slowsky jr.,

i live on my own now! i've got xfinity, because i like to live life in the fast lane. unlike my parents. you rambling about xfinity again? you're so cute when you get excited... anyways... i've got their app right here, i can troubleshoot. i can schedule a time for them to call me back, it's great! you have our number programmed in?

ya i don't even know your phone anymore... excuse me?! what? i don't know your phone number. aw well. he doesn't know our phone number! you have our fax number, obviously... today's xfinity service. simple. easy. awesome. i'll pass. ♪ pres. trump: i'm not looking for war. i'm not looking to do that, but

you can't have a nuclear weapon. alix: president threatens iran with more sanctions instead of opting for war. trump and xi. the two leaders prepare to meet at the g20 this week as china negotiators say there will need to be mutual respect. and daimler's third profit warning. the company slashing its prospects again in the latest black mark for the european auto industry. david: welcome to "bloomberg daybreak," on this monday, june 24. the special representative to the united states has said we need to bring iran into line. when you talk that way, it sounds sort of like regime change. alix: true. come to the table or watch the economy crumble.

really have to wonder what coming to the table actually means. david: one of the problems is you put so much pressure on the country, they come together in opposition to you rather than saying-- rather than we want a new leader. alix: there's still so much demand worries offsetting geopolitical risk. coming on to any highs into the g20. euro-dollar still up, up 2/10 of 1%, despite the german info data rolling over. it feels like a fed backstop story to me. david: time now for your morning brief, looking at a busy week ahead. secretary of state mike pompeo travels to india today in the midst of a growing dispute over

tariffs. housingwe get u.s. data. wednesday get durable goods for may and the first night of the democratic presidential debate in miami. thursday we get jobless numbers and the third read of u.s. gdp growth. major u.s. banks will get the final results of their stress tests. on friday, the g20 talks get underway in osaka, japan. alix: the standoff between the u.s. and iran escalating over the weekend. official threatening new sanctions on the islamic republic that could come as soon as today. joining us is bloomberg government reporter jack fitzpatrick. jack, the latest. jack: late last week, the president tweeted that sanctions already happened come of so there is a little confusion about when exactly these are going to kick in and what they would hit. has said the

sanctions already on iran cover about 80% of the economy, so there is a western of how much further they can push this. there's nothing a lot of trust for the president, at least among democrats, on capitol hill , pushing these sanctions after last week's episode, and which the president flirted with a strike on iran that he said would have killed about 150 people. might not be the most promising thing after there was relief on capitol hill that the president didn't go through with it. we are going to have to wait and see what the details and the timing are going to be, but there is certainly skepticism in washington, especially in congress, about where this would go. alix: jack fitzpatrick, thank you very much. joining us from dubai is ddle east news' mi

economy reporter. what is the mood like in iran? reporter: right now we are just hearing basically the government is coming out and saying we will not negotiate under duress. we will not negotiate under sanctions. that iraniansse have held to their end of the , andin in the agreement not president trump and the u.s., so what is the point of having another lengthy discussion to be broken, basically? alix: thank you very much. with geopolitical tensions playing out in the oil market, wti rallying for a third day. the threats to crude continue to linger. joining us is wells fargo

strategist, and mark cudmore. we are out for 12 days. is there a way to hedge right now? >> i think owning upside and call options is an etf that tracks oil exploring and producing companies. it is interesting going into opec on july 1. the option market is implying only a 2% move. moves 3% on xop opec meetings. after the fed's dovish most recent meeting, i feel like historically commodities have performed really well. we had gold rallying, metal rallying. ' effecthe u.s. tensions

on oil come i -- on oil, you can get exposure to those proxies. david: you also have opec and whether they are going to extend, and fracking here in the united states. is this a supply or demand issue? mark: at the moment, the short-term story is clearly the supply concern. i think over the last few years, it's also been a supply story. the bigger theme in oil is to continue to increase in the shale industry. however, this year the demand has been there. ,o we are in this kind of world and now supply is dominating in the short term. i'm not sure this is a sustainable bounce. alix: fair.

you see that in oil volatility. you play the vol side of the equation? pravit: i think you definitely can come about the way i look at it, most people are directional traders. you are not overpaying for these options. if anything, they are pretty cheap. if using there is a chance we'll jobs because of opec or the u.s. and iran, there's a cheap way to gain exposure to those assets. david: what about agro demand? overall, we have an economic slowdown which is not priced globally which will continue to weigh on prices. from thethe flow middle east in oil has not been that much of the moment, and we are still seeing increased supply from elsewhere in the world. yes, this is a supply story in terms of the news flow, but it is not like supply has been overly disrupted yet. alix: when you look at how

correlated oil is to other asset classes what have you noticed that is different from three years ago? mark: the big break down in just the last month is that despite the squeeze higher over the last week or so, it is still down over the last month. i think equities are more the outlier here. commodities markets are trading that there is a recession coming. treasuries markets are trading recession, whereas equities markets are completely oblivious of the moment. commodities and treasuries are the ones that make sense. bond traders are normally ahead of the game. equities traders wait for the economists to change forecasts, and that is not going to happen until after g20. is there a dislocation between equities and commodities? pravit: i would play catch up in commodities. i think you have a dovish central-bank backup on the ecb signaling they may cut rates or

stay lower for longer. in china, i think we are seeing signs that they are striving to expand again. they are ending their deleveraging campaign of the last year. a lot of that is a tailwind for commodities. plus, you get people at least believing in the inflation comeback story. do i think there is going to be inflation because the fed is coming right -- is cutting rates? not necessarily. we've now started to see the early signs of that, where gold and industrial metals and mining companies, that has been rallying recently as well. i would see a catch up in crude oil and energy companies. david: was if you will be staying with us. coming up, but the main event. president trump and president xi meet at the g20 and could offer new signals on the trade war. we preview that next. this is bloomberg.

♪

viviana: this does "bloomberg daybreak." striping ans squibb agreement with u.s. antitrust authorities to divest one of .elgene's top drugs bristol-myers will sell off a psoriasis pill under an agreement with the federal trade commission. last year that product made nearly $2 billion in revenue.

fila has seen shares rise 400% since friday, up $4.3 billion. in an indonesian smartphone distributor rose the most in four years due to a partnership with electronic juul.ette maker at the end of this month, it will begin to retail e-cigarettes integrator sir greater jakarta area. alix: thank you so much. the focus this week is the big g20 meeting in osaka between president xi and president trump, and the range of what that could mean for u.s./china relations. >> everyone is waiting for the g20 meeting. markets are clearly looking for the trade issue, and it is really a lot of contingency on this trade get better or worse at the meeting. >> it is quite important because

they have the ability to reset expectations. >> as long as there's not a lot more negative news, we think that will be constructive. >> we would but something more affirming, that you could actually see an end to the trade war. >> i think eventually we will have a deal with china, but i don't think it will come directly out of the g20. >> the market is going to be disappointed by the g20 meeting. alix: still with us on set, andit of wells fargo bloomberg's mark cudmore. so how do you hedge it? pravit: the g20 is important, but if you think some kind of grand deal is going to come out of it this weekend, slightly not. have seen is a lot of options activity going into g20. long story short, the options

market is pricing in a fairly decent implied move. g20, i think we kept it open to percent higher on sunday night after the event. unexpected like a deal or a total breakdown, people want to hedge the tail of something unexpected happening. most likely you get a couple handshakes and some constructive talks. alix: this chart shows what the volatility markets are pricing in. , soe a 1% move in the s&p then you get a quiet july 4 week. then what happens? do we go back to regular volatility? chance --sic good , withs a good chance that the dovish central-bank backdrop

collapse. look at puts going out to july. i think the vix is unusually high right now. i think part of that is the expectation for this event, and part of it because we've rallied so quickly. when you were on with us earlier, you said the buzz in asia is president xi does not have to make a deal. basically, it's got to be something he agrees with. do you think they can simulate enough their economy? mark: i think they are willing to take the hits. it is very clear from china that they will not concede or surrender these kind of talks. -- we saw politburo

that they really want a deal, but they will not do it unless they get concessions from the u.s. david: you are based in singapore. how does the rest of asia respond? what is the hit for indonesia and other places? mark: we still haven't seen world economic forecasts downgraded, and that's because economists wait to take the reaction and see how g20 goes. if we don't have concrete steps going forward, we will see economic forecasts flat because the data slowdown has been quite remarkable in the last two months. it is now in contraction territory. it is likely to be contraction territory again when it comes next week.

there's a really bad growth story. war, thenut the trade we get the tariffs implemented in may, so we've got a severe slowdown coming everywhere, not just asia. the u.s. is one of the most vulnerable places. alix: and not necessarily price into markets. to bloomberg,side we have no ethics volatility. the blue line is the move index. situation on a macro backdrop is true, how do you moving? this it is true --pravit: that maybe vol looks a little cheap, but i would say look longer data. i think that's why the fed has decided to cut rates with stocks with stocks

at all-time highs, and the ecb has signaled they are going that way. they see all the things that mark mentioned coming down the road, and i think there's a good chance that central banks move onto the dovish foot, that a lot is not where the market is saying. -- it is not really pricing in any sort of recessionary outcome. david: can the fed make it up to us? there's an assumption right now in the marketplace that as long as you are accommodative, we will be fine taylor: -- we will be fine. at 2007.k the fed started cutting in august 2007, and the equity market topped out two weeks later. policy does not rate cuts.

unfortunately, that feature is even less effective now, given the qe and abundant liquidity. the fed will be able to stop this recession. they don't have 500 basis points to cut. alix: no, but they have 50. mark: they will have to do much more than that unless we get a deal that removes all tariffs. if we just get a truce, there is much more negativity to price in. alix: you are seriously bumming me out. that's some cold water. [laughter] pravit and mark, thank you both for being here. coming up, daimler issues its third profit warning in a year. analysts are concerned this may not be the last. more in today's bottom line. this is bloomberg. ♪

david: time now to look at three companies worth watching this morning. first off, 5g and its effect on equipment makers. the u.s. is saying 5g has to be designed and built somewhere other than china. alix: i mean, that's huge. 5g is the thing for telecom. that is going to be the place where you spend all the money and development. david: this is a bigger battlefield, frankly. let's get to the battlefield of shipping. fedex reportedly slashing prices to sell up some of its planes, offering discounts -- to fill up some of its planes, offering discounts after they ended a shipping contract with amazon. thex good potentially be on -- fedex could potentially be on the unreliable entities list in

china. david: china says this is the not -- this is not the first time this is happened. the third company we are looking at today is daimler. for more, we welcome back to new york work sutherland, fresh from airplanes -- back to new york work sutherland -- back to new , freshooks sutherland from airplanes to autos. wemarie: we have --brooke: have learned there might be software calling them to report lower emissions then what would be expected under regulatory a long listdding to of recalls that number in the millions for daimler.

do they really have a handle on what is going on here? they have not had to pay the fines that vw paid, about $30 billion. right now it is making them compliant to those regulatory standards. david: it is also against a much broader backdrop of trying to deal with auto emissions. we've got new regulations coming into effect over in europe, and it was reported over the weekend that european automakers are not ready for that. daimler has been invested in making a better day and jewel -- a better diesel engine, but is there a market there? or should we be putting more cars?towards electric a lot of these automakers are behind, looking at these new standards and wondering how they are going to get there. if consumer demand is going to be there to help them meet those

numbers. automotiveis an problem in general, but daimler particularly, three times you are going to cut your profit forecasts?how do you not know that ? what does that say about management? david: well, they have new management. they've got to bring electric vehicles on really fast, and they hadn't position themselves that way. brooke: they've done a portfolio shuffle and made some of their business is more independent. alix: interesting. sutherland, thank you very much. coming up, there are already sanctions on oil and steel. what's next? this is bloomberg. ♪ the latest innovation from xfinity

isn't just a store. it's a save more with a new kind of wireless network store. it's a look what your wifi can do now store. a get your questions answered by awesome experts store.

it's a now there's one store that connects your life like never before store. the xfinity store is here. and it's simple, easy, awesome. alix: this is "bloomberg daybreak." i am alix steel. a wait and see but you will going to certain safety. money flowing into the u.s. out of europe.

european auto sector getting hit hard. daimler's third profit downgrade for the year. in other asset classes, -31 basis points on the bund yield. in the u.s., yields down another three basis points. one area where you are seeing dollar weakness across the board. the lira getting a jump although off the lows from the session. a mayoral election change the game for istanbul. the opposition party gaining a win. currency holding on to its gains but nothing exciting. iranian -- potential iranian sanctions. nothing dramatic compared to the headlines over the weekend. david: it is supposed to be today, whatever it is. alix: i'm surprised we do not have it by now. david: we will let you know as soon as we know. let's find out what is happening outside the business world.

we turn to viviana hurtado with first world news. viviana: mike pompeo visited saudi arabia and met with the crown prince to discuss rising tensions between the u.s. and iran. the white house decided against striking back after iran shot down a $100 million american surveillance drone last week and iran warned its forces will not hesitate to take down any more drones that violated airspace. cancelsanders wants to $1.6 trillion worth of outstanding u.s. student debt. how will he offset the cost? taxing wall street. sanders will propose legislation today. it will provide debt relief to 45 million americans. the women's world cup just past the halfway mark and the wall street journal reports it is already on pace to break several viewership records in the u.s.

and worldwide. estimatingfifa nearly 100 billion people could do union. news 24 hours a day and at tictoc on twitter powered by more than 2700 earliest and analysts -- 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. david: -- alix: thank you so much. what i love about the conversation is the chicken or the egg? are you getting more viewership because it is on more stations? david: no matter how many stations are on, it is not good people will not watch it. the fact that people are watching it means it is really good. there was a story bloomberg has about the french now getting sponsorships for women's soccer for the first time. fox in 2015eless, only 11 of the matches were

aired, and this time is 22. david: that is because it is more popular? i hope we are getting there. there is mediation about the dispute of money and pay. in the meantime, we had this amazing weighing in times square -- this amazing thing in times square. one started from 42nd street and went up 47th street. they walked toward each other and then she sat down on the wire and he stepped over her and they kept going. it is unbelievable. he is stepping over her now. she said there was only one moment she was nervous, when she got back up. she was fine. alix: i have nothing to say but oh my god. i think it took her 36 minutes and it took him 26. david: she was in a terrible accident earlier when she was badly injured by falling so this is an amazing comeback. in the meantime we have

president trump tweeting out that despite a federal that does not know what it is doing, raised rates far too fast very low inflation, other parts of the world slowing. david: and did large-scale tightening, $50 billion a month. we are in the court took one of the best months in june in u.s. history and then he goes on. david: p does not like what the fed did. alix: you wonder then if he wants those rate cuts, what does that mean for friday? react markets do not negatively it will be difficult for the fed to want to cut rates. david: that is not the only trump tweeted today. he also tweeted about iran, saying i do not know why we have to protect the strait of hormuz, everybody else gets their oil so why should we be responsible?

he has talked about the flash -- he has two different views. >> i am not looking for war. if there is, it will be liberation like you have never seen before. i'm not looking to do that. you cannot have a nuclear weapon. you want to talk, good? >> no precondition? >> not as far as i'm concerned. david: we welcome the president and ceo of the woodrow wilson international center for scholars and a former congressman who served on the house intelligence committee. you understand geopolitics so terribly well. the u.s. has said they will now impose more sanctions today. what can they sanction and what difference will it make? jane: i think we are doing better in women's soccer, and that is a good thing, then foreign policy. theiran policy is all over

place and are middle east strategy is nowhere. let's start with that. today we are imposing more sanctions on the iran economy. bad, butaying that is what it does is strengthen the hard-liners against the current regime, which is more moderate. cybereek we did offensive , that was our strategy last week. it is not clear how well it worked or what the retaliation could be. next week we will do what? this week there is a conference in bahrain that we called to promote our new israel-palestine plan which the palestinians are not invited to and oppose. there is that. then there is the bombing by saudi arabia -- not by saudi -- by, i possibly possibly those armed by iran against an airport in saudi arabia. our middle east policy is . . .

and how this connects, not sure. we are picking the sunni arabs and the saudi over a long-term future with iran. said ande president people around him have said the goal is to get the iranians back to the bargaining table. this has resulted in a negotiation. the president says he does not want a war. is there a path to get the iranians back to the negotiation table? jane: negotiating about what? deal, a deal, the obama which people out of, which had six parties in agreement, including the iranians but also the russians, the chinese, three european countries, and us on a containment deal for iran and nukes. he says iran cannot get nukes. the deal prevented iran from getting. what we should have done is made that deal stronger, continued to

talk to the iranians, with whom we had decent relations at the time. now are we starting over to get them not to enrich, which they just said they would start doing again? that seems to me not to get us even close to the deal we throughout. bex: part of it is going to stifling the iranian economy, which is already estimated to fall 6% this year. what is left to sanction? jane: if we are prohibiting them and those who buy it from exporting oil, i think that has a sharper bite. the i just heard you say president has tweeted something about why should we be responsible for goods transitioning through the gulf of hormuz, i think the whole neighborhood should be responsible, but if we are responsible for escalating tensions, shouldn't there be

some corollary effect in terms of what we do about that? i think we can squeeze the economy more in iran, but that strengthens the hardliners in iran and those are the folks who never liked the nuclear deal with obama. i'm not sure that advances us to a place beyond where we were in the last administration. david: you have said we are picking sides between sunni and shia. president trump has formed an alliance with saudi arabia, and saudi arabia with israel. it seems to be israel, saudi arabia, and the u.s. against iran. inthere some logic in that the region because you need some sort of check in the region because after iraq fell it has been iran's dominance. jane: let's understand why iraq fell. i was one who voted to go into iraq based on bad intelligence. it was wrong and i was wrong and we created a vacuum for iran to

expand. there is also syria, where we have no closure to that war and it is another place where iran has expanded its influence. picking sides to me is extremely dangerous. let's understand it was just a u.n. report which said that mohammed bin salman, the person or secretary of state's meeting with, was responsible for the killing of an american green card holder, jamal khashoggi. congress is strongly opposed to the trump proposal to sell another eight alien dollars in military aid to saudi arabia. billion in$8 military aid to saudi arabia. there are reasons to be critical of saudi arabia and iran to a great. picking sides does not seem to lead to me to a better u.s. policy in the region. david: thank you so very much for being with us. jane harman. alix: for more on how tensions

will weigh on the oil market, a guest joins us from london. more sanctions coming online. are we going to expect oil exports from iran to go to zero? >> they are quite close to zero already. maybe they have managed to lower about 900,000 barrels a day. if you look at where they cap discharged, there's a bit about cargo into syria and turkey, and a couple floating up china that have not been discharged. is maybe $250,000 a day max. it is rest a hundred thousand barrels a day. for all intensive purposes, we are almost there. alix: is the market accurately reflecting that? amrita: no because this is the demand fears. the curves are still steep

despite the demand weakness and the fears and that is showing you that supplies are continuing to fall. we have seen refineries struggling, our numbers have come down since the start of the year, power supply numbers have come down even more because of iran, venezuela, and other outages. as ceo was talking to bloomberg and said i am more concerned about geopolitical incidents than the economic factors driving that. it is more likely political factors that will throw us off course in the general economic outlook. how do you feel the market is position to deal with these shocks like iran that you do not know how to price in? amrita: i think he is exactly right. the market is complacent. the complacency comes from the view that u.s. shale will grow into infinity. as a result, there is not that

much -- there is little bit in saudi arabia, uae, kuwait. if we get multiple outages, the world is not have the capacity to cope and that is when he sees surging oil prices and you effectively destroy the global economy as a result of that. i think the market is in position to much on the long side. the cpas and the high-frequency side of things was short. we have seen some shortcoming rally because of things going on the strait of hormuz, but beyond that the market is not long on these levels. brent is barely $65. alix: walk me ahead. how does all of this set the stage with opec plus? amrita: they are between a rock and a hard place because, for instance, saudi arabia keeps getting calls from their customers and we're not buying iranian crude, we need more of your fruit. they are saying demand might be

coming off, what do they do? our best cases they go forward with the existing deal. russia will oppose a little bit. the companies do not like being in this deal, but given where $75 orare, if we were at $80, i think they could increase production of it. given the fragility of the global economy, a rollover should be the base case. alix: great to talk to you. ,oming up on this program investors awaiting the release of indians federal budget and steps the government could take two -- could take to the economy. heading in your call, do not forget to listen to bloomberg radio, channel 119 on the bloomberg business app. this is bloomberg. ♪

viviana: this is bloomberg daybreak. coming up on balance of power, christopher hill, former u.s. ambassador to iran. alix: time for all of the lead. at -- time for follow the lead. today we will take a look at india. weighing the country's federal budget and taylor riggs has a snapshot of the economy. taylor: asia's third-largest economy look like growth was slowing, now down to 5.8%. this is been on weak domestic growth and problems in the shadow banking sector causing some of that slow down. credit growth has been slowing. our bloomberg intelligence and economist are hoping a reversal

by the r.b.i. into looser monetary policy should start to help the credit sector and boost lending by some of these banks. what that means is the financial companies relative to the broader index in india has been outperforming. like we said, they've been tightening monetary policy last year. now switching that a release or monetary policy. looserching that over to monetary policy. david: let's take a closer look at india's banking sector and how it is positioned to help growth. we welcome the president of the u.s. india business council, and damien sass our, bloomberg strategists. you meet with companies doing business in india. is it in a position to help growth in the economy? >> the banking system in india does need some overhaul as you

see the government struggling with the issue of nonperforming loans and dealing with liquidity. you saw the r.b.i. did take a step in the last couple of weeks on injecting more liquidity and lowering the repo rates and such but the banking sector writ large has been tightening and i think you'll see continuing moves in the budget that comes down in early july where some additional stimulus to address some of the bad loans that are continuing to be on the books are addressed. david: that was my question. we've heard a lot about bad loans in the balance sheet. have you clean that up? what is the process for getting it cleaned up? nisha: i think they have taken significant steps in that direction but there continues to

be more reform needed and the banking sector. you see that r.b.i. has taken a much tighter stance on regulating the banks. you are seeing that there has been some talk about setting up a facility for bad loans or bad bank loans so to speak. there have been many things discussed in india about how to deal with the banking sector. i think everyone recognizes that reform is needed and also there is some cause for optimism that the government has been taking significant steps and will continue to do so. the same time, yet the deputy central bank governor resign. how does that play out? damian: i did it meets with what we are hearing across all of emerging bank is. central -- emerging markets. central bank independence has been called into question.

the loan half has been calling for the fact that the federal budget deficit is rising. another 50 bits expected by the r.b.i. chief economist out of india. hopefully that will impact the real economy. the mechanism for that transmission remains slow at this current stage. alix: if we are transitioning in india to be more of a cashless decided, does that -- cashless society, does that make the banking system more manageable? foreigners are not able to participate in a lot of the investment opportunities. you up a lot of stressed nonfinancial courts in india that basically need to stimulate. they have bad loans out there. hopefully we can see some sort of reforms and measures to help those companies work their way out of the current system. we are hoping that $1.8 trillion

of capital reserves would be transferred from the central bank to the federal government and used to retire some of the banking debt. we were hoping from -- hoping for resolution on that. that is being delayed. we do not know at this stage. thank you guys very much. if you're stressed about it, you isuld just do some yoga what we learn from the president this weekend. david: i do not know we had international yoga day. it, but can joke about a lot of the caucuses and business groups and retreats, they have these things were you do yoga, you can pet bunnies and hold copies to try to get into a better place of mind. there you go. encouraging. david: a couple of years ago i was in shanghai visiting a school and they started out the class of third-graders with three or four minutes of yoga.

it quieted down. amazing. alix: what is amazing is next thursday, the boston pops fireworks spectacular. here's a look at boston pops by the numbers. ♪

alix: and don't miss the boston pops fireworks spectacular coming up july 4 at 8:00 only on bloomberg. i will be there. david: how could we miss it? 20 minutes and 17 seconds of fireworks. i have be precise. alix: is pretty precise. what is also precise is what i am watching, and that is president trump tweeting about the fed. he says the federal reserve does ,ot know what it is doing raised rates far too fast and did so with large-scale tightening. on course for one of the best months of june, imagine how much better it could have been if the fed had got it right. over the weekend, talking to chuck todd nbc, saying we cannot talk about demoting jay powell, but i could if i wanted to. david: that is exactly right. he sat there like a stubborn child. one is you will get it to

loosen. the market sort of agrees with them. alix: there is a story out there that maybe the fed would not have hiked in december if it were not for the rhetorical pressure from president trump about not being aggressive in hiding. another chicken or egg thing. if the decision does not turn out right, he will say it was not my fault. alix: he has that out. coming up, market field as it management ceo. money going into bonds, the dollar lower as you have the euro continuing decline. this is bloomberg. ♪

lisa: from new york city for our viewers worldwide, i am lisa abramowicz. the countdown to the open starts right now. ♪

coming up, world leaders attempting yet again to end trade wars. markets preparing for volatility out of the g20. fed speak has traders preparing for rate cuts. president trump doubling down on his powell criticism. global tech as facebook threatens to up and currencies. we are resuming the rally as investors for see more fed a meal is. more fedgain -- stimulus. 10 following two basis points. crude climbing the highest in three weeks. let's begin with a big issue. markets counting down to the g20. >> so much attention is going to be on osaka. >> keep your eye on the g20. >>