francine: president trump says he has not promised to hold off a new china tariffs. the fed president of san francisco says it is still too soon to know if there needs to be cuts and by how much. the titans of u.s. making promise to give more cash to shareholders after all 18 lenders pass the stress test. big surprise to deutsche bank also passes -- surprise, deutsche bank also passes. ♪ welcome to "bloomberg: surveillance." good afternoon if you are watching from asia good morning

from europe and the u.s.. here are your markets. we are seeing a little bit of flatlining for european stocks. try to figure out exactly what will happen when president trump meets with president xi jinping. the u.s. 10 year yield is holding just about 2%. brent at 66.34. we are seeing a big move with gold. it is the last trading day of the month, so watch out for any volatility. what marlon is doing -- merlin, announcing a couple of private equities were learning at the company. they are the owner of madame tussaud, amongst other entertainment things in london. coming up, more from our exclusive interview with the -- the-- with the fran san francisco fed president.

let's get straight to bloomberg first word news. ifit is too early to know the federal reserve should cut rates, according to san francisco fed president mary daly. they are widely expected to cut in july. we spoke exclusively with mary daly at the aspen ideas festival in colorado. >> if the data comes in and shows significant weakening, that would call for different action then if the data just showed headwinds. -- than if the data just showed headwinds. so it is too early, from my perspective, to use the tool. ofncine: hsbc's global head fixed income research says it would be odd for the fed cut rate and exit the balance sheet. rates and fix the balance sheet. >> the fed is still tightening. the impact of the previous rate

hikes is working through. they are still shrinking the balance sheet. >> the global economy could be headed towards a slump according to billionaire paul singer. could be as there market correction of 30-40%. but he could not predict the timing. >> i think we are at the high end of the risk spectrum. , or have beening expecting, it is not today's of today's epiphany, the possibility of a slowdown. >> global news, 24 hours a day on air, on tictoc, and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine? francine: thank you so much. breaking news out of the boj. this is some of the purchases they are doing with the japanese bonds. the boj cutting its jgb

purchases for july but is raising purchases on the shorter durations. will it have an impact on the curve? we will get that in a second. i'm actually going to do a price check on jgb. i don't know if we have it up, otherwise, i will bring up my terminal in a couple of seconds. the world's most powerful leaders are gathering in japan for a key meeting -- 40 meetings that may -- for key meetings. things to watch out for are rising tensions between the white house and iran and any progress in u.s.-china trade talks. president trump play down expectations earlier today. -- played down expectations earlier today. >> i am meeting with xi jinping tomorrow, as you have heard. there seems to be a rumor about that. who knows? i think it will be productive.

at a minimum, it will be productive and we will see what happens. francine: for more, let's get straight to give on men in osaka, japan. osaka,vonne mann in japan. president trump praising some allies and beating up on others. yvonne: a very busy day for president trump. he has nine bilateral meetings during his trip. he had several this morning weather with shinzo abe, vladimir putin, or narendra modi. with all of these countries, there was some sort of tension. whether it was trade related or geopolitical. clip, we saw more of a cautious president trump leading up to that talk with president xi jinping. he said there is a good chance of doing something with china. that when itaid

came to pledging not to add more tariffs if talks do not yield anything, he said he has not decided. so you has not promised to withhold for now. now.w tariffs for we have also heard from present xi jinping, perhaps speaking to his domestic audience, condemning bullying. he mentioned this during a session that any attempt to put one's own interest first will not win any popularity. francine: what exactly are we talking about that is at stake? a lot of people say the meeting tomorrow will set the direction for the world's economy. others are saying this will what -- this will decide war and peace in many regions. is this right? yvonne: yeah, the consensus

seems to be this will just be when osiris -- be buenos aires 2.0. again, there are a lots of questions about how long this truce could even last post-osaka. we talk about the issue with huawei, the wall street journal was a demanding or hoping to demand a list of the export ban to get some kind of trade negotiation. is that some kind of provisional demand leading up to the talks? larry kudlow was saying there are no provisions leading up to saturday. so a lot is at stake but a lot is in doubt. francine: thank you very much. in a soccer, japan. japan. us -- in osaka, joining us are at -- are two

guests. what are you expecting tomorrow? issues.had major what will the vibe of the -- vibe be? leslie: it will be very difficult. the black cloud hovering over american politics has been this ongoing feud. ande is so much concern will dampen the world economies and growth, that protectionism is growing. the wto has come up with the reports say 22 new restrictive measures on trade. this is not a good situation. it seems unlikely to me there will be any germanic or significant change coming out of the meeting, but everyone will be watching. francine: i will go to markets in a second, but there is also a

report that china will ask to take huawei off the list. will that escalate tensions? leslie: it may well. it is highly unlikely that the president of the united states would concede to that without some sort of broader deal. although he did have that one moment where he said that if the right deal was on the table, maybe he would. which undermines everything he said about huawei being a national security problem, not just a technology or trade issue. francine: so what do we do? go to cash, go to gold? >> a lot of people have gone into gold. it seems it has moved ahead of itself. it may move slightly higher, but it would be speculative on my behalf to speculate on it. the fundamental issue of opportunity at hand is that everything that is happening is

driving bond yields lower longer. and this is something that started in the early 1990's. this is one of the fundamental forces driving the equity market. outcome of tomorrow's discussions is the cost of a coin we don't know if they will declare truth, eternal friendship, or peace. but even if they were to declare a eternal friendship tomorrow, most likely, the fundamental risks between the united states and china, which has really been driving this, will be there the day after tomorrow. francine: but you need to take a bath on whether the fed is so dovish because they did a mistake or because they worry about the trade war? if it is one or the other, it changes the way you view the meeting tomorrow. burkhard: it is a bit of all.

the fed it feels bullied, clearly, which is holding them back from giving what the president wants. yet if the discussion turns out to be a no-deal discussion, it will be just another peace in in overall puzzle -- piece the overall puzzle. , have allieslie and the other leaders gotten used to president trump's style? even before he arrived coming to saint india needs to reverse some tariffs, china needs to do this. arrived, saying india needs to reverse some tariffs, china needs to do this. leslie: it is extraordinary that --calls into commitment calls into question the commitment of japan's defense,

one of the most fundamental things of the post-war world order. and meansurprised there may be a significant affect. there is a -- effect. there is a holding pattern that people are either waiting for the president to be voted out of office or perhaps just dial it back. it is difficult to do with diplomacy in a serious way with that kind of rhetoric. francine: thank you, leslie from chatham house and burkhard from credit suisse. coming up, the debate heats up, the second night of the democratic debates gets testy with kamala harris emerging as a star of the night. this is bloomberg. ♪ >> guys, you know what? america does not want to witness a food fight, they want to know how we will put food on the table. [applause] ♪

francine: economics, finance, politics, this is "bloomberg: surveillance." let's get straight to the bloomberg business flash in new york city. >> boeing falling the most in six weeks. that on a scoop it could take months to fix of the latest software glitch. the issue was discovered during the faa similar tests when the pilot experienced a lag in emergency response times. after decades, apple's design chief is leaving to form an independent company. he is responsible for the look of the company's most iconic products, but how much was he worth to apple? billion.ts verdict: $9

that is how much of a loss in value when the news broke. as mentioned, the highly anticipated trump xi jinping meeting could determine the next chapter in the trade war between the u.s. and china. so how is this conflict affecting trade relations? annmarie hordern has all of the details. annmarie: we are looking at a deep dive into trade. while you might think this looks like a wet or dream catcher, it webresents global trade -- or a dream catcher, it represents global trade. america's biggest trading partner is china and we have mexico and canada in the pink. the u.s. also has a surplus with countries like the uae, netherlands, great britain, and belgium. but if you start to look at trade as a percentage of gdp, the story looks drastically different. what you can see is that china and the u.s. actually don't rely

on international trade as much as other countries. if we were to wrap up the status quo, countries that could really be hurt are these like germany, south korea, mexico and canada. they count on international ,rade for their growth something world leaders will take into account as they meet in a succah -- osaka. francine: still with us is leslie and burkhard. first of all, do we underestimate the flow of trade? ,e even heard it from apple about potentially moving supply chains. burkhard: depends on who you talk to. usually, when i talked to investors, i do not think they underestimate the relevance of trade at all. if anything, it is being blown out of proportion to the extent

that we should not forget that 70-80% of industrialized , whiches gdp is services is not affected by the trade wars. so i thought this was a good way of putting a realistic sense. francine: so who is benefiting? vietnam will have more of the supply chains, is that a good way to invest? burkhard: they are not the type of companies you can invest in. that is not how these things work. but absolutely, it is southeast asia that is making pitches. but nobody has the scale that china has. and let's not forget, companies are very pragmatic. and companies do act fast. they have had a year to realize they need a plan b or a plan c. and this will not be the last trade spat that we experience. francine: who benefits from

this? are there allies of the u.s. that could benefit? led to if this actually the long-term aspirations that there is a fundamental rethinking of how china runs its internal economy, many stand to benefit. but that is not aware of the trade conflict is taking place. so it is hard to say who benefits. it looks like it is creating uncertainty and instability. it is hard to make these decisions if you feel your supply chains will be disrupted. and if you look inside the whoed states, many of those looked to trump as possibly making their lives better are not doing well. we know the stories. and certainly, europe is getting squeezed because, again, they're looking like they might be forced to take sides. trade is the medium in which these take place. it is much more risky. burkhard: one thing i would say

is -- francine: go ahead. burkhard: the idea of national champions. remember in the 1970's? that will be the beneficiaries. francine: thank you, both stay with us. coming up, a swiss standoff. switzerland says it will block trading of shares across the european union. we take a look at how that will affect investors. that is coming up next. . this is bloomberg. ♪

francine: this is "bloomberg: surveillance." i am francine lacqua in london. unless the last deal with brussels happens, investors and some of europe's biggest companies could face problems today. for once, the issue is not brexit, what an ongoing row -- but an ongoing row. swiss stocks are the third most heavily weighted of the european benchmark. we will have much more on that shortly from our reporter on the ground. but let's get back to our guests , leslie from chatham house and burkhard from credit suisse. we were having a collegiate disagreement over the break over inflation and whether central banks changing their mandate. his inflation at 2% still the right thing to look at? burkhard: not for central banks.

disagree with the consensus mantra that inflation is driven by monetary policy. live, inflation is driven by free competition or a lack thereof. we have got too much of everything. fashion, restaurants, cartilage, what happy, and you can buy all of this online -- what have you come and you can buy all of this online. so in this hypercompetitive world, who can't raise prices -- can raise prices? jeff bezos has done more to kill inflation then central banks. needs financial system stability. francine: will this lead more to central banks coupled with fiscal policy? we have been hearing that for years. but fiscal policy, in europe, has not come forward.

burkhard: fiscal policy is a national, sovereign issue. europe does not have a homogenous, aligned fiscal policy. but one thing seems clear to me. this trade war is a misnomer, to start with. rift a deep, geopolitical which is shared by many who feel they did not participate in the blessings of globalization. francine: we will have plenty more on that next. "ive" had enough. the man behind the design of many of apple's most iconic products decides it's time to move on. this is bloomberg. ♪

♪ francine: deal or no deal, president trump says he is not

promised to hold off on tariffs. he meets with the president of china tomorrow. francisco fed president says it is still to soon to know whether fed rates need to be cut. the titans of u.s. banking promised to give more cash to shareholders after lenders past the stress test. the big surprise will deutsche bank also passed. good morning. this is "bloomberg surveillance." we will check in on the markets. >> deutsche bank, it was a win for them yesterday, up nearly 2% this morning. this says they passed the stress test. all 18 banks past, but specifically successful for deutsche bank. biggest this morning, up nearly 14%. really surgeon. to being bought out.

this is the company behind the london eye, legoland as well as pig. air tellpeppa africa is plunging. they are making their market debut really not such an open welcome as they enter the market this morning. francine: it's one of europe biggest this year, 1.5 billion euros selling a stake in its truck's nest that was only after the german carmaker price the offer at the low end of the target range. while shares opened unchanged at the start. executive, andf to think you so much for joining us. congratulations on the ipo. are you disappointed that the stock prices are moving that much and that you had to price it at the lower end of the

range? it feels really good to be here at this important day for us. the market environment is like it is, and we were able to make , so it makes us very proud. francine: what is your strategy in china? will we see a lot more, any plans for a local joint venture? do think the openness from china to adding more foreign investors will increase? we had a very good conversation with the number three in the heavy duty truck market in china. only -- we are owning 25 point we percent chairs with them. china in developing two angles, one is the

partnership and the other one is kenya and we are developing their and we are the only manufacturer there, so we are following like we are doing a year being strategy, and we see that we have the potential for european trucks in china really growing because the transportation efficiency is higher than in the local production. so we are going to be very successful. francine: by how much do you see it growing in china? >> it depends on the market development, but since the basic is always a gross potential there. year we are selling for and

have thousand, and the next five years it could be easily doubled or tripled. it depends not so on the market development overall, but if we improve the efficiency, and that one of the chinese governments targets if we can contribute to this with the right products and efficiency. francine: how difficult will expanse and in the u.s. before your brand given that it is quite saturated and it is a very competitive market and there are also possible tariffs coming up? the market in our industry is very competitive, so we established two years ago and acquirediance 68.8% and we are working with them to -- in exchanging drivetrain components that they

will use in the future, a lot of different drivetrain components from our overall crew, and it makes them successful. participate in the economic scale. our strategy is based on smart partnerships instead of acquired companies to whatever price. it is much better to work situation, ands this is our strategy, so we have no intention to change. francine: how much of a headache is the trade tension between the u.s. and china? can you repeat it? francine: i was asking you how worried you are, how concerned you are about the u.s. china trade relationship? the volatility in the overall

market, this is part of it, and this kind of discussions and arguments between them, i think it would be helpful if they could find a solution because it will stable the overall it is aent of course little bit volatility or the last couple of years, as we all know, businesswise, for us, it is not so important because we are producing our products always in the region, we are solid in the region. it makes us export import wise, it is not a big headache for us. it would be better to have solutions because this will help the overall market development. think you so much for you so much- thank for joining us. ive saysigner jony

it's time to move on, as well as the iphone designs, including the ipod and the ipad. view from leslie vinjamuri and burke hole. you live in -- burkart. their -- hek about is creating a company but still designing for apple. apple is 1% of the market capitalization, not a huge deal and that context. i think if you look at the way they manage this, it's probably bit in the cards for a few years now. we've heard about this for a while, if you left for years ago, the implications would have been more significant. we are in the move of a middle towards the software, so the importance of the chief designer

is diminish and they have slowly edged him out of some hands-on roles where he is seen as the of theead, the carrier steve jobs legacy. francine: how much do we know about what he was still do and if by creating a new company, haywood go after apple? >> i'm sure there are strict non-competes, there is an interesting line in the story where he says the departure is important. build theve apple and taj mahal, we will cut your hands off, that is a jony ive line. opportunity toan go into other areas. francine: what is the main challenge for apple now? it is actually battery life and finding new products? >> i think it looks as if they are reaching the upper limits of

the saturation of the smartphone. there's always the question of the next big product. to be anotherhas one at some stage but broadly speaking they are swinging towards a software and services paired that is for the margin will come from. francine: do you like tech stocks? >> yes. we are overweight in them. francine: things like apple? software which is not exposed as much to the trade war which is less volatile and which has the beautiful combination of being cyclical and defensive at the same time. francine: thank you all for joining us. we are patiently waiting to talk about the democratic debates. up next the debate heats up, front water -- front-runner biden is challenge while kamala harris shines. we will bring you the details. this is bloomberg. ♪

♪ i was six years old when the presidential candidate came to the california them a credit convention and said it is time to pass the torch to a new generation of americans. that was then senator joe biden. he was right when he said it this 32 years ago. he is still right today. >> i am still holding onto the torch. before we move on -- >> please, please -- street, toon wall

take on the fossil fuel industry, to take on the big money interests. what, america does not want to witness a food fight. they want to know how we are going to put food on the table. francine: those were some of the highlights of the debates. kamala harris in particular, the senator stood out from the crowd and got into a back-and-forth with joe biden. listen. >> i do not believe you are a racist, and i agree with you when you commit yourself to the importance of finding common ground. but i also believe, and it is personal, and it was hurtful. to hear you talk about the reputation of to united states then enters -- senators who built their career on

segregation of race in this country. >> i did not praise racist. that is not true. this campaignhave litigated on who supports civil rights and whether i did or not, i'm happy to do that. this,ne: for more on burkhard varnholt and leslie vinjamuri. leslie, 10 people debating each night or two nights, and those are the democratic candidates. winners, kamala harris, and elizabeth warren, you could argue. tryingr-star -- sort of to figure this out. kamala harris comes out strong. none of the things driving this is joe biden is out in front. there is a competition for who was going to be the other candidate to the left of joe biden. we saw on any number of positions the dial has moved so much in the democratic party,

whether it's immigration, health care in particular with kamala harris and elizabeth warren previously saying they would get rid of employer-based health insurance for that is a dramatic move. joe biden not only is he much older at age 76. pete buttigieg, only 37. he is also coming from a different generation. he is having to defend positions he took in an era when the values, any number of policies were very different from where they are today. it is a difficult position for him. francine: where you think the policies will be, come the actual presidential -- it is crazy that we are starting these debates now. moneywises involved is quite outstanding, but what are the policies that people care about, immigration, health care -- >> health care up top.

obama made the big change to the affordable care act. trump has taking it on as a big issue. even though americans clearly not want it, but which way it will go is important. immigration will be the issue, once we get to the generals, that the president will make the issue, so it is being fought out amongst these candidates. you've seen the position move. people are talking about providing health care for undocumented illegal immigrants against -- charging charges against immigrants against criminal as opposed a harsher standard. taxes, obviously, whether the corporate tax cuts will be rolled back, whether they will be a wealth tax. that is worn's signature proposal. there's a lot of debate over that. francine: do you believe the polls?

is this time different? funny.re right, it's the lesson of brexit, of 2016 -- of 2016 where the pollsters don't know for sure. it is a good thing we are starting this early giving how many people are on the playing theory. the nice thing -- playing field. the nice thing about the debates is that they were really about the issues. the polls will move. they are shifting right now. more data will come out. this is all we have at the moment. francine: the most difficult question coming giving -- given the mood missing -- music, will the democrats choose someone center or more to the left? >> there isn't a lot in the center at the moment. there is joe biden. there's a lot, if you look at

the american electorate, most of the democratic candidates are quite significantly to the left of the middle. the country is divided, 36% conservative, moderate and then 20% further on the left. which emerges -- what we know to be true in the primaries, those who vote tend to be more to the left in the democratic party, so it's difficult to predict. francine: how do you trade all of this? >> i think the impact of markets is a greatly overstated thing. there is no conclusive evidence that democrats or republicans are better or worse for markets, so the ray -- way we trade is the way we always trade. view, to take a long-term -- view -- the rich willng

change the composition of the u.s. from the investment perspective it has positive and/or negative implications. it's not something -- it is something you can easily opine upon. if you are rich you say it's bad , but then if the state was to redistribute the revenues to a -- to better education and other good things improving the infrastructure, then it will have a long-term impact that will lift the economy. francine: thank you for joining us. stay with us. , the debate rages over interest rates. we will -- review some of the exclusive interview with mary daly. this is bloomberg. ♪

♪ economics, finance policies, this is "bloomberg surveillance." expected to cut rates, but fed president mary daly says it is too early to

know whether a reduction is actually needed. she spoke exclusively with us. responsellar is the billy of the treasury, so when we are making our judgments, we are thinking of the inflation mandate and the full employment maiden date. justollar is a form -- is one of the variables we tracked. isdon't think of it -- it largely an input of policy. it depends on a variety of other factors. it depends -- that dollar fluctuates from more than just the strength of the american economy. there he would tell you that would happen, but that is not what you think necessarily could happen. >> if you do a rate cut on july 31, how do you feel about the debate over whether it should be 50 basis points or 25 basis points, the new theory it is better to take stronger action earlier? seems. not as new as it

that is eight there that came out after the great recession and the financial recovery that using your tools early and maintaining it is important. that will depend in my judgment on a lot of how the data come in. if it comes in and shows weakening, that would call for different actions that if they come in and just say we are getting headwinds and we are slowing. it's too early to know whether we should use the tool at all and what magnitude should apply. was that sant francisco bed president mary daly. -- france and cisco dead president -- san francisco fed president mary daly. francine: burkart, where do you

stand? this is the fact that no country is an island, when german bunds yields are minus something, where can the dollar yield go, it can only go down here to me that is the best explanation for this. it note: 1.7 five, does make that huge a difference to your post or leo -- portfolio? >> it's probably right here right now, our expectation is end-of-the-year certainly where we are today, but there's no big major change. francine: do you worry about dollar being too strong? >> the last time i looked, it's been week, and a strong dollar was a big headwind especially to emerging markets last year. nobody can hope for that in a situation where emerging markets are still fragile. but for now the risk of the dollar overheating seems remote

to me with everything that is going on in bond yields and central-bank rates. francine: what else we be watching? be watching? is there anything between allies that you should worry about apart from the u.s. china trade talks tomorrow? i think the worrying aspect of all of this is that we have from a worldt only where there was multi lateral is him in -- being replaced by increasing literalism. that would be a valuable signal.

♪ francine: deal are no deal. the president said he has not

promised to hold off on new tariffs pretty meet with president xi of china tomorrow. sitting on the fence, mary daly says it is still too soon to know if rates need to be cut and by how much. not stress, the titans of u.s. banking promised to give more cash to shareholders after all 18 lenders past the stress test. good morning, everyone, this is "bloomberg surveillance." very focused on what is happening with trade and what is happening with the u.s. ten-year and what it could have. >> i knows he'll just will not give it up. reallyterview was transient coming out of san francisco. it is an out friday into a weekend with huge news. might i suggest mr. cutin -- mr. putin front and center? francine: yes.

and this controversial photo, and we will talk about those comments. nobody gets to be in separate rooms. let's get to the news. claim to betake her a top contender for chi would after joe biden on the issue of race. that put the front runner on the defensive. >> i do not leave you are a racist. i agree with you -- do not to believe you are a racist. i agree with you when you commit yourself to common ground, but i also believe -- and it was aboutl to hear you talk the reputation of two senators who built their reputation and race inn segregation of

this country. >> i did not praise racist. that's not true. if we want to have this campaign litigated on who supports civil rights and whether i did or not, i am happy to do that. areoth harris and biden courting african-american voters. a smiling trump telling president putin not to interfere in the election. you may remember president trump rejected the conclusion by intelligence officials that the kremlin meddled in the 2016 election. the present saying he is not promised to withhold new tariffs on china. the president speaking a day before his meeting with the training -- chinese president. his tone was optimistic. tomorrow, asetings you probably have heard. they're supposed to be a rumor about that.

we look forward to. i think it will be productive. at a minimum, it will be productive. we will see what comes out of it. heearlier the president said wanted to see progress in trade talks, otherwise he said more tariffs would be imposed. news, 24 hours a day, powered by more than 2700 journalists in more than 120 countries. this is bloomberg. is almost the end of june, oil has done nothing, but the equity markets still under 16. the yield is interesting for that should be green on the screen. 2.02 percent dollar index gives

way, anything in the last 10 days has been the weaker dollar off the economic chat. francine. francine: i am looking at a very similar data check. if you look at what the g20 shows, everyone is waiting for this anticipating presidential meeting, and it could determine the next chapter in the trade war. traders are uncertain about what to do right now. looking at gold, quite a good month. in the meantime, we look at various replacements at top jobs , and the front runner amongst this survey of economists per the question is whether it is time for german to and over when he leaves according to economists, our own survey, bloomberg, he is back in the lead for the presidency.

>> this is a troop monitory , a true- fear legitimate peace. he is sort of like richard clarida. i would point out that he is french experienced. i wonder how that plays into the parlor game, that he is one of the few germans with experience working with the french. francine: but he was also one of the only board members to push back -- >> exactly. francine: we will get more on that. back to the g20, the most powerfully there's -- leaders are gathering their four key meetings that may make the difference between war and peace in hotspots. the key things to watch our the rising tensions between the united states and iran and the china talks. the president play down

expectations of the big meeting earlier. ofon there is a lot controversy -- yvonne man, there is a lot of controversy surrounding this meeting. i think they are expecting a status quo, probably the best outcome that we have talked to people here. i mention this is probably one of the most g20 meetings that we have seen when it comes to trade. high-stakes ahead of saturday. the president said just a couple of hours ago that he did not promised to hold off on additional tariffs on china if these talks do not yield anything on saturday. his plan as you said could be be playing off as optimistic saying this is another opportunity to put these talks back on track. xi hear from president condemning projection is him

during a meeting earlier. he was talking about how he is condemning bullying here as well . he stopped short talking about and labeling trump, cc both sides plane to their audience. >> deeply that hong kong will play in this, if we see protests on a given friday or saturday night? do they play in? i would say very little. in fact we spoke to some people here, and there is some mention of it, but it will not be a hot topic here. we have seen some protesters in g20 to make for the this issue a bigger one and four president trump to raise that issue with china as well. say hongoint, i would kong seems to be at the bottom of it right now. francine: thank you so much.

now is the deputy .ead of european equities the mood music seems to change quite a lot. someone explained to me, we heard from the secretary steve interviewving an saying there is a 90% chance or 90% of the trade deal that is done per that gave a low bit of hope to the markets. i guess the 10% is this ticket -- sticking point. >> what are we expecting to come out of this meeting? it is a challenging environment for investors to say anything meaningful given how unpredictable the various particle -- parties are. i think we will continue to seek talks between the two parties and we hopefully move towards a resolution later on in the year

and that we can avoid a sort of kata set -- closing off of communication. i think as long as they continue to talk to each other, i think that is an ok outcome for investors. francine: we are also getting press reports that china would stop going after huawei. that would seem to be ratcheting up tensions. >> i think at this stage in the cycle with the challenges that we see, and it's not just u.s. china, it is also areas other lateral relationships that are under strain. i think it makes sense to adopt a cautious position. regardless of what comes out over the weekend, i think our view is being relatively conservative i think civilly thisse, we will still have ongoing uncertainty. >> you got on your dark suit and blue tie which you always wear

for window dressing. what did you window dress going into june 30 question mark you run a -- 30? you have to prepare yourself for six months forward. >> were not great fans of window dressing. we are pretty long term investors. we pride ourselves on doing as little as possible. that doesn't mean we don't do anything. we want them to be meaningful and substantial when we do thanks. over relatively in active the course of june. we were taking a lot of profits from the rally as we saw stronger markets. we have been generally building high levels of cash. am moving toots cheaper investments, better earnings visibility. that has generally been the shift across our portfolios and year. >> the shift has to do with continued dividend growth coming that will be the theme today.

we have a professor from wharton can -- to join us later today. depends on which parts of the market you are hunting. i think it remains challenging. in an environment where expectations continue to fall in europe. we started the year at 10%. i think we are now at or percent. where we will be at the end of the year is anyone's guess. you will need certain kinds of essences. in order to grow, you have got to be seeing progress in your business. i see a bifurcated market where the strong companies grow, and those that are not in good is this positions struggle. that is been a dynamic that we've seen over the last 10 years. i don't see any reason for it to change. up, a russianng direct investment fund chief

executive, that interview coming up. he will be talking about sanctions. this is bloomberg. ♪

>> i do not believe you are a racist. i agree with you when you commit yourself to the importance of finding common ground, but i also believe -- and it is personal. it was actually very hurtful to hear you talk about the two united states senators who built their reputation and career on the segregation of a race.

i will ensure that this microphone that the president of the united states holds in her hand is used in a way that is about reflecting the values of our country. >> we will let you all speak. america does not want to witness a food fight. they want to know how we are going to put food on their table. evening.ote of the to our guest from the washington post noting the .ictory here without question the debate, the second debate, may not change polls much, but it will probably reorder as democrats begin to think about the choices. as we just heard, america does not want to witness a food fight. they want to know how we are

going to put food on the table. we always have possibilities before us. stephanie joins us right now. am i right, that debate last night was more fun than the night before? stephanie: yes. it was much more exciting. partly due to the fact that we had bigger names onto the stage. the exchanges between harris and biden where the standouts of the night. it enabled kamala harris to breakthrough in a way that she has struggled to do since launching her campaign. there is a lot of hope for her, but she proved herself as a star debater, someone who could take on trump quite effectively. times, been asked three when do they start dropping out? when do they start dropping out? >> the should shakeup the field a bit and allow some of those

smaller players to begin to drop out and realize that they cannot continue. we have got a field of candidates split between the left liberal wing of the party and those who are taking a more moderate position on the three kiss you -- key issues, which is immigration, health care and probably college education. there were differences last night, and it will be interesting to see how the polls react to that debate. francine: if you take the two bigtes, who were the winners, kamala harris. the other one, elizabeth warren, and then julian castro seems to be coming out of nowhere. one -- he was a lot of another one where there was a lot of expectations, and he had struggled to break through i think the debate yesterday, he shone through. it will be interesting to see

how many people were watching, doesn't really have an effect on the polls. i think the other takeaway is that biden, despite his lead in the polls, gave a lackluster performance. ,trong, he is a good debater but he seemed unprepared for some of the questions he knew he was going to get on race, for instance. cede when to almost his time was up. -- there is it unusual were conversations about policies. far in advanceo that it seems they were having decent -- beefy discussions. >> the moderators were trying to pin them down on things. the supreme court overturns roe v. wade, what are you going to do? , willour health care plan

it include undocumented immigrants? i think those things will stick with them drought the campaign. >> i've got more questions, but no time. thank you as always for your perspective. coming up in the next hour, looking forward to this, our guest with decades of experience, our relationship inh china, that coming up the next hour. this is bloomberg. ♪

♪ if the data comes in that shows significant strengthening, that would call for different action. it is too early to know whether we should use the tool at all and what magnitude we should apply. the dollar is the responsibility of the treasury, so when we are making our judgments, we are thinking of the inflation mandate, and the dollar is a form -- is just one of the variables we track, but we don't think about it as an outcome of policy, more likely as an and pet -- input. >> i don't know how you can be data-dependent with aspen, but we will see the answer to that. nevertheless an important conversation always with the head of the san francisco

federal reserve bank. we have an important conversation within aberdeen standard investor looking at the equity market. we go from official to official to official. does any of the talk matter? dependsnk ultimately it , as you say, what's happening with the data. it seems unlikely that we will go from a situation of raising rates in december 2 cutting them in july without a meaningful change in terms of the data that the fed is looking at. even if the economy was slowing, you wouldn't ask you see that in the numbers. i think it is unlikely to see a hail mary rate cut on the back of nothing. >> i would observe thunderstruck that we have lower yields granted, and we really have not given it up at the end of the quarter. we are in a 202 on the u.s.

ten-year. are you surprised how resilient rates have become? >> probably more resilient -- probably more surprised -- when you see what happened with yields falling, -- remove from the 10 year yield over the last six months, and we are singled hitting the five-year highs. those are things that seem to be cautious signals when markets say we are getting a lower discount rate and not thinking about what is happening over the medium-term. in my experience investors tend to be -- cautious and tend to get their a little bit earlier. >> which means the big debate this week was actually whether treasuries touch 1.75. i for treasuries to go lower, think you need the fed to do something meaningful indicating they will embarq -- embarked on a path of cuts. i think at the moment some of

the data look softer than it has, but that is not something that will necessarily drive them to cut. i think you need them to say yes, we will be opening into a more easing of the monetary approach. francine: bennett ritchie from aberdeen standard investments. theng up on the next hour, head of u.s. equity strategy talk. man as wen, yvonne see leaders going to the photo afternoon in osaka. trump and president xi tomorrow. sri mulyani:

>> there is a problem now between china and the united states and from our perspective,

we understand why the u.s. has issues with china of intellectual property and opening the financial sector. toould call on both parties -- it falls into a full trade war. >> how does the meeting on saturday set the tone for your? -- europe? interested,ightly we are thebelieve biggest market in the world. it is crucial after this trade problem is contained. that is as they are able in a friendly way to solve this crisis now or step-by-step. >> will we get a truce? >> i hope. i do understand the issues the

u.s. is raising with china. they are fair. they have to be raised. china is trying to make changes to the system, so the issue will be the speed which this is done and the level of comfort the chinese can give the americans while this is happening. francine: that was the dutch prime minister speaking with bloomberg at the g20 in japan. we are seeing more live pictures, justin trudeau with his wife arriving to meet the prime minister of japan. leaders coming in for the gala dinner. tom: let's go back to that g20 osaka castle in the background. this takes you back to 1580-ish.n england, most of what we are saying is

concrete and not anything original, but captures the architecture of a medieval japan. let's go to a more modern first word news. theana: bloomberg learned white house is developing a capital gains tax break that would largely benefit the thathy, and a move bypasses congress. faced dutchrobably face legal challenges. standoffosi in her with republicans over a bill. infuriated progressive democrats who wanted to vote on their own bill. president trump to sign the legislation. at the g 20 summit, a smiling donald trump telling vladimir putin not to interfere in next year's election.

he has rejected the conclusion that the kremlin meddled four years ago. president trump says he has not promised to withhold new tariffs on china and spoke ahead of his meeting with xi jinping. 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. i am viviana hurtado. this is bloomberg. is the bodyong or language we are seeing at these meetings with president trump, it is stunning to see the different body languages of each leader, and particularly how unique the president is versus everyone else. he is sitting like he is in the locker room and the leader of brazil is doing the thing that leaders do, lean back, casual thing. francine: like anchors. felt looking at the body language, if you just -- without

looking at the body language, if you just look at the tweets, president trump thrives on attacking people to get a good -- better deal for america. the g20 photo was quite controversial because the crown prince of saudi arabia was right in the middle, right at the front, and a lot of critics said he should not have had such a prominent place. tom: christine lagarde of the imf in the back, the leader of the netherlands, and i would point out, we need to make an important note. chancellor merkel of germany on of far right and the reports the last 24 hours of her being a bit fragile. it is a moment of public service for these leaders. francine: we will dig deeper into what people are saying in inking. -- thinking.

stephen engle is standing by with a russian guest. stephen: you are talking about body language and seating charts or standing charts. i have seen the preliminary seating charts for tonight, and guess who is scheduled to sit next to each other? donald trump and xi jinping seated right next to each other. we will have to see what their body language will be. the body language and the different bilateral meetings that we have had, donald trump net with vladimir putin. we have seen vladimir putin and xi jinping. is thet guest in osaka the russiandis, sovereign wealth fund, to russia.funds into you are not appearing in the

bilateral meetings, but you travel and you travel anywhere close with vladimir putin. are you getting any sense that we are closer to a truce between these two giant trading partners? >> we are participating in meetings, including tonight with korea and turkey, and we hope for a trade truce. trade war's lead to a decline in the economy and there could be a couple of percentage slowdown and our gdp if there is no agreement. we hope for good body language and a positive agreement between the u.s. and china. would you describe the body language between donald trump and vladimir putin today? they joked about a serious issue and shared a smile, but would you say relations are starting to turn better between the u.s.

and russia? kirill: we hope so. there was lots of misunderstandings in the past and we need to move beyond them. for the world security, nuclear security, anti-terrorism, russia and the u.s. have common things they can address. it was a positive meeting today, an important meeting to basically outline the areas of future cooperation. frankly, last year, our level of discussion and confirmation as cooperationwas -- was less than during the cold war times. i think it is definitely good for republicans and democrats, for the u.s. to have good relations with russia, good for the american people because it brings security and stability. stephen: you have ties in the middle east and the mueller report benches you as being

vladimir putin's point and for the gulf states -- point man for the gulf states. he will be meeting with mohammad bin salman. what do you hope as someone trying to attract investment to russia? kirill: we have great relationships with saudi arabia , from the last four years negative relations, we improved dramatically. it is not only about saudi arabia investing in russia. ed is oil deals to stabilize world markets -- it is oil deals to stabilize world markets. mohammad bin salman's historical role, and we see the young people of saudi women,enjoy driving for and using the internet. -- more than 70% of the population is under 35 and

they enjoy that. looking for areas of cooperation , oil is part of the discussion. stephen: well russia extend the opec plus deal? stable.oil prices are it is good for the world economy, so let's wait for the official announcement. stephen: another destabilizing factor is the tension involving iran. would you say that war is possibly on the way? kirill: that is beyond the russian capability. stephen: destabilizing to the investment climate? kirill: tensions are rising and when tensions rise, communications are important. russia has always been clear that communication between gulf states and iran is important, and disruptions in oil supply are negative, so we hope for a solution.

stephen: thank you so much. we will do it longer and lengthier in conversation later. more to come from osaka. we are chin deep in the g20 summit. tom: friday evening with stephen engle in osaka as leaders make for dinner. an important moment for all of these leaders, we must remember abe in his3, mr. osaka for a formal dinner. stephen engle in osaka. robert hormats with us for the next hour. this is bloomberg. ♪

♪ this is bloomberg "surveillance," tom and francine from london and new york. after decades at the firm, the man behind many of apple's iconic products says it is time to say goodbye. because designs include the original imac, the ipod, and the ipad. us and stillwith with us is ben ritchie. new companyng a after years of speculation he would not stay at apple his whole life. his primary client would be apple. alex: i think joni ives has a lot of other passions. apple has had to stage-managed this carefully. as you said, there has been a suspicion that his active

participation in designing products has been wilting for number of years, has not quite have the same hands on as before. it has been a clean break and he just left a couple of years ago when it had real implications for appleshare prices and what its future product where about might be. francine: they say he is worth some $6 billion or $9 billion. alex: we saw the dip in the share price, 1% of the market cap. years ago, the reaction would've been more extreme. years past two or three apple has expanded their emphasis on services like itunes , the app store, apple music. that has gained a greater significance, although itunes will be eliminated. that means the emphasis will be moved away from the hardware. lies with the

company of designing these glass and metal bricks. -- hephasis on software is a hardware guy fundamentally so his importance is diminishing. tom: i am fascinating by this story. how do you perceive they replace him? is there somebody on deck? does he consult in why they try to find pixie dust? how do you replace sir jonathan? alex: he has been replaced piecemeal over the years. he handed the reins for hardware , and they have taken on the heavy lifting.

a core team follows his design aesthetic, but there are reasons for optimism when you think about apple design has become a little bit tired. ed is waiting on the same basic concept and i think the company would benefit in a significant way. if you have a better team of jonathan ives acolytes, that might be a problem, but it might be an opportunity for a fresh start. tom: we segue as only we can do without likes web -- alex webb to a scathing piece not on g20 or brexit, red sox-yankees. even more standing around then cricket. and londoners have spoken they do not know what is happening. sox mean asial red much to most londoners as the tots mean to your average

bostonian. nothing. tickets for the autumn nfl series of six london games went on sale yesterday and sold out within hours. how big of a failure will it be? alex: i do not think it will be a bomb or a huge failure, but it is not the out and out success the nfl games have become. ,f they imitate the nfl success they need to imitate their approach and that is difficult in baseball. there is not the sort of hoopla of nfl. the regular season is 162 games. regular season four football team is 16 so they have to make every game count. in baseball, it is another date on the calendar and i don't think they have gone to the same effort the nfl did to win over a london audience and packed the stadium to the rafters.

francine: alex webb from bloomberg opinion and ben ritchie is still with us. siegel, wharton school professor of finance joins us live. this is bloomberg. ♪

♪ i think we are at the high end of the risk spectrum. i am expecting -- i have been expecting, it is not today's possibility of a significant market downturn. francine: the possibility of a significant market downturn, the words of elliott management co-founder paul singer. we could see a 30% to 40% correction but would not call the timeline. he sees a downturn but would not tell us what the catalyst would be. are you expecting a downturn or does this cheap cash and central-bank easing make it more

difficult to see a downturn? ben: it is hard to call a precise downturn, july 17 we will get a 30% drawdown and markets. signals in thee broader marketplace around what has been happening to long yields and riskier assets, where a degree of caution is warranted. what that means in terms of the market drawdown, who knows? if we are closer to the next market significant decline. francine: what is close, 18 months? ben: in the next 18 months we may well see a correction of a meaningful amount. 20% decline in a december around monetary policy and global trade. is it likely we see that combination come back to the table -- unlikely we see that

combination come back to the table? no. tom: with us, the professor of finance, professor at wharton, jeremy siegel. without question, he is the professor of optimism on investment. within the gloom that is here right now, how do you maintain your optimism on buying stocks? all, valuationf is not unreasonable at all, especially in an extremely low interest rate world. equity values, 17, 18 times earnings in the united states, lower elsewhere in the world, are very attractive. secondly, a trade would be very bad. i cannot say trump pushing that to the end. if he pushes that hard and

drives into a bear market or recession, his chances for reelection next year or next to nothing. he knows he has to keep the economy and the markets humming. tom: is friday. -- it is friday. the gloom crew always comes out on friday. explain to the buy and hold crew the modern investment age. we are reading blogs and tweets. how should we adapt to that? jeremy: i think the biggest mistake that most investors make is reacting to the blogs and tweets and twists and turns of the market. staying in stock is probably the single best advice that one could stay. don't be scared out whenever there is a decline, when there

is bad news coming out. when there is bad news and you get down 20%, that is the time to put more in the market. long-run, that has been the winning strategy. i see nothing that tells me that should change. francine: this is despite the possibility of the trade war getting worse? what is the impact that has on stocks? jeremy: a trade war is going to be bad. 25% on allises the , we couldports definitely have a bear market. , for't see him doing that the political reasons i pointed out, but if somehow someone sends him off and says, this is what you have to do, that will not be good for stocks. i will not per taunt -- attend

it is. -- i will not pretend it is. tom: i need a price target from jeremy siegel. one year out, where is the doubt question -- dow? jeremy: 10% higher than today. -- 5%ould be a little bit to 10% would be my estimate for range for the dow. tom: you sound like kudlow and siegel, jeremy siegel, thank you so much. ben ritchie with aberdeen standard investments. the news flow has been extraordinary. hormats next. ♪

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. ♪ tom: this morning, putin meets xi. trump, trump meets with

it is g20. yvonne man and stephen engle in osaka. next debate. biden and sanders and warren and hickenlooper and cory and pete. kevin cirilli picks up the pieces. no one cares. major league baseball dropped the ball in london, tickets go begging. this is bloomberg "surveillance," tom keene with francine lacqua in london. extraordinary footage from osaka. we forget it is a g20 meeting. francine: we do not forget because that is what the markets are focused on. and kind of captures all the tensions between them, theresa may as she is about to step down.

you have president trump with president putin speaking to the argentinian president, and mohammad bin salman being given center stage with angela merkel on stage left when you look at the family photo. tom: we go to robert hormats. have you ever seen a fistfight over a photo op? robert: i have not. i have been to a lot of g20's and g8's. tom: they are always cordial. robert: they are extra cordial. tom: you never had to elbow in first secretary clinton? robert: i have not seen that by any president. tom: right now, to our first word news, viviana hurtado. viviana: last night democratic presidential debate,, let harris staking her claim -- kamala is onesticking her claim

of the leaders. >> i do not believe you are a racist and i agree with you, when you commit yourself to the importance of finding common ground. but i also believe -- and it is personal, and it was hurtful to hear you talk about the reputation of two united states senators who built their reputations and career on segregation of race in this country. >> i did not praise racists. that is not true, number one. number two, if we want this campaign litigated on who supports civil rights, i am happy to do that. viviana: both are aggressively courting african-american voters. a smiling donald trump telling vladimir putin not to interfere in next year's election, a lighthearted warning coming out

of the g20 in osaka. donald trump rejecting the conclusion that the kremlin meddled in 2016. trump says he has not promised to withhold new tariffs on china . he spoke a day before his meeting with xi jinping and his tone was optimistic. >> we have meetings with president xi tomorrow. there seems to be a rumor about that, and we are indeed. we are looking forward to it. i think at a minimum, at well be productive. we will see what happens. viviana: earlier this week, the president said he wanted to see progress in trade talks or otherwise, more tariffs would be imposed. 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. i am viviana hurtado. tom: thank you so much.

equities, bonds, currencies, commodities. futures up five, the curve not doing much. oil still a touch elevated. francine: let me jump in and look at my data check, looking at asian shares a little bit lower, bonds drifting. it is about the highly anticipated u.s.-china president meeting tomorrow between president xi and president trump. 10 year treasury yield lingering just above 2%. meetingt more on this with president xi and president trump. will we have a deal or well it kept worse? it seems like at this point, it is anybody's guess but that seems like it could be the status quo. you mentioned the family photo,

the optics were good in the beginning. president trump and president xi shook hands and had a brief chat, but soon after we heard both sides firing shots before the saturday meeting. president trump saying he did not promise to hold off on additional tariffs if these talks break down. you heard president xi as well condemning protectionism and these bullying practices. not-so-subtle side swipes on america without mentioning trump. tom: greatly appreciated this morning. we will show you more images from osaka in the coming hours. owning us now, the single person i wanted to talk to of china and there is not a moment to lose, his name is robert hormats. service and decades of

experience, looking across the pacific, wonderful to have you with us. i look at this moment, and you nailed it in a recent essay. this is not just about trade. robert: it started off as a tariff war, but the countries have mobilized policies that infect investment, restrictions on exports and buying from certain companies, and now perhaps moving into a currency war. this has expanded far beyond tariffs and investment tech knology and currencies. -- technology and currencies. tom: you know how to measure a mercantilist moment. is he out mark until eisen -- -- mark until -- robert: putting pressure on china to make a deal, or as some

in the administration would like , to create an environment of dis-attachments -- detachment, disengagement, to hold chinese down as a rising technology power which would mean in the long term a set of confrontations and disputes over decades. but you served both parties may identify more recently with democrats. nick burns and bob hormats are the antithesis of what i hear from dr. navarro. what does peter navarro get wrong? robert: if you look at trade is a zero-sum game, you win, i lose, i win, you lose, that is not the way it has developed over the last 70 years. countries have tried to work out common roles and a framework for competing. having a set of rules and understandings that provide the

basis for cooperative competition, rules of the game, , notu can resolve disputes by hammering the other country but by trying to work things out. a lot of people, particularly with china, look at this as a zero-sum game. people are concerned not just for economic reasons, but technological reasons and others about china's rise, and they are arguing for this disengagement process which moves in the opposite direction than the last 70 years to a greater measure of globalization and cooperation. francine: ambassador, the fact that there is less commonality amongst world leaders, what is the danger in that? everyone is trying to get a better deal for their country. if there was a crisis, would people still come together, and is that the only thing we need

to worry about? robert: it is a competitive world and becoming more competitive. the united states saw itself as the preeminent competitive power. now it has competition from china and other countries, but china in particular, not just traditional things china was selling, but advanced technologies were china was the dominant power, and also china's economic system is different from ours. we not only have competition from china, and very advanced technologies like 5g, aia, supercomputing, quantum computing, but you have a different set of rules and a different idea of what the global economic order should look like. it is difficult with the overlap of trade and tech knology and security make -- technology and security making it difficult to work out.

it is not a cold war in the traditional sense. you cannot isolate or contain china. it is not a conditional trade soup you -- dispute about traditional trade items. this is much more complicated in making a global economic order which is deteriorating, more difficult to resolve these issues. francine: do you think at will get much worse before it gets better? robert: they can either reach some kind of compromise, which the markets would like, and move on and continue the negotiations and try to work things out. if they don't do that, it will deteriorate into more escalation on trade and other issues, and that would be the danger. i don't think a major dramatic breakthrough is likely. tom: let us show some of the

images. with ther. abe outgoing prime minister. images continue, the from osaka. we saw mr. and missus kushner -- mrs. kushner. francine: it is interesting to see theresa may's husband by her side. this is her last g20 as the race continues in the u.k. to choose the next leader and prime minister. this is bloomberg. ♪

♪ moment,extraordinary francine lacqua in london, tom keene and new york -- in new

york, robert hormats with us. the markets are churning. should we do something on economics, finance, and investment? lori calvasina comes here. do you have an opinion on g20? lori: i do not have high expectations and i hope we get through without anything bad. dealnot expect any major and most investors i speak with don't either. tom: i like to hear that. jeremy siegel was just here with wharton, looking for 10% over the next 12 months. what an extraordinary bull market. lori: as i talk to investors, nobody is saying the fed is going into easy mode does easing mode, time to double down.

people are work at does worried about where the market is headed. i would say pessimism is pretty high. tom: and then we adjust our earnings path. what are the dynamics of that now? we are reducing earnings expectations, but is it a big deal? lori: there are puts and picks. because we think the fed is gearing up to ease, and we can debate about whether that happens, that helps the pe multiple. we think you lose on the earning side and gain on the multiples with support from the fed. francine: why is the fed talking about cuts? was the last interest rate hike a mistake or because they are worried about the trade war? lori: i think the market angst the last hike was a mistake -- thanks the last hike was a mistake. why is the fed worried about the

trade war? ofyou look at any index corporate confidence, they were high last year and when the trade war flared up, they began to sink and are sinking now. well that deterioration have an impact on capex and things like hiring? my view is the fed will not move unless they are convinced the data will degrade and deteriorate. francine: we are looking at live pictures from a lot of the g20 leaders arriving in osaka. how much will they be talking about the economy compared to geopolitics? lori: i think they will talk about both, because the deterioration in geopolitics is happening around the world. we comb through earnings call transcripts, and when companies are talking about soft demand, most of those concerns were

emanating from china and europe as opposed to domestically. and what do you tell buy hold now? people just own stuff. what do you tell them? lori: you should always be in the market. inflections happen quickly. if you look at the cyclical part of the market, look at things that have been de-risked. -- we areh we ours concerned the cycle is slowing, machinery stocks look good. brick-and-mortar retail, if we were to break up internet retailers, that might be news for them. tom: do you want to make news, amazon will be broken up? lori: i know the democrats are talking about it and the policy agenda will be in focus over the next year, so you can look for retailers that might benefit. tom: rbc capital markets is

going, what is he talking about? lori calvasina and robert hormats, we will come back. it is night two of the democratic debates. kevin cirilli, i believe is still breathing in miami, way more exciting than the night before. this is bloomberg. good morning. ♪

♪ >> i was six years old when the presidential candidate came to the california delegation and said it is time to pass the torch to a new generation of americans. that was joe biden. he is still right today. >> i still hold onto that torch. >> a lot of joe's generation -- let me respond -- >> please, senator sanders -- >> is generational, who has the guts to take on wall street, the fossil fuel industry, to take on the big money interests. >> america does not want to witness a food fight. they want to know how we are going to put food on their table. tom: we don't have time to go to

robert hormats but nobody went to the robert hormats school of charm. joining me now is the always charming kevin cirilli. we were talking about who wants to lose an election? this on free health care for all. who was the moderate last night? was, let harris the moderate? harris -- kamala harris the moderate? kevin: she confronted joe biden and his tone and the pushback he has received from the african-american community regarding recent comments about working with segregationists decades ago in his career as a senator from delaware. you asked where the moderate was on the mistake economic policy. joe biden also laying his economic vision, a clear contrast from bernie sanders who

conceded that taxes on the middle class would have to eventually increase, but their health care costs would decrease . it was a fascinating, riveting part to this democratic debate. tom: i thought the most important person in miami was nancy pelosi when she came to the president on the immigration bill. what did the progressives and liberals learn about the moderates of their party after pelosi agrees with trump, we need to get a border deal don? deal, they want to get a make a deal to move forward. this presents significant challenges for some of these centrists who are jockeying for the centrist lane, people like biden and senator harris and pete buttigieg as this progresses forward.

the former vice president heads to a race relations conference hosted by reverend jesse jackson , along with other democratic hopefuls. senator harris' campaign says they have smashed fundraising records. senator standards said this is -- senator sanders said this is all about messaging and he is happy to take his pitch forward. he is happy to hammer that home to draw a contrast with everyone, including elizabeth warren. francine: the policies were pretty clear. some of the things they candidates said in specific, the late come back to haunt them? kevin: i was struck by joe biden's reaction, response, and rhetoric as it related to senator kamala harris.

that was an illustration of both nights of the first democratic presidential debate. i spoke with three aids to the former vice president's campaign and they say they are prepared to take a direct contrast on the standards. they were caught flat-footed on how they respond to senator harris, but it is a marathon, not a sprint. they were prepared for a long-term strategy. the former vice president will continue forward, but this race is in full-fledged. miami.eat reporting from coming up, we speak to someone on the boston red sox. ♪

♪ this is bloomberg "surveillance." japan, a0 summit in smiling president trump telling

vladimir putin not to interfere in next year's election. he has rejected the conclusion that the kremlin meddled four years ago. he has not promised to withhold new tariffs on china. he spoke today before his highly anticipated meeting with xi jinping. the white house is developing a capital gains tax break that would largely benefit the wealthy and could bypass congress. it would index capital gains to inflation and would probably face legal challenges. at last night's debate, it may have been the breakout moment kamalat harris -- harris. tried to stepshe above the fray as the candidates interrupted each other. we will let you all speak --

>> part of the issue -- >> america does not want to witness a food fight. they want to know how we will put food on their table. viviana: harris has struggled to catch fire in the campaign and she and biden are aggressively courting african-american voters. 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. hurtado.ana this is bloomberg. tom: greatly appreciated. in this exceptionally busy hour, lori calvasina is with us from rbc capital markets, and robert hormats is with us, a kissinger associate. we look domestically with bob hormats. we have a president of nostalgia. how do the democrats capture the good parts of the nostalgia of

the republican, main olympian snow, how do they find that? robert: it can be done again with a few key themes, one of which -- and your show just pointed out in the tweet chart jobs, these are important to americans, good, high-paying and stable jobs. there is so much uncertainty about employment that a lot of americans, even if they have jobs are concerned about the future, can they put food on the table and pay for their kids' education? how you generate employment be a .ey element, and health care these solutions that are expensive and unrealistic will

not work. however, you have to be ambitious. kennedy and reagan and bill clinton and obama all talked optimism,ng ahead aspirations of the american people. can you develop a set of themes that enable you to respond to those aspirations, but do it in a way -- tom: and resonate in the electorate. was their residence last night? robert: you can resonate with one type -- was there residence lastnight -- resonance night? robert: a couple of key counties well determine -- will determine the election. you have to understand when you campaign, you have to go to various districts which

emphasize different things, and that is the complexity the democratic already faces. you have to do both. francine: what are the chances of a centrist democrat running against a republican? lori: given the primary -- robert: given the primary system, they tend to favor someone who is not a centrist. there are so many debates when being atl to people the more exciting end of the spectrum. when you run in the general election, you have got to get the 30% of the people who are largely independent who are looking for a more moderate set of solutions. in the primaries, you have to play to the right or the left and in the general election, you rely on your base and you have to get 30% of people without a strong base that are more independent and moderate. tom: is there a barack obama in

miami? robert: that is what the discussions are trying to figure out at this point, who will break out and be the next barack obama? who can pull the party together? tom: do you glean anyone can do that? robert: i have a lot of confidence in joe biden. tom: what about the other 42? robert: there are some very good candidates who i don't know that well, who are aspiring to this. i know joe biden well and feel comfortable with him. others are trying to identify themselves in the minds of the american people and we will see how the process works out. tom: robert hormats with us, thank you so much. with rbc capital markets as well, we will do a chart with her in a moment. the boston red sox playing in

london. if you missed red sox-yankees, you can migrate over the charles river and see the boston pops, 1812 overture. they will be there in full glory. ♪

♪ "surveillance."

single best chart, lori calvasina with us. in honor of the end of the half, we are up in the margate -- market. yale --dson chart from yale, we are from not extended like 1999. 1999,we are not as bad as and when we look at tech and broad market valuations, things do not look like that. we are a little bit stretched if you look at a shorter-term view. we see the cftc data on our positioning. i think we are due to have a breather. i think we will get it in earnings season when expectations reset because of the trade war, and you will have a good buying opportunity, but

it will be volatile until the end of the year. tom: do i get a dividend and dividend growth? lori: if you are going into a period of fed easing, high dividend yielding stocks tend to have a big pop towards the beginning of the easing cycles. we have seen a nice move in utilities and reits which is well-deserved. tom: it is the evening of a friday and all looking to saturday tomorrow. francine: saturday, the big day where we are expecting president xi and president trump to meet. we have had conflicting reports on whether they can find agreement. a few days ago, secretary mnuchin said they were 90% there. that means there's 10% that

could go wrong, and the chinese side may want to put pressure on the u.s. to be much more friendly with huawei. osakahe well-dressed of with all the different cultures. right now, we want to begin coverage on london and we can do it with a gentleman who changed american fashion. joseph abboud in conversation with you yesterday. joseph: we certainly always look at how to look at other regions, but the fabric we import has less tariff and duty. we are somewhat insulated, but we do products all over the world so it is not just fabric but products we import. our organization is looking at that closely in terms of how to mitigate those risks. francine: do currency fluctuations impact your business? joseph: they do, and wall and

cotton prices do impact. we have seen a spike in cotton prices so that impacts whether we buy all cotton or cotton blend. i love the purity of 100% cotton or wool or cashmere, so we try to put out quality. francine: do you hedge? joseph: it is a little bit difficult. we look at future prices as we are six to nine months before the market. as we understand the price points, we adjust where our retail needs to be. francine: are your clients and a slowdown? joseph: i think it is more morays with how people are living. millennials are getting dressed now. francine: no more hoodies? joseph: it is good to see that the young i sees as it -- the

young eye sees it is important to dress well for the interview, the funeral. francine: why is it changing? is it psycho? robert: because their dads were cycle?y -- is it robert: because their dads were probably casual, they want a custom suit. they are looking at their own way of presenting themselves and it is key. francine: men's fashion is growing at a much bigger amount than women's but at a bigger base. will it catch up? joseph: i don't think so. men are this step children in fashion. it is true that men are the new women and are looking at their personal style at grooming and understanding what clothing is right for them. the business of fashion is

continuing to grow. thecine: do you feel like competitor, or are they more you? joseph: saddle row, all modern u.k.,ar comes out of the saddle row, the embodiment of personal style. we look at all the hollywood stars and dignitaries who have shopped there. francine: do you make a suit for someone and suddenly 20 people come to the store that day for the same suit? joseph: that happens more in womenswear. in menswear, yes, there are icons, but it is about the individual. if we can connect to them and say your appearance is important, that is how we can get the consumer. guys shop differently from women.

francine: there is a big game this weekend. baseball. tom: joseph kennedy shopping in louie's, both of us not being able to afford. it was great to see both of -- joseph abboud and our studios. let's get a little perspective from london. is a boston red sox chief executive officer, chief executive of a team that played baseball. he stepped on the field at klein high school and trinity college. what does major league baseball hope to accomplish in the next 72 hours? sam: we are trying to highlight what we consider the greatest game around the world, and you need to play in the center of the universe. privileged to be here, a credit

to major league baseball for making this happen. tom: you bring over the yankees and red sox with all of the distractions of london, including a cricket match which i do not understand, they do not understand what you were doing. they do not understand that center field is 385 feet away and the yankees have hit a number of home runs in the last few games. how do you teach them the game? sam: when you see the game up close and personal, you understand, but it takes some time to understand the finer points of baseball, as with cricket. the world is getting smaller with technology. we have fallen in love with english football and are big liverpool fans. the world gets smaller as technology brings sports to our global fan bases. we are here to bring baseball

closer to fans across the world. francine: there are very few european born players in your sport and there is no pro league. are you trying to change that? sam: we have players from all over the world, specifically through latin america, so we hope more young boys and will play baseball and make it to the major leagues. francine: are you doing this every year? are you going to make revenue in the next four or five years? sam: i think we will come back, neck stair with the cubs and cardinals. baseball has agreed to grow the to play anymore global fashion. tom: all of us have been taken by the serious injuries of your

star david ortiz. can you give us an update? sam: david is stable and recovering from a horrific gunshot wound in the dominican a few weeks ago. all of our thoughts and prayers are with him. at looks like he will make a full recovery, very serious injuries, just a reminder of how fragile life is. tom: you are sitting next to the duke of sussex and he goes, why did the right fielder not throw it directly to first base? why did he go to the cutoff man? what do you say? sam: you always hit the cutoff man. follow your coach. there are certain finer points you have to learn as a youngster. don't givelecture, the duke of sussex a lecture. trinityhat training at

college paid off. thank you for the effort to get to our queen victoria street studios. we have so much to talk about. it is an end of the quarter friday, osaka, yvonne man and stephen engle in osaka. on bloomberg radio, we will drive forward the conversation as well. let's watch in osaka. ♪

♪ francine: live pictures of the entertainment in osaka, japan, where g20 meters our meeting meeting-- leaders are tonight. betweeng tomorrow president xi and president trump to see whether they can find a way through the jade -- trade tensions. in new york as robert hormats. when you look at the time

pressure president trump has put on a run, he seems to have scaled back -- iran, he seems to have scaled back and he tried to get the europeans on board but that has not happened. robert: the president indicated he does not want a military solution, and the iranians have to focus on their domestic economy. i don't think they want an all-out confrontation with the u.s. basically what the american policy is, is to impose and the anteon sanctions -- up the on sanctions and to get others to be more assertive in the way they impose sanctions. the europeans are thinking of some way to go around american financial sanctions with a special purpose vehicle they have been talking about, has not really happened yet, but i think

the u.s. will try to quash that if they can, and get other countries to cut back more dramatically on imports of iranian oil. on iran iss strategy to basically up to the sanctions presser and get others to do likewise. -- pressure and get others to do likewise. francine: will anything be left of the nuclear accord? arert: the iranians suggesting they may exceed the limit on enriched uranium, in a way to put pressure on europe and other countries to lighten the sanctions, or at least not toughened them. they do not want to go above that level if they can use it as a way to get the europeans of being more supportive of their economic needs.

economicsthe issue is and if they can avoid tightening of sanctions or even get loosening, that would be a positive thing to help their economy. that is what they are after. the u.s. is trying to put pressure on iran and others. andcine: how much focus worried do you have of peace in the region? robert: i think the iranians at this point want to demonstrate they do have, primarily through their surrogates, the ability to put pressure on various american interests in the region without crossing the line that would cause the u.s. to take retaliatory action of a military nature, that would make their economic plate worse. each one is playing a game at the margins of not wanting to

over disrupt the situation, but also demonstrating they both have power to exert in various ways without going to a confrontation. francine: do we look at it percentage wise? we are running out of time. abert: the big danger is miscalculation, but if they play it like they are playing now, they will avoid a confrontation. other countries do not want the closed and they do not want a disruption of oil. francine: robert hormats, kissinger associates vice chair. this is bloomberg. ♪

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meeting president xi of china tomorrow. alix: countdown continues to president trump and xi's meeting tonight. world leaders meet at g20 and political risk. the june to everything rally -- the june buy everything mentality. can the second-half half deliver on earnings and growth? lastank passes the fed's round of stress tests. we speak to sullivan & cromwell's senior chairman. david: welcome to "bloomberg daybreak" on this friday, june 28. the big news last night was the democratic debates. alix: it got a little dicey. i feel like wednesday was more policy, and this when they just went after each other. david: the main story was really, harris -- was really kamala harris against joe biden. i think it's fair to sa