anchor: european stocks in u.s. futures tread water on this fourth of july low volume trading. $1400 asks above investors wait for u.s. jobs data. core inflation, global yields continued their downward slide. what inflation expectations and weak data mean for central bank policy. and crude awakening. tensions linger in the middle -- as forcesltar in gibraltar sees a tanker. we break down everything impacting oil and energy prices this hour. welcome to a special edition of "bloomberg markets" on this thursday, fourth of july. i'm anna edwards here in london. markets closed in the u.s., but over here in europe, here's a

data check for you. stoxx 600 pretty flat this hour. fourth of july low volumes waiting for payroll data from tomorrow. outperforming. yields areyear certainly worth talking about. yields have dropped below the 0.4 level, below the ecb's deposit rate. we've got gold still acting as a haven above $1400. the dollar index not moving all that much. president trump doesn't like the strength of the dollar. we will talk about that. wti not reacting positively to the production cuts extended by opec. let's take a big picture look at what is going on in these markets now. the u.s. stock market closed for trading for the july 4 holiday. in europe, equities continue

little changed while investors search for direction and await u.s. jobs data. we are joined now by paul markham. very good morning -- afternoon, in fact, here in london. valentin, let's come to you first. >> it does feel like risk off is back on. currencies are outperforming low yield or's. it remains to be seen whether that positive feeling will be sustained. the market is still pricing in almost three rate cuts by the fed this year, and if that is challenged by someone -- buy some more constructive data tomorrow, that feeling may not be sustained. most central banks in dovish mode, it does feel

like stock markets are outperforming, and on the ethics side, carry trades -- on the fx side, carry trades are back in vogue, so that may have staying power. anna: paul, how would you feel about the risk reward at the moment? i know your focus is equities. bonds and equities are sort of missing each other at the moment. give me a different picture of global growth and where we had from here. paul: it is a bit of a pavlovian response from markets initially, which was to sort of push some of the rate sensitive stocks a little higher. that came to a halt quite quickly after a couple of days. it is something now for the markets to figure out whether the growth numbers are good or not. i think data dependency will be very high. whether we see a rotation from growth to value were not in the fourth quarter depends very much

on data on a day-to-day basis. that in theng with rotation between sectors, we have fresh eyes on the s&p this week and other indices within the united states. some people have point to do the comfort they take from the breadth of the rally we have seen in u.s. stocks. it is not just one part of the index going higher, it's all of them. i've got this chart that shows two different measures of the s&p, one that reflects that breadth and shows them both moving in tandem. do you take comfort from that, or say this isn't very comforting? paul: there are different ways you can look at that. one is that there has been a leadership issue in the equity market for a while. at the end of 2017, i think a small number of stocks, 15 of the s&p 500, were briefly worth more than 485. that meant indexes were being

somewhat skewed by those mega cap stocks. so the breadth is pretty encouraging. on the other side, investors have maybe been piling into etf's and passive funds, and in some way that probably shows a change in sentiment which may not be justified. on the whole, i think for most technical perspectives you are encouraged by breadth, but there will be a caveat. anna: we heard a little bit earlier on from mark mobius, who was talking about his appetite for gold. of course, he's a big name in emerging markets, but he said i love gold. interest rates are going so low now, particularly in europe. i don't know if gold features in your currency universe. many investors these days have. it is the case with the central

.anks put on the currency side, there is an amount of currency debasement. the weaker the currencies we have out there, all to make -- out there, ultimately that fuels demands for real assets. a real assetto be with real value. we are seeing accentuated moves to the top side, but targets are meant to move. we could see quite an aggressive extension here, especially if the fed cuts rates later this year. overall, the flow of money really hitting the market from the central banks continues.

this might continue to fuel demand for currency debasement hedges, hence higher gold. anna: lovely set up for our next conversation. thank you both very much, inov of credit agricole and paul markham of newton. both are staying with us. reporter: president trump warned tehran not to increase uranium enrichment. iran has said that is what it will do if europe fails to offer economic aid by sunday. off gibraltar, british forces have seen a supertanker suspected of carrying oil from iran to syria, in violation of u.s. sanctions against the syrians. china and the u.k. are escalating their war of words over protests in hong kong. beijing accuses the u.k. of meddling in its former colony

after prime minister theresa may said she was shocked by violence after protesters stormed the legislative capital. switzerland was judged the best place to live and work. last year's number one, singapore, was the runner-up. 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. hows.ivia this is bloomberg. anna: thank you for that. coming up, europe's japanification. we will discuss that next. this is bloomberg. ♪

olivia: welcome to "bloomberg markets." deutsche bank ceo christian sewing is putting the final touches on a turnaround plan. among the moves being considered, another management shakeup and a new unit to house unwanted assets. bloomberg has learned the u.s. justice department is on the verge of approving t-mobile's merger with sprint. the key, asset sales to dish network. the justice department once enough concessions so that issue can become a fourth competitor

in the wireless market. william hill has been hurt by a law that limits bets on roulette's and poker machines aimed at cutting gambling addiction. that is your bloomberg business flash. anna: thank you. over the past few days, countries from belgium to austria have seen their 10 year yields drop below zero for the first time. by one measure, japanification is defined by this measure. we had the german yields dropping below -0.4%. let's get bloomberg's's dani burger, who's been pouring over the details. relentlessve these dovish central banks and continued low efficient, and we get this world of eurofication.

japan has the highest absolute amount of debt, but on percentage terms, switzerland and germany are actually higher. even 50 year yields are about at zero. , but if you're looking to buy any positive yield on the curve, you're out of luck. italy 8%, but trending the way of the other markets. we've also seen yesterday the btp rally caused 10-year gilts to hit their lowest level. u.s. only 1%, escaping this to a large part. the world at 24%. i want to show you the chart of what this looks like over time. that 24% is even more stark when you compare it to late last year , when it was just at 11%. it has really taken up, so it is the amount of negative yielding debt to the total investment

grade market. another measure of this is just how much investors are gorging on lung maturity bonds. this is duration. basically a risk of your bonds moving a lot when there is any sort of change in interest rates. us how manyly tells years it will take for an investors who see cash flow from a bond. this is the longest on record, and it also means one percentage point move would lose $2.4 trillion in the bond market. anna: thank you very much. dani burger with fascinating trends in the eurofication of the european bond market. and paulmarinov markham are both still with us. on german yielding debt below the ecb deposit rate, rhonda's remind us rate, the significance of this. valentin: it is bad news for the

ecb. they would love to have an upward sloping unit curve. -- upward sloping yield curve. the euro zone, it also is an important signal for the governing council that the markets are now expecting them to cut rates, potentially september or later in the year, notwithstanding that draghi's term is coming to an end. it is a case of the continuance of the ecb easing policy now being priced in. yielding negative rates is quite scary because the ecb is no longer expanding its balance sheet. and stopped really growing reinvesting. the fed has been done for two years or so. sick about what happens if the global economy now has to go into a slowdown and qe has to resume again. where will all of these yields go?

that is a scary question, especially in uncharted territory. that could get even less clear, how we will deal with that down the road. anna: and policy response to come. this is a bond market story. you are in the equity world, but clearly they linked to each other. every time we see yield taking another leg down, we see people reassess the relative merits of holding stocks. what you see in the stock market as a result of this? paul: a couple of things. one, the banks have already been mentioned. the problem is that they have tended to be very balance sheet heavy, as opposed to the u.s., where there's been lots of securitization of corporate debt. that allows banks to take corporate earnings and not have to hold them on the balance sheet. the spread becomes crucial for those banks, and that has continued to see the sector derate. on valuations in general,

there's a piece of accepted wisdom which is that pe should expand as interest rates come down. what we saw in japan is sort of a bell-shaped distribution of pes. you may get to the stage were continuing falling bond yields will tell you something about the economy, which would probably imply that pes should contract. i think that is something to watch because i think the idea that lower rates will continue to push equities higher can't carry on forever. anna: because it is telling you something could be bad about the global economy. paul: precisely. and someare nominal, sort of disinflation around the quarter is what bond markets are telling you. anna: if we are going to look at central banks to be ever more creative in their policy, when you talk about fiscal policy and what part that plays, but if we stick with the central bank, christine lagarde is going to the ecb. are you somebody who takes comfort from her political expertise and experience in the

troika and other bodies around european and global decision-making? or are you someone who says she hasn't actually sat on a monetary policy committee, and that makes me nervous? to know: it is early how creative she's going to be, but the fact that she is a relative novice to central banking also means she will stick very closely to the rulebook mario draghi has written. already in september, mario draghi will lay the groundwork for what is to come. clearly, i think lagarde may have no choice but to follow potential further expansion of qe and creating easier restrictions to 50% if you are potentially cutting rates. i'm pretty sure draghi will prepare the ground for that. what comes next? for the central banks running out of options to do more and more, i think they will have to continue to create an environment which is stabilized enough for the government to step up to the plate and potentially consider fiscal stimulus and lower rates. anna: that's the other side of

it. thank you very much, valentin. and paulmarinov markham are both staying with us. have more we will details on all of the developments in the energy market. this is bloomberg. ♪

♪ anna: welcome to this "bloomberg markets" special edition. antish forces have seized oil tanker carrying iranian oil off the coast of syria for violating sanctions. the foreign affairs ministry says the seizure was done at u.s. demand. isning us with more bloomberg's suis wallace.

reporter: this is exceptionally unusual. as far as the oil market, it probably isn't a big deal because iran was already struggling to get its oil out there. it is probably more important for syria in that this is pretty much a lifeline, more or less the only oil moving in or out of syria coming from iran. the question now is what on earth do you do with it? you've got 2 million barrels of oil you can't do much with. what do you do with the tanker? first they have to establish ownership. it must be worth tens of millions of dollars. what is the process by which all of that is sorted out? i think it is enormous lien interesting and incredibly unusual. for the oil price, it probably doesn't mean that much. anna: what about the other oil story, the saudi's and the kuwaitis coming to some sort of

agreement about the contentious land ownership issues, and who is going to get the oil out of the ground across their border? stuart: it's been a spat for five years in the making. long time an awfully to resolve. we hear that they are very close to a final agreement on this, so that is hugely significant in terms of capacity because it is about 500,000 barrels a day. saudis andh the kuwaitis, as part of opec, have agreed to keep their production at a certain level, so we will not get a sudden rush of oil. but in terms of future production, it is enormously important. anna: thanks so much. bloomberg's stuart wallace with the latest on what is going on in the energy space. still with us are valentin mari newton paul markham of investment management.

the oil price is coming down again. inflation expectations seem to plumb progressively downwards. how does oil play into that? if oil does recover, and we think it may hold its ground given that opec cuts have been extended to 2020, that may provide some support inflation expectations. there was actually quite a bit of decoupling between oil and inflation expectations that kept collapsing. expectationsation just seem a bit more sensitive to that. i guess stronger or higher oil prices may play out with higher inflation expectations in the u.s. briefly, your hopes for oil stocks? we haven't seen the oil price react positively to the opec+

meeting. paul: we've tended to take a fairly neutral stance on oil the price of crude is fairly hard to predict. we tried to go for stocks which ,re generally yielding preferably around some kind of capital discipline, which has been an increasing theme within that sector. much.paul, thank you very mobius sees ak shift into emerging market bonds in the face of a low global interest rates. we will talk about that search for yield and where it takes us. this is bloomberg. ♪

anna: welcome to "bloomberg markets." i'm anna edwards in london with this special edition for the fourth of july on "bloomberg markets."

let's check in on the bloomberg first word news. here's olivia hows. olivia: the trump administration is expending a crackdown on what it sees as unfair trade practices. it will impose additional duties on steel coming from asia, including china and vietnam. bmw and qualcomm are among the winners in a fight over the cars of the future and how connected cars talk to each other. the companies argue that wi-fi offers poor performance compared to future 5g networks. the only house republican open to impeaching president trump is leaving the party. michigan congressman justin amash says he is disenchanted with party politics and frightened by what he sees from it. he wrote that he is declaring his independence. he said the mullah report convinced him the president had engaged in impeachable contact -- the mueller report convinced him the president had engaged in impeachable conduct.

will speak from the steps of the lincoln memorial. critics say he is turning the event into a campaign rally. 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 olivia hows. this is bloomberg. anna: thank you. latestnt donald trump's accusation of currency manipulation by europe and china has foreign-exchange analysts game planning the administration's next move, but a weaker dollar on fed rate posedand a weaker economy risks. the currency weapon has been on the table for a long time. the chinese have used that weapon. it is interesting that may be in preparation for this recent meeting, the chinese allowed

their currency to get stronger against the u.s. dollar. that sort of eased tensions somewhat. but the u.s. is in a very difficult position because the u.s. dollar is a global currency. , given they little fact the foreign reserves of the u.s. are not that great, it is very difficult for them to do anything about the currency. other countries can control their currencies. china controls the currencies very closely. the europeans can do it. other countries can do it. the only thing the u.s. can do is get the other countries to ease up on the beginning of their currencies. if i look at the context of what is going on in markets, some people are saying we are hitting irrationally exuberant times, what would you say from the e.m. perspective? is it underpricing trade angst

between china and the united states of america? mark: i don't think it is underpricing. i think the risk is out there. everyone is aware of it. i just returned from a five city tour of the u.s.. everybody asked about the trade war, so they are very aware of it. the other factors that are overwhelming on the positive side is interest rates. interest rates are so low. in europe, it is negative, and they are going down in emerging markets, which is very good. lower interest rates in the u.s. helps emerging markets a lot, so i think that is what's really driving the situation. also, don't forget liquidity is increasing. a lot of people have overlooked the impact of cryptocurrencies. inelieve the increase cryptocurrencies means there's an increase in global liquidity, which cannot easily be measured. uri emerging market

expert. i'm curious -- you are an emerging market expert. i'm curious, after trump was basically had s&p saying they were no longer able emseparate dm economies from based on the strength of institutions. is that something you are watching or something you would agree with? very difficult a problem. just think about it. alibaba, where is it listed? it is a huge company listed in the u.s. is it an emerging market company or not? these are issues that are very difficult to untangle, but the reality is that if you celebrate -- if you separate the emerging market countries and the developed market countries, what we normally think of china, india, south africa, brazil, those are growing at double the rate of the developed market

countries. the argument for emerging markets is still out there, but moret is even becoming tied to the index, to the big stocks. they are asking, maybe i am taking too much risk of being with this crowd in the big stocks. maybe i should go into a more actively managed fund or an emerging market fund which will give me diversification. i think that's what is happening now. anna: that was mark mobius, mobius capital partners co-founder. still with us is valentin marin ov, credit agricole head of fx research, and paul markham, newton investment management director. what do you think trump wants to communicate? does he want to go further than

just jawboning the currency? is it about pressure on the fed to cut rates? or is he suggesting that the treasury will intervene? valentin: it is a little bit of both, really. more and more clients are saying trump is unpredictable. you can expect a lot of things. one of them may well be an intervention on behalf of the u.s. treasury come on behalf of trump, if you wish to start the relentless rise of the dollar. for the time being, it is clear that markets are calling his bluff. there's a lot of bark, no bite. from that point of view, where the dollar could really take the fx investors would be concrete action, rate cuts by the fed, or a surprise intervention in the markets when or if that comes down the road. but the sentiment is clear, he is unhappy. president trump is unhappy where the dollar is, and he continues

to highlight that. he's going to continue to do that unless he gets what he wants. anna: if he decides to bite and not just bark, and decides intervention would be a good way forward, there seems to be divided opinions on this. some suggest the treasury will goals.to achieve their others say the dollar is such a global currency, you can't do this on the around. valentin: and history is not really on the fed's side. the only successful concertedons were interventions in tandem with other central banks. that is the treasury acting in tandem with other treasuries outside the u.s. if you are hoping to achieve anything, it would be hoping to stop the dollar from appreciating further. that is a decent hope itself >> -- a decent hope itself. whether they hope to trigger a downturn, we have to wait and

see u.s. recession possibly next year with rate cuts from the fed to see the dollar tumbling across the board. anna: paul, what are your expectations from the fed? i got a chart of the numbers we got this week, the weakest three sinceof adp job adds 2012. this doesn't bode well for the jobs data tomorrow, and some say this will make or break the fed for a cut in july. it could be 25. it seems pretty certain they will be something. anna: we could see 50? paul: i think so. i think they may feel that they want to jumpstart things. on the other hand, they may not want to get rid of all their dry powder in one fell swoop. they may want to hold something back. the data has been deteriorating, but they will be watching everything very closely. i think there we something in

july, probably 25, but possibly 50. personally am questioning the whole view. my view is that the markets have moved too quickly in expecting the fed to respond the way they will respond. is hoping to never use it , to only use it when the time is right. if you look at financial conditions, to me there's no real reason for the fed to cut u.s. datass the continues to deteriorate at an alarming speed. our expectation given that stockmarkets are at all-time highs, yields at multiyear lows, financial conditions have eased considerably, why should the fed now also cut rates? why not offer forward guidance and tell the market they are going to cut in september? how will the markets react?

i think it is a fairly time balanced, in terms of munication thedelivering, and so far forward guidance has worked brilliantly. anna: it could also be seen as a move of confidence in forward guidance. thank you both very much, staying with us for this special edition of "bloomberg markets." coming up, the bank will cement details of its latest restructuring this weekend when it's supervisory board meets. we will be back with more on this story, next. this is bloomberg. ♪

olivia: welcome to "bloomberg markets." another sign of how tough regulations are, france's bnp paribas will get rid of the majority of its research staff in hong kong. instead it will use content from morningstar, partly brought by pressures of european regulations. aipacser brewing company is set to raise up to $9.8 billion in hong kong later this month. the ceo says it will give the company more flex ability to seek local partners. the german lighting firm's ram german lighting firm has received a takeover offer from bain capital. issue -- in rim

march, osram issued its sixth profit warning. anna: deutsche bank ceo christian sewing is putting the final touches on a sweeping turnaround plan, which could include thousands of job cuts. the supervisory board meets this weekend. bloomberg's durham bank reporter, joins us now. this is a slow burn story we've been following clear a while. what is the latest news? reporter: as we are about to celebrate july 4 in the u.s., this is now heading for a showdown as well on sunday. the supervisory board is scheduled to meet, confirmed by the bank officially. our information is that they will meet and ratify the restructuring report we've been reporting on for months now. many of the details have been reported by us. they will more than likely ratify that, and there will be an official announcement may be

sunday or monday, and we will then see the full plan. anna: are we looking at job cuts? that's what we've been talking about for some time. management changes? i guess that depends on future structure of the business. steven: that's right. it's going to be a big package of what we are seeing. you mentioned job cuts. there could be 20,000, alleged number. of theuld be 1/5 workforce, probably stretched out over a number of years. they will likely shed their profitability target for this year, and will need to tell investors what they want to achieve two or three years down the road. there will be management board changes, in all likelihood. it is a big package. it will change, fundamentally probably, change deutsche bank. i'm quite excited to see the details. anna: thank you bloomberg's

steven arons. no doubt a busy weekend covering that. marinov and paul markham still with us. you talked about how the low interest rate environment is making it incredible difficult in banking. it is not the creative side of banking, the more vanilla side. it is making lending make money. there's nothing positive you can about that. at the moment where rates are so low, that is also dampening volatility, so that trading revenues are down as a result. that is adding up to a fairly dire picture for the banking business as a whole. deutsche bank is just one example.

what the central banks could do and have done in the past to alleviate the pain from low rates would be to introduced tiering or ways to shield some of that profitability, and that is one of the considerations on the table for the ecb. if they get some signs of that tension materializing as a scenario for the ecb september , if indeed draghi mentions that investors will see that is a sure telltale sign that rates will be heading lower. is one thinging that might change the dynamics of banks. cheapb has been pushing loans through these tltro's. i've had questions about central bank policy and whether they are brokered to the economy. do you see a lack of demand for some of this cheap money in europe? is that more of the problem?

valentin: in the euro zone, it is a bank based system. in the u.s. it is lack of growth. the ecb tries to put money into economy. instead, banks are hoarding cash. they are penalized by that for the ecb, and that is eroding. cutting rates and tiering, i would not call it especially creative. it is just a lack of fresh ideas, and investors would be justified to be a bit more bearish or less optimistic about the outlook for the banking sector. anna: we also talk about how cheap it is, but it doesn't mean it doesn't get cheaper. paul: right.

it is like a value trap. there are a couple of structural issues around economies as well, in europe and japan, which makes it very difficult from the perspective of the rates scenario. i am with you. in increasing populations not earnings in risks and the stock market, i think that is a very uncomfortable situation at a time when pension deficits are growing for governments. i think from that perspective, the idea of putting rates up would be certainly radical for most central banks, but structurally would help. i think banks being healthy, being profitable is an important part of our economies. i think the central banks are live to that, verrilli caught in a trap. anna: thank you both for your time -- but really caught in a trap. anna: thank you both for your

time. and paulmarinov markham both joining us live in london. coming up, it is the july 4 holiday, which is why we are in london. you are looking as crowds begin to lineup for the boston pops spiral effect secular. more on one of the country's fireworksboston pops spectacular. more on one of the country's oldest and biggest celebrations, next. ♪

♪ welcome back to this special edition of "bloomberg markets." the boston pops fireworks spectacular is the added state'' la -- is the united states' celebrationoldest for the holiday.

let's take a look at what to expect. ♪

people take to the edges of the charles river in boston for this event, and one of them is bloomberg's matt miller, who's going to be hosting this year's boston pops. matt, good to see you.

normally my coanchor on the european open show. what are you expect to be the highlight of your evening? matt: i set aside ursula bandar der l- aside ursula von eyen and christine lagarde to come to this event. my highlight is probably going to be amanda gorman, a 24-year-old poet. she puts on an incredible performance with the backing of the boston pops orchestra. it is something i highly recommend checking out. this is literally the future we are watching on stage tonight, and it is very exciting. anna: and a lot of fireworks? matt: there will be a lot of fireworks, yes. i do kind of live for the fireworks, as well as the howitzer 105 millimeters cannons that sit by the fight of the stage. usually i get the opportunity to

fire one or two of those cannons. they said it off during the "overture of 1812," which is extremely patriotic. i think it is one of the highlights for everybody every year here. anna: bloomberg's matt miller, clearly enjoying the sunshine and the energy and excitement ahead of that boston pops event. thank you very much. we will see him again in an hour. quick check of the markets, without much of the volume we would see, hence pretty flat on the stoxx 600 right now. intel he and stocks not doing too bad. some excitement around -- italian stocks not doing to bad. some excitement about what is happening there in yield and some of the government plans. more in a moment. this is bloomberg. ♪

♪

anna: holiday drift. european and u.s. stock futures tread water amid low-volume trading. investors wait for the u.s. jobs report. global yield continued their downward slide as germany drops below the ecb deposit rate. what inflation expectations and weak data mean for central bank policy. and tensions linger in the middle east as officials injure officials in tanker headede a for syria. welcome to "bloomberg markets" on this thursday, july 4. i'm anna edwards, here in london. let's give you a quick limbs of what is going on in these markets. right now the stoxx 600 fairly flat, actually a slight upward bias.

u.s. equity trading not happen today, but u.s. futures flat to positive for tomorrow. low volumes, of course. the mib outperforming in the pace.ean s yields in germany on the 10-year dropping below -0.4%. gold a little bit of a haven, drifting downward, but still above the $1400 mark. indexoomberg dollar mostly flat, slightly downward. wti not reacting all that much in a positive direction to the development from opec and opec + earlier in the week. market is closed today for the fourth of july holiday. in europe, equities continue to trade come a little changed as volume remains like while investors search for direction and await u.s. jobs data.

let's bring into the conversation jp morgan asset management global market strategy it -- jp morgan asset management's global market strategist. stocks seem a little range bound right now. how is your risk appetite this thursday? still well, we are relatively late cycle in the global economy in the u.s. it is not the right time to take oversize bets on risk asset. the new environment in terms of monetary policy, which is obviously much softer than one may have expected a couple of months ago, is really supportive notisk assets, so it is time also to exclude these from your risk portfolio.

low-volume even the fact that the u.s. is closed today, digesting the news of the weekend. there a truce in terms of trade war, starting up negotiations between the u.s. and china, and obviously the news out of europe with the new nominations for the top eu jobs, which give some hope for investors that the european degrade in process, the work done by mario draghi will be continued in the coming years , which is reflected already today. we will come to central bank policy in just a moment, but i want to linger on your strategy. how difficult in the wake of osaka is it to come up with the investment strategy, bearing in mind president trump's thoughts on trade? his approach on trade could change at any point. that would indicate a very different path for the fed and

the global data that has been deteriorating. this has been a difficult situation for the investment community, i imagine. , but defining investment strategy has never been an easy thing, so you need to focus on the thing you can control and analyze. as an asset manager, we do our alwaysk and there will be unknowns in the financial market. we have one certainty, that the impact of the trade war has a huge economic impact. 3.7% torowth went from just over 2.5%. is aboutomething which to continue. we see advanced economic indicators like the pmi, globally, and in china, the u.s., and europe. the economic trend is going to continue. for the central bank to maintain

softer monetary policy than growth, modest inflation upside. we've obviously lower for longer monetary policy. emerging-market debt, credit, fixed income markets overall will continue to perform real or real -- continue to perform rather well. they are performing quite well your to date, and i believe it is the way to go for the second part of the year, without taking too bold a risk in equity markets. anna: all right, and what is your assessment of what has been driving up equity markets lately? some suggest the bond markets and equity markets are telling us a different thing, that

equity markets are ignoring a global deterioration in the economy, whereas bond markets are acknowledging that and predicting worse to come. we look at equity markets, it is a very good question. one might wonder, what has driven this market your to date? this is a topic which is usually debated in industry as well. across seen outflows emerging markets and developed market shares today. massive share buybacks schemes in the u.s. olivia: we are used to seeing that -- in the u.s. we are used to seeing that, but in europe we have seen the same thing in this environment. see that the duration of this market strategy on equity markets, for the fixed income side we took the decision to

increase duration in our portfolio a year ago. jp morgan announced we were increasing duration in the u.s., and this was a very rewarding call. we have also seen that central banks are no longer tightening, but lowering their interest rates going forward, which should be supportive of fixed income assets going forward. i don't think that there are two stories there. there's clearly the same story of we see growth stalling at the moment. we see support for equity markets coming from corporate debt, but looking to hedge themselves and looking for carry assets of the moment. anna: thank you very much. yns stays with us. let's check in on the bloomberg first word news with olivia hows. olivia: off of gibraltar, british special forces have suspectedupertanker

of taking iranian oil to syria, in violation of u.s. sanctions. there's growing concern that the 2015 nuclear treaty with iran is about to collapse. president trump warned iran not to increase uranium enrichment. iran has said that is what it will do if europe fails to offer economic aid by sunday. china and the u.k. are escalating their war of words over the protests in hong kong. beijing accuses the u.k. of meddling in its economy -- in its former colony after theresa may said she was shocked by violence when protesters stormed hong kong legislative council. fromding to a new survey hsbc, switzerland was judged the best place to live and work and earned top marks for earnings potential. singapore was the runner-up. 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 olivia hows. this is bloomberg. anna: i'm not sure those

pictures do switzerland justice, but it is a good story. thank you. coming up, europe's japan of acacia -- europe's japanification. yields in germany going before the -.4% level. this is bloomberg. ♪

♪ olivia: welcome to "bloomberg markets." deutsche bank ceo christian sewing is putting the final touches on a sweeping turnaround plan. the bank supervisory board meets to make a final decision this weekend. among the matters being considered, huge job cuts

focused on the investment bank, another management shakeup, and a new unit to house unwanted assets. the u.s. justice department is on the verge of approving t-mobile's $26.5 billion merger with sprint. the key, asset sales to dish network. the justice department once to get enough concessions so dish and become a strong fourth competitor in the u.s. wireless market. british bookmaker william hill will close shops and cut jobs, heard by a law that limits machines to curb gambling addiction. anna: over the past few days, countries from belgium to austria have seen 10 year yields drop low zero for the first time. japanification is worse in europe then it is in japan itself. joining us is bloomberg's european managing editor, and vyns, with us is vincent ju

jp morgan asset management. going year bund yield down below 0.4% -- below -0.4%. does this tell you the market expects more rate cuts from the ecb? reporter: that's part of the question. germanyd people lend to at a rate below the cost of parking money at the ecb? there's three different things you can think about here. one, they are pricing in ecb cuts, which means you might get a better deal with the ecb, but at the long run you're are going to suffer. you might be able to sell the bunds you bought today back at a higher price in the future. three, you can at least do things with them. you can use them as collateral for other transactions or lended out and that kind of thing.

you can use it if you are a bank to shore up your balance sheets. germany is still europe's safe haven. vincent, coming to you on this negative yielding environment, are you assessing the various negative yield playing off of one another? japan's negative yields are looking juicy when you compare them to germany. is this something that attracts you? where do you see an opportunity in the negative yielding environment? , negative yields show me that german bunds over the last 18 months have been a very good call. put the emphasis on the periphery, excluding

italy, but italy has recently gained traction. we have continued to focus on the credit market, european high-yield, for instance. otherwise, we are much more positive on the u.s. yield curve and credit market given the carry debt that we have. which has everything a positive yield are clearly favored by investors. we should also note that for any europe, itvesting in has also been quite attractive over the last couple of months. we seem flows coming from japan in europe, and the outcome of european elections reassures global investors somehow about the future of europe. obviously, due to the fact that populists gain some traction, but not enough to slow the european project and integration

process. anna: that is an interesting thought on the european side. the move to more dovish policy from the ecb goes in tandem with a move to more dovish policy from the fed, so maybe we need to give thought to how low interest rates go in the united states. i want to play some thoughts of mark mobius. we've been playing bits of this interview throughout the program. let's listen to how may rate cuts we expect to see from the fed in the future. two cuts would make sense. the numbers indicate the u.s. growth rate is slowing down. i think the fed is definitely looking at that and saying we better do something about it, and of course, the boss in the white house is also going to raise hell if the economy slows down. mobius they're talking about the cuts he sees from the fed. what are your expectations over

the next couple of busy days, paul? not busy in terms of volume, but we've got important data out of the u.s. summer's adjusting whether we see the fed cutting in july. what are your sources telling you? paul: it is definitely a big day for the u.s. tomorrow. everybody is going to be watching when the number comes up. the number was way lower than the market expected and pushing towards the bottom of that trend growth. that, thea repeat of idea is the fed is going to cut sooner, and maybe more aggressively for a more 50 basis cutpoint to shock the market back into life again. on the other hand, the headline number can do really funny things for the market.

that's matched by higher-than-expected rates in average hourly wages as well. anna: vincent, just very briefly, your expectations for rate cuts from the fed. are you somebody who thinks july is definitely going to happen, it will definitely be 25? what are your thoughts? vincent: july seems more and more likely. in the meantime, gdp figures will be released. we are seeing gdp somewhere between 1% and 1.5% looking at current economic data. the market discounts a rate cut in july. according to forward guidance, this rate cut seems pretty high probability in july, so yes. anna: thanks very much to you and vincentobson juvyns.

vincent will be staying with us from paris. coming up come of the u.s. is said to have demanded the seizure of a tanker off of gibraltar. more on what is driving the oil price. this is bloomberg. ♪

anna: you are watching a special edition of "bloomberg markets" for the july 4 holiday. british forces have seized a syria bound oil tanker carrying oil from iran. forces say seizure was done at u.s. demand. joining us is bloomberg's will kennedy. your thoughts on this news around gibraltar? this is not a very usual event, is it? a large amount of move oil just -- a large amount of oil just

sitting there. will: this was loaded from almost 2 million barrels almost certainly from iran, and it made the voyage all around africa and into the straits of gibraltar. typically you would expect this to go on a smaller ship through the straits. that may be the first time people have tried to send oil to syria through that route, giving this opportunity to read this ship as it sailed past her broader. anna: is this something that -- past gibraltar. anna: is this something that could be market moving? will: i think what it demonstrates is it is very hard for iran to export oil right now. it is really struggling to find places to put its oil in the face of u.s. sanctions. we've seen iranian oil exports plummet over the last few months as those sanctions imposed by the u.s. have tightened. this is one possible, albeit small outlet, to syria, but clearly western countries have

sought to close it. anna: the other big oil story today involving kuwait and saudi arabia. there's been much dispute about who had the rights to drill for what on the border, and there's been some progress. will: there's a neutral zone between the countries in the desert that has existed for almost 100 years, and there are two big oil fields capable of producing 500,000 barrels a day. they have been shut down for about five years. now there have been efforts to , founded onng again diplomatic and legal disputes. there may be a deal to restart them. it is worth stating that the 500,000 barrels a day is distributed to the opec quarter of both countries -- the opec quota of both countries, so because of production cuts, even if they restart, they made out

affect supply. anna: thank you very much. vincent, were you surprised to see the weakness we've seen in the oil price despite the extension of the opec+ cuts we saw coming through from vienna? or is this just typical because of the low global growth environment? vincent: i am surprised not so much about the opec cuts, but when we see the situation in the and the current situation with iran that would have pushed oil above $100 years ago. the u.s. has become a major oil producer, with over 10 million barrels a day, which is a total game changer and which probably anchors oil prices lower. still, even in this weak

environment in the region, we are surprised to see the oil .rice hardly reacting to this for the global economy, it is a good thing because we have seen price or that high oil increasing price really hurts the consumer. it is still one of the most important elements in inflation dynamics, so it would have come .t the wrong moment it is more positive than negative for the global economy, and as you rightly mentioned, the fact that global growth is in syriakes that better that price is creasing -- in theory better that prices are not increasing at all. at the moment, we only see modest inflation upside. we obviously look at inflation every year, especially in

context of a long-term capital market assumption. it is very hard at the moment to see a big rebound in inflation, which is tied to the discussion we had earlier on on monetary policy. this is the conclusion that central bankers drove at the moment. broken due toing global financial crisis, but not only due to the fact that we , that we debt levels have -- anna: vincent, think you very much. more on emerging markets when we come back. ♪

anna: welcome to bloomberg markets. i'm anna edwards in london. let's check in with bloomberg first word news during here is

olivia how. via: the u.s. will impose additional duties on steel coming from asia. targets include china and vietnam. bmw and qualcomm are among the winners and a european fight over the cars of the future. european states scrapped rules over wi-fi technology over how cars talk to each other. the only house republican open to impeaching president trump is leaving the party. michigan congressman justin disenchanted is with party politics and frightened by what he sees. he says he is declaring his independence. he says the mueller report convinced him the president has engaged in impeachable conduct. the tanks are ready to go and the fighter jets are set for the flyover, all part of presidents trump's changes to the

traditional fourth of july celebration in washington. critics say trump is during the event into a campaign rally. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this isvia howe, bloomberg. anna: thanks very much. let's check the markets. the stoxx 600 up .1%. the fourth of july, that is why you have a special edition of bloomberg markets. u.s. markets closed. the best gains are coming in on the ftse mib in italy. some excitement around the lower yield on btp's. yield dropping below the ecb deposit rate. let's switch up to the other board angie what is going on with gold prices. --ll above $1400 a barrel dollars an ounce, even if it is not making gains.

president trump suggests europe and china are manipulating their currencies. wti in there as well. -- prices weaker this at this afternoon u.k. time. there is trump's latest accusation of currency manipulation by europe and china as foreign-exchange analyst game planning the administration next move. a weaker dollar on account of fed rate hikes and a slower economy is a tailwind for emerging markets. earlier bloomberg spoke to veteran investor mark mobius. this is what he is saying about president trump criticism of the currency and emerging markets. currency weapon has been on the table for a long time. the chinese have used that weapon. maybe in preparation for this recent meeting, the chinese allowed the currency to get stronger. that eased tensions somewhat. the u.s. is in a difficult position because the u.s. dollar

is a global currency. ,here is very little particularly the fact that the foreign reserves of the u.s. are not that great. very difficult for them to do anything. other countries can control their currencies. china controls currencies closely. europeans can do it. other countries can do it. the only thing the u.s. can do the other countries into easing up on the weakening of their currencies. >> good morning. if i look at the context of what is going on in markets, some people are saying we are hitting irrationally exuberant times. what would you say from the e.m. perspective? is it underpricing escalation of trade angst between china and the united states of america? mark: i do not think it is underpricing. the risk is out there.

everybody is aware of it. i just returned from a tour of the u.s.. everybody asked about the china-u.s. trade war. but thereery aware, are other factors overwhelming on the positive side. that is interest rates. interest rates are so low. in europe it is negative. they are going down in emerging markets. as you know, lower interest rates helps emerging markets a lot. that is what is driving the situation. do not forget, liquidity is increasing. a lot of people have overlooked the impact of cryptocurrencies. i believe the increase in cryptocurrencies means there is an increase in global liquidity, which cannot easily be measured. >> you are an emerging market expert. i'm curious. there has been a chorus of people talking about how developed markets are starting

to resemble yen a little bit more. -- resemble em a little bit more. after trump was elected, it was said they could no longer emarate dm economies from based on the strength of institutions. is that something you would agree with? mark: it is a difficult problem. think about it. alibaba, where is it listed? it is a huge company. is it an emerging market company or not? these are the issues that are difficult to untangle. the reality is if you separate the emerging market countries and the developed market countries, what we normally think of as china, india, south , those arezil growing at double the rate of the developed market countries. the argument for emerging market is still out there. salients becoming more

because so many people have gone into etf's. everybody has indexed or is tied to the index to the big stocks and they are asking maybe i am taking too much risk of being with this crowd in the big stocks. maybe i should go into a more actively managed fund or an emerging market fund which will give me diversification. that is what is happening now. anna: that was mark mobius, mobius founder. todaye hearing from mark about how the search for yield is pushing investors into emerging market. is that an attractive place for you? overall we are selective at the moment. i would not say we are overweight emerging markets. see a lot of value in em for

a long-term investor. there is no doubt about it looking at current valuation, the equity side you are 1.6 times price-to-book value which is been associated with a strong return in the years that followed. we are also in an environment where we believe the low to negative yield we see in your and finally a dollar under pressure since the 18th of july. this may be a window for em debt assets. we start to see more interest with moreth in em preference for asia or china. i believe that is a secular story within em remains intact on the discussion regarding whether or not china uses currency. china is probably more interested in opening up its capital markets like it did for equity markets last year, and is year for fixed income markets, which over time should support

use it as a and weapon against the u.s.. andee short-term challenges world trade volume, declining growth are among them. -- shouldhat china respond with more stimulus. this is all challenging in the short term for em. if we see the valuation story, the fact that the u.s. monetary policy is much more supportive should be a huge statement for emerging markets in the future. anna: that should be a positive. you mentioned what trump had to say about the dollar. at what point do you think trump -- what point do you think trump was trying to make with his comments on fx? do you think he is suggesting the treasury could intervene or is it just part of his long running pressure he applies to the federal reserve?

vincent: i would see it at this stage as more of a long running pressure. it is not new that trump and that u.s. administration blame china and europe. this sense that they have been surprisingly quiet on this front over the last two years -- this subject comes back on the table. at the same time, it comes at a time where we see more pressure on the dollar as well. i am not concerned at this stage. -- the mobius said dollar comes with advantages, but also with disadvantages we see at the moment. anna: where in the currency world you favor? moment, we had a temporary position in the yen. protection a good and a more uncertain

environment. the supposition we could trim down a bit in the future, but the main active goal we had so yen.as especially on the anna: thank you so much. you have been staying with us from paris. coming up, the big bid for a lighting company which receives it has received a $3.8 billion buyout offer from bain capital group. we take a look at how public companies are going private. that is next. this is bloomberg. ♪

"bloombergme to markets." i'm olivia howe. unit willusch's asia use money from its recent ipo to look for deals in the region. budweiser expected to raise money in hong kong -- will give the company more flexibility as the global partners. a sign of how tougher regulation are forcing banks to change their business model. bloomberg has used that a french bank will get rid of the majority with asia -- in hong kong. the move is partly due to pressures brought by european regulations to put a price on a network. has hired aionaire deutsche bank executive to look for deals.

that is your bloomberg business flash. anna: thanks. -- i have readto quite a bit about the various sectors that have been pushing equity markets higher. you gave me your thoughts earlier on why we have seen equity markets as strong as they of in given the deteriorating -- as they have been given the deteriorating global growth picture. i wonder what you make of sector rotation? it is interesting we see not just stocks connected with growth but those that yield well and pay good dividend going higher. what is your sector perspective at the moment? say -- we areld end of cycle. the u.s. just celebrated the longest expansion in their history. we see that we are end of cycle, it is clear. [indiscernible]

we need to have a more defensive approach in our portfolio. this means a more value play portfolio play -- favoring kerry assets. this works also in the equity space. europe, but also in emerging markets, this means we see more defensive sectors, the sector which can benefit from domestic demand. we found them in the u.s. but also in markets like china, where we see the local market has performed quite well year to date given the local dynamic which -- we like bank deals, more in the u.s. than europe. obviously in europe there confronted with a low yield environment and a low environment to expect in the coming months. health care remains a structural theme within equity market, probably more in the u.s. than in europe.

from a regional perspective, we the euro atfavor this stage. it is a more defensive play with a structurally higher equity with a more diversified investor markets less dependent from exports in the european market. the european market is export driven and bank driven. are you actively avoiding anything attached of globalization themes? some suggest the thrust of globalization only last as long as the trump administration, and others say the benefits of globalization at the margin argonne and we need growth ideas -- are gone and we need other growth ideas? vincent: it is too early to call the end of globalism.

it is more discuss than ever. we have seen in europe and the global economy, we have seen , we havee agreements tension between the u.s. and china and the u.s. and europe. beneath the surface, i still see the ambition come even of china, which is the common advocate of globalism, still see a lot of support for globalization globally. that will remain my base case. anna: thank you very much. thanks for your time on this fourth of july. we appreciate it. let's talk about a corporate story that in europe is of specifically the story and what it signifies about broader trends. osram has confirmed it received a $3.8 billion buyout offer from private equity firm bain capital

and the carlyle group. sarah silex joins us from berlin. this is a story that has taken quite a long time to put together. how certain is it this goes ahead? spain and carlisle are very hopeful it goes ahead. they have been working on it for at least eight months. we first reported on baines interest in november of last year. in february we found out that pain and carlisle -- that bane and carlisle had teamed up for the bid. we have a few months of hard to get to diligence -- of hard to diligence before making the offer. we understand there is a supervisory board meeting this afternoon to discuss the offer, which analysts say is very fair, and so they are hoping that because it has taken so long and they have been able to rally shareholder support, that the deal should go through. anna: what does this tell us

about broader trends in terms of private equity buyouts? this is another example of public to private. why are we seeing this as a trend at the moment? : they are exciting and difficult to cover as a reporter because no one wants to have leak they are working on these public situations. the reason they have become so popular is because private equity has seen a lot of value or the potential for value in listed businesses that are undervalued and under loved on the public market. cheaper butr, not less competitive when they hold bilateral conversations with the gettinglisted companies involved in private option processes, which pes have been doing for decades. that is very competitive, and

also very expensive. the public companies are undervalued. they are much cheaper and that is the private auctions. anna: sarah, thank you very much for the update. bane story and the broader link surrounding that. thanks for joining us. coming up, it is the fourth of july holiday in the u.s. you are looking at the live shot in boston as crowds begin to lineup for the boston pops fireworks spectacular. half a million people gather on the banks of the charles river to watch the festivities. one of them is matt miller, my coanchor. he will be with us shortly. this is bloomberg. ♪

anna: welcome back to "bloomberg markets."

this is a special edition on this fourth of july. the boston pops fireworks spectacular is the u.s. largest and oldest worth of july event. here's a taste of what to expect. ♪

anna: that does look spectacular. bloombergs matt miller usually hosts the european market show with me. he has been in released from berlin to boston for the event. tt: i just want to say one time, no hard feelings. we are over it. that wound has healed, we now have a special relationship. it will be a fantastic celebration of american independence. queen latifah is performing, the texas tenors. amanda menna from america's got talent as well as the first u.s. poet laureate. i recommend everybody, even those of you in great britain, tune in to watch the independence day celebration tonight. anna: thank you very much. we hear the message. no hard feelings. i still do not get an invite. matt miller joining us from

boston, the boston pops on bloomberg later on today. a quick check on the markets as we headed to break. early afternoon in europe and we see the stoxx 600 is flat, low volumes because we are without the united states. gold has been something of a haven recently, losing a little bit of its shine but still above the $1400 mark. sluggish,ice fairly down .6%. i want to show you what is going to -- what is going on in my map. we showed you that supertanker just to the east of gibraltar. this has zoomed in on the mediterranean. the map function on the bloomberg or you can see the latest developments on the british forces these are of an oil tanker. more on that in the next hour. this is bloomberg. ♪ we're the slowskys.

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

jonathan: 2:00 in london, 3:00 in frankfurt, from london, i am guy johnson. happy birthday america. u.s. markets closed for the fourth of july holiday. let's check out what is happening in europe. european equities incredibly low volume and in a headline level not going anywhere in a hurry. the action has continued to be in the bond market. the german ten-year now trading below the ecb depot rate. how much lower can we go? -40 bits on the german ten-year. a little bit of a reverse from yes years -- from last year's --e -- from yesterday's move 1.1282. the euro barely budging. it is at least moving to the upside. let's check in with bloomberg first word news. here is olivia howe