why take dutch why defend the bondholders -- why defend the bondholders? influence president trump? george pataki: i think that is more likely we can converse the elected officials of puerto rico -- and p of puerto rico the people of puerto rico that it is in their interest so the economy can grow and get a control board off their back. vonnie: why sue them on monday? george pataki: give me a chance here. that's what the bondholders tried to do. we were this close to a deal. you have to stop negotiations, file for bankruptcy. i think it was wrong for puerto the standpoint of the finances and making lawyers rich. we think is they took a step back, we have filed for bankruptcy but we could reach this agreement. it is the best thing for puerto rico and honoring the constitution. anna: are you getting contention? george pataki: there is a lot of going on in washington and i hope the white house will take a look. thatu saw in illinois, have $14 billion in unpaid bills, let alone multiple -- multiple billions of dollars in unpaid debt. whatever happens in puerto

european regulators decided banco popular of spain, debt was wiped out, senior bondholders protectived authorities over today run on the bank. w a textbook succs for the regulator, and captured by the chart, but what about the investor? scott, a success for the regulator, i see that. is there a warning for the investor before they can go in and take a nice 11% coupon come across their fingers, and hope it never gets triggered. >> it is a wake-up call for investors. for subordinated bank bond investors, they have to be aware of the risks they bear for the higher coupon. this be with which the regulator took care of the situation, obviously there was a takeover as part of the deal. that is extraordinary as well. jonathan: it happened quick and there was a question whether this was a test of the cocos. the idea is you suspend coupon payments before the bank fails to keep the bank functioning. what was it this week? what was the take away from the first real workout for the securities? >> scott is right. if you think about what risk you are taking, you are getting paid a high interest rat

these are contingent convertibles, which means they convert into equity as a bondholder at exactly theime. and when the bank, when the institution is in trouble, these bonds get converted to equity, and you potentially lose capital, but that is the nature of these bonds, and investors have to understand they are getting paid a huge amount of premium to buy these debts, and the pace and few which it happened -- what i read it like $2.2 billion worth of cocos have lost their value, i think people need to be aware of of what they are getting into. jonathan: luke, what was remarkable is that the cocos were pretty resilient. can you do this with the bank that is too big to fail? can you do this in italy, where the holders of cocos are not institutional investors? they're mostly retail. is that much of a success? >> well, that is the point. how do you test the wider market? they were held in a restricted number of accounts. these are not the mom and pop accounts. these are the ones that have been really heavily sold into asia. that is a very different set of circumstances. i would like to th

the gft strikes a deal to wind down two doubled lenlders and protecting senior bondholders. shares of nestle top the european market, after they reveal a $3.5 billion position with demands to reshape the swiss food giant. >>> closer to deal arlene foster returns to london in search of agreement to prop up theresa may's government as brexit minister david davis vows to secure a deal of his own. >> what i want is free trade agreement, customs agreement and so on. >> german business morale his a high and angela merkel conservatives pull further ahead of rival democrats three months before the country goes to the vote >>> let's look at this green across the board of european markets. ftse is up three-fifths of 1%. same in germany. up .9%, and ftse, success story of the day, if shareholder, up that's on the back of that news about san pal oh you look at foreign currency markets. euro has fallen back against the dollar, was doing better in the day's trading. dollar strong against a yen. sterling up a tenth percent against u.s. dollar. aussie dollar slightly higher than couple hour

he sided for the bondholders and voters of capital funds and opposing any debt restructuring for puerto rico saying puerto rico should pay its debt in full to wall street speculators in spite of cuts for police, fire, pensions, roads and schools. he hosted -- he hosted the g.o.p. presidential candidate ben carson and the governor opposes lgbt rights and same-sex marriage and town hall, the uberconservative democrat, praises him for his conservative approach to helping bondholders over schoolchildren. and the governor has withheld his criticism of president trump. which few democrats are able to resist and for latino democrats s darn near impossible and unless he's playing the democratic role to get ahead. when confronting the obvious, trump denigrated mexicans, promised to build a wall to keep latinos out and the governor responded saying of the president, my view i don't know he's anti-latino. obviously i heard some derogatory remarks but i don't know him personally and it doesn't deter me. instead of spending money to help children whose schools are closing, to fix roads that are fall

vonnie: and for bondholders, because that is who invests in the bond market in italy and in , where youees institutional bond buying. what kind of precedence does-- precedent does this set? elisa: the concern it has raised today among investors and analysts is you are creating a precedent of getting around the rules. ist is being applied here somewhat skirting the rules. so it created uncertainty as to how investors can price the risks of various banking securities, in light of the fact you are not quite sure who will be bailed in and under what terms. mark: is the italian banking industry a much safer place today? npl's and zombie banks, are they being put to bed? elisa: an argument is this basically does draw a line under the sand. this is the end of weaker banks needing capital and from here onwards, you have created financial stability in the sector, which italy needs. mark: good to see you. europeantinuzzi covers finance and investing for us. we will get more insight. we will talk exclusively to pier carlo padoan, the finance minister of italy at 11:15 new york time. vonnie: time t

convertiblentingent which means they convert into equity as a bondholder at exactly the wrong time.the bank or the institution bonds getble, these converted into equity and potentially lose capital. that is the nature of the bonds and investors have to understand they are getting paid a premium to buy the debt and the pace in which it happens, it is $2 billion which is a small amount. people have to be aware what of what they're getting into. jonathan: they are pretty get converted into equity and potentially lose capital. resilient. we can celebrate with the regulator for the bank -- can you do this that is too big to fail? can you do this and in the league where it is not an to additional? is it that much of a success? >> that is the point. as far as we understand they were already restricted to these are the ones that are being really heavily sold. that is a very different set of circumstances. i would like to think you would be right. the bank is very different -- it is very convenient. it is like the bank of england. >> the other big question is where else do you go? 's,you loo

and in this case, senior bondholders, you know, managed to get lucky and stay safe. but in future incidents, we could see senior debt taking some degree of loss and we have an isolated smaller bank cases. and this is really the problem in italy. you mentioned depositors. italy is introducing depositor protection, but only from the 1st of january 2019. so at the moment, they have this problem that if they were trying on to bail in senior debt, it is perry pasu with all the guaranteed and nondefered deposits. so italy is in this particular situation where it needs to be very careful the way it handles resolutions. >> i just want to ask you about how you feel this example would pertain to the two banks and the northern italy and the venetian area because the solution from monte pasci is i don't think the ideal solution for banks going forward. and you still have noble banco to be resolved. how do you think this all falls out in the end? >> well, in italy, i think it will probably be handled differently. as you say, it's not ideal, but it could be handled differently and

we have had senior bondholders protected.this is a nee for further integration in the eurozone. you think -- why do i want to going tod if rules are get stretched. that is the longer-term impact. tom: thank you so much. other guest coming up. rupert harrison with us, as well. we will continue. much to talk about. a discussion on the american economy. william lee will join us. from london and new york, this is bloomberg. ♪ we have data showing german business confidence servers to a record high in june. this comes after they increased the cost for germany. joining us now, -- is still on set with us, rupert harrison. how do you explain the euphoria in confidence for german businesses? >> conditions have been good for some time. interest rates continue to be low. there are forces pushing the domestic demand. the export side is relatively new. is explainingn this record high in the index. like all votes rising. it seems to be optimistic. has the german economy reached escape velocity? >> this is optimistic. we are not yet in a si

the stockholders lost 90% of their investment and the total loss for bondholders and stockholders combinedlion. so i think this move now into an environment where he serves the american people is really challenging for him. i don't think he's yet grasped that he can step back, pay attention to the people's business, let these things roll off him and maybe achieve a few things. >> kirsten, do you think this argument that sarah huckabee sanders makes and that he has always made and his wife makes it, he's a counter of puncher. he punches back. do people continue to buy that? there's one thing during the campaign and the argument is, i'll punch back for you, i'll do this for you. >> right. >> at a certain point, maybe people continue to believe that's what he's doing. but it doesn't seem like he's doing it on health care right now. it's really about punching back at mika brzezinski. >> right. exactly. i think pbs "newshour" and marist had a poll that came out and they asked people what they thought about his tweets. in no group, including trump supporters did any group of voters go over 50% o

if the meduro goes to the bondholders rather than starving its people, it will show them as the corrupt i wish we'd see more people protesting in the streets about the people suffering there than the paris accord. david: steve, what do you think. >> they should be paying attention, the investors, should look at. they're calling them the hunger bonds. david: it may be a bad investment, but they're doing it hoping it make money. is it right that they're doing it? perhaps it's throwing a lifeline to a bad government? >> yeah, legally they can do whatever they want. in in case with venezuela, but morally it's absolutely wrong giving this government $800 million and that money is going to the government, they didn't buy these on the secondary market, these bonds. so they're giving a lifeline to an atrocious regime starving its people and killing its people and shouldn't have done it for moral reasons and reputational reasons for the firm. david: you shouldn't be restricted from doing it, but morally it's wrong. and you say? >> i'd say goldman is in the business of profit, but more important

losses are meant to fall on bondholders rather than taxpayers, but easily sidestepped that by arguingthat the banks are crucial to the region and the italian economy. the concern is that the decision will undermine the european banking union. >> some are worried that what the government decided to come in order to save the small banks, we will compromise the wesibility that in europe .ill the banking union reporter: however, the prime minister says that the state has done its duty, making sure that they "on monday -- open their doors on monday. kate: european investors were boosted by that banking deal. up about half a percent. german business confidence hit a new record high in june. shares in swiss food group nestlÉ outperformed. we are seeing more muted session on wall street. nasdaq has fallen into the red, as tech stoxx bareback. -- pare back. the number of people looking for work in france as picked up slightly. 22,300 more people sign up for unemployment benefits in the month of may, an increase of .6% from the previous month, and a reversal of the trend seen in april. it is al

the thing is, suggesting at the moment that there are no plans for takata -- a bondholder meeting.hey are probably, getting less -- than $.20 on the yen for that, holding them -- corporate has talked. of course, where would that leave carmakers? they would be further down the food chain. >> yeah, absolutely. with the acquisition, takata gets about 1.6 billion u.s. dollars, but from what i can see, they have the deaths of $10 billion, which would be mostly bonds, which means that -- gives you the 20% or so, and leaves nothing for the carmakers. talking about at least 12 billion u.s. dollars. i actually think it's more that carmakers will have to share. it's not shared evenly of course, it is shared accord -- according to how many they actually board. for them unfortunately, they are number one. others that will have to carry cost. i don't think insurance will want to cover that. they will have to do that over a few years. it's just very -- yes. please yes. haidi: that's what i was going to ask you about, is automakers going to have to bear this burden. of course you are saying it's

the bonds are designed to harness the wisdom of the crowd by putting the bondholders at the front linescharge the securities are too complex to be properly understood and too much like to be to considered -- considered bonds. it can be triggered without creating broader risk. a bigger test will come when a larger global bank imposes losses on its potholders. you can read more on all of our quick takes on bloomberg. >> hawks dissenting on the bank of england. late tos of waiting too tighten arriving. markets, find it on the bloomberg. i know you have been busy in the past few days particularly looking at money markets and rate hikes. what is interesting is where we got that split. you were commenting on the fact we had not seen much of a re-pricing terms of expectation of a rate hike. now, we are above 50% probability for a rate hike 2017. why? is it because it is surprising? housing is usually more of a dove. >> i was surprised that i think the market was surprised. housing was always considered a dove. the fact that he is looking more like a hawk, in the second half of the year, he is

so bondholders are currently undergoing restructuring agreements with the island to determine the fatethat hasn't caused wall street, which invested heavily in po witherso rican bondssh they're investing largely privately. >> leslie, thank you for that. >>> we take you to the president at d.o.t. talking infrastructure. >> thank you secretary chow, thank you, everybody. this is very nice, by the way. beautiful. i want to really thank you. you have been so amazing as the leader of this department and the progress that's being made so quickly. leaders and officials gathered here from across the country have all praised the work that the secretary is doing to create a safety, modern and reliable transportation system for the united states and for its great, great, great people. i also want to thank secretary zinke for the fantastic job he's doing at the department of interior to clear the way for new infrastructure and economic development. both secretary chao and zinke joined us tess white house for the meeting state and local leaders to develop plans to replacement america's decaying inf

we have a few lines coming through saying there is no plans for bondholders meetings.nd payments will the pen on the rehabilitation plan. it is, for car owners, good news because it means the company will continue to operate and that it will continue to produce airbags needed to replace those. the takeover by key safety systems means there will be new investment in the company in order to produce the massive number of airbags needed to replace the faulty ones. bondholders, less good news for them, and as well for companies that have all kinds of liabilities with takata. now that they are a bankrupt entity, there is less money to pay out on those, so there will be a gap between liabilities and the cash on hand, and that will have to be worked out in court. rishaad: what is likely to be here the impact on the industry as a whole? industry as a whole, obviously there is going to be more concerned going ahead about the cost of recalls, to see how these can bring companies to their knees, not just parts makers, but the automakers themselves. constantly pushing to cut costs,

that's going to be okay bondholders. not so great if you're talking about the banks.n you're talking about europe.ng curves in you can see what this chart is showing, you got two ten spread there in blue. financials index in white. they've tracked each other closely. flatter curve, not so great for banks. is, of course,on what did you miss. the question is, at what point we see more acceleration of rate hikes in the u.s. rate tore waiting for growth. in the euro area it's the same thing. from bloomberg intelligence euro area earnings, subdued. very nowhere near the peak that we have seen precrisis. reminder, this is a global phenomenon. u.s. thatctors in the mediocre wage growth. europe, they're not to where they were in 2011. barely where they were in 2013. another reason that mario is not going to be under much pressure time soon.te any isia: it's part time work going to workforce rather than full time. which is suppressing wages. closed here in the united states is next. take a look at the major indexes. four minutes to go before the close. you're looking any moves

from my perspective, a dollar paid out is maybe, the bondholders are not that worried right now.ey we might lose. in some cases, what i see is incredibly unhealthy institutions. we can talk for hours about wells fargo. from my perspective, these are not healthy corporations. they are dangerous and systemic and should not be paying dividends. joe: are the dividends bad, per se, or only bad at this level of capital health? beother words, were they to healthier, would you be fine with them paying dividends in the future? >> of course, all companies have to pay. but some companies are very healthy, including a bank shareholder like warren buffett. pay dividends, they have things to do with the money. if you take it out, it is a symptom of having a lot of debt overhang. case, it is extremely unlikely. so everyone lets them. that does not make them healthy corporations, in my view. if they were anywhere near where other companies are in terms of overall embeddedness, then sure. julia: the bank's equity ratio has doubled since 2009 to 12.5%. capital would you be happy with at this stage

ultimately, that is not very good news for italian government of this everynse a senior bondholder waslding. there will be considerable weight upon the italian state. guy: i want to go back to the bund story. d think that what draghi has done is to convince the germans that the italian bank bailout was a one-off? ewen: i think that is a good point you make. who was he talking to? where was he talking as well is the other point? is he now addressing the german fiscal -- saying we have to do this because we don't have much choice? but do not despair. we have not abandoned sensible policy. matt: where do you think we are going to see tapering next year? do you think we will be completely out as far as the ecb is concerned, and raising rates already in 2018? ewen: i think that depends on the persistence of the european growth dynamic more than anything else. we think that we are in a slowly recovering and fairly long flat economic cycle, and it will take quite a long time to get to the point where you really need to rates in europe. obviously, the fed is into that pattern. here is the ques

the senior bondholders are sitting pretty. the picture on your screen? futures go nowhere.ing a bit softer. the dax up the other way. the cable rate hasn't moved for two straight days. as euro a little bit softer we look ahead to the ecb forecast tomorrow and reports suggesting they may revise those .orecasts lower the treasuries anchored around 2017. we are softer, up by a single basis point. that is the -- -- it's righthas to sell its chip business. weston digital wanted to derail a deal with concerns the chip unit may fall into the hands of competitors. they've not been able to match the price offered by others. likely to be cut as part of a business review. southeast asia's largest airlines is trying to revise earnings after a quarterly loss. it is under pressure to reduce costs after con -- competition from regional carriers. that is your bloomberg business flash. alix: in the treasury market, the question has been why are 10 year yields so low? the potential answer came yesterday when maybe china may be buying treasuries. foreign-exchange reserves climb for four month

i'm sure that report that you referred to as concentrated people's minds, the months of bondholders,lloff in bank stock today. people are nervous about holding shares in bank of popular going into the weekend. julia: think you so much for your insight on this. scarlet. scarlet: thank you, julia. merge jan anderson -- new york stock exchange this morning, the formation of this global asset manager with more than 330 ilion dollars in assets comes amid rising costs of do -- compliance with new technology and competition for lower fees. including vanguard. here in studio to discuss this, janet hendersons co-ceos -- and your for mica, and take well. thanks for joining the gentleman. you now have been working a grand -- understanding of each other's businesses. talk to me about the key distinctions between henderson and janice. what does each firm bring to the table here? >> think the first thing to notice, henderson is a terrific, successful name, great relations in the u.k., europe, had a good business in australia. if you look at the footprint of janus, we have done well in the united s

they will be holding a bondholders meeting on june 28.uptcye takata is the largest ever in manufacturing history. to key safety systems will close in the first quarter of 2018. we will be waiting for this press conference from kyoto, a press conference with takata executives in tokyo at 11:30 local time in japan. out for those headlines. the stock still suspended on the tokyo stock exchange. >> i don't think it will trade today. we will see how things trade in the next couple of days. bounce on theto news of this bankruptcy filing and the announcement of this takeover offer, but a lot of questions about where the global recall goes from here for takata , as well as for key safety systems. for now, key safety systems will keep the operations in japan. again, you can look at the stock , a brutalt week or so couple of days, 60% down, losing more than half that value in the last five sessions, although we a great deal of volatility in the last year since the news of this recall. another chapter when it comes to takata as we move ahead with th

howt of questions here on bondholders, the carmakers, are going to be repaid through this entire process and where does takata go from here? of questions to ask after that $1.6 billion sale of takata core assets. we have the ceo in just a couple minutes time. betty: that exclusive interview. cannot wait to discuss all of those issues, yvonne, that you just outlined. more ahead on daybreak asia including a closer look at the meeting between president trump modi of india. with the deals mean between the two and what is likely left on the table they need to resolve. much of that having to do with the its one b visa and trade. h-1be going to be -- the visa and trade. how it is inis asia at the moment. slow going in new zealand for the -- we are down about .1%. australia, we had an interesting seriousness with gold overnight. at onevolume spike and point, the prices fell just 1.6% in a minute, so a little bit of recovery, but want to watch through the australia session. the aussie not doing much. futures pointed to pretty much nowhere for the essex 200 today. -- the asx 200 today. unchanged f

mark: if you are senior bondholder and you are looking around -- there are different rules.currently what we have seen in both spain and italy is that senior debt is not getting touched. and the reason it is not getting touched is because the implementation of the directive isn't quite ready yet. you need to find a way to bail in senior, unsecured creditors without bringing in depositors and derivatives into the mix. mark: is it a level playing field? bridget: it is getting very close to a level playing field. if you ask me next year, i will say yes, it definitely is. mark: with the resolution of popular, everyone was clapping. they have done a great job. no cost to taxpayers. then a a few weeks later the state essentially helping resolve to the cost of the taxpayer. bridget: the italian state has given 5 billion cash to intesa to help them take the banks off their hands. and they have also given a 12 billion guarantee. 5 billion of cash behind that. to equalize the benefits of this support for these problem banks to intesa shareholders. mark: are there more state -- more zo

this is what the bondholders actually care about. i think it is positive.rtunity to look at this yield and look at this backup. plus the global backdrop is pretty good, too. you have strong fundamentals globally. you had a little bit of a hiccup well.zil for us as brazil is in the position that we have for us as our -- in our portfolios. with temer's problems, we added to bonds and currency. e.m.,an: as you look at do you want the local debt? do you want to get exposed to the currency bump? the current environment where the reflation story has been moving of growth, stability, without inflation picking up to the extent that we expect it, i think that that environment is favorable for local currencies and for local debt in emerging markets. what we have been doing in the portfolios is clearly adding on weakness, particularly in the case of mexico, which has been subject to noise associated with the u.s. administration, potential trade policies, nafta, renegotiation. clearly the local rates has been one of our top picks, and it has been one of the top perform

choice come a precise choice by the italian government and the bank of italy not to hurt senior bondholdersnetian banks, too small troubled has been a place for a long time and it your ago, it was decided to put together the private rescue plan. liquidation. this it's an alternative to a resolution which would have involved bibail in. they do this because a lot of the bonds are in the hands of retail investors. bear the have to losses and there could be political consequences. there is also fear of contagion across the system. is afterate question 17 billion euros, is this the price to pay for the fear of contagion or is it too much for italian taxpayers? alix: is there another medium-sized bank that the ecb says will fail? is there another one like it? that's exactly the question. for a long time, we feared there would be banks which were too big to fail. now we have discovered that in europe, there are banks that are too small to bail in. in italy, there are few other banks which are small which are having issues. the question which i think investors will ask is what will happen? will we

state law and court orders i have to pay bondholders. than state workers pensions. then schools.t have money for things like school buses, ambulances, domestic violence. 700,000 people left the state of illinois. at that tax base eroded. public unions dominate the decision making and trial lawyers. they have been downgraded 20 times down the last six years. that bond debt is near junk status. are they puerto rico-style, you know, debt problem where puerto rico was allowed to basically do a form of bankruptcy for the first time. states are not allowed to go bankrupt. could congress say, you know what? they need board oversight or board manage are like detroit had. charles: they certainly can't raise taxes been. liz: people are leaving. 700,000 people have left. charles: thanks very much. appreciate it. >>> 27-year-old brooks koepka won the his first major, 17 under, second lowest recorded score in u.s. open history. he rocked that thing from beginning to end. >>> coming up, van kills pedestrians outside of london. police say they're treating this as a terror attack. >> we're all o