Transcripts For BLOOMBERG Bloomberg Surveillance 20170710

Theresa may says she wants views and ideas from other parties as she tries to reset her brexit stance after last months election loss. This is bloomberg surveillance and im mark barton in london. We are one hour into the equity session. Stocks have opened, gaining for the first day. Rising for the first week in five. Stoxx 600, up by 1 3 of 1 . Kuroda, the boj governor, reissuing the boj remains ready to adjust policy as they did following the intervention last week to cap rising yields. The german 10 year yield is down by a couple basis points today. In the last couple weeks, we have had the 10 year yield rise i30 basis points. We have seen a 30 basis point moved to the upside following hawkishs from the likes of president draghi. Oil falling price, 4 last week. Kuwait saying libya and nigeria might be after capping supply to rebalance the market. Listed to the bloomberg first word news. Reporter Donald Trumps eldest son met last year with a russian woman who offered to provide potentially damaging information on hillary clinton. According to a statement from donald trump junior, the meeting took place in june of 2016 after his father secured the republican president ial nomination. The fbi is investigating russian interference in the election and whether there was any collusion between members of the Trump Campaign and moscow. U. S. Treasury secretary Steven Mnuchin says the white house is committed to givinetting the tax overhaul process through congress by the in of the year. Tax will not include a 40 rate for the richest americans. Theresa may will call on opposition lawmakers to help steer britain at of the european union. In a speech tomorrow, marking one year since she entered 10 downing street, the Prime Minister will urge other parties to come forward with their ideas on how to tackle the countrys challenges. Meanwhile, a survey by the british chambers of commerce shows u. K. Companies are overwhelmingly opposed to britain walking away from talks to leave the eu without a deal. The poll of 2400 firms found over 1 3 wanting the u. K. To remain in the customs market. More than 75 fighters using 10 fire engines have tackled a huge place at Camden Market in north london. Emergency services were called to the popular tourist attraction surely before midnight local time after the fire took hold in a property near the camden stables. This comes less than one month after at least 80 people were killed in west london. Global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. You can find more stories on the bloomberg at top. Be payingstors will close attention when janet yellen gives her semiannual testimony to Congress Later this week, after fridays u. S. Jobs report came. Nonpharm payrolls rose by 222,000, the strongest reading in four months. The data comes amid increasingly hawkish tones from the fed and other global Central Banks in recent weeks. Ans bring in the Investment Committee chairman. Boot in, stephen. What will yellen say . It is all about legacy and she has excellence to go. She has a six months to go. There is no way she will be nominated again. She know she is on the way out. What kind of legacy do you want to leave . Do you want to be the fed chairman that led inflation get out of control, you want to reality miller . Do you want to be allen miller . But i think there has been a big change in fed speak the last couple of months. And i think it has been largely desire to show she is tough and she could raise rates and she will leave the u. S. Economy with inflation under control. Secondly, there has been talk about financial conditions and that is the second thing. The Financial Markets, the last generation all believe it was the fed put. Now we have the fed saying, sorry, gusy. Everything is over the top here. S it is not just the equity markettephen isa. Weve got a very big change in fed policy. Mark why arent the markets taking it on board, if you agree with stephen . She does not want to be the first person to take the punch bowl away. And i think the markets are still watching the influence of that. And it is really difficult because polls are extremely biased. U. S. Flows and european flows effectively what the Central Banks are now wssaying are, look, for the time being we will look more into output extension rather than cpi profiles. Stories will continue to be boring. Oil might actually give a little bit of a boost on the break even over the next six months. But effectively, the central bank, we are getting the same by thec from the ecb, way. They are saying, were going to look into the output extension and even there, we are getting the level of stimulus is not coherent anymore. That is what they are saying. The markets have to get a hold of it and understand it and adapt to that. Therefore, we are still relatively negative. Aside, weing the fed have to talk politics. Stephen, congress is back, three weeks. Health care will be attempted to be pushed through. Before you move on to tax and infrastructure, health care has to be addressed. A, is it going to be addressed in three weeks . If its not, what are the knock on effects for the rest of the year . For the last three months, the donald stock in washington has come off the lows. I think there has been an understanding. And you read some of the editorials in the New York Times. The resistance, or the attempt, tusing the russian weapon to stymie the whole administration, that will run out of steam. Some of the by elections have come in good for the republicans. That gives the Republican Administration a little bit of a chance to put their differences aside, but the question is, can they . I dont know. ,he politics inside the beltway the divisions within the Republican Party are so great difficult still typical t to see in three weeks. Expert we have been talking to for the last quarter has been absolutely surprised with the slow space, the ability of this government to push for any type of reform. Very good third they have a lot on their plate when it comes to investigations about the russian meddling. The media is not focused on that anymore, but effectively, we have not come to the conclusions of that yet. They dont have the willingness they probably have the willingness, but not the power to get people together. I agreed that the gop, it is the same template of friction. Ell come towill in the third section. Up next, trump, putin, and g20. We focus on what we have learned this weekend about the state of international weekends. International relations. This is bloomberg. Mark lets get to the Bloomberg Business flash with nejra cehic. Reporter the ceo of total confirmed he will travel to qatar next week to kick off a joint venture amid diplomatic tensions between the nation and its neighbors. He told bloomberg that gas is still flowing from the pipeline operating from total. Exchangeuropean stock has about 2. 3 billion available for acquisitions as it looks to double its finds and diversify. This figuredants out at the pending at bit of pending exit of britain from the european union. I think our fundamental trend is starting. If you want to make money and do business with the companies in this group of 27 countries, 19 of them losing steam, then you have to be located in that part of the world. Nejra that is the Bloomberg Business flash. Summit concluded with the u. S. More out of step than ever. President trump flew home, having been lectured on trade by china and france, having received platitudes. In his first sitdown meeting with president putin, the leaders agreed on a syrian ceasefire. Trump plans to create a cybersecurity and it with the russian, amidst criticism from fellow republicans, as well as democrats. What is the measure of success for this summit . Who are the winners, the losers . Well, yeah, of course that depends on who you are. I think the german chancellor Angela Merkel certainly got something out of it. She is running for reelection this year in less than three months time. She held a summit, holding aside the writing going on holding aside the rioting going on in the streets. If you like a facilitator of the worlds most important leaders and got a final communique of the summit that bridged the differences, but also did not paper over them, which was her purpose. We talked about putin. He also got this sort of what appears to be an announcement from trump that the russian meddling in the u. S. Election, they will let bygones be bygones. We will see how that plays out. And certainly, french president summithad his biggest yet, if you like. Hes only been in office for a couple weeks. Everybody took something away from it, which does not mean it produced massive progress on these issues. Mark thanks a lot for filling us in on the g20 summit. Still with us, Stephen Isaacs and luis costa. You are markets guys. How much do you care about the g20 . Is not that relevant to markets, but it is interesting. I think the trump approach here was to reach out to different allies, different directions. He spent a great deal of time in poland and gave quite a keynote speech, quite a impressive speechn about western values. Got through the summit, had the meeting with putin without a great deal of controversy a little bit about the cybersecurity, but they managed to make the point that they both wanted to get on, and made some sort of agreement reference regarding syria. , where is he going . Hes going to the chance ely sees. A little bit of international cooperation. Trump is completely isolated. Bbc aslways shown on the a controversial president. You can ignore him and things are getting done by his the ministration, and that is not a bad thing. Some say he is weak at home because of the probe and is undermined abroad. Absolutely. Unfortunately, the last time the g20 meeting gave the markets an honest direction was during the European Crisis in 2011. That has been it. Now it is becoming a lot more boring. How comfortable is President Trump still with the russian deal . He is desperately trying to move away from that and try to start a new policy agenda. Mark that is typical with the probes going on back home. Unfortunately, 80 of the story is out of his hands because we have these investigations and he is part of the investigations. He is being investigated by the National Security agency. The story is far away from complete, which will continue to make him uncomfortable. There are point is, many World Leaders who are uncomfortable with his administration. They are trying to make amends and the nice and friendly in front of the cameras, but the climate deal that fell through and the lack of support by the state, this is still an ongoing issue. Theres a lot of risk sentiment around that. Mark little progress on north korea, climate or trade. Up next, we hear exclusively from the chief executive of airfrance on the outfit of the industry. What he calls unfair advantages for the middle east carriers. This is bloomberg. Mark the chief executive of airfrance has lashed out at what he calls huge subsidies carriers receive from governments. He is pushing for rules of favor for what he calls fair competition. We are in the freedom business. Our goal is to carry goods. 1 3 of all they goods in the world in value. Course, we are in the business of carrying people from one continent to the other. So, we are in favor of having an open frontier. But it is also a strategic industry for many countries. There is regulated free competition. We are in favor. So, we are working hard to persuade our government and the European Commission to put together rules that allow us to work in these regulated environments and to fight against unfair competition. Reporter is this something you see for example, in the middle east with some of your rivals in the middle east region . More specifically in the gulf area, where we have three carriers, which are huge carriers. By 2020, you will have 800 planes in america, 1200 in 0 the gulfand 100 in area. These three are carriers able to deliver themselves. Fromhave direct subsidies their government. They are not really commercial operators. Theirre weapons of government. The competition with them is not fair. Government,g to our and to the European Commission, to put together rules that favor fair competition. Reporter but the crisis we are seeing in the region with Qatar Airways having to change flights to 19 flight destinations, is this something you see evolving in the gulf region . Will airfrance jump in to take some market share back . We needed to give up our business. This has nothing to do with what i was telling before. We dont want to take favor of the situation and force the consequence of the unfavorable situation with this. We hope it will come back to a more normal relation between the states of the gulf area and between allies of this country. Mark up next, as theresa may opponents to out to deliver a brexit deal. One hour and 26 minutes into the session. Yes, we see stocks rise today. Investors, looking at the earnings side of the equation, looking at the factors. The wage data was tepid. Yellen speaks this week. A big week, another one. This is bloomberg. Lets get the first word news. Son metd trumps elder with a russian woman who offered to provide intentionally damaging information on hillary clinton. The meeting took place in june of 2016 after his father had security of the denomination. The fbi and congressional committees are investigating russian interference and whether there was collusion between members of the Trump Campaign and russia. Says the white house is absolutely committed to getting its tax overhaul proposal through congress by the end of the year. He added the plan would not include a 40 tax rate for the richest americans after a report that trump advisors steve bannon had been pushing for the personal tax rate. Using 10 engines have tackled a huge blaze in north london. Emergency services were at the place. A month afterthan at least 80 people were killed in the tower inferno in west london. Gainss production price held in june. Consumer prices gained 1. 5 just below forecast. Demand remains robust in the regulatory moves. Analysts think controls are building and Building Construction could be on demand. Japanese Prime Minister shinzo abe has seen the Approval Rating for his cabinet slide to its lowest ever. It fell 31. 9 . Decemberowest since 2012. The biggest reason was a lack of trust in him as a person. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. Im nejra cehic, this is bloomberg. Mark Prime Minister theresa may, this week she will appeal to opponents to appeal a successful brexit. She will promise to show renewed courage and vigor and vigor after coming under fire from our own party. A survey by british chambers of commerce says companies here overwhelmingly oppose to brexit talks. Lets talk to Stephen Isaacs and luis costa. Reset relaunch her credibility within not just the conservative party, but the country itself . This reaction is more than telegraphed and expected. She is trying to sound inclusive given how weak it is in the brexit process. Effectively labor and corbin are becoming very effective forces in how negotiations will be delivered over the next many quarters. This is effectively showcasing how weak they are. Hardcore brexit part of the party. Mark reaching out to other parties with Cross Party Cooperation during this process is what many have been crying out for. Some might say she is doing it from a position of weakness, but isnt that what people want . They want inclusive talks. Stephen there is a bit of here. I give the Prime Minister credit here working something out. The partys pencil blitz for 40 years in europe. The party has been split for 40 years in europe. Where does Jeremy Corbyn stand . The labour party stood on everybody can have , that we would somehow stay out, we might control immigration. It was a very ambiguous position. We no going back a long time that he was part of the hard , the contingent that was against the eu. That is if you want to bring socialism to the country which means mass nationalization, you name it, you cant do that in the eu. There are a lot of rules stopping you from doing that. I think it is quite likely that corbin is very happy for us to be out because it can allow him to institute a very Aggressive Program and tactically, why not let the tories carry the can . Why not let them Carry Forward a hard brexit, subtly supporting those actions within the conservative party and then the economy will suffer, you going to the election and guess who is Prime Minister . Their two strands here. A couple of weeks ago there was a motion before the house for the u. K. To stay in the Single Market. 49 labor mps voted for it. They were all. Is a bit of a master tactician and theresa may is packing up just picking up on this. Mark can she last . Would be Prime Minister in 2018 despite losing her majority. Andrew mitchell says she is losing her authority. Clearly there is dissension in the ranks. Can she last another year . Luis i believe so. The party is massively split, but you can squeeze and try to squeeze a consensus out of it. They dont see a huge advantage in getting rid of her right away. I still think you have somebody there with negotiations. We are already behind schedule. It looks like we will have an extension deal. The markets have not woken up to that yet. I think you still have a little bit of a residual life. Mark the economy is waking up to it, look at the pmi data last week. It is coming in below expectations, it is still above 50. Its the reality of brexit beginning to bite in the u. K. Data . Stephen it is more a reality of how cyclical this a, me this economy is. Financial conditions globally, perhaps they are rising. That is going to choke things off. Brexit is coming down the line. Two factors together. Luis the brexit creates this cloud and it is influencing the we conduct Monetary Policy going forward, you cannot discard that. Live, but ik it is do think you cannot discard because of effectively the Central Banks are going on a synchronized tightening. Im pretty sure the board of the boe will discuss this more actively. With a very tight breakdown in the boat. I would not discard it. People were very this is a right assessment of the risk. Mark hopefully he does not carry out what he warns. Ecb suggests the bank Monetary Policy will become less intensein the fall. Hear what he had to say next. This is bloomberg. Mark you are watching bloomberg surveillance, im mark barton in london. Nce while villeroy Francois Villeroy indicating the ecb has begun to a daft the intent adapt the intensity of its Monetary Policy. Are Monetary Policy is efficient. As you just mentioned we had negative inflation a year ago. We expect for this year inflation of 1. 5 . That is partly due to Energy Prices and the process of our implementation gives results. Target is midterm inflation of around 2 . As long as necessary we will implement the Monetary Policy. What we have to do and what we started to do is adapt the intensity of the Monetary Policy , get progress to our inflation target. What we did last march when we qe and wee monthly announced one month ago that clearly we would not reduce further interest rates. This will be our decision next fall. Theill go on adapting Monetary Policy. Do you think the discussion should move quicker . Do you think markets are expecting discussions to move more quickly . I think we have been extremely clear about the predictability of our monetary strategy. December, we have known are Monetary Policy for the year to come. We will see what happens after that. We will have no impatience. We are independent, meaning from marketal pressure and impatience. Are you waiting for the Political Risk . You mentioned protectionist policies Global Growth. This is an important characteristic of the european situations. Political risk has diminished within the eurozone. Brexit, 2017after this is to be a very dangerous year in the eurozone with much turmoil expected. We have seen exactly the contrary. Recovery is solid because of his domestic driven. There are Political Risks, but they are more on a global level outside the eurozone. The brexit negotiation is a real challenge. What we have to do and this is a because of the g20 summit happening now is to go on with world policy with International Rules on financial relations. This is the best solution for Global Growth and this is the best solution against inequalities. Mark with us is Stephen Isaacs and lewis concept lewis concept luis costa. Youve got the germans and the villeroy is side, when we say we start to change things. Give us the timeline. Stephen im looking forward into the home stretch with mario draghi. The question is who will be the next president . The president of the ecb has incredible power. I think we are looking at germany and that is important. It is germanys turn. Weve had froms comp france, the netherlands and italy. Which economy is due . The answer is germany. I think that in itself, just the fact of a german there is incredibly symbolic and markets are often swayed by symbols. I think it goes with the flow. Weve reached Monetary Policy. The evan flow for sure, we are moving in a very different monetary direction. Mark look at the moving yields in the last couple of weeks. What is the path now . Much . Why are we moving so what has changed . We had a few speeches here in there, but effectively the markets are finally starting to wake up to the reality. The markets love the look of the story from the sequencing point of view. By september we might have to signal that we are going to start seeing a reduction. Meantime, do not lose track of how synchronized that notbe with the fed, it is one single central bank. 20182019, there could be no with Balance Sheets or policy. Mark the bond yields rise last week, stocks held on. In europe, we rose. Wire stocks being hit more . Why are stocks being hit more . Luis you look into spanish stocks, we havent had too much damage. Perception does theres this misperception about european equity. U. S. Stocks there is this perception of the cycle recovery. Not a mature cycle recovery in europe where in the u. S. We had quarters of extension period in the last quarter we were worried about retail. If you look into inflation there is a method by purchase. I do think that was expected. Add a certain point if we continue with the rising yield, the bnl shocks can become nastier. This is not good for global risk in general. Look at how real yields are rising. This is nasty in general and highyield risk in general. Stephen the market does not want to believe it. You go back, we are going into qe, we had a lot of jawboning beforehand. Of we will doech whatever it takes. A lot of people didnt believe it when it actually happened. We have the jawboning now and people at the moment are very skeptical. We are seeing the data and saying this isnt going to happen. I think the market is wrong, it is going to happen. Get ready for it. Mark Stephen Isaacs and luis costa. Up next, bonds have stabilized after bonds of stabilize. This is bloomberg. Stephen isaacs and luis costa are still here. Best performing emerging markets, look at the pace. Europeant eastern currencies. Luis things will be choppy for emergingmarket assets in general. I do believe we were discussing the five or 10 year yields in and we know they are trending down, kind of flatlining. Expectations of global tightening, not a Good Environment for ems. I think it will be a lot choppy are here. Investors will have to do their homework. We were talking about brazil, we are Political Risk. Mark and in south africa. Luis things will be, a lot more interesting. Stephen, earnings are troubling you. As we begin the earnings season. Stephen the punch bowl is being taken away on the monetary side then earnings per share. I would encourage all investors to look at that. It has been flatlined, a bit of a bounce in the first quarter. Expected to be some advance in earnings, but nowhere near first quarter. Where do earnings go . Aserwise the share of labor it gains capital, perhaps being squeezed too far. That worries me. Earnings per share is going nowhere and that is bad when stock prices go up. They are at their peak. Time to go on holiday. Mark and invest in what . Stephen corporate bonds. There is some value there. Maybe five years, but the yield curve does not pay. Mark do you have a favorite pick right now with the ems . Luis we have to be short with some of the highyielding currencies. Ou have to be very careful we do like a very shortterm tactical short on some of the highyield currencies. Weak, it looks like the template of low diminishing returns when it comes to the meeting. Talking about nigeria being forced to cap production. It looks like it looks like a translated into the energy market. I cannot discard a break. Mark we are going down to the 30s . A couple of things going on in private markets. Bankruptcy, a 3 billion company 3 billion company at its high. Stephen the private markets have higher valuation. K at this and manikins look at the shenanigans at uber. When smart money starts to sell, the game is over. Mark Stephen Isaacs and luis costa, thank you gentlemen. That is this that is it from us. Guy johnson in london will be joined by scott keane out of new york. This is bloomberg. Tom after the g 19, britain and the United States regroup. The Prime Minister meets with mr. Corbyn. The japanese yen is weaker this morning. Yellen seek coordination. Good morning, everyone. This is bloomberg surveillance. In johnson joining us london. Francine away for the week. I believe it is a holiday. Word . Id you even use that vacation i guess is the language you understand. Neither of us understand what is going on. She is away in italy. She has a welldeserved rest. So much over the weekend, so much to think about after these markets, what is happening with your present and my Prime Minister. Tom we will have to see with that. Simon kennedy is here to talk byn dynamic. Ycor damagingially information on hillary clinton. According to a statement from donald trump junior, the meeting took place in june 2016, after his father secured the republican president ial nomination. Cooperation between the u. S. And russia on cybersecurity is drawn skepticism. This is after Donald Trumps talks with vladimir putin. Saidlican Lindsey Graham it is not the dumbest idea i ever heard, but it is close. Whether President Trump can deliver on his promise of a historic tax cut, several obstacles faced lawmakers, including the health care fight, basic parameters of the tax bill, and avoiding a default on u. S. Death. Theresa may will call in opposition lawmakers to help steer britain out of the eu. Tomorrow she will reiterate her call for economic reform and the success of brexit. Crossll call for Party Cooperation. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am taylor riggs. This is bloomberg. Tom thank you so much. Lets look at it right now. With of the monday morning curve flattening after the jobs report. Interesting jobs report. Real jobs strength but without wage growth. We will talk with care weinberg about that Carl Weinberg about that. Onhad a better market friday. Weaker yen is the major story. Guy, what do you have . Guy european equities are up, but not by much. Over the weekend, it appears opec may ask libya and nigeria to cap output. There is a belief that maybe that could provide upside for the oil complex. Keep an eye on sterling this week, wednesday we get wage data out of the u. K. That is really important. Take a look at silver, it is down 1. 95 . Is it bottoming out . Tom repeal mean Something Different in the United Kingdom than it does in washington. Let me go to the bloomberg. This is a Carl Riccadonna chart on a monday in july. You steal from him. This is employment from population. Up we go. A lot of this the entry of women in the workforce. Fromger percent, moving 56 to 64 . Here is the financial crisis. Over we go off the cliff. We have barely recovered on the employment to population ratio, one of those tensions within the american job machine. What do you have . Guy youre talking about the yen. Let me give you another angle on that story. This is something the ecb will Pay Attention to. The blue line is japanese terms. The german curse is the white line, going up. You make the yen the funding currency and the euro starts to gain on the back of that. That is something the ecb will want to Pay Attention to. That is going to have a downward impact on inflation. We will talk a lot about inflation this week. Tom after the pageantry we saw in hamburg, it is time to reset. World leaders go home. We talked to james hurting who has talked to too many leaders going home. What is the buzz on mr. Trump after hamburg . I got the zeitgeist over the weekend, we mentioned g19, was the u. S. Really there . What did you observe . Talk is not a19 joke. The world and American Allies are scratching their heads. They see mr. Trump as someone to work around, not some of the work with. Our colleague Mark Champion had a terrific story today on the wire about World Leaders finding ways, i matrix, finding t ricks, finding tools to operate considering the u. S. President. Tom we have the uproar over trump junior. He goes on to a really Difficult Health care debate. My reading on it is it is basically dead. Is that when you take away from london . That is what everyone is saying. Given the history of the house and what happened to the house bill and the states for farblicans, it is not too from saying that their legitimacy as a governing party rests on their ability to make ofs that make their promise repealing obamacare a reality, and if they cannot, that will undermine their standings with their base. If they do pass, that will mobilize the opposition. Househy is the white briefing the New York Times on a story that there was a meeting between trump junior and a russian lawyer . They did not brief on the meeting but on the motivation, that there was dirt to be found on mrs. Clinton. I know as little as you do when it comes to the real motivations, but we can guess or infer. It is not an unreasonable inference to suggest they need be trying to they may be trying to get ahead of something worse that could come out and spin and even worse story. This is an incremental story. Causes a minor uproar. We are not close yet to the explosion. Guy ok. Kamal sharma, we are not close to the big explosion. What happened in your world when that big explosion comes . Markets reaction to the trump tweets twists and turns, underlying the concerns is that there is something there. If you look at the broader opposition, the Investment Community remains structurally short the dollar. This is despite we have the big poston dollaryen election. The investor Community Remains concerned there is a geopolitical side to this trump story. Tom we will talk about this later in the hour, but percolating over the weekend is evidence of a weaker United Kingdom economy. Do you buy that . Kamal we have been at the forefront of this view that the domestic economy will continue to slow as the squeeze on real incomes continues further. Some of the supermarkets, this slowdown in consumer demand is continuing. If you look at that relative to what Michael Slagers has been saying, he thinks some of the slowdown in the domestic economy can be absorbed by a stronger Global Economy and investment flows that have hit sterling since the referendum. Tom where are investment flows into london . I dont see any evidence of slowdown. Kamal if you look at the imf numbers up until 2016, 6. 5 times the levels of inflows we saw visibly in 2015. There are large flows coming and even after the brexit referendum. U. K. Lls you the demand for assets on the back of the 20 depreciation in sterling looks attractive. One final question, i took away the multilateral diplomacy, trade deals from the g20 meeting. Ive been told continuously for the last two years that the weakness in wages is globalization. If i see reduce globalization, will wages go up . I dont think globalization is a train you can derail. There is no shortage of bilateral trade deals. Regardless of the legal construct around it, global ohizat globalization is here to stay. Carl kamal sharma is going to stay with us. We are talking about the issue of where we stand with the European Court of justice and its relationship with the u. K. This is bloomberg. This is bloomberg surveillance. Lets get to the Bloomberg Business flash. Janet yellen delivers the semiannual Monetary Policy report to congress this week. Before thepear house on wednesday and senate on thursday. Price gains in china held up in june with inflation coming up at five point 5. 5 . Demand remains strong. Barclays is on a hiring spree to boost Investment Banking and operations in japan. This move comes a year after it shut its cash equity business. That is your Bloomberg Business flash. Tom, guy. Guy thank you. Reportellen delivers the to congress on wednesday. Her comments will be closely watched just days after a strong jobs report. Wages are growing issue where the ecb. To thee exclusively governor of the bank of france. He says the ecb is likely to decide on the next change in the fall. Our policy is patient. We had negative inflation a bit more than one year ago. 0. 2 . We expect this year negative inflation of 0. 5 . Of implementation of our Monetary Policy, we are not yet there. Guy the governor of living france speaking. Of the bank of france speaking. Markets are beginning to get the idea that they should be pricing in rate hikes from the ecb in 2018. You can see it right here on the bloomberg. What we are starting to do, maybe according to many market strategists, is getting ahead of ourselves. Should we be pricing in rate hikes . I think we should. I think you are right, the markets did get a little ahead of itself. The narrative from draghi pointed to guidance in september and october. The eurodollar is around the 1. 30 and is stable at the moment. Guy it is going to hit structural barriers on what it can buy from the qe program soon. It is basically trying to position the market for the time that it no longer can do what it has been doing, and that is quivering out hoovering up bonds in europe . Is that what it is about . Kamal the political and hit thel issues will ecb in early next year. Hike in thee a deposit rates. The ecb has to acknowledge the Downside Risk has diminished, although inflationary prices remain low. Tom lets move from the foreignexchange space to the eye dont want to lose money we showed this chart last week. Price not yield. We usually show yield. Here is fixed income, the german 10yearold 10 year. Price thinking yield or right now . Damagere been enough where people have been losing enough money . Kamal what we have to look at here is context in the balance of payments. If you look at any central bank that has conducted qe, you see significant outflow of funds from their economy. The ecb has had it. In terms of the yield, this is significant because it encourages like Central Banks that have no compulsion to hold negative assets to return to the market. Tom this is well said. Are we there yet . My opinion is were not even close to there yet. How much price damage do we need in microsoft stock held by the Swiss National bank before we go this is not a good idea . We are not there yet. Kamal i think the direction of travel to the ecb has signaled it is going to be a slow pace. We are looking at a 2018 story rather than a 2017 story. Guy quick question on this number chart. Bloomberg chart. A fundingen become currency . Does the euro go up . If it accelerates to the upside, how big is a problem how big of a problem is that . Kamal this is consistent to what we saw last week. The bank of japan came in to market forcefully. Be thek the yen will funding currency of choice. We are thrilled you are with us to get us started this monday. Kamal sharma of bank of America Merrill lynch. We will look at the return of the present to washington president to washington. What a good time to catch up with Carl Weinberg. From new york, this is bloomberg. Minutes past the hour. Im guy johnson in london. Tom keene in new york. Kamal sharma is still with us. Yen weakness. Of what happened over the last several weeks is Central Banks tacitly or not the agreed that we are in a position now to talk about exit and reflation. Most Central Banks seem to be on the same page, and the bank of japan six out because it is not. Go you arent do you thatdifferent page, currency manipulation, people will Pay Attention. Kamal i think currency diplomacy starts to become an issue, but we are a long way from that. Get to aarting to position where folks make tor may turn to the weakness in the end. Governoroded kuroda does not want to declare victory on reflation too early. For them this is domestic story rather than a currency manipulations toward. Tom bring up the chart. We are going to do a little trigonometry. Here is abenomics. To 2015en from 2012 from 80 to 120. This is called a sinusoidal dampening function. This is textbook. If we are in a classic range brown abenomics, how do we break out . What is the catalyst to break out . Kamal a couple of things, yield curve control seems to be in force. If the market starts to believe that their grip on yield curve control is listening, and events last week did not really show that, given the positioning now that the markets are expecting the bank of japan to be the caseout, that could be the on the downside. On the upside, what is crucial is donald trump and tax reform. The Market Expectations of tax reform are on the floor at the moment according to our investor surveys. If donald trump does meaningfully deliver something, that impacts u. S. Inflation expectations and could break to the top side. Tom kamal sharma joining us from bank of America Merrill lynch will stick around. Helena kennedy will be joining us. We will get her view on where theresa may now stands with the European Court of justice. It is a redline for the Prime Minister. Is it a redline for everybody else . She joins us in a few minutes time. Cross Party Cooperation is what we are now dealing with. This is bloomberg. Guy welcome back. I am in london. Tom keene in new york. Waiting on a decision relating to the u. K. From the european hike a high court that could have a Significant Impact on markets in london. It will take a while to read out. It will happen soon. 10 30 expecting its at london time. I suspect we will not get it. With theart Data Financial markets at this point. European equities not up much. There is a story going the rounds this week and that opec is going to ask nigeria and maybe libya to cap output. A sign of desperation. Lets catch up to what we need to know around the world. Aslor the health care fight u. S. Lawmakers return to the capital this week. Mitch mcconnell is trying to find enough votes in his caucus to pass the measure. Several republicans opposed the bill. Begins what today is called the summer of help. It begins significant repairs today. Writers should expect fewer trains during rush hour. The 650,000 people who use has station every weekday will use a passport system, a patchwork ferries. F buses and various a former minister called for him to resign. Canmost senior that he cleric to ever be charged for sexual abuse has returned to australia to stand trial. He cardinal is pope francis top financial advisor. 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Guy thank you very much. Theresa may will call on opposition lawmakers to help steer britain out of the european union. This is after coming under fire. Rom her own party lets welcome house of lords member helena kennedy. Still with us is thomas, of bank of America Merrill lynch. Cross Party Cooperation, is this a trap for the labour party . Does she mean it . Helena i think she will reach out to those who have declared brexit has to happen in the labour party, but she will have difficulty for those who want to remain in the Single Market and the customs union. They will see the opportunity of this repeal bill, which will be published on thursday as an opportunity to pull things back in another direction. There are red lines that people are saying cannot work if we want to have some sensible trading relationship. One of them is the idea of a supranational court. If youre going to have trading and all those other things we do with europe, you need to have a court that crosses borders. It is at the heart of all of this. I suppose lawyers would do this. I am one. If you want to do trading across borders and have relationships on tariffs and all those things, you have to cooperate, and you have to have some kind of adjudication body. They may want to call it something else, but there will still be one. Tom one of our themes this morning is leaders coming back on to face domestic issues. I was thunderstruck knocked out invisible the Prime Minister was at you 20, but she looked exhausted at g20, but she looked exhausted. Maydoes Prime Minister represent . Who is it . Certainly, she is probably feeling demoralized. She will put on a good show tomorrow when she makes her, if you like, reclaim on her authority. She has been undermined by the selection. This election. There are people in her own cabinet who do not feel hard brexit is very sensible. Might chancellor, who she have sacked if she got the big election, he is unhappy about it. Even the chief negotiator is making noises that he feels we have to think theres the about this business of a supranational court. There has to be something. Are a lot of ministers bringing their own reasons as to why they are seeing the brexit she has talked about in the past will not be billable the deliverable. Is there time on the european side . I would assume the european leadership waits this out. Helena they can do that. The problems exist in britain. They are multiple. I sit in the house of lords and on the european subcommittee on justice. There is a lot of law, by god. There will be real problems because one thing the government will want to do is have in this bill what is called henry the lauses,ca secondary legislation. We dont like secondary legislation in britain. Therell be strong opposition to that on the conservative fringes. If youre going to change law, we have to be there doing that. How she gets all that stuff through in the timeframe, i think we will have to have a transitional arrangement, which she has said she does not want. There will be challenges in the house of lords. I think this is going to be a messy business. Guy very messy, pretty complicated, and pretty unknowable in terms of the ultimate outcome. What do i do if i look at sterling this week . Wage data coming out on thursday, the u. K. Consumer being squeezed, there is expectation it could be softer than soft. Is that the big event this week . Kamal you have a hawkish bank of england on one hand and soft data on the other. On brexit, i think nobody really knows where we are headed. We have been talking about if you are trading brexit narrative, your trading volatility. This is not about trying to pick the top and bottom in sterling day today, and that is not going to be conducive to trading sterling. Think the top end of the range in cable is 1. 30, and that is easing lower. There may be some kind of transitional deal towards the end of negotiations that moves the u. K. Exit out of the eu, which will be bullish for sterling. Guy does the bank of england raise rates in august . Kamal if they were going to be hawkish, they should have done that earlier in the year. Now they are being challenged by the fact that the consumer continues to slow down. If inflation remains point, and ignorerative that we can the slowdown in consumer data because we have investment spending and tailwinds from the Global Economy, they may well do. Our baseline is the bank of england will not hike this year. Guy within this that tom within this is the assumption of what politicians do. We are staggering into a summer that is a blur between the two major parties in the u. K. Where will we be in september . Helena i dont think a lot is going to change by september. A lot is being done behind the scenes on this repeal act, which is supposed to take all the european legislation and bring it home to britain before we decide what to keep and get rid of. A lot of it relies on reciprocity. That depends on your playing ball with us. Europe playing ball with us. A lot of homework will be done by politicians on how to deal with this legislation. Labor is looking at this. Byn is somewhat of a eurosceptic himself, but he is also looking at opportunities for labor. Weakeneds a Prime Minister, he may go with the dividers that leads to a noconfidence vote and an election. I think there will be a lot behind the scenes that is unnerving for the Prime Minister. Tom the uninformed american question, are there any tony blair, gordon brown labour members anymore . Helena they have softened their position is a lot of people in the election who were on that third way politics and are having to review their position. Something has happened to the temperature in the country. Thatn had touched a nerve the austerity pain has gone on too long. He is touching something that is generalized in the u. K. , which is a sense that they want Something Different. His moment could come. It is interesting to see what could happen. It could be he had the perfect storm, or there is something in the air taking us in a different direction. Guy we are going to circle back to the ecj. If i am in the Financial Markets trying to understand brexit, i need to simplify it and find something to hang my hat on. Ecj looks like it is one of those areas. If theresa may shows any sign of softening her stance on the ecj, is that something markets will Pay Attention to . It seems to be an absolute redline. If theres any inkling that she is going to act away from that position, how do you react . Kamal i think we have already seeing in the first batch of negotiations, they have already backtracked. I think markets are in the waitandsee mode. Ecj position is going to be critical. I think that is likely to help sterling. Seeing are waiting and on how negotiations go next week. Guy thank you very much. Helena kennedy, member of the house of lords. You we have coming up for is more british politics. Business secretary in a coalition government, but he is also potentially the new leader of the liberal democrats. U. K. Government selling arms to saudis. More on that in a moment. This is bloomberg. Guy guy johnson in london. Tom keene in new york. We have just had a really handed down by the u. K. High court sales the u. K. Government of arms to saudi arabia is lawful. There is a shift in this country against, arguing for more oversight of sales to saudi arabia of weapons. This is a significant export market for the u. K. At a time when the u. K. Is rethinking trade relationships around the world. A lot of jobs are on the line with this one. Markets are paying attention. Adnoc says it is considering selling shares and is looking for International Partners in its Oil Services Business. This comes as the producer of the most crude in the United Arab Emirates is trying to increase production. This program will create a stronger, open, more progressive andmore competitive adnoc sends a clear signal to the market that adnoc is truly open for business. Guy lets go to abu dhabi. To be clear, this is the Oil Services Business they are considering spinning off and listing . That is exactly right. This is hot on the heels of saudi aramcos plans. Notplans here is they do plan to sell a slice of the whole company at a holy level, but minority stakes in its services business. This is a company that was for many years synonymous with the abu dhabi ruling elite and government. This comes as many Energy Companies are trying to consider their strategies in the face of Lower Oil Prices. Saudi arabia and i would doubt and weightymong Energy Companies as well. This is part of the will to survive in the air of low oil era of low oil prices. This is hard for me to get here after the solid gold knobs in a hotel room i saw once in abu dhabi. Is this finally after years and years of megawealth, the 10 rollsroyce is lined up at the four seasons, are they finally broke . The people on the ground here will tell you this is a Virtuous Cycle for that Companies Involved and the economy. Not only does this allow investment to come into the country, but also allows the country to start attracting highly skilled jobs, more technology, helps the country to Ascent Capital markets. Shift, youe cultural are absolutely correct. These companies have a history of being closed and secretive. Now they are at this moment where they are actually opening to the wider world. Tom it is easy to say they should have done this with hindsight at 90 or 100 a barrel, but which country is doing this best . Which of the royal families is getting western capitalism best . That is a question an excellent question. I was talking to someone on the ground lastly, and they got the new Saudi Crown Prince is copying what the uae is doing. We have heard some people say adnoc is copying what saudi arabia is doing. It seems no one can agree at the moment. There is a tendency for everyone to follow the same template. The question is is there room in the gulf region for multiple Financial Centers . That is an open question. Guy great stuff. Interesting question. Come on, joining us from bank of America Merrill lynch will stick around. Canada, an announcement later this week. A great function on bloomberg tv , not only fantastic video streaming, but this amazing sidebar that brings up what we are doing on bloomberg and allows you to break out some of the Amazing Charts we have into your bloomberg. Use it. Plenty more coming up. This is bloomberg. Is bloomberg surveillance. Guy johnson in london, and tom keene in new york. Wednesday we see the bank of canada out with its latest decision on interest rates. Bankamerica of Merrill Lynch is still with us. Nevertheless, this was the bank that started the move in the markets for Central Banks to take back some of this emergency stimulus. They are out on wednesday, what happens if they dont deliver . Kamal we have about 85 probability of rate hike, so for them not to do that you would have significant pressure on the Canadian Dollar. Central banks historically dont like to surprise markets. The bank of canada wants to signal, not backtracked, so they are going to hike in our view. And commodities in general ed,k of canada, are they link are they really linked into these countries or separate . Kamal i think they very much are. We reckon the bank of canada thinks the canadian economy has whether the commodity price storm weathered the commodity price storm. These Central Banks are looking at the Bigger Picture. The Bigger Picture for canada is the housing market, which remains relatively strong. There is a growing imbalance i think the bank of canada thinks needs to be checked. This is in their view the correct decision to make. Guy if Lower Oil Prices are structural, how does that affect the ongoing debate . It is deflationary for a while but not forever. Kamal i think the bank of canada has been keen to work through that. One thing they have to be aware of is that they are looking at the nonenergy sector of the manufacturing economy which has suffered postrecession. They need to assure the Canadian Dollar does not appreciate it much. The base effect of the Oil Price Shock will wear off in the months and years ahead. Tom what is your trade for the week . What is the signal trade Merrill Lynch is recommending . Kamal i think markets will fade a little bit heading into the ecb. Traitsk the direction of has been for foreign guidance in october. We may want to rain some of that in coming up. Eurodollar lower. Tom thank you very much. What a great briefing this morning. Kamal sharma with us from bank of America Merrill lynch. Everyone is coming home. Prime minister may went on. President trump went on. We are looking for trump tweets this morning. Carl weinberg is joining us this morning. Looking forward to catching up. We will reset the washington template. Or dead is trumpcare whatever you want to call it . I do not know. We will find out on a good monday morning. Here is a beautiful new york. Stay with us. This is bloomberg. The 1819 and the United States to regroup. Ministering, the prime needs Jeremy Corbyn. The president needs trumpcare. Coordination in this hour lingers in the economics. And welcome home, mr. President. Good morning, this is bloomberg surveillance. Francine lacqua is on assignment in italy. Guy johnson is in with us. What does Prime Minister may come home to . Guy i hear the same thing is happening stateside . Tom you are dead on. Kevin will join us in a moment. , you looking for cooperation. There happens to be distraction along the way. To get you caught up with the first word news, it is taylor riggs. A russian woman offered to provide potentially damaging information on hillary clinton. According to a statement on donald trump jr. , the meeting a uselace in 2016 after after his father had secured the republican nomination. Skeptical comments from congressional quarters. The notion of a cybersecurity unit emerged from President Donald Trump talks with president putin. Lindsey graham from South Carolina said it is not the dumbest idea ive ever heard but it is pretty close. And the next few weeks will be to show will be crucial as to whether trump can deliver on tax cuts. Republicans on basic parameters of a tax bill and deadlines to keep the government running emerges on u. S. Debt. And theresa may will call on opposition lawmakers to help steer britain out of the hq. To restate her mission to tackle in justice. She says social and economic reform is needed to make a success of exit. She will call for cooperation to deliver it. Global news, 24 hours a day. Powered by our more than 2700 journalists and analysts, in more than 120 countries. I am taylor riggs. This is bloomberg. Tom thank you. Go through it quickly. Futures up fractional. A little bit of curve flattening. The euro was weaker. Leon is weaker. Guy . Geico 16 cutting its forecast by a barrel. It is just 45 a barrel. The other thing to take note of is that over the weekend there was a nice opec story that opec is going to ask that libya and out of cap their output a sign of desperation. Maybe it does change the narrative . Contrast. E the look at the silver down there. Tom oil and gold are weak. Lousy wage growth. Chart. Omic back to lbj and jfk. We have seen employment go up. Here is the financial crisis. We rollover and bitterly come back. We have a long way to go to get to a normal america. Guy lets talk about the yen story and the funding currency to becomekely problematic further down the road. 1979 is the chart here. A flattening japanese curve and you can see that with the blue line. Nd a steepening german curve the steepening german curve and a flattening japanese curve. That makes the yen weaker and weaker. A trip d not go on lucky Kevin Cirilli, he did not go to hamburg. He stated washington to recharge. Senators come home to washington today. What will greet all of the politicians in washington . What is the chief headache . Back and it will center around health care. Mitch mcconnell has a choice this morning as he heads into the return from the july 4 recess. Whether to negotiate with folks in the conservative wing of the party, like ted cruz or to deal with democrats, as he looks to shake us as he looks to try to pass some type of reform before the august deadline. Tom the washington post. Writing a great offense over the weekend. It was never that about dollars and cents. The strategy postworld war ii american conception of the world largelyvely order succeeded. There was no world war iii. What we are witnessing is extraordinary a voluntary surrender of power and influence. A surrender of power of the executive branch . Kevin a vacant is that with weekend i over the spoke with several in the administration and faces there difference on trump separating himself. And they feel this is a new tone and a new direction on a host of various policy standpoint, from energy and Foreign Policy and policy. Ancial in terms of what they feel is the president getting a bigger deal on a bilateral trade agreement. Guy what is the white house worried about . Have they consulted within it what part of the sourcing on the story surrounding the president stunt . Kevin donald trump jr. Saying that this was a meeting that only lasted about 30 minutes. He pushed back on the notion that it was anything other than just a meeting. But clearly it does raise new questions about the Ongoing Investigation into the administration and the iteration of the campaign and their endless dealings with russia. Christopher wray is set to testify this week before the Senate Judiciary committee. Im sure he will get questions from democrats about how he will look into meetings like this, with trump liaisons. His the president s nominee to be the fbi director. And that hearing is scheduled for wednesday of this week. Guy on the sourcing of the times story, im curious as to what the white house would be part of that . You would think they would be searching the wagons on this but they are part of the story. It doesnt compute with me . Kevin i think these are Ongoing Investigations. The white house continues to have to answer for. I make it has been widely at widely reported about divisions within different factions of the administrations. And manaforts of the world other trump strategist and aid es. Such a staff, the Steve Bannons of the world. These are people who have different competing interest. Tom i want a simple answer. At theis pounding, deals trump hotel like you. I want to answer. Does this president of the Senate Majority leaders back . Of now, yes. But the Republican Party campaign for quite some time has been to repeal the Affordable Care act and get something through. And now they are starting to talk about a piecemeal approach. If he spurts if he starts negotiating, it will bring a far right reaction. Tom Kevin Cirilli, thank you so much. Is Carl Weinberg. He has seen this before. Can you get Economic Confidence with what kevin was talking about . Confidencele develop with this . Carl i dont know. Is writing this morning about how they are withholding data and so forth. Because people expect him to get something and now this people probably are not going to get nearly as much as they expected. And possibly nothing at all. It is a total system it. From the point of view of businesses. Tom what does jim say about our gdp. 3 . As just slotted a sub we have we have a 2 growth. I see the chart of a total employment as a percentage of the employment. Getting people who want to work into the workforce, we are there , ok . But creating jobs historically everything we know about economics is that sooner or later, it will lead to higher this so we are looking at being enough to do the job and keep way from the labor market type. Guy good morning. At some talked about point we will see feedthrough from this employment picture. What is the lie that you think the fed should be working with . Carl my personal view is that the fed should have been more aggressive to get him where it is right now. I say they are behind the curve. There is no way to put precision on it. But they are far enough behind the curve that will see them doing what the fed always does to anse the catch up inflation picture. A little bit faster than what they are expecting. Tom Carl Weinberg is with us. Thrilled to have him with us. For a train at penn station. Audience, there are no jokes that can be said. It is an absolute best. Absolute mess. Station, years of mal investment has caught up with the city. This is bloomberg. Taylor this is bloomberg surveillance. Lets get the Bloomberg Business flash. Chinas Producer Price gains held up in june, coming in at five. 5 . Consumer prices gained 1. 5 percent, just below forecast. The forecast remains robust. Barclays is on a hiring spree to inst the investment inking japan. The move comes a year after it said its cap equity business and cut 120 jobs. They plan to hire more than 10 bankers and sales staff this year. The Federal Reserve chair janet yellen delivers the semiannual Monetary Policy will or to congress and answers questions on the state of the economy this week. Housell appear before the on wednesday, followed by the senate on thursday. That is Bloomberg Business flash. Tom we will look for that on wednesday and thursday. Humphrey hawkins testimony but now it is not humphrey hawkins. Age 30 thank you, Carl Weinberg for telling me that. Testimony with full coverage at 10 00 a. M. You Better Believe that. Carl weinberg is with us. Who will be the next head of the u. S. Fed . A favorite . Carl no idea. No leading candidate jumps out at me at this point. Tom let me talk about coordinated centralbank action. I dont buy it. You have lived this for decades. Have we ever seen coordinate action . Carl no. I think there are coincidence and points of view as at the which wasast week interesting. Between the bank of england, the ecb and the bank of canada came out and said he much the same thing but the bank of japan was sitting quietly on the sides. I learned this lesson from Larry Summers. Favor toanks work in interest ofr own their own countries and not the interest of the worlds. So it is unusual to see a Common Thread, a Common Thread with Central Banks coordinating. Tom lets bring up the Larry Summers oped. The former secretary treasury really, really going after the Trump Administration. The president s behavior in and around cg 20 summit was unsettling to u. S. Allies. Biographer robert caro has or may notower may corrupt but it always reveals. A corporate chief executive who spent behavior executive whose public behavior was as a rough as that of mr. Trump would already have been replaced. Read the Central Bank Reports and they say they have uncertainty coming out of the United States. They are saying, we dont know what to do or expect and we are prepared for anything but we are not changing policies based on this erratic behavior. It is a variable in the policy decision. Guy fantastic. Is janet yellen still a labor market economist . Carl yes, i think she is. Her focus, if applied correctly with what is happening in the labor markets, i think she is a after in the sense that has been breached, and we think it is there already, wages will be rising. We are watchful and were setting a policy in anticipation of that happening. Guy why she talking about asset pricing . Carl the fed is broadening the view of things that affect the labor market. And this is interesting. They did used to be keen on watching overall market positions, what they called monetary positions in the economy. What it ise for doing. Market is stable. And there is no Systemic Risk in the system. , i having heard about that think all Central Banks right now are overly sensitive to the risk. And there is now a constraint on Monetary Policy. s bond deals jumped by 100 basis points than they will take their foot off the brakes. And they take a look at the risk that could come out of the financial system. Rip up the script. Did you know that didnt know the swiss franc from swiss cheese before he worked here . Here we are. A weaker swiss franc, a stronger euro. What is this . Or is it theraghi fears that drive us for the strength . Be a it could also stronger euro that we are seeing here. Hearinguro side, we are rumblings of tapering. And there are out of sovereign bonds to buy. They will reduce the amount that they are buying up. So they reduce the amount of the excess cash the economy. So the euro should get stronger. Because less money has to be pumped abroad. Tom Carl Weinberg, you will be here with us when we come back. Valliere. Greg stay with us, this is bloomberg. Guy welcome back. This is bloomberg surveillance. Lets talk about british politics. Theresa may will call on opposite lawmakers to see if britain leave the eu. Joining us now is Simon Kennedy. Carl weinberg is still with us. Good morning. Theresa may will reach out across the aisle and she will ask others for assistance and ideas in how brakes is formed from here. That sounds great. It sounds like we may have some kind of consensus. But what she is really trying to on theorce trouble labour party. Because they havent figured out what their policy is towards brexit. Is it what Jeremy Corbyn thanks or what the party thinks . Simon she wouldnt have asked for help or advice had she won the election more convincingly. It is a slight indication of the weakness. But you are right. Jeremy corbyn could come forward proposal, she is trying to make a point that the opposing party hasnt been entirely clear themselves. There are a lot of holes in what can achieve when negotiating with the eu. Related to the vote later on this week in the repeal bill . So she connection make this work for her . If not, what happens next . Simon there is a number of amendments that can be added to that and that is what the labour party will be trying to do this week. Adding amendments to limit the ability of the government to change some of the things in the legislation that it is shifting over from the eu. Guy one of the red lines that theresa may has made clear is that she will stand firm on the glaring standout amongst Everything Else if we start to see any weakening, how big of a signal is that . Simon it is a big signal. You can use that as a benchmark. Earlier this year it was a hard. Edline at the ecj since then, the analysis increasingly is that they will but theyfrom the ecj will be willing to do some kind of deal to create a new body that will oversee or have say in return slot. So there is lots of areas to monitor in that zone and it is a of weakness. On guy Simon Kennedy on the brexit story. We need to discuss what is happening in these markets. Carl weinberg will stick around. Coming up, the new leader of the liberal democrats what is his view on what is happening here . We find out later today. This is bloomberg. Stay with us. Coming up from washington, gregvalliere will join us. A former minister called for him to be replaced. Trumpn the u. S. , donald easeless son met last year with the russian woman who offered to information ong hillary clinton. According to a statement from jr. The meeting took place in 2016 after his republicanred the president ial nomination. The fbi are investigating russian interference in the election. Collusion. Res an the hillar healthcare will greet lawmakers again. Trickle back to the capitol. Is trying toll find enough votes to musters the measure. Several republicans indicated the bill. E global news 24 hours a day by journalist and bloomberg. S is thanks so much. He is absolutely lights out on fire. Valliere has been writing. Ever optimistic gentlemen from new hampshire, why are you so grim about your washington . I got to say that the economy fundamentals look fine. From washington standpoint, this away. L is not going its going to get deeper. We got new story this morning. Ask me, public doesnt care about the russian thing. The press is overdoing it. Be. But the republicans and congress, they are the key. The republicans in congress are outraged and theyre not going to let it go. Tom you do a similarity thing. We mentioned the washington post. Whats the linkage of trump to lbj . Obsessed with vietnam. He miscalculated on vietnam. Here we got a president who is obsessed with the russian investigation. Trump instead of letting it go, just has one selfinflicted wound after another. I do see an analogy between the two obsessions. Tom who in the white house the president . Thats a good question. One. Uestion is probably no maybe ivanka or jared kushner. Thats no one there in ecochamber to get off this. Focus on health reform, focus on tax reform. Thats where the real interest him. D lie for back to the New York Times piece. In the first paragraph, according to three advisors to house and two others with knowledge of it, why is sourced out the white house . Im curious of the motivation . That the president himself, has a spin in most of with. Visors disagree thats why they dont want to be identified. This does infuriates trump. Lot of the things that hurt him come from Anonymous Sources and leaks. Advisors feel there should have been a stronger push back against putin. Is it another bombshell or is there a bombshell still to come . Thing withthis donald trump jr. Has legs. One moreust investigation that Robert Mueller is going to have to on. D time mueller is more discreet than comey. Determined. Ust as i think mueller as the year comes to an end, will become a really big story. Tom im asking the same question i asked Kevin Cirilli earlier. Sense the president or the white house is covering the Senate Majority leader. Ont see evidence fast thats true. Thats a really good point. Ryan and Mitch Mcconnell have had criticism at the white house. Complained about his tweets Mika Brzezinski tweet. Health reform, i think that would make mcconnell even less popular at house. Te tom this is 17 gdp. Healthcare, what is the significance of that . Status quo, maybe able to continue in the healthcare industry. Something has to be fixed in healthcare. Nobody is happy. What solution well come up with. I dont have a, clue what the right thick to do thing to do. Here, is not so much fixing it. But the politics and the on it. S of i love to hear what greg think about what this means for in terms oftions legislative agenda. What does it mean for the midterm elections. It mean for president ial elections down the road. Senateill think the stays republicans not by much. The house is in play. The big issue is, whether we can see the combination of tax reform. Mnuchin hinted of that. Long way to go. I dont think we get tax reform 2018. Well into mistake to let washington go constituencies. Im curious to know what the feedback was when they went back thatalked to the people voted for him. It was pretty bad. Time addages a long in washington. S issue ofarty own healthcare regress it. The republicans own the issue. Problem for them. Tom i want to end here with a little bit of history which i this weekend. I went back it doesnt really went backelate i to trisha and julie nixon. When you your thought saw ivanka trump sitting at the g20 table in session . There it is, great image. Getting that. For valliere i cant fathom the doingghters dop that. Kennedy. Cared bobby it didnt help. I dont think it has a big impact on the market. It does reinforce widespread republicans that thep still has not shown gravitas of a first grade president. Greg is painting a picture travelly a direction of that take us towards tax reform. Takes us towards some policy pa actually going to deliver american business. Youre janet yellen and youre watching this, how do you read it . It . O you just ignore that is that not a lot of is going to happen. Administration has showed incapablely that its of legislating. Bit ofet anything little Infrastructure Spending that democrats can agree on. Republicans cant amongst themselves about tax reform. Back finally to your idea of house that is in play. How does senator schumer and speaker pelosi, how do they adjust in the next three or four months to a house in play . They certainly go bipartisan. Ridiculous notion that we get a bipartisan solution. Defies cruelty. Pelosi and schumer arent going there. Greg valliere thank you so much. To make a note, were not up outo send mr. Valliere notes. Now, this is important. House q a. Mony, should we grill. A premature. Wednesday, 10 00 a. M. , we come weinberg. Carl this is bloomberg. This is bloomberg surveillance. Buyout firms raise their takeover offer for german drug maker for 6. 2 billion after earlier acquisition attempts failed last month. They are seeking approval from regulator foral exemption from the one year exclusion period to submit a renewed bid. Shares raise construction are plunging. It will be lower than forecast. Payments will be suspended. The company will remain for up to help with the ceo transition. Klm signaled that a turn around that began earlier this year is continuing. Tells bloomberg, rising. Ookings are tourist and u. S. Return to france after staying away in 2016. Its good. The summer. Mark,t was ceo John Bloomberg in france over the weekend. Thats your Bloomberg Business watch. Tom heres what you need to know. Americastaphor for lousy infrastructure. Hell. Alled a summer of pennsylvania station in new york city. 1910 in the original boards building. Changed in 1963, 1964 when it was destroyed. The old station now. Among other things, theres more. Daniel patrick and the shoe. Sion shined is it and when do get to moynihan . Its not looking too bad this motorcycle. Moment. Trak form at the theres a number of people who are cueing up for trains right behind me. Railroads,ajor amtrak, new jersey, transit and Long Island Railroad will be affected. The 650,000 commuters who use everyday are going to see some serious commute problems throughout eight weeks of summer. Yorking dubbed by the new governor andrew cuomo. September 1st. Beyond theres a lot more needs to be done here. Tom it always takes one it happen. To make we say that with chip oneil in boston. G dig does President Trump want to fix city train station . I think thats what a lot of investors. A lot of employers in new york will definitely want to see. President trump spoken about spending a trillion dollars on infrastructure to make the necessary upgrades. Seeing here at penn station is part of a wider problem of lack of spending. Ture well see eight weeks of work here. Going to extend beyond that. There are vital repairs and huge invested. Money to be lot of people keeping their crossed. Why they take these eight weeks . Sorry guys. You. Nt hear guy why these eight weeks . Why have they done it now . As you mentioned, there have been three derailments since april. One of them happened last week. The decision was taken that immediate work needed to be done order to improve platforms to replace tracks. Tracks outbe three of action across the three weeks. Vitally important for the safety of passengers and future of penn station. Recommend krispy kreme you get real taste of america. I remember when there was infrastructure in america. Lets look back. Here . D we get how did America Screw this up so bad . We havent invested in infrastructure. We invested in defense and we haventices, maintained it. Tom i never had a straight answer. Tangible. Go more americans arent good at savings. Theyre not looking down the road. Short term. Theres a nation relatively view. Term the road work, lets drive in and forward. E it whats the chain here other than we lose the bridge like we lost yearsnesota a number of ago. The bridge collapse. Got to fix it. Thats only catalyst we have. It. Hats politics are demanding that that politicians do more to fix their infrastructure. You drive on the parkway and your wheel falls off because it runs into a pothole. Get angry. Were seeing closures to bridges for various reasons. Were seeing also untenable situations like the bridges over hudson where theres actual on theructure, problem bridge. I think that politics is what it. Es user penn station, youre really need to have something done there. Its unbearable circumstance. Guy the french have invested in the infrastructure. Do they have better productivity americans . They have higher productivity than the americans. That. T sure about to be fair, the europeans in general have done really good themaintaining infrastructure. Take car drive from amsterdam you wont see a bump in the road. They built new bridges. U. S. Is lagging behind in all of this. Project for america if anybody wants to do it. As weve talking about all the segment guys, we dont have a congress that can lift off on anything right now can agree on anything. I dont know if were going to underlot of fixing done this administration and with this congress. Think the french number. Vity is a better what would u. S. Economy look like if it had better infrastructure . We talk about it here in the u. K. As well. We talk about that the is one whatrt would both u. K. And economy and like if betterok infrastructure was part of the picture . Take the amtrak to new york city, its 1 hour and 40 minute ride. How much would my productivity go up if i can get to where i was going on time . Simple things like that. Vehicles,ear on our bumpy roads. Theres lots of ways which the can fixucture productivity. Talking about productivity and it i cancture, why is only get 14 megs on my internet connection. This is 2017. Theres lots of public goods money andn spend increase productivity. Tom Carl Weinberg with us and has become the morning tweets. Giving update on that. Trading desk. You have the privilege of watching. Carl weinberg. Cancome over here and you look on an old segment rather cancan bring it up and you steal that dollar yen chart. You can take that and bring it over to your own bloomberg. This is a miracle. Bloomberg infrastructure. This is bloomberg. Guy bloomberg surveillance. Tom keene in new york. Bloomberg day break americas. David, the r. Word. Russia. Its dominating lot of news back hear in the United States over the weekend. Real expert on this. Chris weafer hes founder and senior partner. He lived in russia for 15 years. When with we talk about healthcare, maybe we forgot about the sanctions. Theres a bill from the senate that will ramp that up. Could affect russia as target. Nt tom thank you so much. The president tweet, theres many of them out. Friends retweets. Heres what germane whats going on now on healthcare. President of the United States. I cannot imagine congress would washington without a beautiful healthcare bill and ready to go. The chart. Single best chart which shows the trump fade. This in business insider. Heres the election, steeper up we go with Carl Weinberg with optimism. Lift here of central bank action. Does the president have a policy thehow does it link into markets and into Economic Growth . Its a good thing we dont q a on twitter someone should be asking which healthcare bill is he expect pass. Ss to this is a problem. Nobody can agree about what to do. Get the idea president ial cheerleading. Its a proven thing for a president to do. Do you in the policy you see apparatus in place at the white to support their republican leader . I dont observe it. Forecasting any big shift in fiscal policy coming the next year. Tax reform now pushed back. Infrastructure spending is now scaled down. Reform, we never knew what to do with that. Were continuing not to know what to do. Promises of the Trump Administration brought in were deliverables. Guy would tax reform be easier to deliver with healthcare reform. We park healthcare and move on . Lot of people suggesting that the republicans do that. Jim has written about that. Many republicans will be relieved to see healthcare put back on the shelf again and then focus on the tax reform. Something they think they can get some democratic support with and move through have succeed in something. I dont know what the answer to that is. Im in the a legislative tactician. Tom carl weafer thank you so. Uch guy johnson, thank you so much. Us this week. Do a report. Weak, 11421. Swiss frank big deal. 110. 130. Yen now to Deutsche Bank really ratcheting higher. It is one of the challenges of new york city. Waiting for the health to breakotalitarian through. G20 turns g19 the u. S. Keeps the rank to address unfair trade practices. Central bank converges, one targets fall for. Next change in stimulus program. Fed chair janet yellen preps for her testimony to congress. Congress gets back to work. Storm. Weets up a d. C. Distracted by russian drama. Very warm welcome to bloomberg day break on this monday july 10th im alix steel. Stacked up onere this monday. It was a brutal week if youre a long bonds and long stocks last week. That seem to be reversing as we get under way here. Slightly. S up dollar yen strength the story of the morning. Dollar yen at a two month high. About central bank divergence. We affirm the fact they will keep yields low. Much goesield pretty