Traded deal with india and japan. Asian stocks slip ahead of saturdays meeting with xi jinping. Americas biggest banks have promised to boost payouts after all 18 aced the fed stress test. Deutsche bank had a surprise pass. Switzerland is set to block trading of its shares in the eu after treaty talks with russells failed with brussels failed. Matt good morning. I want to draw your attention to something that is market related but not a driving force. Still, i think an incredibly interesting move. This is just a threeday chart of bitcoin. We started at 11,000, went up to 14,000, then back down to 10,000. Just massive moves. Gratzrd from michael nola that he had wished he sold more on wednesday. His comments could be one of the things that weight on bitcoin in yesterdays session. Incredible to see a 30 moved in the price of bitcoin. We see a mixed picture if we look at european futures just about 30 minutes away from the start of trading. Dax futures are gaining right now. You will see that cac and ftse futures are down. Not big movements in terms of any of the futures. We will have to wait and see which way markets go today. Maybe traders will be sitting on their hands waiting for the result of the trumpxi meeting tomorrow. What we see on the gmm is something quite stable in the major Asset Classes. Waiting for that g20. If you are looking for volatility, they goodness for bitcoin thank goodness for bitcoin. Some of these asian markets are in the red. Overall, the asian equity session is in the red. We see some appetite for emergingmarket currencies. The dollar is pretty flat. The other side of the gmm tells us that is some appetite coming through for fixed income. We see treasury yields pretty flat. Gold seems to be on the move but few other major assets making any big moves. If you think about where we are in terms of building up to the g20, it feels like the startup of a race where they go, ready, set. Markets waiting and watching. U. S. Futures also pointing to a fairly flat start for u. S. Trade as we wait to hear what xi and trump come up with an just how much or how little that ends up being. Billionaire paul seger, runs elliott meant paul seger, who runs singer, who runs elliott management, says this. I think we are at the hi gh end of the risk spectrum. So i am expecting i have been expecting, it is not todays epiphany the possibility of a significant market downturn. Nejra that was policy or that was paul singer speaking to Erik Schatzker in aspen, colorado. Good place to start a conversation with garfield reynolds. He joins us from sydney. Paul singer had a gloomy outlook for where markets are headed but did not have timing in mind. Think about how low bonds and equities have done in the first half of the year, garfield how well bonds and equities have done in the first half of the year, garfield. How are we set up for the second half . To try and find out which of those 2 Asset Classes falls over, bonds or stocks. It seems very unlikely you could get a similar extended rally for both in the second half of the year, given just how high stocks have gone and how low bond yields have gone. That is your key question. Matt by the way, were going to see pictures, i think, of bolsonaro with trump. Incredibly interesting story, as his advanced team was found with 39 kilograms of cocaine headed for the g20. That was stopped in spain. I think he has put the blame on a member of the military there. These are two leaders that take very strong, authoritative positions. Interesting to see them sitting here and talking to each other. What are the expectations for trump at the g20 . Initially, we were all focused on the meeting with xi, but he has also talked about his great relationship with Vladimir Putin. Hes talking to bolsonaro there. Rdogan innext to earn the group photo, which i thought was fascinating. I think the market is strongly expecting that he will not rock the boat for a change. Perhaps his emphasis on being everybodys friend as the summit gets underway sort of prefigures that. That would tighten with tighten with the idea that in with the idea that he has already started his campaign. Hes on the world stage and wants to show is best side. Officials on the chinese side have made it clear that we should expect there to be some sort of a trade truce, some sort of a return to talks that could lead to a resolution of this problem. I think that is very much the base case. The potential tail risks on either side would be i like to look at what happened with that mr. Trump had with north koreas president. If you look at the first one, you had a very happy seen and an detailed, not a very one. In the second one, you had trump storming out. I think those are the potential risks you could have on either side of that base case. Either of those could cause a lot of market fluctuation, especially because rates are going to be so key. Where do people see the fed going . Where the fed is going is very much predicated on that base case of a trade truce. Nejra lets listen in to what President Trump is saying about his meeting with xi. President trump you will know maybe before most. We will see what happens. It will be a very exciting day. For the world it will be an exciting day. A lot of people are talking about it. It will, hopefully well for both countries come out well hopefully for both countries and hopefully it will work out well. [indiscernible] President Trump no. Good question. No. We discussed a lot of things with president putin. We will have to see what happens asenezuela, as was well as [indiscernible] we will see what happens. [indiscernible] President Trump not at all. Things take time. We are behind the people of venezuela. Thats who we are really behind more than anything else. We have been helping them out a lot, bringing a lot of food, medical, and other things to venezuela. We are working very closely with columbia, who has helped. It shows you what socialism can do. I have been watching the debates a little bit and i was not impressed. Thats what you are talking about. That has become like the socialist party. I heard a rumor the democrats are going to change the name of the party from the Democrat Party to the socialist party. I am hearing that. Lets see if they do it. Thank you all very much. Nejra President Trump sitting alongside the brazilian president , bolsonaro. Members of the White House Team accompanying him. We have secretary mnuchin there, you can see wilbur ross. Plenty of his team alongside him talking about what we might see from his meeting with xi jinping , the chinese premier. He will have that meeting tomorrow. He said the world is watching. Certainly, markets will be watching. Thank you to garfield reynolds, who was giving us the Market Analysis before we listened to a President Trump had to say. If you want to join in the debate, get involved in the question of the day. Give us your thoughts. Matt . Matt i just cannot leave it on said. The president must have been joking when he said the Democratic Party was thinking about changing its name to the socialist party. Jessume he said that in t. You saw mike pompeo laughing as he made the comment. We are live in osaka with more from the g20 gathering of the most powerful people in the , pretty much overshadowed by donald trump and his bilateral meeting. This is bloomberg. Matt welcome back. This is Bloomberg Markets . Ropean open 16 minutes away from the start of cash trading across the continent and u. K. Futures mixed. We were seeing it mixed picture 10 minutes ago. Not a lot of movement in either direction. It remains the same, as markets and the world are awaiting this meeting that could determine the next chapter in the trade war mattoon the u. S. And china. Discussions between the u. S. And china. How is this conflict affecting trade relations among g20 nations . Annmarie hordern has the details. Good morning. Asde is top of the agenda World Leaders meet at the g20 in osaka. There is that highly anticipated meeting between trump and xi jinping. I have been looking into how global trade is working, how interconnected it is. You can see this looks like a web of trade. The United States biggest trading partner is china in canada. Mexico, and the u. S. Has a trade surplus with the uae, belgium, great britain, and the netherlands. When you look at trade as a percentage of gdp, the picture looks drastically different. They are less dependent on International Trade further gdp. Countries that could be hit the hardest are those closest to the u. S. , like mexico and canada, as well as germany, france, and south korea. Nejra thank you very much. That is the latest on trade. For more, our chief north asia correspondent, stephen engle, joins us. We have had so many twists and turns in this g20 already. We saw trump with Vladimir Putin, with bolsonaro talking about his meeting. We spent a lot of time of lingering on what might or might not come of the conversation with china. What else has been happening . Know we have, i been kind of lingering. The last 24 hours i have been inundated with bits and pieces of news. We are all really looking forward to the meeting tomorrow. It is now being called a working lunch at 11 30 tomorrow morning osaka time between xi jinping and President Trump. We just heard the comments from President Trump about the potential meeting tomorrow. He said, it will be a very exciting day. Ultimately, it will work out. He did not elaborate on what that means. Does that mean it will work out for the u. S. , china, both parties . We do not know. We had that meeting earlier between donald trump and Vladimir Putin. Some jokes and smiles about the interference in the election, hisre donald trump wagged finger at Vladimir Putin and said dont interfere in the elections, please. Both of those men smiling to the camera. That is against the face of a very serious subject. They talked about syria, iran, venezuela, and they talked about ukraine. Not sure whether the ukraine issue was about the detained ukrainian sailors, allegedly, by the russians. A lot of these discussions, a ats happening on the sidelines of the g20 ahead of the meeting tomorrow. Matt did he say please . Was it just a command, dont interfere in the elections . He said, dont meddle in the election, please. Matt thats interesting, so asking nicely. Thank you very much. Our chief north asia correspondent in osaka following this g20 meeting. We want to go to debra mao in hong kong for the Bloomberg Business flash. Deborah . Boeing falling the most in six weeks on bloombergs scoop that it could take three months to fix the latest Software Glitch on the 737 max. The issue was discovered during faa simulator tests when the pilots experienced a lag in Emergency Response time. Apples design chief is leaving after decades at the iphone maker. He is moving to form an independent company with apple as one of its primary clients. He is responsible for the look of the companys most iconic products. How much was he worth to apple . The markets verdict was 9 billion. That is how much apple lost value when the news broke. Volkswagen has raised over 1. 5 billion euros selling a stake in its truck business after pricing that offer at the low end of the target range. They expect to divest 11. 5 of traton at 27 euros per share. June is not over and so far Large Companies doing business in europe have announced job cuts. The latest is stored motors. Ford motors. They joined peers in industries from autos to power in making massive layoffs to cope with the downturn in their businesses. Nejra thank you very much. Debra mao in hong kong. We are minutes away from the start of equity trading, the last trading day of the week. We are waiting for that g20. We will take a look at stocks to watch, including swiss equities, as the government blocks their trading in the eu. This is bloomberg. Nejra welcome back to Bloomberg Markets european open. Lets get our stocks to watch. We are covering Deutsche Bank and this really fascinating story coming through from switzerland. Lets start with Deutsche Bank, shall we, and the surprised pa ss they received from the fed. They passed the test, which they failed in the past a couple of times. It is definitely good news for the bank and its management. They had to fight a lot of stuff in the past couple of weeks. Investors will appreciate that. You see shares rallying in the premarket, up 4 . Matt those impressive Deutsche Bank towers. What about swiss stocks . You cannot see zurich from your perch in frankfurt. You will not be able to trade the shares from frankfurt or anywhere in europe, right . Thats right. It is a crazy story that came up a couple of months ago. I was pretty sure that they would find a solution. Yout now, it looks like will not be able to trade any swiss stocks coming next monday. There is still a possibility of a lastminute deal. We are hearing it is very unlikely. It will be a bit messy and you should watch liquidity of some of those midcap stocks when those european markets will be closed. Nejra it is interesting. I was looking i was looking at the size and scope. One third of trading in swiss shares currently takes place in the eu and the rest in switzerland. Of a seems to be something setting of a brexit example. Switzerland caught in the brexit standoff. Thats right. The holding i believe is on sentiment. There is no rationale behind it. There could be an easy solution if both parties agree. With the Brexit Debate and whats going on in europe, everybody is defending its own place and its weighing on the issue. Matt thank you for joining us from frankfurt. Looking at pictures of a foggy zurich this morning. You can get all the latest stock stories from are Equities Team by typing first bill on your bloomberg terminal first go on your bloomberg terminal. , go tonews section different subsections and you can find firsts there. Futures are mixed, as the markets and the world are waiting for that trumpxi meeting. We have four minutes and 40 seconds to go on to the start of stock trading across the continent and in the u. K. Issue tradingnew in frankfurt as well, a new i feel the new ipo. Trucks, are watching vw traton. The ipo has set unessential milestone. We are watching shares in merlin. They seem to have done a deal with the lego owner, blackstone, and others. We will be back with the start of Equities Trading this friday across europe. This is bloomberg. Anna a minute until the start of cash Equities Trading. Friday morning on the European Equity market and a minute until the start of trading this friday morning. What does the session hold . We are in a waiting pattern, and waiting for the g20 meetings to get into there. Weve seen bilaterals between trump and many others overnight and others. , we are of that in mind lingering on the asian equity session. Territory,negative down. 1 . Oil price in decline although we are set for the best month of oil prices is january. The iran story making a difference. U. S. 10 year hovering around 2 . U. S. Futures were fairly flat. Waiting to see what happens between trump and xi. European futures indicating a mixed start as we wait for progress. President trump says it will work out. He is expected to meet xi at the g20 tomorrow morning. The world is watching and wondering what will come out of that meeting. Lets talk about the equity markets. Looking at clues coming through riskthe g20 around sentiment, how the markets want to be positioned going into the weekend with this potential risk event, and then come monday, what will the stories be . The japanese yen, fairly flat. Ftse 100 flat, the dutch market flat, euro stoxx flat. We are waiting. Are inaid earlier, we the phase before you start going and we dont know which direction the athlete will be sprinting. The sectorat perspective. No big clues as to sentiment. Financials, looking mixed. Sector to interesting watch because we had the stress tests out of the fed and Deutsche Bank got a surprise pass. That could be a stop. Health care in the red. Basic materials going higher, utilities look a little stronger but generally, a mixed picture and flat start to fridays session as we wait and watch osaka. Matt im looking at the mov screen to see individual movers and we have 345 stocks up, 225 down. Interesting to see all the german names. 600 lift the stoxx helping to hold it at a level. 02 adown, but only point. The biggest boost to the stoxx basf after thep, chemical maker announced it would fire some 6000 people. Adidas, the most interesting. To watchme a story adidas and puma because nike had its first earnings miss in seven years. On the downside, you have some big heavy stocks pulling points off the stoxx 600. Novartis is one of those. Interesting to see the swift stock, as you will have difficulty trading it outside of zurich in the near future. Holdings,e roche dragging down the stoxx 600. You see Royal Dutch Shell as oil prices come down. The novartis and roche, biggest losers by points. Interesting the contest of that swiss story. European markets, opening a bit cautiously today. This afternoon mixed session in asia as Traders Await the weekends meeting between trump and xi. Anymore tariffs . No, nothing. Anna President Trump saying he hasnt promised to hold off on new china tariffs. We will wait to see what the meeting delivers. We have the head of Flow Solutions at societe generale. Great to have you with us. I have a chart which illustrates a point you were making today, the weakness in some chinese data points we have seen. This picks up on new lows and the weakness there. Is this something you think will mean china gives ground at this meeting over the weekend . It will clearly be a factor in the marketing power. Making ofee the s p highs, it is giving more leeway for trump to put more pressure on china because ultimately, this also hurts u. S. Companies. Summit, xithe g20 jinping will have incentive to find a deal that will be mutually variable and move on with life, so to speak because clearly we are in late cycle, there is a lot of pressure on the chinese economy and further thee tension will not help domestic economy. Matt what do you make the fed, we talk about the possibility of cuts and the likelihood of a cut and what it will be that we also have the stress test coming through, all 18 paths. Deutsche bank shares, up 3. 5 . They are only trading at 6. 79 euros, but is it a positive that all the banks passed the stress test . Is that market good for this rally . Good clearly, it is a sign because over the past five to seven years, youve seen pressure put on banks to improve their capital ratio and liquidity ratios. Banksclearly showing that are effectively doing the hard work of improving the quality of their balance sheet. Ultimately, the problem will become the level of Interest Rates so if you look at the eurozone, negative Interest Rate has been a drag on margins and explains some of the underperformance of the sector mostlearly banks are the exposed to the gdp of an economy and this could clearly be a factor to bear in mind, as well. Anna one of your contrarian his long european banks. , interesting you are talking about the supportive nature of Central Banks and the way they have become more dovish months in recent months. How set in stone is that . I was interested looking at fiveyear fiveyear fiveyear Inflation Expectation and overlaying an oil price. There is a slight uptick in Inflation Expectations because the Oil Price Goes higher. Do you think Central Banks could have reacted too soon to these expectations . Kokou clearly ayers a correlation between inflation and the oil price because it is growth butr of geopolitical risks some time, you can see mixed signals in terms of what is growth driven or global risk driven. The Central Banks have done a preemptive strike against what happened in december of last year where the market was going into a negative spiral. Central banks are being cautious and not trying to put the economy or markets in a situation that will create a credit crunch, as we saw in 2008. They are being cautiously risk and the risk of overreacting is limited because inflation is so low. Matt what do you see as an effect on the Global Economy of the weaker dollar we are seeing right now, and weaker dollar forecasts . It has been a huge debate on the and from donald trump Elizabeth Warren and the left, the argument is a weaker dollar is better for the u. S. Economy. From the right, we hear from arguing a stronger dollar is better for the u. S. Economy because it is better for the Global Economy. Which way should these officials be pushing or pulling . Kokou clearly if you look at the s p, a lot of revenues are driven by exports so therefore, a weaker dollar would be good for the exporting parts of the largecap in the u. S. Also over the last several years, the tightening cycle in the u. S. Has caused the dollar to strengthen. Forward, the dollar is clearly stronger than it has been over the past five to seven years. Itsre, it is adjusted adjustment relative to other currencies would not be surprising. The dollar oneh, of the worst performing of the g10 currencies. Interesting ahead of the g20 meeting and the prominence of currency conversation. If you want to get involved in our market live question of the day, ib tv to reach out to the team. We will check on individual movers in a moment. Deutsche bank is one of the biggest gainers, up 3. 3 . Kokou agbobloua will stay with us. We really you this shot of the Deutsche Bank share price, up 3. 2 as it gets a pass from the fed on the stock price. That and more. This is bloomberg. Matt welcome back to the european open. Just 12 minutes into the session with pretty green arrows across european stock indexes as we wait for President Trump to sit down and talk with chinese president xi. Lets get top individual stock stories with annmarie hordern. Lets start with Deutsche Bank. A win for the bank yesterday and this morning, opening nearly 4 , one of the biggest gainers on the stoxx 600. They passed the feds stress test. All 18 banks past. Marlin entertainment is surging, up 14 . This is a Company Behind pig, they look likely to be bought out in a 6 billion pound buyout backed by the family behind legoland, lego the company and blackstone. Africadownside, airtel down 12. 5 as they make it there market debut today. They ipo and they are suffering at the first chance at the market. Anna and now we need to talk about european corporate. From a macro perspective, we have the latest reading of euro area inflation later this morning. Prices have fallen from a 2. 3 peak last october the we got some french numbers earlier today that were higher than expected. Bloomberg economists see the week spell for the european economy continuing. Kokou agbobloua, global head of flow strategy and solutions at socgen. I want to talk about european corporates and your notion of Zombie Companies. Companies that dont have the money to spend on Capital Investment that can pay off their interest charges. My colleague hillary made a chart that shows the performance of some of the Zombie Companies with low Interest Rate cover. What is your thinking about focusing on this kind of company at this point . Kokou this is an important theme. We have done a lot of work on the week sheet versus weak sheet versus strong balance Zombie Companies are powerful as a concept. They only survived because of low Interest Rates but not enough cash to grow their assets and revenues. Demonstrates that in environment of low Interest Rates, you are not increasing inflation. You are creating zombies to create excess supplies of goods and services. Like inat are weakened, japan, have a marginal propensity to finance Zombie Companies because they fear having to take capital charges because of the risks of increasing nonperforming loans. As a result, you have a system that self perpetuates by creating an increasing number of zombies. Anna banks are encouraged to extend and pretend . Kokou to extend some of these loans but this is a similar case to japan in the 90s and this creates underperformance of share prices and credit that cycles last longer than average. Matt if you try to make it parallelbetween a between zombie corporations and it makesonomies, sense, there are a lot of theories out there we are in negative rates because europe cant afford its socialist programs anymore and they are trying to pay for that in this there is one country that has a time of cash just sitting around and hardly any debt to gdp. What do you think about the situation in germany where they are not spending any and will that change . Kokou this is a good point, and this is the issue with the state in germany for a while because the cultural idea of spending and going into that is clearly not part of the dynamic we saw in germany. I think this is one of the reasons why we dont have as much inflation in the eurozone. I think companies are also global, so in the case of germany, a lot of them are major exporters in the car industry, for example. Negativehere the Interest Rate dynamic in europe might not always be relevant for Global Entities that have the ability to tap into emerging markets or the u. S. Market. Anna let me ask you about one of your calls which links into what matt was saying. Weve seen eurodollar volatility quite low, or this chart shows it on a multitier trend. Weve seen Little Movement in this pair and yet you like volatility in eurodollar. Why is that . Kokou our view is to look at a world where things get japanified so to speak. Rate volatility goes on downward pressure but if you look at the you dollaryen, negative rates or negative yields typically become funding currency. All of a sudden when the market drops and the currency tends to move up and down because investors use them as funding. Our idea is to own volatility in eurodollar currency and against short eurorade, go rates volatility. It is more a relative value argument than an absolute bet on the fx call. Matt thanks very much. Kokou agbobloua, global head of flow strategy and solutions at socgen. I want to point out we are looking at pictures of the ceo truck unit,he vw debuting on its first day of trading in from third. Shares went out for 27 euros a piece. Pretty unchanged, 27 even carried the ticker is interesting. 8tra. 8n wouldhave thought tr have been a great one. If you want to follow their trading. Anna onestory crossing the bloomberg according to italy, italy may propose mario draghi as head of the European Commission. We had a story overnight talking about how Michel Barnier might move into that position. Some frontrunners falling away amid the inner shell, in up inertia. Swimming against the tide, as assets fly out of h2o, now is the time to invest in natixis, the french bank. This is bloomberg. It is a day to come in and if the data came in and showed weakening requires different action in the data saying we are getting headwinds and slowing. It is too early from my perspective to know whether we should use the tool at all and what magnitude of the tool we should apply. Matt that was San Francisco fed president mary daly speaking to bloomberg at the aspen ideas festival. Lets get to h2o. It still isnt managing to stem its outflows. Backed,it natixis concerns over illiquid holdings. Our next guest is swimming against the tide with a buy rating on natixis. Lorraine, is this just a case of be greedy when there is blood on the streets . Matt. Ne hi, buyers of natixis, on lowcount of today is probability. Anna you say it is low probability we get this extreme scenario. What kind of scenario do you expect to see for natixis . Do you have to assume natixis manages to stem the outflows from h2o or that h2o manages to stem the outflows . Thats basically what we expect. What we calculate is the share price today assumes that not in our view, h2o is doing the right thing to try to limit the outflows and they posted a number of press releases saying the outflows are coming down and they also start to see material inflows. We thinkt expect the overarching acids have a good enough reputation not to have a contagion effect. Matt what do you think h2o did that was right . About moving the distressed assets into a deep value fund . Do you think that will be the right move and do you expect a recovery in h2os flows, as a result . First, they removed entry fees until further notice to facilitate inflows. They also start to reduce the portfolio they have in private bonds, which are illiquid. They also marked down to transactional value the remaining part of the private bonds. This means if you get into h2o today, you might get the benefits of the higher value of the bonds if they were to sell better value than the transactional value. Some french articles yesterday were saying they were going to put these private bonds into other vehicles but when you look at h2os website, they said they dont have any intention to do this. What we expect is we still expect some outflows at h2o. We are going for 10 billion. This is equivalent to the level of inflows they had last year, for a first in, first out scenario. In monetary slowing, we have to see how things evolve. Anna more broadly, do you have concerns about a mismatch of liquidity within some of these funds . H2o or other similar funds . Weve talked about this with a number of guests and mark carney talked about how some Investment Products are built on a lie because investors think they can withdraw their money instantly and yet the assets are not able to be sold instantly. Are you concerned about that mismatch in liquidity . Aboutne we read regulators concerns. We have to see how they intend to regulate data. There are currently some regulations around illiquid investments, so you are not allowed to have more than 10 of aum in the form of a liquid assets. Lets see what the regulators do now. It is not unusual to have a little illiquid assets as part of your portfolio. What we say in the note is what concerns us, the fact that thexis didnt know instruments are concentrated. Anna thank you, lorraine quoirez. Equity Research Analyst at ubs with her call on natixis. This is bloomberg. Matt lets get your top headlines. Trumpme in osaka, donald touts trade deals but says he has not promised to hold off on new tariffs in china. That is his entire dealmaking style. Investors traded cautiously. Full house, americas biggest banks promise to boost payments after the fed stress test. Even Deutsche Bank passes and the stock jumps. Switzerland is said to block trading of shares in the eu after treaty talks with brussels fail. One of the biggest stocks the stoxx 600 are swiss issued. This is the european open. I am mac miller in berlin alongside anna edwards and london. Miller miler alongside anna edwards in berlin. Anna what hundred 86 stocks to the downside. 186 stocks to the downside. We do see a bias to the upside. Session, there seemed to be a buys to the downside. But we are waiting for news out of osaka. This is an operator of theme parks. That business has received a bid from lego, blackstone, and others. This Software Business in germany, they received a buy rating. Autsche bank up by 4 after unexpectedly pass of the stress test set by the fed. Lets look at the downside briefly. We have got a couple of ex dividend scenes. Christian hanson continuing the downward slide. That stock down by 2. 3 . The worlds most powerful leaders are gathering in japan are a meeting that may set the direction for the Global Economy. Now we go live to the g20 summit. Our colleague is joined by one of the World Leaders at the. Vent, the dutch Prime Minister yvonne thank you, anna. I am pleased to be joined by the dutch Prime Minister. Thank you for joining us. Lets talk about trade. You just came back from china on your way here and you met with your counterpart. Im guessing trade was part of the discussions . We discussed at length how to uphold the systems. There is a problem now between china and the United States. , we our perspective understand why the u. S. Has issues with china over intellectual property and opening the financial sector. But we call upon both parties to scale down the conflict. It isdys interest nobodys interest that this of all into a full trade war. Yvonne how closely are you watching what goes on on saturday . Interestedlightly because we believe it is important for europe. We are the biggest market in the world, bigger than the u. S. , bigger than china, and the biggest trading partner for everyone in the world. So it is crucial that todays problem is contained in that the comeresidents are able to in a friendly way, solve this crisis. Yvonne do you think we will get some kind of truce . I hope. Again, i do understand the issues the u. S. Is raising with china. They are fair and have to be raised. Speed problem will be the by which this is done. Yvonne was far as we know, the dutch government has not publicly stated who they will be supporting for yonkers junkers successor. Who would you prefer . I would hope to come to a consensus. Council president with broad support. The agenda is huge. On one side, it is about making sure the European Union is big concentratingngs, on real issues like migration, Climate Change, and internal markets. Same time, presenting ourselves on the world stage with a bigger impact. We have to project ourselves with more confidence. So there is an internal and external agenda which requires broadbased support. Tonne is it reasonable think that whoever will be the next European Commission ifsident comes from the epp the party can find a candidate that can win support . That is a logical outcome. It is not the only outcome European Parliament has stated they want one of the socalled switching candidates. At the moment, it seems to be difficult to get to a majority for any of these. On how theall depend backroom dealing with of all over the next couple of days here. Particularly come on sunday in brussels. Particularly, on sunday in brussels. Yvonne some have said that whether does not have a majority weber does not have a majority . Ideas, but most are given in confidence. My understanding is that they will hang onto his candidacy. Clearlynt has stated after the elections that the new Commission President has to come from one of these three persons. You think of the three front runners should be part of these discussions. It was the outcome of the 5uncil a week ago that million europeans could become president , but not these three. That was a bit strange. Some have said the recent system is now dead. I was never happy about the idea. It is a strange way to have a democratic legitimacy. I do not think it works like that. Course, these big parties, the social democrats krishnan democrats christian democrats have been clear this is how they want to proceed. So it seems logical that you first look at one of these three candidates to fill that post. Has beenour name thrown around a couple of times to replace jeanclaude juncker. I was one of those you mentioned. Yvonne but you have said before you are not willing to give up your job as Prime Minister to take a job in brussels. Nope. Yvonne but what if you were asked to do it . Thing about all of this is that nobody has asked me. Yvonne but if you have been . I would not. I am almost nine years in this job. Im also a member of the European Council. So my effectiveness might impact effectiveness, the impact i can have, is interesting for me. So i would not consider a european position. Yvonne what is your expectation for sunday . Will it be a wonderful package with all of the comparables were just one with a couple push with all of the roles or just want with a couple forward . Default, thinking about who might be chosen by parliament as the president of the European Parliament. There has to be some sort of package. Otherwise, i cannot see how we can solve the conundrum. Yvonne do you have any preferences for the other jobs . Like the ecb president , for example . At this moment, it is not part of the debate and i think it is good. This debate is not about countries but is, for the most part, about political affiliation. Next president should be a real banker with central banking backgrounds. Of how itthe presence is now formed, it makes sense a central banker is not particularly coming from the south of europe. But that is a debate to have later on. This is a separate issue we have to deal with after we have dealt with the top European Council and commission. Commissioner. Yvonne have you seen anything in italys budget projections that justifies not starting the excessive deficit procedures . No, no. It is up to the commission, so we will have to hear what their view is. I have seen nothing which would suggest that they can escape this excessive deficit receiver. Procedure. It is crucial that the deal really is a deal, that they also to the rules. And the netherlands, we have put into place over 50 billion in savings and are growing. We have the lowest unemployment in our generation. The lowest youth unemployment in our generation. More jobs than ever. Makes sense to put forth savings when you are going through a crisis. Yvonne how big of an effort is still needed . Very big effort. Economic growth is still low. They still have a deficit is too high taste on the sustainability the stability and growth pact. So making sure that we all have to do what we have do at our national levels, italy has to do more in the commissioner has to interview intervene. Yvonne why does it matter . Tell us about italys finances and how it impacts your overall. In the netherlands, when i split my population we had to do this, we have done this because we believe it is necessary to get growth that. Unemploymentr down, we were successful in doing so. But also, being a member of this euro club, you had to do what you have promised others to do. If you dont, you get a trust issue within the eurozone, which is not good. And then it is up to the commission to make sure the rules apply to everybody. Yvonne one last question on brexit. When it comes to Boris Johnson or jeremy hunt, who would you prefer as the best candidate here . I should not interfere in that election and i have to work with whoever will be chosen, be at hunt or johnson it hunt or johnson. But generally speaking, brexit is a brexit and im afraid to tell them that a hard brexit is a hard brexit. And you hear voices saying that a hard brexit might not be a hard brexit and we will immediately have a trade to. It is not so trade deal. It is not so. A harder brexit will impact the economy and Many Companies in the middle of in the netherlands. Yvonne quick one, are we going to get any word of Climate Change . I am fairly optimistic. But i was optimistic a couple of hours ago, and this morning, and the optimism has built a bit dulled a bit. But im fairly optimistic we have some ambitious on which. Matt Prime Minister, thank you for joining us. That was the dutch Prime Minister in osaka. With the dutchn Prime Minister over there. Saying a hard brexit is a hard brexit. Coming up next, we speak to the founder and ceo of mullis and go mullis and co. This is bloomberg. Bloombergme back to markets. Joined atn has been the global forum in london with a guest who may have some answers. Lets try and get some of these answers. Moelis joining us now. What is happening with the trade story, g20. What is your take on what is going on with the trade story . How are companies having to react . How are they rethinking their strategy . Ken you are seeing companies go to their supply chain. They were ahead of the game. They moved a lot of supplies in anticipation. There has been a lot of movement and people are trying to figure out what happens in the end game on this. But i think people are very confused because, deep down, there is the belief that this is more than a trade war. We had a hot war in the 1900s. I think we may be going into an extended period of a cold war. It will be fought over different methods in terms, but the fuel of the next 200 years of the will be fought over control of Digital Assets and i think who controls the information and what you are allowed to do with it at the sovereign level will be a big issue and is not easily solvable. Ken if i may company look doingf i am a company m a, do i understand the ramifications of what you have just described must mark described . Ken it depends on what industry. There are certain portions of the chip industry that are up for debate. There is the possibility that we will end up putting a divide up on the information. I think that if you are , i think you go ahead and do that transaction. It really depends on what industry you are in and how the information flowing across could affect you. Ken guy looks like the fed is going to cut in july. 25 it 50, we make it may get 25. Ken that will start to change the whole elements of the market. October, theo stock market and the world had priced in a recession in 2019. The fed statement alone turned that. So i think this rate cut is probably in this market. This has been a pretty dramatic change. 1015 change. On the anticipation side, i think it is in their. I think the market is operating as if that has happened. Europe, the european m a market looks flat right now. You are smiling, but is that the correct assessment . When is it going to change . Ken im here so i have to be nice to everybody. Your has figured out how to think about m a across nations and etc. It is always very hard. Prebrexit and the underlying elections going on and it is very, very difficult. I think it has turned a little bit. , everyere two months ago conversation with brexit and 75 percent was brexit. I did not talk brexit today. I have been here for a week guy its early. [laughter] ken people have not talked to brexit. Talked brexit. People are ready to move on and i sense that in the deal environment. Guy the followup question from that is clearly u. S. Assets look cheap. Are they cheap enough to drive activity . Ken people dont like to take ks right before even seven events happen. So it is hard. But u. K. Assets do look cheap and the economy is great. You continue to see where people see free market capitalism. A lot of the world is going towards populism and edging towards nonfreemarket instincts. The u. K. Is a leader in just a Good Business principle, good courts, free markets. There is a gut feeling is still a great place to do business. I dont know that you wont see without overcoming up, you might just see people waiting a little bit longer for the move but they are interested. You focused your business on the gulf. Im curious as to how you see that working out right now is it a good decision . There is the kind of umbrella of geopolitical tension that is manifesting itself in that market. Ken we have 600 people in new york and 20 in the gulf. Goodded up with a very position in the gulf as a result of things we did there. When i started, the gulf was not the center of my strategy. We were discrete, we do not talk a lot about it it just shows what is effective with clients. Making sure you are on their side, and shutting up. Talking about the region in general, i am bullish on the region. I think that when the largest economies has we are going to and let halfion the population that never drove drove, we will and entertainment in, talking about saudi arabia and really move our economy into the 21st century and the demographics of that situation are mindboggling. How young the population is, what they want to accomplish. There is an underlying wealth and i think there is a change in momentum. Its going to happen. There will be ups and downs along the way but the direction is exciting. The crown prince still talks about aramco, the. Ofa of 2021 the idea 2021. Work on me you do not these things, but are you as a firm doing any work . Ken a long way to ask a question you know i wont talk about. [laughter] dont talk about anything we are actively involved in, so i wont answer that question. Guy do you think it is realistic . Is it going to happen . Ken it is a goal, they have stated that is a goal. Look, i think they are moving. I think they are heading to achieve this plan which is to move the economy in different directions. So i have a lot of faith and they will execute on their goals. Guy you talk about having a lot , but ise in the gulf the focus on the gulf affecting what you do in the states . You could argue that you are having a tough year so far. Can i point to the gulf and say your focus there is having an effect on business . Ken a good question, but i dont think so. In the states, m a is a very lumpy business. If you miss one or two large deals, as i said, it is also a 10 year cycle business. One of the most important things you can tell a client is not to do a deal. That could result in you not having what you wanted. Wanthat is the banker you and the banker i want for my next 10 years i want somebody who is willing to say hold up, dont do that. So when you pick your brain surgeon, you might be careful not to pick someone who is on a oneyear bonus pull. You will end up on the table. How big is your mortgage . Look, we went public. Dont think about this on a quarterly basis and i can see an instance where we have the best quarter as bank and dont know doneue bankers and have no revenue. But it could be the most important thing weve ever done to lead to a 10 year success record. So that is the business and you have to execute on that. Guy got to leave it there, nice to chat. Great to see you here. Ken moelis, back to you. Ken guy johnson with ken moelis. Con there. Ere an i up next it is surveillance. At comcast, we didnt build the nations largest gigspeed network just to make businesses run faster. We built it to help them go beyond. Because beyond risk. Welcome to the neighborhood, guys. There is reward. Beyond work and life. Who else could he be . There is the moment. Beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. Take your business beyond. Francine President Trump says he has not promised to hold off a new china tariffs. The fed president of San Francisco says it is still too soon to know if there needs to be cuts and by how much. The titans of u. S. Making promise to give more cash to shareholders after all 18 lenders pass the stress test. Big surprise to Deutsche Bank also passes surprise, Deutsche Bank also passes. Welcome to bloomberg surveillance. Good afternoon if you are