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tv   Bloomberg Surveillance  Bloomberg  July 18, 2016 5:00am-7:01am EDT

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>> this monday, turkey considers democracy after a failed military coup. president erdogan must invent a new turkey. in direction this morning, a global risk on trade. cleveland, it greets the grand old party. in new york, monday, july 18. picked the short straw in london, guide johnson.
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boris johnson,, the honeymoon is over. he had to speak and act on turkey over the weekend. >> that is right. speaking about where the eu goes from here. is turkeyestion is, investable right now? that is the question people are asking in london. story. this is a moving with an update, here is taylor reeves. demanding they turnover inspiredr billy say the coup. they want the u.s. to extradite a man who lives in exile in pennsylvania. rouge, louisiana,
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authorities say the man who killed three police officers was a former u.s. marine angry with the weight that people are being traded. the shooting broke out after please got a call about an armed man. please shot and killed the armed gunmen. -- release shot and killed the armed gun man. talk, for paris acquaintances are detained of the man who ran down the people on the sidewalk. attack took place after basile dave. into a powerful player in repost brexit world. in the first appearance in parliament, maple argued about the nuclear system. she will tell lawmakers the u.k. cannot compromise on security for keeping the nation safe.
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in donald trump could make it harder for people to come to the -- on 60 minutes. >> entire states, terrorists, we're not going to allow them to come in. we're going to have an extreme venting. we're going to have extreme vetting. extreme vetting. we're going to know who they are and where they came from. >> he said the u.s. would have quote unbelievable intelligence. be nominating in cleveland. powered by more than 2600 analysts and journalists in more than 120 countries. i am taylor would explore bloomberg. tom? tom: risk globally today. hired year at
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getting out to the 116 level. germs,rms in -- the url too. euro churns, too. there is turkish lira. guy johnson, please. guy: the feature right now as you are saying. story to workock this morning. the chip goes in pretty much every device you have in your pocket. softbank up 43%. tom: thank you. removable wall today. we will look at the turkish going back 40 years. you can see the outright
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evaluation of turkish lira and that blue dot up there is when mr. one came in. if i blow this up, it is the dollar lira with president erewhon. president erdogan. a weaker lira again. the turkish lira is a litmus paper for the system. it has been terrible, then stability, then really really bad and looking for new stability right now. >> trying to figure out where to go next. that is the big question. let's go to our middle east managing editor in istanbul. our investors reacting to what we saw friday and the weekend? what is the sense in the investment community? >> well, i mean, this was the first chance that people reacting over the weekend. at the moment, the markets are
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down. down almost 5%. with banks especially hit hard to and the airlines and airports hit hard. so important to turkey, tourism, being hit. tom: how will this change the politics between united arab emirates and turkey? interesting calculus there, isn't there? turkey, the gulf in general, has close relations with president erdogan's government. remainationship should unchanged as it were. the question is what is president erdogan going to do inside turkey. making it more a presidential system where there is more power in his hands. tom: thank you.
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joining us talking about where we go next. let's fun out. ernest neville-jones join us now. she is the former minister to counterterrorism in the united kingdom. also have the chief european economist. good morning. your reaction. given us a sense of where this fits into the narrative you see developing in turkey. and: quite a surprise -- >> quite a surprise. never good for the public or economics. we do know that president erdogan does want to establish a more presidential and i think probably more authoritarian system. and that is his instincts, to tighten political holds. decrease democracy. the thing i find most worrying
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is the suspension of a large chunk of the judiciary. i think it is a moment for a very great deal of active diplomacy on the part of our turkish friends, europeans, americans, to help get this back on the rails. the turks have to decide what kind of constitution they went, but i think we can help. if it is 20 authoritarian. and we don't want to get into one of those situations where we are barely talking to each other. a nato member. on the front line with syria. an important role with the migrants, refugees, and at the a place for a lot of western operations. really important. as your commentators have been there has been a lot of
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support in the streets and he the streets. when he calls a coup, it indicates he sees it as a political opportunity. tom: baroness, what needs to be the response? if we look at a president with 50% of the vote and we: a generic statement or an asian vote or islam phoned, how much will be west recalibrate after the coup? fairness neville-jones: let's not leave turkey to go on its own path being shunned by everybody. that is calculated to get the worst outcome. i would like to see western foreign ministers and the u.s. talking directly. having really good conversations at this moment, and boris
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johnson does have good ancestry to take this one on. among other things, you know the u.k. really means it when they say they are not going to lock down the world. tom: is turkey and emerging market. 10-11, g-seven, is turkey and emerging market? the alphabet soup you deal with everything. >> it is critical for europe. one of the biggest. to play a keying role and a key role in europe. we suffer repercussions so we see economic for turkey. at the same time, remember the whole migration crisis has europe.he politics in turkey is currently hosting over
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2.7 million. it is difficult to the strategy to deal with migration and security. >> a lot into that deal, if that and presidentrt erdogan on indicates he is not widely happy, it seems to be priced in. nobody in europe is interested right now in sing that. remember, there are dutch elections at the beginning of next year. french elections in may. germany elections in october. this is critical because migration, security as a weak core of what is happening in europe and the u.k., so if this deal falls apart, you will see thousands of migrants coming back into the european union through turkey. that could be a major, major shock. tom: we will continue. neville-jones is here.
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coming up, international relations. we will ask them that conversation this afternoon and i was big with christine lagarde at the new york federal reserve. this is bloomberg surveillance. good morning. ♪
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>> i am guy johnson with tom keene in new york. societe generale says london home buyers could fall more than 30% because of the brexit .ecision to leave the eu they will certainly have to move some of their business is to eu to the and prices tapering off.
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prices rose in june, down from 60 cities animate. more are following the lead in shanghai and slowing down the property basis. a huge deal in the semi conductor field. $32 billion represents a 43 percent premium to the closing price on friday. becoming one of japan's most acquisitive companies. it owns shares in alibaba and sprint. we studied the details of this transaction. rick david covers for bloomberg news. in the post-brexit world, we have been anticipating people would use this in an opportunistic way to get into stock. insist that or something else? of both.a bit this is not just a brexit deal.
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that is correct. if you look at how the company has performed post-referendum, it was up 16% on friday. yes, the pound has declined against the yen about 11% but it cannot be just that. it cannot be just the currency. coming into a political environment charged after it. an industrial strategy to defend british companies. themight argue that it is most well-known british tech company names. >> the most well-known. you talk about the currency story. i have it here on my bloomberg. the yen versus the pound. there is some correlation but it is not the complete picture. how was the u.k. government reacting to this. the new government open for business, is this going to be used for a text case of how open we are?
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>> this is great for britain, business as say usual. that had to been coordinated, right? >> yes. >> in we are going to double jobs in the next five years, making all the right noises. -- it seems to be very friendly. for a moment.y it the noise is the crown jewels leaving the tower of london right now. who was the next to go in the united kingdom? i'd set is a good question. first let's see when the deal closes in tell it gets done. it is interesting because this was one of the few companies mentioned after brexit because it's businesses is so much outside the eu that they will have the advantage are, right? you have companies across sectors. they will look at this as a test
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case given needs size. >> this just popped into my name. this is comical. can the eu block this deal because london is still in the eu? >> what would they want to block this deal? >> i don't know. i am looking at sterling down x percent. everything is on sale. they are going to buy guy johnson's house. >> they are too busy dealing with brexit to care about tech companies being acquired. >> i don't know. the british open was born this weekend, maybe they will buy 809 gulf horses. thank you very much on this huge and important transaction when you look at the economics and political economy of the united kingdom. we will do that in the next hour. carl weinberg will join us. turkey and a challenge to europe. this is bloomberg. ♪
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in johnson tome keene of course in new york. let's talk about, remember, the one of the eight who said the economy was uncertain. the direction of travel is likely to be lower growth and higher inflation and a lower exchange rate.
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remember he was saying that banks should cut and cut aggressively. we have also had this out this morning. the exact opposite. the old lady of the bank of let's bring back in our guest for the morning. i will go to the baronet's first baroness first. there was a promise from the governor we would see action. there was stability at the core of british policy making. >> there was widespread expectation the markets would do what we would expect. signaledect was being
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so poor, this was the moment to do it. it was my expectation they will do it later. i think the general analysis we're all going to face is a slowdown. the prospect for higher inflation. you cannot argue with that. to me, it is a timing issue. i think they will find it in due summer ormetime in very early. it will be a boost to the economy. we'reh barclay capital, exhausted with lyrical events. back to the script, are we just out of monetary tools? is the role message of summer of 2016 that the monetary gain is over? we ares true that pushing the limits, no doubt. remember, the 50 basis points. we think they will cut at least 45 basis points.
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and they will do a little more 100 billion, 100 50 billion additional. is it necessary? i think so because the slowdown into a recession and you need to lean against that. ona note this weekend article banking being as bad as banking. this is a general statement. to get the italian banking crisis solved? >> that would be ideal. it has been way too long throughout the crisis. certainly they are going to try harder in the european commission, especially in the eva. the critical factor is the resolution on the banking is intertwined with teletext because some of the resolution the require to bail some of
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holders and some of this holders --.held by as you can imagine, that will not go down politically. major shakeup in politics. to speakicularly want with baroness neville-jones about social media and what we evening.friday that was extraordinary use of cyber technology in the middle of the coup. the motion of friday evening. bid, 4599 aodest barrel. london, i am in new york. worldwide, this is bloomberg. ♪
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guy: i am guy johnson with tom keene. in brussels, as we can see,
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side-by-side by secretary of state terri. currently addressing the issue happening in democracy and human right. significantly more important following nice. we will bring you headlines. kerryary of state speaking now. we will bring you the headlines in just a moment. first, the news. bags turkey's president has a demand for the country, he called a strategic partner. president on a whim once the united states demand over and claimslim preacher he inspired the coup. he lives in exile in pennsylvania. to agree to extradite him, turkey would have to prove the allegations. president obama says there's no justification for attacks on police.
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a man killed three police officers and killed three others louisiana. the shooter is a black former marine who is angry over the way black people are treated. u.k. will not abandon its leading role in europe. europe.hnson arrives in the country voted to leave the eu. >> very pleased to be here for and the overseas trip mesh and i will be spreading to our friends. europeano leave the union. notre leaving europe, abandoning our leading role. >> a johnson said the events in turkey and france underscore the importance of staying together. and an eight under par 63 in the
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final round, beating nicholson. a 65.son shot global news 24 hours a day, powered by more than 260 journalists and analysts in more than 120 countries. >> mark crumpton, as we watch the coup unfolded and the unknown in incorrect and istanbul. baronesslled to have neville-jones with us. with her experience in technology and diplomacy. what we just think of president alone, the most anti-technologist of the western world using the iphone to communicate with his people? it was truly a remarkable cyber moment, wasn't it?
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>> he understood he had found some way of getting through. i think what we see here, what we saw with the arab spring, you can bring the crowds out onto the street using that method. he has done it himself. the differences he has the power of the state the hind him and we will see what happens next. he was able to use that as a lever to start a counter to. .ction against the coup it may take a get through immediately. tom: it speaks of rules that have changed and rules that of not change. we had the experience of the london school of economics as well. as a child, part of the lebanon uproar and revolution and two more in the childhood. truly one of the world's experts and al qaeda, isis, and turkey. you've had a number of days to reflect on the turmoil.
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what will turkey do with its stubborn border. how will the dialog change between syria, isis, is on look state, and turkey? >> tom, as you know, in the past few weeks, turkey has been bridges to both local players, regional players, and international players. israel,iation with russia, newon with conversations with turkey and egypt. the president -- the prime minister does and even dare to say he would like to mobilize the situation with syria and iraq. turkey does not just need to normalize relations with its neighbors and the world, it needs to make peace at home. this is the most important challenge facing turkey today. carter is that president
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one is going to use this particular moment as he has had, a gift from god. military?? purge the cleanse the military? crackdown against the judiciary and political rivals? i mean, i do not understand. why would you basically dismissed 3000 judges and prosecutors? this tells me a great deal that president erdogan is going to use this particular moment to really cleanse the political system of any rivals in the military and also, you know, in the political landscape broadly speaking. tom: when i look at the new turkey and the new military that mr. erdogan will have, they need to do the ancient questions of the kurds. how will president erdogan, with the 50% support he adds, with the islamist support, how will he regenerate the kurdish relationship? >> i mean, i think, this is what
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i meant. president erdogan, the challenge is to basically begin the process of reconciliation not only with his political rivals in turkey but also with the kurds. what you have now, time, as you know in the past year is a kind of mini-civil war between the turkish state and the kurds. especially between the radical and military segment. i do not expect any major shift in the way president erdogan has dealt with the kurds, because remember this has to do with quasi-nationalism. he is using the fight against the pkk to strengthen his position. that is why the next few days and few months will tell us a great deal whether president erdogan would rise up to the challenge in particular vis-a-vis the kurds and his political rivals at home. direction of travel is
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less democracy, not more. treating the kurds more harshly than warfare. what would they believe he is going to step up pressure mark isn't it likely to get more of this many civil war as you describe it? >> that is what i fear. the early signs are not reassuring. when you basically dismiss 3000 judges in hand prosecutors, i do not believe for a moment that judges and prosecutors were part of the coup. obviously what he is doing and what he is in for a much is this is within the state. he is trying to cleanse the political system. he was this as a gift from god quote unquote to crown himself as the unrivaled leader. >> will diplomatic overtures that he should not go down this route be in any way acted upon? >> look, whether it is president obama the french, saying, respect the role of law.
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you are part of europe. the europeano join union you must respect the law. president erdogan does what he does. he does not take any hostages. is weak.ition his party, ak, is the dominant party. when you have the weak opposition you can do whatever you can and it provides president erdogan with the ideological domination to dominate the political in skip for the next 10 years or so. tom: he stood at the airport in front of the portrait. -- die friday night? >> done although some has been dying for the past 20 or 30 -- dunnalism has been dying for the past 20 or 30 years. the reason the coup failed was
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not because of the ineptitude of the military. president erdogan has been able to create a broadly based support. millions of turks have benefited from the economic revolution in turkey. remember, turkey has the largest in the world. millions have become part of the bital class and that is why this particular coup has failed. not because the military officers and junior officers did not come off as planned, and they did not, but because turkey has shifted. president of about the one is the new face of the new turkey. update everybody on what the secretary of state has been saying. john kerry is speaking in brussels talking about what is happening in turkey. talking about the latest situation, saying that -- let me bring you the latest details.
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saying he firmly urges the turkish government to maintain calm and stability. but as we've just been hearing, we wonder how much he will listen to those. he was also talking about what is happening in nice, saying that rance will only strengthen and it will strengthen all of our resolve as we work forwards from here. more on this story next. this is bloomberg. kerry: create space for genuine political transition. the meetings we referred to, the homework that needed to be done is being done right now as i speak and this week there will be further meetings -- anticipate we will announce further steps as we go forward. further, we also addressed today the fight -- ♪
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: it guy johnson and for francine lacqua today. leading our political coverage from cnet cleveland. mark, i think of mckinley in the front porch campaign. donald trump has never sent still want a front porch, has he? >> he is not a front porch guy. he is more of a boardroom guy. this will be donald trump in a different setting then we have ever seen up. first-time presidential candidate. tradition thathe everybody is used to meets the very untraditional donald trump. tom: the tradition went out last night with a 60 minutes interview. it was final. interrupting his vice president, the governor from indiana. had to jew take away from that conversation and how does mr. trump amend his message in
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cleveland to make it more cogent, more forceful, to take #mark: i do voter not think he will said very often for a joint interview. i think it is awkward for anyone to be in, let alone a guy who it is his first time as candidate. i think you'll see a lot more focus on cap here in ohio than on pence. up, it some showing not. john heilemann is not caring a ribbon on the floor, is he? >> he has a slingshot and a bazooka, but no traditional firearms. there will always be distractions. the challenge of the cap campaign and the republican national committee is to not let the protesters on the street or world events dominate the coverage. they want the coverage to be focused on rebranding donald trump as he introduces himself in a different way to the
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american people. >> all through this campaign we have heard about division. not only in the party but also in the country. -- divided will the party be if it walks way from this convention? >> it is somewhat divided. part of the reason he chose mike pence is because mike pence has allow theg that will party to unite more. hillary clinton unites republicans a nation strong way just as trump unites democrats. tocap can extend his reach the center as well as the party, a lot of that has to take place over the next four days. going to meete is a lot of people. has he in any way change what he has said? : let trump be trump will be the last word of the next four days as well as a campaign. the people working for donald trump recognizes success depend upon people liking what they are
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selling and that is donald trump so i do not suspect a major recalibration. some efforts to make his business record and his record as a human being a little bit more well known. but the basic message of change, radical change, is what is going drives the trump campaign. it will rise in and follow on that. tom: mark, your book, at the beginning, as the obama campaign struggles and this and that and the other thing, what is the level of sweat of republicans in cleveland to get to friday or to saturday or even to the spin on the way to philadelphia? mark richt: it is a fair shot. going,antage for them they considered back and watch. friday morning we will see hillary clinton's running mate and then a sprint to the convention. they have a challenge to leave an indelible impression that
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extends beyond the two conventions when again, they are going first. you for thatank coverage in cleveland. it will be a long day for all of us. with all due respect, tonight mark halperin and john heilemann worldwide, atime most interesting day said for cleveland. bloomberg takes a look. ♪
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>> tome keene in new york, guy johnson in london. welcome back. let's talk about something fun and central. the banking sector in europe. baronesswe have neville-jones. and barclays chief european economist. next, let's talk about the ecb. the bank of england has done nothing. more further down the road. is the ecb following the banks lead here? >> i think it broadly we will
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let the bank of england act first. then they will go in september with more qe. doing more qe is tricky because the program is already written some of the limits and parameters. [indiscernible] -- they will have to change some of the parameters. baroness, the prime minister theresa may, that she indicate politicians are beginning to wake up to the idea that actually what they thought was happening to help them out, the qe policy was quite divisive and feeding back to the general public. >> she has made it pretty clear that the austerity program, the
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aim of balancing the books of by 2020, she is not so interested in that. she is interested in putting the public purse at the disposal of public and investment. i think it will be stimulating the economy, the economic activity and keeping down the levels of unemployment. we have a very good record unemployment in this country and she will want to keep on that. distractionss of if you want. global distractions, political destruction. deal up in a new room is negative interest rates. as you look through july and go to fed meetings and physically and bad, give us an update on the chronic nature of negative interest rates. what does that mean for the banks and for what that matters, what did it mean for president
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may? >> it is a difficult issue no doubt. her reaction to how weak inflation is. globalization, not just in the u k in the united states. central banks do not fully understand and neither do we and that is the bitter reality. even that, although we are facing a crisis, many financial industries are suffering. insurance and banks themselves. so, i think that is why it is all the more important to clean up the banks. the issue you discussed before. the goal.tugal is right? tom: what would you like to see from the chancellor of the exchequer? talked very little about this, but what does your new chancellor of exchequer need to do?
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baroness neville-jones: i think needs to go money into infrastructure which is poor in the u k and they are simulating -- poor in the u.k. and they are stimulating jobs that way. the other thing i think would've been true in any event but now is vital, the u.k. has divine and economic path of which is outside the u.k. on to the whole question of trade deals. how do we are in a living? this is a country that is largely de-industrialized. where would put the money into research, innovation, stimulating the private sector. putting enough public money into a to turn the key is going to be
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very important. i think all of those things is pushing forward on a new economic path. to get on to the japanese. is that a good thing? baroness neville-jones: i think what happens where matters. if i was theresa may and i wanted to put into conditions, i would be cautious. but it would be about economic activity and intellectual property staying in the u.k., the economic intellectual property is important. it should not go out to japan. tom: bareness, that is a story of this morning. before.seen this can this new government manage sterling to protect your crown jewels of corporate britain? isoness neville-jones: this
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difficult, isn't it? if you prevent anybody buying anything here, you may very well prevent useful investment. i do not think the tax and version deals are particularly good for us by japanese are promising on the face of it to put a great deal of money in and make it a company that is much bigger than it already is. what we need to be doing alongside what we already have is actually creating new committee or two bring on our smes. and invest in them. tom: baroness neville-jones, thank you so much. barclays, dr. thank you as well. in our next hour, carl weinberg will join us from high frequency economics. this is bloomberg. ♪
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tom: turkey considers democracy after a failed military to. over 6000 are detained. president carter about must invent a new turkey. supremehour, the former commander in and we look to cleveland to greet a grand old party. in france, and nice, and in paris, let us go to a moment of silence.
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♪ tom: in extraordinary moment for the republic of france. nice forever changed. the palm trees and the views of mediterranean, it will never, ever be the same. >> it will not, but it is a continuation of a theme. that has raised the most
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disturbing economic aspects of this. what happened and nice, the concern about the immigration population that has not been fully integrated has become radicalized in certain instances. and, what is happening in turkey and the threat that potentially poses to the migration store that has been broken with the administration. to thinkor europe about right now in so much to figure out and reflect upon what has happened and what may come in the future. that is a story. let's get to the first word news now. >> turkey's president is demanding the united states henover and islamic reacher accuses evans buying. president erdogan repeated his demand. he wants the u.s. to extradite a man who lives in exile in pennsylvania. state set secretary john kerry says he would have to prove the allegations. and upholding democratic standards following the failed
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two. john kerry says the u.s. would unlessradite the cleric they can prove the accusations. in baton rouge, louisiana, authorities say the man who killed three police officers was a former u.s. marine angry with the way that people were being treated. police responded to a call about an armed man. three lease officers were also wounded. -- three police officers were also wounded. in more than 120 questions. i am taylor riggs. tom: i want to get through this quick with all that we've got this hour. euro churning. oil churning earlier. on to the next screen. extraordinary equity markets. futures under 13.
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german 10-year was a positive statistic friday, barely under zero right now. let's go to the bloomberg and take a snapshot of the long-term view of the turkish lira. massive depreciation. chaos.ears of a great that little blue circle is the beginning of resident erdogan as prime minister. you can see very clearly the stability and leveling of turkish depreciation that mr. erdogan brought. bennett changed. a reaffirmation of decline, weakness of turkish lira to where we are now. a snapshot of the currency of turkey. we have followed this for years for bloomberg news. spent toou and i have much time in dubai and istanbul to know that whatever happened friday will forever change. how will is temple change in a
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failed coup? -- ridayh: centralizing power in his own hands is something he has wanted to do. there are all these arrests going on. i think the failure or success of that and what his next moves are will determine what happens going forward. >> how divided is the country ?ight now how will everybody else react to that. low civil war taking place in this country. what is next? riad: there is a low-level war taking place with kurdish separatists. the country is divided.
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people are very concerned about the movement to a more islamist outlook in turkey. undoubtedly, he is winning elections with a big majority will stop so, it is very much a country divided. riad hamade, thank you so much. dr. weinberg teaching at new york university. decades of experience with financial and economic crises. now we will go over the political crisis. whether it is turkey or brexit. i want to expand your wonderful the englishing at patient or the turkish patient or the old world patient.
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in emergingnvestor markets, what is happening in turkey, while it is an extreme event, it is not an unthinkable in event. emerging market investors are different than other investors. there used to going into places where there is risk. something is going to break, they will get over this and look for longer-term fundamentals and turkeys economy. , though, therek is a place where you expect everything will move smoothly forward in terms of relations. tom: you doubt that? >> we are in for a big change and i think it will be very rough. tom: i saw a chart and unfortunately i cannot remember the citation, but i saw a chart which stunningly showed the -- theon london versus impact on london versus elsewhere. we say it a london event and you have pushed against that?
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the think it undermines validity of london's reserve center. for europe to ask for more of its financial center court activities back. that was not on the table prior to the referendum result. perhaps it will be rolled back, scaled-back, relocated to paris or frankfurt or other places, luxembourg. i think we're going to be looking at a change in the conditions of companies within the city of london and that is going to be the core of the new chancellor's negotiations and it is going to be very, very important. >> let me take you to cambridge. we're just seen one of the biggest tech companies in the u k potentially being sold to the japanese. heart of that might be because sterling has depreciated. is the way we find our current account deficit by selling companies? >> i am glad you asked the question that way
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because you are going to have to sell a lot of things in the u k to find this current deficit. it is about 140 billion pounds. at an annual rate it is at about 6% or 7% of gdp. it is unsustainable and we have to look at ways to bring in money anyway possible. if it is foreign direct investment in buying u.k. companies i think that should be welcomed as an opportunity to in which incomes can be adjusted and it will have to be adjusted to reduce the deficit. >> what would suggest that what happened? what does the government and bank need to do next? >> i think the only way to close the current deficit for role is to reduce incomes. i mean, there are a lot of people thing left to devalue the pound and so on. but that is only part of the solution. the reason you have a current account deficit is because in britain you consume more than you produce so you either have to produce more or you have to consume less and the quickest
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thing to do in the short time and what the markets will do if they do not do it for them, is to draw down consumption expenditures. to draw down domestic demand until it matches domestic production and that could be a painful reduction. we need a policy to get there. tom: looking at weinberg economics, looking at assets. james trevino's will be with us as well later today. in the one hour, my conversation with christine lagarde. from london, from new york, this is bloomberg. ♪
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♪ guy: i am guy johnson in london,
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tom keene of course over in new york. bank coming in paying for u.k. chip designer. arm. the surprises it is softbank rather than a stock like intel making the acquisition. the is the yen versus british pound. you can see both have risen over the last few trading sessions. saying this was not a brexit trade. now is the time to commit to the u.k., he says. tom: i will go with it. i think we will see a lot more of this action based on what i have seen. whether it is a golf course or a technical jewel, you wonder where it will end up. cleveland.focus on thanks to mark halperin.
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mark halperin and tom heilemann tonight with their expertise. she does not work in newport beach, she holds court in washington looking at policy. we could top for two hours this morning, there's is that much going on. let me cut to the chase. is donald trump throw-business? >> that is part of what we are looking for me few days, to see whether his positions on different sectors, on pharmaceuticals, on financial reforms reveal themselves and one thing that has been difficult in terms of analyzing to what donald trump presidency would mean for the market as he has not given very many policy details. is he pro-business? it remains in question in certainly his statements about corporate tax reform would be positive for business but there are not enough details to make an .ssumption tom: sec. clinton, in various
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shades supports. do you sense washington lobbyists are gop-like in banking, finance, investments? would they find comfort with a democratic candidate? libby: that is part of hillary clinton's challenge. we will see that revealed in terms of who she picks for vice president, for instance. policy advisers are. it will be an indication of how far she will go on finance. obviously, bernie sanders has brought her farther to the left hand she is starting to pivot to the center. her vp choice will be a big first step in that direction and if she wants to u.s. wage the business-minded folks, ticking someone like tim kaine from virginia versus elizabeth warren who has been more extreme on financial issues. the as we try to understand phenomenon of trump, is the exit
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?he way to do it libby: are our similar ways to do it in terms of anti-immigrant sentiment. more xenophobia. there are key differences. i have been talking to folks on the pimco trade floor. democrat in the u.k. are different than those in the u.s. and voting for in idea, for a referendum, and voting for a camp is different than voting for a candidate at his worst. should i tell my investors overseas about what a mean forsidency might investments? libby: as you likely know, the executive story has quite a bit a lesseetion on trade and unlike these other fiscal issues, would have to have additional approval. so we are analyzing quite a bit as well. we hope the rhetoric does not become reality in terms of trump's declaration of
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withdrawing the united states from the wto or from nafta. it remains to be seen. with it. luck i do not know how you handle that will stop it is truly historic. this.l continue with joining us will be johnson you knew the younger. from new york. and from london. this is bloomberg. ♪
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.om: good morning guy johnson in for francine in london. carl weinberg with us from high-frequency economics. libby from,". and we are thrilled to bring back from cleveland, ohio, former senator johnson you who knows how to engineer a problem with his work from m.i.t. in mechanical engineering. mr. trump needs to engineer a miracle in cleveland. where does he need to be at the end of the convention? take aunu: it will not miracle, but he needs to define himself the way he needs to be defined to be understood in america. that is what election is all about in america. what skills, where does he want to take the country? if he wants to make a country great, how do we do that? jobs, economy, trade.
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hillary clinton's weaknesses. but he is going to be clear in specific and disciplined him driving that message to in america that will be watching. tom: can he send the message he sent for months, the battleground states. at the margin, he needs to changes rhetoric to the sununu tone. a more moderate, measured tone. mr. sununu: i don't have there is a sununu on. maybe better language and rhetoric. to me, his strengths are talking about job creation, turning the economy around, his experience in the event sector, trade, immigration. people's speak to nationalism. maybe xenophobia, but it is on people's minds. as i said, immigration is something he has been talking about. i do not expect them to stop. lastly, the fact that hillary clinton is the old legacy. a carry-on legacy.
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people are looking for change and i think if he focuses on those three issue areas are topics, he comes out with a pretty clear message and vision for the country. if he is all over the map, the convention experience will be less effect. >> to pick up on the points lead the answer coming up next and their convention a second, how does he positioned himself in advance of the fact that they are going to be coming after him to make sure he defuses some of the issues he brings up. how will he have first mover advantage? mr. sununu: it is in the tone and message. he knows what people attack him on so you do justly you said, you get out there first. you stick out your territory. you define yourself on the issue. maybe it is trade or immigration. be clear about what you're going to do and not going to do on immigration so others cannot define you. on your economic regular skills yourccess, talk about
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private sector achievements. be honest about areas where you have not succeeded and what you have learned and define that to the american people rather than letting someone do it for you. in a way, it is campaigning 101. believe the curtains were changed in 2003. are they going to change the curtain? pimco world, is johnson new news republican house --? libby: republicans are really able to consolidate support, as were democrats. leaving very few in the house. so it would have to be a wave election for democrats for the way. to be that but certainly, will they lose the historically high majority they have in terms of moving the numbers? yes.
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probably. it will probably move 5, 10, or 15 feet. tom: should mr. bush be at the convention? sununu: no. not if he does not want to be. nobody should be that does not want to be. even republicans who just tried to disrupt things and get attention for themselves. that is not what it is about. it is about the party choosing its nominee. we certainly think it will be donald trump tomorrow so it is a show, his opportunity. no republican should try to be a distraction. they should allow the republicans to choose the electionand get its together. tom: thank you so much mr. sununu and libby. we continue worldwide. this is bloomberg. ♪
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?c+sv tom: good morning, everyone. tom keene in new york. guy johnson in london for francine. let's get to first word news on turkey.
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here is taylor riggs. recep erdogan once the u.s. to hand over -- wants the u.s. to hand over the person he blames for the coup. turkey would have to prove its accusations. meanwhile, the u.s. secretary of state, john kerry, is urging the turkish government to uphold them aquatic standards following the failed coup. john kerry is in brussels for a meeting with eu foreign ministers. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries, i am taylor riggs. this is bloomberg. tom? tom: now joining us, james stavridis of the united states navy. of course, our nato supreme commander a number of years ago, and someone who has been in the news recently.
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admiral, we are thrilled to have you with us. why did this to fail? you studied this at war college at newport, rhode island. why did the to fail? mes: i thought this coup was more beer hall pooch then it was geostrategic earthquake. the military had a set of lingering grievances on a slow burn for almost 10 years per they took a shot but they were disorganized and did not have the senior players. only one four-star officer involved. i do not think they put it together effectively, and the people rose up against it, and the rest of the military helped crush it. is: part of being in europe no death penalty. we hear talk of a renewed death penalty in turkey. how do we adapt to the realities that mr. erdogan faces?
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james: tom, as we look at the aftermath of this, the numbers are staggering. there are 6000 military judges -- military, judges, prosecutors who have been rounded up. 25,000 leaders have been arrested. tension and emotion are running extremely high. i think there is a possibility that the turkish government will seek the death penalty against the senior leaders. how do you square that against european norms? it will be very difficult and it will set turkey back on its path to membership in the european union. guy: good morning. it is guy in london. was this destined to fail? james: there is a conspiracy theory running around that either president erdogan or members of his team kind of inspired this and let it bubble in order to bring a crackdown in
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place. i do not feel that. as i talked to senior turkish officials and friends, as i look at the news and the body language on erdogan himself, i think they felt a real threat from this coup, and i do not think it was manufactured. guy: is turkey and reliable nato member? james: well, historically, they have been. turkey has been involved in every operation. alliedwas the supreme commander, i counted on turkey in afghanistan, libya, the balkans, piracy. they were 100% in with nato. they hosted the largest nato headquarters. the internal distraction that comes out of that is going to make them less reliable. in one sense the big winner of all this is the islamic state. tom: we used the lira as a litmus paper. bring up the lira chart right
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now, which shows the shock and awe of friday. thanks to matt miller and mark crumpton for terrific coverage friday evening. we come down into a very normal quiet. there is no quiet in our air base turkey. explain within your experience base,e u.s. has an air whether it is in turkey, the philippines, wherever, and it is controlled as well by turkish civilians and turkish military. did that looked odd to you friday night when we heard of turkish involvement off our military base? james: not at all, tom. a very common construct in these these are going to be sovereign territories of the host nation state. typically the host nation will provide an outer ring of security, the u.s. will provide the inner ring of security. it is normal and logical to see interaction between the two. one was concerning was the fact
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that those operations were frozen for a period of time. we did not have effective communication into that base. it is a sensitive, strategic base in every connection. guy: one of the concerns is the deal that has been struck .etween europe and ankara is that deal at risk, do you think? james: i think it is not. it is in the interest both of the turks, who are looking for the money they have been promised to make this work, as well as in europe's interest. nato, the european union, will continue to work to facilitate and zone between turkey greece, where so many of the migrants came last summer. because it is in the interest of both parties, i think that deal will go forward. the thing that could upset it could be a violent,
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french-revolution-level, off-with-their heads attitude in the streets. that is not likely to do so. tom: i want to go over two themes. one is what we just saw in nice and paris, france, which is a moment of silence directly related -- these are live pictures from these -- it was really something at the top of the hour. admiral, this is a pan-european problem. it is not just about a coup or a tragedy in nice. how do institutions in europe get their hands around what has become a chronic problem? tom, i will give you three things to think about in the european context. one is international cooperation. this is why brexit is so disturbing. anything that creates centrifugal force and pulls the union of four -- and pulls the
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creates -- second, homeland security forces, the military, and 30's private-public cooperation to develop the technologies, the big data, the quantum data. all of that put together i think is the future of working these problems, recognizing a few will get through no matter what we do. tom: in our agreement to have you on today, we suggested we would not talk about u.s. domestic politics. you have been a little too visible for the people up at recently.chool so instead of asking you about your future, i would like to ask you about the new vogue. you joined the navy when it was the least popular since world war ii. you joined the navy when it was not john mccain and george bush senior and others. of lookings new vote at -- what is this new vogue of foring at military men
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senior operations? where is it coming from? james: you are nice to raise that as an issue. i appreciate it. there is a sense of the military as an admired institution, extremely different from when i entered in the 1970's. that sort of sense of accomplishment of stability i think appeals, and whether or not we see military individuals enter into domestic politics in a serious way remains to be seen. but i think it speaks well for the military, but it speaks well for the nation, the mutual respect between the two. tom: james stavridis, thank you so much. we will continue. carl weinberg with us, patiently waiting, with high frequency economics. i think i could talk to five hours this morning with carl weinberg and never run out of things to talk about. i will be a little busy after the noon hour today.
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bill dudley, opening comments thechristine lagarde at fed. then my conversation with madame lagarde. ♪
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guy: i am guy johnson in london. tom keene is in new york. i am sitting in for francine lacqua. to see thehing details of bank of america. now the bloomberg business flash. taylor: the seven-year housing boom in london may be about to end. housing values could fall by 30% because of the british decision to live the eu. some companies will almost certainly have to relocate for services from the u.k. to retain access to the eu single market.
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airports in india have to keep up with traffic growth. boeing estimates india needs 1800 new planes in the next 20 years. last week go airlines ordered 72 planes from airbus. the big problem, coming up with landing and parking spots for those planes. there is a huge deal in the semiconductor industry. a japan company has agreed to buy bank british chipmaker arms. softbank has become one of prolific companies. that is your bloomberg business flash. guy: let's talk more about that story. there was a press conference with the ceo of softbank, apparently not a brexit deal. this has all happened rather quickly. let's get the details now. this is being put together rather quickly. , two weeks for the
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financing, two weeks to meet the chief executive. did the small island become smaller? guy: hopefully. or bigger, with boris johnson. you have to wonder, given the timing. ruth: i think one of the things is they do have a currency appreciation that is making it easier to get a deal done. they have so much debt on their own balance sheet. that means that banks are positive about the deal getting done. and the fact that they are in most businesses outside the u.k., which is a key issue. their own stock has gone up 16% since the u.k. -- since the u.k. wanted to leave the european union. if you look at the way the stock
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is trading today, it is interesting that it is just at the level that they made the offer at. it seems there is optimist him -- there is optimism this deal will get done. softbank is a company that has stepped really big on some huge names. the alibaba story -- who can forget? tom: ruth david, thank you for the update. from london, we are waiting on bank of america to see what mr. moynahan will do. right now let's look at the data. risk-on this morning. i will call it a lift up of three with oil slightly negative. we are looking at bank of america, and we are also looking at new york. this is bloomberg. ♪
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tom: good morning. breaking news. it is on bank of america. jpmorgan had good results, citigroup had good results. a net interest income of 9.2 million dollars, down $1.3 billion from $10.5 billion. many other numbers, including $.36 a share, at the top of
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their press release. to give us colored year on a more troubled bank is hugh son. hugh: if you look at today's results, i believe that the range was $.33 to $.40. $.36 is perhaps on the higher end of that. tom: they come out with all sorts of sub numbers. i could recite 12 statistics that none of us will remember in five minutes. you are the pro. what should we focus on as we digest this? -- boa is always tough to get through in terms of actual results. i would look at the investment bank and see how they did in fixed income. citigroup and jpmorgan both beat on fixed income. some of the loan charge-offs -- it is a polygon
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with banks merging together. within the government's of mike mayo, huge critic of the government over the last 18 months, is this a new bank of america moving forward with a plan, or is it a hodgepodge of the verge banks? hugh: you have people running it with moynihan, you have people in bc and on the west coast. unlike jpmorgan, where jamie dimon can yell down a hallway and get everybody in the sea suite with one yell, it is a more diverse organization. you can make of that what you will. guy: if i was john cryan, how would i read these numbers? what is the impact on the business and on europe? hugh: i would look to specifically see how jpmorgan and citi have done with the fixed income trading and see if they have taken any market share.
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guy: is brexit affecting this? hugh: brexit happening within two or three trading days left, everybody has deflected the question and said the second course so far is fine. tom: carl weinberg, this is the strength of a nation, it's banking system. these are very good numbers versus europe. carl: with brexit coming, sterling down 10%, there must have been some impact with the exchange rate in which they closed the books. is there a profit impact out of the sterling drop? jpmorgan and city have talked about how the volume leading up to brexit have talked -- have health in currency and bond trading. tom: 200 13,000 employees -- the bragg note from one hand at the top of the press release, mr. there is a level
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not seen since 2008. i'm sorry, in your world the solution is to cut expenses. how much fat is there to cut at bank of america. hugh: there is a lot more. do you need as many people to do the same things that we have done today? do you need as many people with jpmorgan cutting expenses faster than the headcount? you could see further cuts because they were used automation and technology, how the rhythms to reduce people -- algorithms to reduce people. cryan asked the john question because that is a big deutsche franchise. who is it going to be? hugh: you have to look at the difference in business mix. jpmorgan are huge and currencies. those are all businesses. goldman, not as big a business. suspect -- i think there is a
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bloomberg story out today. tom: very quickly, there is a whole new regime of looking up the next 18 months. what have you learned from jpmorgan, citigroup, and bank of america? hugh: they are optimistic. they see that their core loaned $106morgan billion more in the second quarter. they see wage growth, they see optimism, they see housing again. , on thank you so much bloomberg news this morning, on bank of america. carl weinberg, you have led with a discussion that world trade is terrible, and that is the coverage of every story that we face, whether it is turkey,
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italian banks, and such. do you have an optimism that we will see a jumpstart economy? i am asking because i have to talk with madame lagarde today. she has been out front cautious like you. when do i get optimistic? carl: the imf has been leading the conversation on the decline in world trade. it will probably pop up at the bank of england as well. declining world trade is a negative for global economic growth, and it is being caused by the slump in commodity prices. remain quiteces low, and that creeds trouble out of the bloomberg story out of venezuela this morning. -- and that creates trouble out of the bloomberg story out of venezuela this morning. tom: the backdrop to this is chengdu in a g-20 meeting, no one is focused on. there is so much chaos out there right now, with the tragedies of baton rouge, nice, what we have
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seen in turkey. what is the hope of institutional leaders like madame lagarde? carl: if we did not have serious tragedies to talk about, we would probably talk about the g-20 as being a tragedy. at the end of the day, this is a group that will meet and talk, but they cannot come to terms and agree on anything, implement anything. there will no -- there will be no action at the end of their weekend conference. that is a tragedy. it is not going to come from this compact. guy: let me jump in. the macro is not going to solve the problem. policymaking at an elevated level is not going to see this. going to fix this. i wonder whether this will be a bottom-up story. back to doubling wages back in the day, how from a bottom-up point of view do we fix this? carl: unfortunately, everybody
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in the u.k. does not work at jpmorgan, and is not benefiting from the increase in wages. the same thing is true in the united states. a colleague of mine talks about wages in the u.s. is a possible trigger for fed action. and a going to get a fed policy response on this side eventually. very complex question, but i am not so sure that driving from the bottom-up can help the problem. the problem right now from my view is commodity prices. if we do not get them back up again, we will pay the consequences of making a bigger part of the world poorer than it has been in the past. that reflects back on the countries that import the commodities. guy: higher prices mean a lower dollar, right? carl: maybe yes, maybe no. there will be stronger opec companies -- there will be stronger opec countries.
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of latiny coming out america, commodity producers, helping our exports, which have been coming down as well. there are does cosines to every coin. the demand drive is probably the key element for the world economy. tom: is madame lagarde, and other global leaders, are they working within the mill you of a currency war? carl: i think everybody is alert to a currency war, but they do not want one. people are suspicious of the japanese and their activities. it is not really a war, it is kind of an acceptance that we pound goes where the down, the bank of england is not displeased, the canadian dollar gets weaker. everybody is welcoming it when it is happening. it is one of these things that is happening, and nobody is doing anything to make it happen, but nobody is complaining either. negative rates, will that
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be the gig? carl: it should only happen in england but it is happening in china -- 6%, 7%. they are still growing, pulling the world forward. it is still growing pretty well at 2.5%. in that part of the world, we will see tightening and positive interest rates. like europe and japan, we will see a very low interest rate environment. that includes the u.k. as well. carl weinberg will continue with us on radio this morning. let me do a forex report. guy johnson, thanks so much in london, for helping out today. the forex report is a weaker yen, a risk-on feel. sterling stronger. i will call that a churn over 1.3228. few days,
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affected bylira is the tumult we saw on friday. 2.9620. we will be monitoring events out of turkey. the moments of silence we saw in paris and nice earlier in the hour. then we will move on later today to a conversation with the international monetary fund's christine lagarde. this will be an interesting interview. she is speaking at the new york federal reserve. bill dudley will give an interest rate -- will give an introductory commentary. this is bloomberg. ♪
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>> an arm and a leg. paying $32 billion for a rm
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holdings -- for arm holdings. >> and bank of america earnings just out. inching higher, topping wall street estimates on the top and bottom line. jon: a very warm welcome to "bloomberg ," with david westin and alix steel. i am jonathan ferro. unattended military coup from turkey. the weekendl spent watching the dramatic developments over the weekend, and they reflected themselves pretty immediately in the lira or there was a plunge, the biggest in eight years, although it has come back today. jon: there is relative -- alix: there is relative calm


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