tv Bloomberg Surveillance Bloomberg May 16, 2017 4:00am-7:00am EDT
francine: secret scandal reports. president trump leaked reports to russia's foreign minister. easyjet, the budget courier posted signs of a loss. this is "bloomberg surveillance ." i'm francine lacqua in london. we will get into your markets in a couple seconds. first, those reports, incredibly important on the back of saudi
and russia yesterday deciding to extend the production cuts and the iaea saying the demand outlook is slightly downgraded on lower first half estimates. non opec increased in 600,000 barrels per day. you can see brent is up on the back of that, 52.19. it was around 51.7 when i looked at that. oil is climbing a little bit more. reminder yesterday, we found out audi plan to extend production cuts for another six months. watch oil. we will bring you those trump headlines. that is giving a nice risk to the euro dollar, the dollar weakening for a fifth straight
day. the euro is soaring amidst classified information donald trump made or may not have given to a russian diplomat. we are looking for the mexican peso strengthening and the south korean yuan strengthening. we will get more on your markets, but let's get straight to the bloomberg first word news. reporter: we start with europe. angela merkel has vowed to work with macron. that as the german chancellor hosted the newly elected french president in berlin on his first full day on the job. >> we each represent the interests of our own countries, but the interests of germany are closely tied to that of france. germany will only do well if europe does well and europe only do well with a strong france. and i am, as well as the german government, committed to that. hopes of the u.k.'s
a speedy brexit deal have been dealt a blow this morning. case has been widely seen as setting a precedent for britain. china has increased the holdings of u.s. treasuries by the most in two years, a sign that the world's second-biggest economy is stabilizing and stricter capital controls have heplped extend capital flight. bob iger says hackers have stolen a disney film and are threatening to release it online if they do not deliver a read some. the company has declined to do so. 200,000 computers were infected with so-called ransomware. the opposition labor party will vote on a radical and responsible program ahead of the general election.
jeremy corbyn will accuse theresa may of favoring the rich over those in need in a speech. he will also little plans to reverse the priority for government and put the preservation of jobs first as britain leaves the european union. global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries around the world. this is bloomberg. francine? francine: president donald trump's top foreign-policy advisers are trying to contain damage after there were reports saying he released sensitive, classified information to russia. "the washington post" shared he revealed information about an islamic state plot to russia's foreign ambassador. >> the story that came out tonight as reported is false. the president and foreign minister reviewed a range of common threats to our two countries, including threats savto civil aviation.
at no point where intelligence sources discussed and the president did not disclose any military operations that were not already publicly known. francine: let's get more on this andy with kamal sharma stephen isaacs. thank you, gentlemen. jim, talk to me about this latest report on donald trump. who's going against the president? it seems both parties are now. >> this story is a much bigger than the politics. this is another chip -- a gives the republicans one more reason to perhaps move away from trump. but politically, that has not happened yet and it is questionable whether it will happen, even with this, but this has ramifications and fallout on so many levels. if in fact he disclosed
something he was not supposed to disclose, now the russians can use that against him, either to embarrass him publicly, or to use the information tactically. it undermines allies' confidence in the white house and u.s. administration and it goes straight to donald trump's biggest problem in the u.s., his credibility, which he knowledge last week. providingmen were information on this. francine: these are reports th at the president shared this highly classified information. whether now be an investigation -- will there be now an investigation? or are there just reports? >> right now, there are just reports. theoriginal report in "washington post," reported that the u.s. intelligence agency was withholding a lot of details
they had, which implicitly confirms this. legally the president is allowed to decalassify at will. information,osing he does not break any laws. what will probably happen next is classified briefings on keytol hill to the committees on both sides of the hill. they will go from there. francine: this is also five or six days after he fired fbi director comey. there is a lot going on and there are many questions raised about the u.s. and russia. will this have a direct impact on the euro-dollar? >> there are a couple reasons, really, following the weak u.s. data on friday. the cpi numbers were weak. there is obviously an element that u.s. economic data has softened, and it continues to remain a concern in the near-term.
obviously, there are the geopolitical stories we have always been concerned about. francine: the geopolitical concerns, for example, is that why the president has distracted by the tax or form and health care bill, because he has to deal with these reports? >> the media has been trying to demonize trump. this is another grenade thrown into his credibility. i think it will blow over quickly. francine: not all media. >> a large portion of the media. "the washington post" and the "new york times" reported this story. serious members of the establishment are coming out, denying the rumors flat out. this story will die pretty quickly. in fairness to trump, he's got the budget through. the republicans got the budget through because he signed off on that without the dramas of a
last-minute debt ceiling issuance. a lot of people thought this would not happen. obamacare has now been repealed. we don't know what will replace it, but the clock is ticking the re. somehowion that there is a great risk has been overblown. the administration is beginning to work, in its own unique way. francine: what about tax cuts and tax reform? is that why we are starting to see pressure on the dollar? is this creating the slightly weaker growth trends in the yuan? >> nothing can be taken for granted. we don't know when this issue will be brought to the forehand. i will reiterate the point that he seems to be finding his feet in washington and starting to get things done and let's face it, the republican party does dominate both houses of congress. in theory, it should be possible. that issue will be determined about the inner politics within
the republican party. theyreedom caucus, are prepared to accept some -- the budget deficit, or not. francine: where do you see the euro-dollar, kamal? >> we think there will be a bit of a tug-of-war between constructive ecb and the fed rate hike. francine: thank you so much for the trump briefing. now, we will also be talking to mitch mcconnell at 2:00 p.m. u.k. time. now, let's get straight to the bloomberg business flash. it had asyjet says record loss in the winter travel season because the weak pound inflated expenses and the company slashed fares amid a continent wide price war. ford is reportedly planning to cut about 10% of staff worldwide as the ceo faces escorting pressure to boost profit and a lagging stock price.
according to "the wall street journal," citing unidentified people, the job cuts will be outlined as early as this week. ford says it does not comment on speculation. ubs' large shareholder is slashing its ownership in the swiss bank, selling a 2.4% stake. gic says conditions have changed fundamentally since it invested in february, 2008. that is the bloomberg business flash. francine: thank you. leaders of the euro area's two biggest economies have pledged to create a new roadmap for reviving the eu. onis came as emmanuel macr left to travel to berlin for talks with german chancellor angela merkel. >> i am today in front of you happy to be able to represent france, but with a daunting task
to accomplish. the first one, and i reminded the madam chancellor, to implement the reforms that france needs. so, the french agenda will be an agenda reform for the next three months. economic, social, and educational reforms. like i said during the campaign. not because the european union asked for it, but because france needs it. francine: let's get the latest from our germany government editor. tony, let's kick off with you. what did angela merkel say after the meeting? was norancine, it exaggeration to say she was all smiles, meeting macron for the first time since his election in berlin. our basic message was that of course, we have disagreements and that is only to be expected, but we are very committed to
reinvigorating the german-french relationship, which, as everybody knows, is at the core of the euro area. and working together, i think, on a personal level because clearly, the personal chemistry for now was quite positive and sort of says there is a spark in the air. there was a very positive message. we can make this work going forward. francine: what will the german chancellor's hopes be more tfore new relationship? >> merkel is looking for a partner in europe who is pro european. can doces case, who something for the french economy oft gets this feeling off germany that germany is holding back the french economy.
it is interesting to see, she has already talked about the reforms germany went through, really more than a decade ago under chancellor schroeder, who caused quite a bit of pain in germany with his labor market and welfare reforms, and she said, look at how germany in the long-term has benefited from this. now, it's not up to me to be patronizing, but here is what happened in germany. here is what worked for us. francine: caroline, what are the points of contention between president macron and chancellor merkel? >> there are many points of contention and as tony was just saying, but merkel reminding macron that the reforms carried in germany in the early 2000's clearly is a message for macron to think of a performing friends first. -- performing france first. ofneeds to convince merkel
his seriousness about the labor reforms, but he is also sensitive about the fact that angela merkel faces elections in september. that is why last night in berlin he said he rejected sharing the eurozone debt. so, healing for now, the idea of creating a euro-bond. he knows that german voters are very opposed to the idea because they are afraid that german voters will end up paying for it. francine: thank you so much. let's get back to our guest hosts, kamal sharma and stephen isaacs. when you look at the euro-dollar, how much is euro strength? >> i think the major driver here has done the reduction risk
premium. we have had variou s landimes. i think it's important from a european perspective that macron starts to make some reforms in france. a coordinated fiscal push of some kind with germany. i think germany would like to see some signs for france to start off with some labor market reforms in particular. euro, the bottom line is, how does that impact ecb thinking? francine: we are seeing the green shoots of recovery getting firmer. oill the ecb act to quickly? >> this is what has been highlighted by our economists. there is a peripheral story as well and the hopes that france carries out structural reforms. tough in terms of
the short-term pain, but germany has shown there is a higher level of growth. francine: what would you be looking to buy right now in europe, yield, currency, or companies? >> i think it is still pretty troubled right now. the relief trade that started in february when fillon imploded. i think that trade is starting to unravel. the reality is that 12% of french voters spoiled their ballot paper. nearly 5 million people went to the polls and refuse to vote for either of the candidates and a second round. i think the parliamentary elections coming next month, that is the real test for reform anin france. the president is a symbolic figure, as we have seen in america. can macron carry parliament?
he is trying very hard to effectively take over the existing parties with his choice of prime minister, a moderate, a republican, the support of alan juppe. the intention is very clear there, but the reality is, if you include the socialist vote, nearly 30% of first-round voters -- that is effectively his plan, which means 70% did not back his plan. i fear that when it comes to the parliamentary elections, we will get a fractious set -- francine: which means france is not reformable? >> have you govern a country with 256 different cheeses? nobody else has been able to reform france? good luck, monsieur macron? francine: i was going to try to find out how many cheeses were in the u.k.
down sharply after the airline had a record loss in the winter travel season as the new pound replaced expenses in mainland europe and the company slashed prices. the ceo said she was not concerned about the share price move. >> our share price will always read negatively went fuel goes up. yes, there will be some shorting today, because actually, we have had a good run over the last three months, but if you look at our share price, it is fine for where it is today. francine: let's get more with our aviation and aerospace reporter. thank you for joining us. how worried should we be about easyjet? >> well, if you listen to carolyn mccall, we should not be worried at all. her cieview is the share price s
quality.e she says it is where it should be. two things from the company this morning that was interesting. loss they mention. the other was that they have converted a number of orders into larger planes. the underlying signal is, here is a company upbeat about its prospects because they are ordering larger planes than the one they have now. they think they can' fill this capacity. to answer your question, probably some optimism there, unlike what the stock is doing today. francine: give me a sense of what the airline can do from here. they have placed $3.8 billion in the planes. do they think it will get better quite quickly? >> they probably see some
growth prospects here that are two no small degree born out of the weakness we see within the european market. we have air berlin here struggling. spaine welling in taking capacity out of the market. these are pockets where easyjet things they can grow. they are taking the a320 type p 21's. and upgrading to a3 so, it is about 50 people per plane they are adding into this market. phase the pockets of growth here and think they can benefit while others are having a lot of trouble filling the planes. francine: thank you with your update, our managing editor for global business. up next, the post brexit vote surge. we bring you april's cpi number.
we also have a great story on bloomberg.com, which i'm pushing on social media. it is theresa may trying to reach out to the brexiteers ahead of the election. these are your markets. oil, expending gains. the trump concerns that he gave a briefing with classified information to a top russian diplomat. we will have more on that. this is bloomberg. ♪
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rancine: you're watching bloomberg surveillance. the german chancellor and the french president met. his first full day on the job. >> we represent each of our own countries. europe will only do well if there's a strong france. and i am, as well as the german government, committed to that. >> the u.k.'s hopes of a speedy brexit deal has been dealt a blow. the top court set a free trade agreement with singapore and needs the approval of national parliament before it can become legal.
in the e.u. the opposition labor party will offer voters what they call a responsible program ahead of the general election. in a speech marking the publication of the manifesto, jeremy corbyn will accuse teresa may of favoring the rich over those in need and will lay out a plan to reverse the priorities of government and put the preservation of jobs first as europe leaves the union. bloomberg, power bid more than 2,600 journalists in more than 120 countries, this is bloomberg. francine? francine: we're just getting breaking news out of inflation for the u.k. this is c.p.i. month to month, better than expected. we were expecting a 0.4 month figure. core is also better than expected. it's a nice little thing because this is the pound, 129
42. this is the concern for the bank of england and we saw a bit of a discrepancy about how you deal with that from the item club and from governor carney. this is a concern is that as a saving ratio for u.k. households goes down and the average weekly earnings also goes down, if inflation goes household re a you'll have less to spend. looking at this c.p.i. data let's go to merrill lynch and expert from capital management. what do you make of this inflation higher and weakness? kamal: as the chart nicely highlights, there's a second order of effect, the higher inflation rate crimping disposable income and leads to the slowdown in u.k. economic growth. longer term it has negative implications not only for the pound but the u.k. economy as
consumers continue to slow down. we see the vehicle registration numbers which also are weak and bringing it to egg the pound move may be on the basis you which we ng rate hike don't think is coming but the bigger squeeze is for u.k. personal consumption. francine: the inflation resumed upward march last month boosted by the airfares and clothing but also energy. kamal: the economy performs well and all the polls, the conservative party seem to be significantly ahead in terms of management of the economy. the polls have not moved over the last few weeks or so and does suggest the conservative party will be coming back with a house majority. francine: steven? stephen: teresa may is not a fool and saw the writing on the wall and part of the calculation is go there now.
the u.k. is a cyclical economy and part of it is the housing arket. it's been recovering six or seven years. brexit, we'll talk about in a minute, i don't see grounds of optimism and it will be a nice, cozy brexit deal. once teresa may comes back into downing street with her thumping majority, reality will start to bite and we're looking at troubling times ahead for the u.k. economy and the pound. francine: this is kind of the projection for the inflation datas. this is basically the b.o.e. forecast and yesterday they were saying it was maybe too optimistic. stephen: it's hard to see inflation carrying away if the economy is cooling at the same time but a period of stag nation the back end of this decade with inflation remaining
above 2% is very likely. francine: will wage growth follow c.p.i.? kamal: if you look at the press conferences, that's what the bank of england will happen in time the labor market will feed into higher wages and as of yet it's not happened and we've been through a various cycle since 2013 where various members expected to pick up in average earnings growth and hasn't happened. i would suspect tomorrow's employment figures the focus will very much be on those earnings numbers. francine: what needs to happen, i'm all about inflation charts. what needs to happen for wage growth to pick up significantly and do they need to feel better for brexit because there's no ariffs and you can still sell? stephen: what may did was kick the can down the road. and what is the ability to form long term contracts, etc., will
be the key drive where you see those decisions form enhanced wage negotiations for the labor market. francine: stephen, do you think wage growth, is it a metric we need to leave one or two years since we're dealing with brexit? do we look at things differently as brektsity -- brexit negotiations get underway? stephen: plenty of books written about this one, it's a global problem, not just a u.k. problem. the majority can draw upon the 500 members across the e.u., not trying to be too political, the reality is hundreds of thousands of net migration coming into this country was very difficult for groups of labor to generate decent wage growth. in 2021 or something like that when we're most likely outside the e.u. and those taps have been turned off we can see a different dynamic. the share of wages, the share of labor is a proportion of the economy is at pretty much
record lows. he think that will change for the next decade. all politicians deal with this problem. francine: if there's one single thing you look at brexit is a success or not, what would it be? stephen: from an economic point of view the prime minister wanted to have friction free access and wanted to pick up where people like turkey or algers or many countries around the periphery of the e.u. has had, well while one doesn't have customs free access or friction free access, will that be achieved? every single politician, mr. macron will be no different, telling it won't be achieved and there's a political issue to play here and i'm afraid i can't see that changing on the issue for instance of the residual rights of people living here, the three million or so of them, for the europeans to say there will be two class skens, there will be european citizens and the right to residence and will have
recourse to a european justice system whereas british citizens don't, that's a very obtuse reality. and i think it shows you there re things put in the works and will be a difficult negotiation. francine: stay with us. up next angela merkel meets her fourth french president since taking office 12 years ago, german cus on the issues with michael fuchs. this is bloomberg.
advisors trying to control the political fallout following the report the president revealed the diplomat last week. this is the dollar spot index with 10-day volatility, the white line is 30-volatility and the average lines for each expected metric since trump of november. both measures below their average volatility. there's more evidence also the dollar rally is losing momentum and large speculators cut in their bullish dollar predictions by the most in 11 mopts last week. china increasing holdings. the world's second biggest economy is stabilizing and capital controls helped stem that capital flight with the nation raising the ownership of otes and bond and bills.
right after japan. they of course extend the oil production, if saudi and russia convince producers to adopt the strategy in next week's opec meeting and will pair near record industries in developed nations by 8% and to raise the glut weighing on the market according to bloomberg calculations using government data. what a wonderful chart that is. very quickly, gold today, hedge funds are another speculation cutting their long positions in futures and options by the most in eight years, traders betting the fed will step up the pace of borrowing, concern over political risk in europe is easing as well. it's interesting as it comes, francine, gold gains for the fourth day, best run in a month in the highest level in almost two weeks. fran cheen?
francine? francine: merkel's party topped polls this week. let's talk to michael fuchs is who is a close merkel supporter and joins us from berlin. thanks for making a bit of your time this morning for bloomberg. give me a sense, first of all, of merkel's strong position and what it means for political risk in europe going forward? michael: well, the situation is at the moment quite convenient for all of us in the c.s.u. and angela merkel is pretty happy because of the state election we had on the last weekend hich we won the large state. d while the situation lost three stage elections this year so shultze is not in a position which shows a lack of evidence
he's going to take over in september this year. but anyway, we still have to go four months and you never know what happens in four months. i wouldn't say it's already done. we still have to work on it and angela merkel is keen on moving. francine: what are the top priorities of angela merkel as she heads to g-7 next week? michael: top priorities are of course the e.u. and all the the problems and she had president in her office yesterday and obviously it was a very good meeting already and there will be the alliance etween france and germany even stronger and i'm positive we have a partner with macron we can work and all the problems we have in the e.u. including brexit, macron could be a good partner for us and that's one of the priorities. but, you know, there's so many
internally and externally if you look into the situation with russia and the ukraine, nothing has been talked so far and all on the agenda. so she's pretty busy. francine: what are your impressions of president macron and are there spembing points, any concrete actions germany can help france with when it comes to reform? michael: first of all, i have to say the meeting went very well yesterday, as far as i know, i didn't talk to her but will see her this afternoon. but what i heard is positive and macron seems to be somebody we can really work and count on. european ery much pro as hollande has been and that will be good for us because we want to have a stronger europe and one thing that was very positive, he mentioned in his
press statement later, the day after yesterday, he said very well he knows that france is going to do a lot of reforms and he's the one pushing it forward with reforms. and also, we're pretty happy philippe, who will be the new prime minister, from a close ally to c.d.u. francine: tell me anything bilaterally that can be done between france and germany to help with some of the reforms and will germany and france deal with brexit together united? michael: definitely we will. we will discuss the situation as far as brexit is concerned with france and since we have a european oriented partner is macron, it might be a little easier. and always the concern of course the four freedoms are undeviseable and definitely also macron looks at it at the
same time. so we have somebody on our side which is going to help us in that situation. francine: dr. michael fuchs, one more question on donald trump, we know every day there's a new report and it's difficult to know what's true or not, his side are denying these reports about intelligence leaks and that he briefed some russian official some plots in dealing with terrorism. how would you deal with president trump? michael: it's a very difficult question, the latest news not very good for all of us because whether the two or not, it's anyways bad if this kind of news is in the world. we need to have a strong and reliable partner in the u.s. and at the moment it doesn't look really positive. although the meetings my chancellor had with him went pretty well and even his recently as in berlin
and had some good discussions and that's not all of it. to r of fact, there seems be things to improve and we look forward to the g-20 summit in hamburg and do hope trump is coming up with decent proposals to this meeting but yes, it's a difficult situation, we all face it. francine: thank you so much, michael fuchs, deputy leader of the c.d.u. joining us from berlin. up next, the happiest place on earth. the cybercriminals are upholding the disney studio asking for payment from the studio. this is bloomberg. ♪
continent-wide price war. disney c.e.o. bob iger said hackers have a film and threaten to distribute it online. the alleged extortion attempt is part of a string of cybercrimes rattling the world after more than 200,000 computers were infected with so-called ransomware. ford is planning to cut 10% of staff woldewide as there is escalated pressure to boost lagging d a lacking -- stock price. the job cuts are expected to be outlined as early as this week. ford says it does not comment on speculation. that's the bloomberg business flash. francine? francine: now we have final thoughts from paul and stephen. you were akin to go back to germany with the entry by michael fuchs. you almost seem to suggest the relationship is puff in the air
because nothing really will happen between germany and france. stephen: if you cast your mind back five years to the height of the euro debt crisis, the content of kiwi and interest rates was revolutionary and the german with their history of fear of inflation wouldn't counter it and they did and it was to save europe from the demons that were lurking and fortunately in holland and now in france, the extreme right have been defeated. so the question now is germany going to continue to and and ce this approach there was a call for the end of the e.c.u. and it's towards germany putting its weight behind the issue of some euro bond, you got short shrifted with those
concepts and that's the irony now france is safe may be muddled in my opinion but safe from the far right. germany may be much more determined to reduce the stimulus and get away from these very extreme actions. francine: you can argue germany is talking to a domestic audience when you say that and like we've seen from the past we've always known there they were against the stimulus but tacitly approve. does the special relationship between merkel and macron, if it exists go a long way even if it's not telegraphed around the world? kamal: that's the roadmap, we have the german elections and there has to be quid pro quo as we highlighted today, france and germany need to see france delivering before it takes the next estimate. obviously the big focus will be the brexit negotiations in the next 18 months or so, but germany will need france to
move in a reformist direction before we talk about a federalist europe. francine: because angela merkel did so well at the elections over the weekend, four months is a long time in politics, anything can happen with marckell and shulz. stephen: the fair wind is behind us and is a phenomenal we're seeing that the center left parties are failing, in america obviously and in france the socialists have been more or less destroyed in the u.k. and looks like labor will head to a record defeat. so the irony of the ironies and shulz is finding it in germany as well, despite the center right failings seems to have more appeal and america sell on course for a fourth victory. francine: give me your best the t opinion, and what is best play given what's happening in europe? stephen: there are no cheap securities to be had and certainly are emerging markets
we like. india. there you have rule of law, english language, world's largest democracy, long-term growth rates of 6% plus. we see not exceptionally cheap but a steady good story and we much prefer that. francine: thank you both for being here. bloomberg surveillance continues in the next hour. i'm joined out of new york with a guest. this is bloomberg. . ♪
trump revealed classified information to russia's top diplomat. top courtan union's says a free trade deal with singapore needs the approval of national parliaments before it can become legal. daycrude rising for another as kuwait joins in the call to continue production cuts. i am francine lacqua in london. tom keene is in new york. we look at trump and the various reports surrounding that possible disclosure to a top russian discuss -- official and then the euro-dollar. tom: the bombshell last evening went all across america. news, analysis, and controversy. i know you have the morning must-read.
francine: it is one of the first times that it suggests having a little market impact. i would qualify that we did have a little weakness in the data friday from the u.s.. but euro-dollar at the highest since november. let's get straight to the bloomberg first word news. let's get to taylor riggs. taylor: the white house is trying to contain the fallout from a report that trump disclosed secrets in a meeting with russian diplomats last week. according to the "washington post," the president shared sensitive information on an islamic state plot. informationt -- the included using laptops on commercial flights. john cornyn of texas and michael rodgers are the top candidates
for fbi chief. in the u.k., new labour party leader jeremy corbyn plans a new corporate tax if the party wins in the election. the tax would hit companies that pay staff more than $425,000 a year. it is part of policies aimed at reversing years of conservative party rule. 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: thanks. equities, bonds, currencies, commodities. ,e have some good charts particularly what is going on with merkel and macron. $1.1042. 45. vix, 10.
unchanged.iss seems i put in euros lottery showing -- euro's lottie -- euro-'s lottie -- euro-zlaty. expectations a little below what analysts were thinking. this is a picture of european stocks. regaining earlier. $1.1042.ar, a fifthar weakening for straight day, having to do with the report that trump revealed ossified information. and iea, the price of crude up $49.23. it cuts different ways, whether it is this was frank or
the japanese yen. this is zloty. here is a strong euro. then up we go. you have stronger polish zloty. little off of the regression in 2012. you will really have to break through right there to have a strong zloty. francine: this is what i take -- picked. u.k. inflation that are than expected. resuming its upward march. bestrice of care for your airfare went up. there is concern -- and this goes back to the boe expectation that if wage growth does not canow cpi, if you are a you household, you will feel that your income is squeezed and will spend less. tom: what we tried to do on
"surveillance" is lose the hysteria. there was a fair amount of hysteria last night on the announcement of the president's actions with the russian ambassador. there was an immediate response from the secretary of state and the national security adviser. here is general mcmaster last evening outside the white house. >> the story that came out tonight as reported is false. the president and the foreign minister reviewed a range of threats to our country, including civil aviation. at no time were intelligence sources and methods discussed. the president did not disclose any military operations that were not already publicly known. dino paul in the back of that video, working with the president. she and general mcmaster were in the room with the president and the foreign minister of russia.
kevin cirilli joins us from washington. what is the need to know on this story? kevin: democrats are pouncing, suggesting that trump was reckless with national security intelligence. that said, there is a legal precedents, where the president of the united states can disclose national security intelligence. democrats and republicans all admitting he did not break the law. whether or not he was reckless with the information is unknown. launched a series of criticisms, bipartisan criticisms, about the notion and bandwidth of how in-depth this was. tom: is there any indication that the president understands how serious this is? kevin: he is getting warnings from capitol hill. i want to bring up a quote from senator bob corker, a prominent republican.
he told reporters that the white house has to do something soon to bring itself under control and in order. it hasit has to happen. obviously, they are in a downward spiral right now, and they have to figure out a way to calm to grips -- to come to grips with all that is happening. francine: what i do not understand is the euro-dollar reaction. what are people concerned about, that trump gets dish acted by these reports and does not focus on tax reform? kevin: yes. the sources i have spoken with seem increasingly frustrated that the president will not be able to accomplish other items on his legislative priority to do list, such as health care, tax reform. this is a republican-controlled senate but with a very slim majority of republicans in control. later, we will speak with senate majority leader mitch mcconnell. i will tell you leadership in the senate is increasingly concerned about the confusion of
the administration. francine: thank you, kevin cirilli. in damage will -- vara mcdool. and moritz kraemer from s&p. derek, what do we actually know? you have the white house saying it did not happen and reports saying that trump talked about classified information with the top russian diplomat. >> the only people who will really know what happened in that room are the people in that room. it is worth noting that general was phrased.ote story was false as written.
that was not the allegation in the washington post, which is by revealing and intelligence operation or certain details of powdered -- about it that russians would be able to figure out the message by which it was actually gathered, and that this information came from an allied government that had not given permission to share it. this is about trust with other nations. francine: what comes next? does this jeopardize the sharing of information? >> these are the big questions. it is something we have found is the greatest source of instability around the trump administration. not knowing what will happen next. we recently concluded a large study that we will release at the end of this week, where things are very unforgettable because the main actor is
unpredictable. if the "washington post" story is accurate, this is not evidence of much of a plot or collusion between the trump administration and russia, it seems to be an off-the-cuff remark. christie's80's and of trump himself, the story got out. it will lead pasta allies to share information in the future. tom: you have a great subtitle. the foreign policy of russia is domestic policy. is noericans, mr. putin more than a former kgb apparatus. -- moritz: russia -- daragh: russia has many competing agencies fighting for the ear of
putin. so there's a fractured intelligence apparatus fighting with each other. certainly, something like this will inform the kremlin that there are ways we can use trump, push america and its allies in directions that are adventitious to them if the user properly. on the other side -- dvantageous to- a them if used properly. but there is a lot of danger for russia as well. francine: so far, we talk about geopolitics and politics, but now we are seeing impact in the euro-dollar. at one point does this put into jeopardy the real credibility of the u.s.?
corollary. have a as a rating agency, we are not so much commenting on the diplomacy of this fall and i have no insights. francine: you were not there? moritz: i would have let you know. a spannerically puts in the wheel of the legislative agenda. some of the market reaction has the beast team in that context. put in thato be context. the infrastructure boost, we have not heard about it. if you look at reflation trade in the u.s., that has gone cold. if you look at the issues of tax or even health reform, all of this is still in the early stages. test will be in the senate.
because the majority is rather the mrittle -- brittle than house. these issues are not helpful to promote economic agenda items, whatever you think of them. there is a certain sense of frustration. thank you., coming up, the interview of the day for all of bloomberg worldwide. our kevin cirilli in conversation with the senate majority leader. this will be extraordinary. in the 9:00 hour this morning. this is bloomberg. ♪
♪ is "bloomberg surveillance." there is a report that job cuts are on the way at ford. the automaker plans to cut 10% of its staff worldwide. the "wall street journal" is mostly salaried employee. ceo mark fields is under pressure to increase profits. in europe, car sales fell the most last month in four years. sales dropped 6.8%. one reason is that there were two fewer selling days than last year. that is your bloomberg business flash. francine: thank you. angela merkel and emmanuel macron have vowed to work
together to strengthen the european union. that as the german chancellor hosted the newly elected french president on his first full day at the job. >> we each represent the interests of our own countries. the interests of germany are naturally tied to the interests of france. germany will only do well if europe will do well. europe will only do well if there is a strong france. i am, as well as the german government, committed to that. francine: we are with moretz kraemer, fromtz s&p, and antonio barroso from teneo. macron went to talk about the budget, but he did not get much. is it too soon? >> it is way too soon. it is an old tradition that
german or french leaders visit their counterparts after getting elected. what is important is that there seems to be a platform, there seems to me more that unites the leaders than before. what berlin is hoping for, in my that france isis starting to catch up. of over the last couple years, since the crisis and a little before then, there has been a divergence of economic parts and of influence, which has forced berlin into the role of hegemon in europe, which is a role that the country did not want to play. there will be a reform drive that leads france to catch up. francine: is there something germany can do in terms of bilateral relations to make sure
france pushes through reforms, especially when you have a president that. elected but may not -- that got elected but may not get a majority in the general election? antonio: i do not think there is much he can do. needs tongela merkel see some reform coming from committingt before further. at the same time, micron has managed -- macron has managed to do something important. put things back on the political agenda. macron is putting that decisions on the agenda. francine: what needs to happen for europe to be stronger? we focus on france and the netherlands. is it the problem child? moritz: not so much on the
netherlands. where we have to be am large economies that have fallen behind in growth and reform momentum, it is france and italy. variable been a geometry in the eurozone, where you have the so-called core, like germany and the netherlands, austria. then there is the periphery. and france was oscillating somewhere between the two in people's minds. what berlin hopes is there will be a clear reconnection and that there will be a stronger core. tom: maybe there is some hope and maybe there will be some audacity from the new president of the republic of france. we will continue this discussion of europe. in the next hour, we will speak with nick burns of the harvard kennedy school. york, andn, from new
help me a what mr. draghi needs to do with these politics. is he de-linked from the dance? antonio: i think draw the season seesn -- i think draghi macron as an ally. there is only so much the ecb can do. we need member states to do their job. france was one not doing it, where high unemployment and low high unemployment and low growth. tom: is the credit quality of europe improving? moritz: no. it is going sideways. there have been a couple of upgrades one or two notches. cyprus, portugal. spain, ireland.
majority leader mitch mcconnell p the white house has been the presidentrts disclosed secrets to russian diplomats last week. according to the "washington post," the president revealed closely held secrets to russia's former -- foreign minister. anders corr joins us now. give us a sense of what you think will happen next. thewill have -- you have thep camp trying to contain damage, but it has been condemned by both parties. how far will they take it? anders: there is a good chance the republicans will calm to -- will come to a realization that trump is a danger to their political futures in 2018.
there is a good chance of that republicans will seek impeachment over time. one interesting thing i have 's"n in the "washington post most recent reporting is an article that implies that jordan was the country that the data was leaked from. there is an implication there that is not explicit, which is interesting. tom: as you are expert at the structure of the new russia across the western world, when the foreign minister entered the oval office, how was he different than previous foreign ministers? anders: first of all, the american press was not allowed to that meeting. normally, a meeting like that you would have the american press present. there is a red flag there,
literally, in the oval office. there are too many connections between the trump administration and the russians. it looks to strange. there are -- it looks too strange. too many issues. the comey firing looks like of structuring of justice -- like obstruction of justice. which leads to impeachment. tom: this is no a feldman of feldman law -- noah of harvard law. if any on else in government except for mr. pence word classified information, that person would be going to prison. but the president has inherent constitutional authority to
declassify information at will. and yet, the language reported is trump has "great intel." aware, in your opinion, of the ramifications of his actions? anders: i do not think so. i think he is fairly careless and cavalier. it comes to many things, including foreign policy. unfortunately, some of trump's foreign policies have been good. he has taken a tough approach to north korea, which is sorely needed. he has many good things going for him. muchhis hubris is too m here. the republicans and u.s. allies will not be able to trust him. he is a loose cannon. tom: thank you. greatly appreciate your
attendance. with core analytics -- with corr analytics. right now, we need to resolve the conflict of news. here is taylor riggs. taylor: starting in israel. the politician with the best chance of succeeding benjamin netanyahu says he welcomes attempt to broker peace. >> not doing anything is also a choice and is a bad one. tryingt that somebody is to push some sort of envelope is a good sign. israel trump travels to may 22. the new south korean president will visit the white house next month. there is growing concern about
north korea developing missiles. the u.s. is south korea's the trumply, and administration is taking a harder line. increased holdings of u.s. treasuries by the most in two years in march. the chinese now have slightly debt.2 trillion of u.s. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am taylor riggs. francine: thank you. judges at the e.u. court of justice said a free trade agreement between the e.u. and singapore need national parliament agreement. this comes as the u.k. election --paign gains momentum
momentum. i want to get back to moritz kraemer of s&p global ratings, and antonio barroso of 10 ao -- teneo intelligence. in theeems to be people markets that think if theresa may does not do as well as expected, it will somehow temper brexit. is this just wishful thinking? antonio: i think it is wishful thinking. if you look at the analysis of of new m.p.'s, they are all brexiteers. it does not look like she will get the brexit she once -- wants. so if we assume we are
going for a heartbreak -- hard break, what will the economic landscape look like? moritz: i think after the election, there will not be that much more room for maneuver for anyone. it will not make a big e.u.rence to the eeo -- negotiators. say well not wake up and will change our attack. what will happen is that there will be a much more concrete agenda and mandate, which will be published in the coming days, i assume. frexit --oft peddling brexiteers, it will be difficult.
basically, they signed up for it. folks for the soft rags it will be just -- brexit will be disappointed. tom: we are almost one year on from brexit. is the clock ticking? fast where weto may not get any negotiation or deal at all? antonio: the clock -- moritz: the clock is ticking against the u.k. if you look at the position of the u.k. after a year, we do not really know. we may find out in the manifesto. on the other side, the europeans have made it clear, up to the --it one wonders what the u.k. objective will be and we do not
even know who the negotiators will be. it will take a huge step forward to make this happen. and do not forget, there will be german elections in late september. so the real stuff will only get underway after that. then you need to calculate a couple of months for parliamentary approval of any agreements. francine: are we underestimating the fact that germany will lose a lot because of exports? antonio: sure. you open up the way for countries to make agreements with the u.k. the unity between member states is unprecedented. i think they will stay united. francine: do you agree? moritz: i agree. thenare united much moreso and the immigration crisis and
in the eurozone crisis. it is quite remarkable. you.thank antonio barroso, thank you. we greatly appreciate your work with us when we were in paris. coming up, do not forget the mcconnell interview in the 9:00 hour. kevin cirilli and the senate majority leader. that, ted alden on trump and trade. from london, from new york, this is bloomberg. ♪
government bonds stands at over $2 trillion. stricterign that capital controls have helped. pledged $7after xi billion in the one road infrastructure initiative. here in the studio in london, we still have moritz kraemer. $78 billion is what was pledged. --you have a feeling it has it is one policy that trump has given china a gateway to the world but domestically they still have problems to deal with? >> sure. it is being labeled as globalization 2.0. there is no doubt it will be a significant infrastructure
outlet. billion -- over 200 it will boost trade and demand that china trades with. but domestically, they have a lot together own head around, not least the ongoing increase in debt. that is why we see authorities continuing to try to grapple with what is happening. externally, it might help them but domestically, there is still a lot of fragile sentiment. certainly in the capital markets and on the exchange rate. francine: we also found out china increased its u.s. treasury holdings by the most in two years. will that trend continue? enda: this is a big turnaround.
at the start of the year, we had capital outflows in double-digit s. now it is stabilizing nicely, to the point where reserves are increasing, and china is back buying treasuries. factors,t to external including the pace of fed rate hike and dollar strength. that has been the key. el-erian has a beautiful phrase for what we are going through. it is the "strategic vacuum." how big is the trump strategic vacuum on a foreign agenda that buttresses against china? enda: how big depends on your interpretation of it. china is certainly seeing a gap
they intend to fill, from the davos summit to the g 20. 20 heads ofthan government arriving to shake hands with xi. openness andching are trying to be the defender of the status quo. at the same time, the protectionism we have heard from the american campaign has not played out. we are in the early stages of the trump administration. talks between china and the u.s. are still ongoing. it will be critical to see what comes out of that. if there is a vacuum right now, whether it is real or not, china is happy to be portrayed as the one carrying the flag for globalization and anti-protectionism. francine: thank you. enda curran in hong kong.
let's get more from moritz kraemer. china is looking at regulation and how to manage risk, but the risks remain. how those are we to the possibility of a financial crisis? 100% no way or a 30% chance? well.: enda described it it is a dichotomy. you have the desire of the to marketsto open up and be the champion of openness and let the markets determine the allocation of resources. on the other hand, when the market is doing something that the party leadership does not liketo -- does not seem to much, they stepped in, like with the capital controls. oris a little early misguided to say it has stabilized, because it is the result of administrative limitation of capital outflows.
what the government is now undertaking is an attempt to move away from credit growth. but they have been saying that for some time. if you look at the overall investment boom, that continues to go on, so there is some rebalancing. but given the size of a challenge, it is happening quickly. the hope of many is after the congress later this year, when xi jinping will get a new mandate, they will really get going. francine: the real question is if you trust the regulators. if there are smart enough people in the spotlight to navigate this economy without too many hiccups. moritz: this is a huge challenge. we have a system here in the credit you have state owned bank s leading to state owned entities. so some of the transparency you
are used to in other countries you just do not have. what you do know is the credit growth continues. there are attempts to slow it down. there have been liquidity measures. if we will need to see authorities are really willing to follow through on that, not just in the first step, but to like the steps they take. they are committed to rising growth and prosperity. the only way it has been achieved is through credit growth. tom: thank you. we will continue with mr. k raemer a standard and poor. let me show you the bloomberg terminal. you watch francine with the sound on, watch me with the andd off, then click here see previous segments. and you can download a chart of
taylor: this is "bloomberg surveillance." shares of easyjet are lower today. european discount airline -- the european discount airline posted winter losses, but bookings are running ahead of last year. still, the ceo acknowledged brexit is having an impact. >> it will be a bumpy road. shares have been volatile for many stocks, particularly for sterling denominated stocks. we are one of the few ftse companies that are sterling denominated. taylor: easyjet has been hurt by the weaker pound and falling airfares. that is your bloomberg business flash. tom: thank you. we will really look to washington in the next hour. ambassador burns will join us.
we have the senate majority leader in the 9:00 hour. let us pause and look at something mr. macron cannot ignore in france. that will be a dutch parliament. to getuld not be able anything done. and there is news out of austria where six months ago's government is vaporizing into a far right return. moritz kraemer is with us from s&p global rating. this is something francine lacqua has been watching. just willsm/far-right not go away, will it? moritz: no. i do not think we can go on that election after election we are holding our breath and giving a sigh of relief that we just got off the hook this time. in the the election netherlands, the elections in france, and it will be more to come. the economic recovery and employment recovery helps, but it is still very weak.
in terms of employment. the unemployment rate in the eurozone is still well above precrisis levels. there is a long way to go. on the dutch side, i am not overly shots, because the dutch political system has been traditionally extremely fragmented and continues to be so. many commentators were expecting a long, drawnout negotiation to build a coalition. that is what is happening now. francine: the question is how do you make france more competitive and what happens if you do not? there are a good number of avenues that have been identified and discussed by national organizations and the commission. most of these recipes would start -- we are looking at the state sector. in france, you have some 56% of by the state, by the various levels of the government.
where germany with the federal system, it is actually in the mid to low 40's. it has to be funded by taxes. the high taxes will be a hindrance to competitiveness. this is one avenue. there are others -- product and labor markets. there is a whole gamut of activity. tom: we will have to leave it there. we are out of time. standard and poor's global ratings moritz kraemer with a story the next hour, in washington, kevin cirilli will be here with us, as well as ambassador burns. peter hooper with optimism in the american economy. this is bloomberg. ♪
legal or not on declassified and classified information? it is controversial, no question about that. in this hour, ambassador nicholas burns and our kevin cirilli in a sleepless washington. the case for the american economy. peter hooper of deutsche bank on sustained growth. china going into the vacuum left by trump nonpolicy? this is "bloomberg surveillance ." i am tom keene with francine lacqua. an uproar in washington like i have never seen. you have general mcmaster on the driveway of the white house, backing up the president. absolute turmoil in washington. francine: we saw a lot of republican speaking against him. it is the first time it is directly going to the market. whether it is because they think
growth will not be a sustained because it will dish out the president or not, the point is we see dollar weakening today and the euro surging. some great quotes, including noah feldman. with much more, here is taylor riggs. taylor: starting in washington, the white house is trying to contain the fallout from the report trump disclosed secrets with russian diplomats last week. the "washington post," the president shared sensitive classified information with the russian foreign minister and ambassador. the intelligence involved a plan to use laptops as weapons aboard commercial flights. the white house says the story is false. the trump administration has --erviewed a contending's eight candidates to replace james comey.
the white house refused to answer questions about whether trump secretly recorded conversations he had with comey or anyone else. in the u.k., labor party leader jeremy corbyn plans a new tax if he wins next months election. corbyn is unveiling the tax today as part of policies aiming to reverse years of conservative party rule. 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: thanks. home depot out with earnings, always a bellwether for the american economy. i guess he will not buy a 2 -- you will not buy a 2 x 4 from amazon. they guide forward with a positive reaffirm.
more on home depot getting it dump-in let's go to a data check. equities, bonds, currencies. the euro, 1.1044. the yen, swiss franc, and euro-zloty. the eastern european affect. francine: this is what i am looking at. the euro soaring, or at least the dollar weakening, at her the report that trump revealed classified information to russia's top diplomats. it is having an effect on the market. in crude gaining on reports that cuts will be extended. $49.05. the yen a haven. tom: there is a collective memory of the financial crisis re-ductas a readout --
in the oval office meeting. here is general mcmaster with the statement. >> the story that came out tonight, as reported, is false. the president and foreign minister reviewed a range of common threats to our countries, including threats to civil aviation. at no time were intelligence sources or methods discussed. and the president did not disclose any military operations that were not already publicly known. tom: there we are. kevin cirilli in washington this morning. can the president travel abroad and focus for a moment on riyadh? moritz: -- kevin: he will have to focus on what it means. while he denied the report, republicans are increasingly frustrated about the leaks and how it will hurt his ability to pass his legislative to do list. let's pull up what senator bob
corker said last night. he said "the white house has got to do something soon to bring itself under control. it has got to have been. a downwardwe are in spiral right now. they have to figure out a way to come to grips with everything happening." tom: who is the adult in the room who will fix this? you just named some of the folks, including deana trump trusts. but he has to work with the republican congress to pass health care and tax reform. in the past 24 hours, every republican aide i have spoken to has told me this is a major issue and they are questioning his ability to govern. francine: what does that mean for the investigation? kevin: what was that?
francine: is there an investigation? what is the next step? kevin: there are ongoing investigations within congress. the senate intelligence committee is looking at the finances of trump. financialitting more records. not the full a state of his tax reforms, but of these investigations are still ongoing. he still has not named an fbi director. there is pressure that he may want before he takes off for saudi arabia. kevin cirilli, thank you so much. now joining us by telephone, the former ambassador, nicholas university.vard ambassador burns, kevin cirilli just stopped me in my tracks with the idea that people are questioning whether this president can lead. are we beginning to frame a president who will be forced to resign? amb. burn: it is hard to know
that. this is a disturbing story, if true. i think it is important to say because we do not know that. there is mounting evidence the president is undisciplined. he has not shown ability to adapt to this job. the firing of james comey, this incident, many others. it seems tome a -- be a crisis a day. is notg evidence he leading effectively. it is critical, because you have to be disciplined. you have to understand the difference between classified information and unclassified information, what you share, especially with an adversary like russia. it is a very disturbing example. tom: there is a primal scream from the democrats and a lot of other people that there should
be a set of resignations. re resignations around a president of value to the process or a waste of energy? amb. burn: it depends on the person and time. much restssystem, so on the maturity and just him -- wisdom of ournd president. trump has a strong views but has not shown an ability to be consistent in how he acquires information, to be briefed, in relying on the advice of others. if the president will not listen to his advisors, if you will not understand that he probably knows less -- certainly does -- then most of these people in specific issues, you have to wonder about the value of that. notoes back to whether or the president can adapt, whether he can change in office, adjust to this entirely new job that is
completely different than anything he has experienced in his professional life. francine: can he learn or will he start losing the support of the republican party? amb. burn: you saw some notes of frustration from senator bob corker, the chairman of the foreign relations committee. that was significant. you saw it from democrats. of vermont, mark warner of virginia, who have a lot of respect on both sides of the aisle. the president has a legal right to disclose information to foreign governments, but he has to use judgment as to whether it is the right thing to do. is an story is true, it indictment of how the president is conducting himself in office. a lot will depend -- maybe everything -- on republicans to give the kind of advice they
need to give to the president to get his attention to understand that these types of things cannot happen. francine: i want to come back to something you said. storye stories-- if the is true, who can verify that it happened? amb. burn: it is important to give everyone due process. the press will have to continue to pursue this story. happen, there are at least conversation between the congress and the president and the president's staff as to how to prevent it in the future. but we have learned in this administration that the press is playing and extraordinarily important role. tom: ambassador burns, thank you. nic rinse from the harvard kennedy school. nick burns from harvard kennedy school.
we talked to peter huber from deutsche bank. how do people synthesize this stuff to an excel spreadsheet? this is original? peter: certainly. what is going on in washington is important. the ability to get tax reform through. tom: do you delay that? peter: obviously. -- these that machine sense that the machine is operating smoothly has gone by the wayside. chances of getting a significant fiscal package this year has gone down. tom: very good. -- peter hooper with us. it is without question our interview of the day. our kevin cirilli -- you just heard him speak about the -- kevin cirilli and
♪ live pictures of the labour manifesto. moran, iaitlin believe. this is where jeremy corbyn is launching his manifesto, where he think he will position himself. he plans to hit one million more people. the one thing i will say is a lot of the labour manifesto was leaked over the weekend. it is something we need to keep an eye on. at the same time, polls are showing tory support is surging in the labour heartland.
so jeremy corbyn does not seem every votero reach in the country. that is the latest labour manifesto being launched. manifesto," was this written in the reading room of the british library? of anotheras a tinge time. who are they going after here? francine: "manifesto" is a common word in the u.k. language. but your point is does labor still signify a fairer society? given theresa may, how she has positioned the conservative repeating about the forgotten few she wants to include. there is definitely a meeting in the middle for the tory party. they are still pro-brexit.
this is what theresa may is bringing along. ,he wants to be fairer especially the just-about-making households. gagapeter hooper going over that banner. aner hooper, you have optimism in the u.s. american economy. can you bring it over to europe? peter: certainly. they are facing their own challenges, but europe in particular is starting to look better. the economy they are having picked up to the point where the ecb will eventually be tapering their policy. tom: i drove by your shop in washington -- in london. what is the view of deutsche bank? cane was ambivalence about the economy be sustained? peter: we have a challenge with
the negotiation of brexit. the u.k. is obviously more exposed. some of the concerns arising now is the fact that political developments on the other side of the channel are putting europe at the pace where they able to negotiate from the position of strength, germany and france, etc. it will be a challenge. we think the u.k. will muddle through, but the cloud on the horizon is how do negotiations go? francine: and of course, negotiations -- and i would also point to pound weakness --means inflation grows. let me bring you to my chart. households will get squeezed. how concerned are you about my chart?
inflation and basic wage growth higher but maybe not enough to catch this increasing inflation. peter: this is obviously a symptom of what is going on with sterling. currency weakness gets you this gap. it will be a political challenge going forward. is there willense be a muddle through. there will not be a major hit in this case. the u.k. has a more deep-seated inflation issue with the labor market having gotten to the point where you are eventually going to see wage inflation catching up, beginning to push prices up as well. but not to the point where we see risk in the u.s. down the road. hooper, deutsche bank securities chief economist. coming up tomorrow, we are live in las vegas and speak with the
a blistering sentence from mike allen. right now with a bloomberg business flash, here is taylor riggs. taylor: there is a report that big job cuts are on the way at ford. stafflan to cut 10% of worldwide. the "wall street journal" report says it mostly targets salaried employees. held the, car sales most last month in four years. sales dropped 6.8%. one reason -- there were two fewer selling days compared to one year ago. and car sales plunged 20% in the u.k. a new vehicle excise tax took effect. and in the u.k., inflation rose at the fastest pace since 2013. the big reason -- higher-priced airfares and energy.
this means more misery for british consumers. wages are failing to keep up with prices. that is your bloomberg business flash. francine: thank you. angela merkel and emmanuel macron have vowed to work together to strengthen the european union. that said, the german chancellor newly elected french president yesterday. let's get more prospective with gallian in paris. what was macron's demands and did germany acquiesce? well, 50% of the people who voted in the first round had -- even though the question of changing the e.u. treaties, which is something germany was a
reluctant to do in the past, a manual said this is not taboo anymore. this isuel macron said not taboo anymore. there is also a sense that i go a merkel also faces elections, so he said he would -- that angela merkel also faces elections, so he said he would reject those plans. francine: what details about the prime minister, announced yesterday? macron wantednuel a new face. quite unknown to the french public. experiences in the private sector. he was a lawyer and worked with a newsletter company, but basically, he is from the center-right. he basically left the republicans to join this new
government, broadening repeal -- appeal to the republicans. he used to be the front man for the republican who lost in november. clearly, he is trying to split french republicans. francine: thank you, caroline connan. peter hooper of deutsche bank stays with us. coming up, we will be in brussels to speak with the bnp paribas. this is bloomberg. ♪
has been rocked by report that the president disclosed secrets to russian diplomats last week. closely held intelligence about an islamic state plot. the presidents national security adviser denied the story. >> the story that came out tonight as reported is false. the president and the foreign minister reviewed a range of common threats to our two countries, including threats to civil aviation. at no time, at no time, where intelligence sources and methods discussed. and the president did not disclose any military operations that were not already publicly known. republican and democratic lawmakers say the report raises new questions about the administration and they want details from the white house. in south korea, news media says the new president will visit the white house next month. there is growing concern about north korea's process and developing nuclear weapons and long-range missiles.
this south korea's closest military ally and the trump and ministrations taking a harder line. sign that china's economy is stabilizing with stricter controls to slow down the capital flight. they're holding u.s. treasuries by the most into your since march. the chinese have slightly over a trillion dollars in u.s. debt. japan is number one. the best politician with a chance of unseating benjamin netanyahu says he welcomes president trump's initiative for peace with the palestinians. the party leader spoke with bloomberg a week before the president's trip to israel. >> not doing anything is also a choice and it's usually a bad one. the fact that he wants to be proactive and the fact that it's also quite a long time that nothing happened, somebody is trying to push some sort of an envelope is a good sign. taylor: president trump travels
to israel on may 22. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, i'm taylor riggs. this is bloomberg. tom: i want to start off this half hour. don't forget kevin cirilli's conversation with the senate majority leader. we will talk with peter huber about economics on the back and. onst, ted aldon of cfr what's going on in washington and his expertise on trade. here is no a feldman last night from harvard law with a definitive primer on what we observed last night. this is an amazing article. " if anyone else in the government except possibly vice president heads had revealed classified information, that person would be going to prison. the president, however, has inherent constitutional authority to declassify
information that will. he can classify and declassify, but he can't send people to prison for disobeying his presidential order." that's a superb article. ted aldon, how do you link what is going on in washington to the way we promote ourselves abroad? ted: i think it's very troublesome. there's an article in "the new york times" this morning from the former cia deputy director saying one of the reasons that we have been so successful as a country in recruiting spies and gathering intelligence around the world is because we are seen as exceptional, as a beacon of hope, as a country that by and large intelligence assets can trust. i think all this calls into question. we don't know the full story, but at the very least, there seems to be a lot of carelessness right at the top. tom: what folks are reading this morning is the trust that other
parties would have in the united states after these comments. selp me with how it fall over to net exports. can we see greater trade gross for the united states? ted: i think absolutely they are possibilities for greater trade growth. the u.s. economy is reasonably stronger right now. i think there are decent options abroad. trade is a central focus of this administration, at least when it can get to it. we are seeing a distraction a see so it's very hard to how the administration's policies on the economy are going to play out over time. absolutely i think there are possibilities on the trade front. at times we see the administration doing some things to take advantage. the recent announcement of agreements with china was very positive on that front. francine: give me a sense of how the republican party will actually be with this. can they influence president trump?
is there anything they can do to try and change how he briefs other ministers and heads of state? is: the party in congress obviously not in there with the president in these kinds of meetings, so the control is a little limited in that respect. what you do see, i think, is growing oversight, a series of investigations into the relationship between the president, his campaign, and the russians. we are seeing statements from important republicans like senator bob corker saying, look, there really has to be more control at the top in terms of how this sort of information is handled. "thei was at financial times" years ago, i covered the fallout from the iraq war intelligence and it's hard to keep this contained within the white house. i think it will involve the party much more broadly. francine: give me a sense of what this means for the republican party as a whole. how long will they support
president trump? how do we find out if this was true or not? ted: i think the question is what this is an ac exactly. h.r. mcmaster last night so the president did not reveal sources and methods. that is not what the sources are saying. they are saying that what the president share was potentially cro compromising. the only pressure from senators to get cliff occasion for what happened and get assurances of it not happening again. tom: a whisper of a secretary desk separation from secretary ross and that the reason dr. navarro. where does the ross navarro theory stand right now in our trade policy and our trade reality? peter: the encouraging thing we are seeing is the administration, when it comes to something that could potentially be damaging to trade, withdrawn
from nafta for example, has backed off. now they are renegotiated. the relationship with china looking more positive than people imagined early on. ishink the administration recognizing that staying out of trouble on trade is important to the growth prospect. tom: with the huber optimism, which you have received great acclaim, you reviewed the big bounce back now and pretty good gdp, but it fades away. how does trade folder to that? how does trade get there over 18 months? peter: assuming we get some small fiscal package, assuming the economy bounces back in a very weak first-quarter, it looks like it will. inventories were weak and that's going to adjust. consumer spending looks to be pretty good. i think the dollar beginning to strengthen again is going to tend to put a damper on trade prospects as we look into next year. our sense is that some of the
growth we get this year will be driven by investment recovering from a very weak period over for five years. animal spirits have a significant with. assuming the events in washington don't dash that, we can see the beginning to slow. francine: let's top not about the politics of it, but in terms of the president's focus on reforms that he promised. will it delay the infrastructure spending he has promised or tax reform or even health care? ted: it has been tremendously difficult for this administration to sustain any sort of legislative momentum at all. care, the president won a victory in the house, but now it's going to the senate where it will be much harder. there is no forward movement there.
he has unveiled a tax package. that has kind of fallen off the front pages amidst this discussion and the firing of james comey. infrastructure already seems to happen pushed back to next year. trade is kind of hit or miss. it has been a tremendously difficult for this administration to maintain any momentum on the issues that the president was elected on. francine: peter, what is your take on this? is there something that will actually be delayed? anytime there's a report come the white house and ministration has to do with that instead of pushing through a reform that promised. peter: we started the year with the possibility and the promise that a republican president surprised and a unified republican congress surprise would get its act together and get something done, not just on health care reform but on tax reform and fiscal expansion.
events in washington over the last several months obviously reduced the odds on that kind of outcome. best asee it best -- at small fiscal stimulus into next year as a result of something done this year. ,ertainly the more this goes on the smaller the chances of getting anything on that front. n is taking ted alde your book "failure to adjust" out in 2020. tell me about the president's failure to adjust. what does trump need to do? ted: he needs to deliver something to the swing voters who put him in office, particularly in the rust belt states. whoot elected because those got left behind hoped they would do something for them. and infrastructure package could do that. intelligence tax reform could do that. the health care bill will not do
that. it will leave voters worse off. he actually needs to deliver something to them. all these distractions in washington -- i just think you are going to increase the general cynicism in the country about the ability of washington to deliver anything that actually improves their lives on the ground. we have not seen the administration do that yet. tom: thank you so much with the council on foreign relations. we will continue with dr. hooper. much more to talk on the david brooks morning must-read as well. here's the conversation of the morning. we will take it worldwide across all of our platforms. washington with a conversation with the senate majority leader. that could be a two-hour conversation. think it will be a little shorter. mitch mcconnell in the 9:00 hour. this is bloomberg. ♪
taylor: this is "bloomberg surveillance: i'm taylor riggs. let's get the bloomberg business flash. elliott management has come out with a new list of demands at bhp billiton. they won a review of the oil unit. the firm calls for a full or partial spinoff of oil assets. they also plan for a review of the corporate structure. it would allow it to stay headquartered in australia. hackers claim to have stolen and unreleased disney movie and threatened to release it unless they are paid a ransom. ceo bob iger disclose the threat in a , staff members. -- a call with staff members. they say they will not pay. francine: china has increased its holdings of u.s. treasuries by the most in two years. it's ownership of government bonds stands at over $1
trillion. it's a sign that the second-biggest economy is stabilizing and stricter capital controls have helped. this comes after president xi pledged $78 billion for financing with the infrastructure initiative. diana and peter hooper is still with us. right to have you with us on the program. give us a sense of how we should look at china. $78 billion is quite a big number. his president -- is president xi trying to rival president trump to be the big man on the global stage? diana: he has taken it upon himself to be the front leader in global stabilization, but the motivation in china behind the belton road initiative is very much a geopolitical one rather than an economic one.
it's the economics that we should worry about the most when it comes to china over the course of the next couple of years because growth there has slowed down dramatically. timeis clear is that every since the financial crisis the authorities try to stimulate, the stimulus last shorter and shorter periods of time. there's a growth slowdown afterwards that is much better. bigger. francine: the only concern is that investors need to look out growth ist considerably less, but will it hit the 6.5% target? if it does, it's not bad at 6.5% growth. diana: the problem is that it's not at 6.5%. the chinese real gdp growth numbers have always been suspicious given how flat they have been over the years and not really showing real volatility
that you would expect for such a huge emerging market. i estimate my own real gdp growth for china yielding entirely the official data on nominal levels in various price indices. andhese numbers, quarterly annualized, real gdp growth was just 3.5% in the last four quarters. francine: what data are you looking at that is different? we have a lot a big houses coming here saying they believe in 6.5%. 3% is dramatically different. diana: what i do is take the official nominal levels for gdp, seasonally adjust the data, and then take the official data on cpi, fixed data investments come away those by the share of components in gdp to create a deflator, and use that deflator to deflate nominal numbers.
it's what the national bureau of statistics say they are doing but they don't know the details. tom: your been committed to 12 years to covering china. diana, yup got a chart on gross savings in america, something peter huber and as well. it has been the heart of deutsche bank analysis for 20 plus years. they save and save and save and save. is that ever going to end? diana: that is the fundamental issue in the global economy. it's not just china but japan in northern europe. eights striking is that years after the global financial crisis, the world is still seeing excess desire to savwee. the chinese will not be able to address that until they let that go. francine: you people on this. tom: when does that savings glut
break in china? peter: there's obviously a lot to be done to raise the social safety net. a number of factors will encourage consumption relative to saving investment in china. that will be a long, slow process i think. next fivein the years, hopefully we will begin to see some progress there. whatever the baseline growth is, whether it's through percent or 4% -- 3% or 4% or 6.5% as the consensus seems to think, it has been slumming overtime fairly significantly. a beginnings of a shift in the direction of consumption away from investment. tom: we will come back. diana, thank you so much on a currently busy morning. we've got to dash on. tv -- we showed you this earlier. you can get off the bloomberg
francine: this is "bloomberg surveillance: tomorrow, i will be in brussels speaking with the chairman of b.n.p. paribas. what we want to ask them is about regulations, the banking system, profitability. we will also be talking ecb with the finland board member. what we will be talking to him about is also reforms in the euro region. coming up shortly, it is "bloomberg daybreak: america's." alix steel joins us today. what you have coming up on the show? alix: we will dig deep into what broke overnight and the classified information with russia. at the heart of the conversation, what will it take for republicans to push back carter on the white house? who better to talk about that with been senate majority leader mitch mcconnell? his insight crucial at this pivotal time in the white house. tom: really looking forward to
that kevin cirilli interview. our single best chart with peter hooper. this is atlanta gdp and i've thrown in that big rebounds, the white circle. up we go with the cooper box. you have a fade within your 3% gdp, a good three or four quarters forward. kindo we fade after that of economy? peter: part of this is a bounce back from a very weak first quarter. consumer spending was not as weak and inventory investment is coming back. their -- to flow from slow from there and it's a long study slow. some of the back half of the growth would be the left and animal spirits we have had because of a more business friendly environment this administration has given us with these regulation -- deregulation. itt will not go as long as
could've happened if we had more meaningful tax reform supporting this kind of lifting and spirits. what's going on in washington is less likely. gridlock seems to be alive and well. initialctation is an list this year following a very weak start and then a gradual slumming into next year. francine: at the end of the day come all the markets care about seems to be balance sheets. there talking about the ecb balance sheet and the fed. is that really the danger for the markets and the economy is balance sheets get redressed to quickly? a problem, may be but the fact that we are talking about redressing balance sheets is just a symptom of the fact that the economy is looking better. europe's growth is above 1.5%. -- even if we were only growing at 2%, we would be well above our current speed limit.
we continue to see the labor market tightening. this is building potential inflation pressures down the road. the fed is not behind the curve -- andt they continue don't start talking about balance sheets. tom: we will continue this discussion on radio and particulate folded into the fed policy with the way core inflation has rolled over the last couple of days. foreign-exchange report -- euro stronger. i throw in their euro at the bottom because we can do that at bloomberg. we continue with mitch mcconnell in the 9:00 hour. this is bloomberg. ♪
president donald trump reportedly reveals classified information to the russians as the white house does damage control again. d.c. drama and the u.s. dollar. the greenback hitting the lowest level since the u.s. election and the euro stores is the trump agenda hits another roadblock. the pound drops. hopes for a speedy brexit agreement take a hit after singapore free trade agreement must cap national parliament approval first. david: welcome to "bloomberg daybreak." i am david westin along with alix steel. jonathan ferro's on assignment. there's news overnight that president trump reveals classified information to the russians potentially. euro stocksere, lighter, but the move is in the currency market. over that $110. not a ton of reaction unchanged on the day. david: is time now for your morning brief.