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tv   Bloomberg Markets  Bloomberg  May 28, 2018 7:00am-11:00am EDT

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mark: here are the top stories recovering from bloomberg and around the world. political risk finds its way back into the minds of investors in italy. the president on the populists are crash in and he has not carlothe premier, mr. cottarelli to form a government. a global trade fight a key of a key deadline this week, we look at the implications of trade uncertainty on the markets. as crude oil climbs on again saudi arabia and russia send mixed messages on the direction of crude prices. we will hear from the energy minister from russia. ♪ on what is check happening to markets today. this is the gri function highlighting what is going on with european equities.
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slightly lower today, given that we have a bank holiday here in europe. volumes are about 40% below the average for the past 100 days. of ave about a 10th percentage, and we are falling after rising earlier, as much as a third of our percentage last week. we had an eight week winning streak, which is the best since 2014. all about politics once again, today. this is italy versus germany 10 year yield, i can show you a number of yields, i could show you the italian 10 year, the spread between the two. as you can see with this one that popped up, the spread blue up after this announcement cottarelli, former executive director of the imf, was asked to form a government in italy he is a.
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approach that she has a strict approach to straight finances. over the weekend, the president of italy, which was interesting, refused the nominee for finance minister put forward by the populists. so they have essentially walked away from the discussions to form a government, which is what the president has put in place a check in a crowd. the big question -- a technocrat. the big question now, is whether the populists will accept the nomination of cottarelli and whoever he puts forward within his government. let's move on, there's so much to discuss today. how the euro is faring against the dollar. it was a earlier than came off the highs of the day. have a look at this unchanged against the dollar, one .16 -- 1.55 earlier. rebounding from a six month low on friday after the italian
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president refused to appoint the finance minister proposed. this is the worst run for over three years, slumped 6.5% since closing at $1.25 on february 1. let us finish up with the difference in price between brent and wti. we are talking about oil prices, they have had a bit -- the hit a bit of a speed bump. continuing to fall following friday's announcement about saudi arabia and russia are discussing easing out what curves -- output curves. the difference in the
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the price has risen to eight dollars, the mor most in more than three years, and making american great more possible to purchase. . who would have believed it was a bank holiday both year and a holiday in the u.s.? so much going on let us get a check on bloomberg first word headlines. . >> cap regions is from new york marks, president trump appears to confirm his summit with kim jewelr john kuhn is back on. last week, the president abruptly called off the meeting. south korea's president guangzhou you in held a surprise to our mean it with kim jong-un on saturday. he could end up taking part of the summit. senator marco rubio says his. zte and otherock chinese telecom companies from operating in the u.s. would have majority support in congress. president trump wants to let zte stay in business by paying a billion dollars fine for violating sanctions agreements. southeastern u.s., subtropical storm alberto could cause more than $1 billion in economic losses. the storm is expected to come ashore today in the florida panhandle.
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winds have hit 65 mph and parts of florida, georgia and alabama could get up to one foot of rain. british foreign secretary boris johnson is again putting pressure on prime minister over brexit he repeated his call for the united kingdom to make a clean break from the eu when it leads the bloc, explaining why they must resist calls to remain in the eu system. powered by more than 2700 journalists in over 120 countries. global news, 24 hours a day, on air and at tic-toc on twitter, powered by more than 2700 journalists in over 120 countries. i am kailey leinz, this is bloomberg. ! n> mark: we have a interesting start of the week italy, and the aspiration of populist leaders to from a government fell apart, as the president rejected their choice of a eurostat took minister.
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in spain, prime minister rajoy may be facing a no-confidence vote later this week. we are joined by our bloomberg european governments editor, then fields. then, the nomination of cottarelli as a minister will surely inflame the ever present political divisions within the country. ? ben: yes, you are right, it is a pretty desperate move by ttarello. i think he felt about the nomination put forward by the populist government was beyond the pale, but he is really doing nothing more than delaying the this could lead to another election sometime in the fall, as the populists will be going into that arguing that the establishment is trying to block the will of the people.
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mark: who is set to gain if we have an election in the fall. what are the polls telling us? is it only that the populists will gain from all of this political chaos? -- it is mateo ini, the head of the league, he is anti-immigrants and has been the main beneficiary of the negotiations, maneuverings since the election in march. but he has many been taking support from silvio berlusconi, a more moderate and center-right. party so the balance of forces between the establishment and populist parties, is not really going to change much. however, if the head of the populist front is stronger, that might be enough to tip the balance. let us talk about where you are in madrid, how close are we to a no-confidence vote? ben: the latest reports we have
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coming in suggest that it could happen on friday. so it looks like that is going ahead. whether the opposition parties can get together the votes to actually asked rajoy, looks a lot more dubious at this point. what he only has a minority in the legislature, the three main opposition parties have been struggling over the past three years, to put up a united front against him. mark: great to see you, thank you again for talking to us on this busy day. is davids from berlin cole from julius baer, chief economist for germany had of currency research as well. what a day we are having, david. the euro rising after much bay town and president struck down the eurosceptic nominee for finance minister -- after the italian president ministerwn finance
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nominee from the populist parties. positive?ro numeral neutral or euro euro ?neutral or euro positive? david: i think the politics doesn't play a major role right now when we look at the euro dollar, i think it is really the interest rate differentials, which have not played out in the last few months. that is rising right now, the dollar is stronger. politics is sometimes accelerator, like we have seen the last few days. when the populist government became more and more likely come and another is volatility. the direction of the euro is probably still a bit more down from here, because interest rates are so much higher in the dollar area. that has the effect of aging into the momentum direction
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established earlier, but by the formation of the italian government. mark: on february 1, the euro closed at 123.10, a 10 year high. now, we have dropped. is there a floor, and if there is, what is the level? david: you could argue with technical indicators, which are really not our main source of information. but when we look to the short-term, we see a three-month move to interest rate differentials, and how to translate that into the exchange rate. we were looking at levels of $1.15, levels that are consistent with the current interest rate advantage of the u.s. versus the eurozone. so that would be the floor level when we look at the three months why are interest rate
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differentials suddenly coming into play, david? mark: before april, while the dollar was sliding in february, the same interest rate differentials were part of the narrative. why now, is it so important, when it seemingly wasn't so when we had the dollar declining through february into april? david: it is more the anomaly, that it has not been imported for the exchange, then it is the role. so we can ask ourselves, whether's episode has been so special. there are a number of contributions. one is the most likely one, from our perspective, the central banks, a lot of them built up a positions in the euro, which had reduced during the euro crisis. also, institutional investors were building a positions, so the euro had been neglected --
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investment in the euro had been neglected in the past. this has now been rebuilt. and since october, interest rate differentials did not play over aut we think that longer. of town, they do increase and play a role, and were watching them closely. politics,d, does the both in italy and in spain, the fact that the data highlights that the euro zone economy is not as it was last year -- yes, it had the best performance in a decade -- does it suggest that the ecb will not normalize policy as quick as we thought a few months ago? david: i would say that the expectations are not really for a quick normalization, anyway. of course, an explanation what the euro zone in economy slows the right now, is h
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appreciation of the euro we have seen in the last 12 months. by distributing this away from the eurozone to the u.s., we will probably see in the next 12 months, different behavior. some growth being distributed zone.he u.s. to the euro this is probably the time for the ecb indeed, to start normalizing rates. when he asked when this will happen, not before 2019. somewhere in the middle of 2019. . . until then, there's a lot of time to go, and we will still see some more euro weakness until then. probably because of this political headwinds we have seen from italy. mark: david, you will stay with us. for the moment, that was david cole, head of currency research. he will stay with us. coming up, the latest move from turkey as monetary policy makers have the turkish lira gaining against the dollar today. this is bloomberg. ♪
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♪ mark: this is bloomberg markets, i'm an london and it is time for the bloomberg business flash. let us get over to kailey leinz in the new york. >> mark, softbank has dropped a. quest to buy stake in this company according to people familiar with the matter, the two sides disagreed on prices and over how much management control would be given to softbank's founder, masayoshi son. they say that they will continue to welcome an anchor investor. blackstone group making a bid mostone of australia's
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pursued property companies, offering about $1.2 billion for the investor office fund, which owns dozens of office buildings. investors directors plan to recommend that they vote for the deal unless there is a better offer. some of china's biggest internet companies are putting on the countries they just ipo since 2015. andliates of baidu, alibaba tencent are becoming strategic investors in foxconn, apples assembler.ant that is your bloomberg business flash. mark? mark: thank you, kailey leinz. the turkish lira was rescued by the central bank, rising as much as 2.6% against the dollar, after the country's central bank says it is planning to simplify its monetary policy. system as of. june 1 still with us is david cole. l,ad of the russian david koh
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research.rrency the monetary policy framework can only be deemed a positive thing? david: yes, definitely. it started with the increase in week,st rates, and last this will gain credibility when it comes to monetary policy. remember, president erdogan was saying that they had to take over bob turner policy, the wrong steps to stem -- take over the monetary policy. they needed to stem the money going out of turkey. so they needed to stabilize the outflow, and you need to think of offering a higher price by her interest rates, and increase credibility. to steps that have been done here by the turkish central bank , at least encouraging the turkish lira going forward. mark: is it too early to draw a
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line under the crisis? do you foresee further declines in the rea lira against the dollar, despite the fact that they have seen the greatest gains for 10 years? it is a hugely volatile market right now? david: that is definitely an indication, it is interesting to look at it from the interest rate perspective. you get more than 16% for short-term money, and long-term money as well, decent compensation for the risk. so the big question is what is the risk in turkey? when you look at volatility, it is measured as very high risk to go into turkey in the markets. but we think that there are good chances that these interest rate levels can stabilize, that you compensate some investors for the additional risk of going to turkey. we would actually like to see a bit more higher interest rates get a bitrder to
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more compensation, before we say that it is a suitable route to stabilize the turkish lira and overcome the crisis. which is very much in that election of the balance of payment crisis for turkey. mark: broadening it out for the general em fx space, we had a rebound last week. the decline took us down at the to the lowest1 levels of 2018, and we bounced back from their. are you comfortable -- from there. are you comfortable that there is not much further decline to come? david: i think the richer of em fx is -- you have countries like turkey and argentina which is stick out, and other countries which are more
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vulnerable and have much larger current account deficits. , the is another factor shortage of the u.s. dollar, or the more expensive u.s. dollar, which is important for emerging markets going forward and currencies. the slowdown we are seeing in china, china is a major driving force for emerging markets and for reserve accommodations that we have seen in emerging markets. that is slowing right now him and it makes the crisis a bit more permanent that we are now seeing -- that we are now seeing. so i would say that it is too early that emerging markets offering an attractive entry point. when we have slowed the correction, both in bonds and the emerging markets fx rates. mark: thank you very much, david kohl, head of julius currency research. coming up, foreign secretary borris johnson calling for a
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clean break from the customs union. and the pound is caught in the middle. this is bloomberg. ♪
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♪ mark: this is bloomberg markets, foreigned kingdom secretary taking aim at prime minister theresa may again in the weekend. "theng in the telegraph." that the united kingdom must take a clean break from the customs union. minister may reiterated her gold at the united kingdom remain in the customs union. we have the julius head of currency research year, david kohl. claritye have perfect
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when it comes to zero meaning, we have no clue as to where we are on brexit, given the uncertainty of the disagreements on this big issue that is the customs union. a sortindeed, there is .lot of uncertainty the customs union is not the defining goal of the negotiations. all the actors have their freedom to formulate their own opinions. to check if they are popular or not. so this is a political game course, for of financial markets, it is a really difficult situation particularly when it comes to the interest rate. in 20very quickly, seconds, can sterling fall through a dollar 30 against the dollar -- can it fall through
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one dollar 30 against the dollar -- can it fall through $1.30 against the dollar? david: yes, the and definitely can. mark: thank you very much, that was david kphl, and he is staying with us. still ahead, tariffs hit the eu on friday. will they make the last minute deal with the u.s. to avoid global trade tensions? this is bloomberg. ♪ ♪
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mark: this is "bloomberg markets." i am mark barton. let's check on bloomberg first word headlines with kailey leinz. kailey: another development to
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witholitical turmoil president sergio mattarella asking the former imf executive toector to form a government that would be an interim step before new elections. the populist points of a eurosceptic germany fashion .andidate as finance minister the european union is trying to work out a last-minute trade to with the u.s.. president trump wants to impose tariffs on steel and aluminum imports this week. the eu has threatened to retaliate with terrence on them and just with tariffs on american products. president trump's decision last week to cancel the summit with be jong-un now appears to agent history. the president tweeted that a u.s. delegation is now in north korea making plans for the meeting. there is talks that south
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korea's president moon jae-in may be part of the summit. opec and its allies have concluded that the surplus in the oil market has dried up. the excess and oil inventories plunged to less than the five-your average in april, sure to be the focus of a tense meeting next month. saudi arabia and russia said they want to boost output, but want to cuties production. onbal news 24 hours a day air and on tictoc and twitter. this is bloomberg. mark: trade is kicking off the week. u.s. features climbing on signs that an american-north korea summit is back on track. we'll blow's travels to beijing for trade talks with china's vice premier this week at the eu
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seeking a last-minute deal with the u.s. before steel and aluminum tariffs start on friday. i am with david kohl, julius baer head of currency research. if we do not get a solution to the eu-european portion of the trade spat, as in the aluminum 1 asteel tariffs on june the deadline, if there is no favorable resolution, are there implications for currencies? david: difficult to say. probably the most important implication for currencies would be that it encourages some kind of risk off mode. in this respect, as support for the japanese yen, the u.s. dollar. we are seeing that more in the past already. it encourages strength away from the more risky part of the
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currency space, and this includes emerging markets, the euro, and the british pound. it was in the same direction we have seen in the past few weeks. they need to find a narrative that translates to aluminum and for certain currencies, and that is difficult to find. it is really only the euro and he u.s. mark: david, how much are you watching sort of the daily goings-on when it comes to the north korea-u.s. narrative? three days ago the summit was called off. now trump even suggesting it might even take place on june 12 in singapore. do you look at the daily tweets and daily comments or do you step back and just, as you earlier, interest-rate
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differentials driving at least the euro-dollar difference right now? david: in the first place, you cannot avoid it, to watch that. of course, you watch it. for the currency perspective, it is getting really interesting and dishcinnamon sentiment drivers go against the economic -- the sentiment terms go against what is rational. we think the interest-rate differential is more long-lasting. movingow, everything is more or less in the same direction, so we have economic dynamics in favor of the u.s. dollar and we have this risk environment which favors the , classicalrrencies safe haven currencies. mark: yeah.
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on the dollar and the big data points on the weekdays, we have jobs report on friday, will he confirm that we're just a month away from another interest rate hike from the fed? june man? thereafter, what happens? june 13 is the day. are we looking at two more this era possibly even more by the fed? david: we look at three more rate hikes. we think both the labor market and the inflation rate will help the fed to argue in favor of three additional rate hikes, which we forecast for this year. also one in december. this is support for the u.s. dollar. in terms of data point, we do not need a strong support or even more aggressive fed policy, simply because other central
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banks are even more constrained with their will or ability to normalize or this applies to the ,cb and for the bank of japan even to the bank of england, were interest-rate hikes have been postponed. so the fed does not have to do much, actually, to maintain the interest-rate advantage and really increase it over the next three to six months. mark: david, thanks for joining us today. david kohl, julius baer. saudi's and russians say reviving output is on the table. russia's energy minister weighing in on the decline next. this is bloomberg. ♪
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mark: this is "bloomberg markets." i am mark barton in london. time for the bloomberg business flash, a look at some of the biggest business stories in the news. kailey leinz has the latest from new york. kailey: canada's bombard ea is responded to the growing demand for large cabin business jets and will build two new planes, one was will be up to fly nonstop from london to hong kong. business jet goes into service the second half of this year. concern about the credit crunch facing some of china's companies. china's energy concerns --
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confirms it has not seen a bond that measured earlier this month, triggering cross defaults on other bonds of the oil and gas producer. they will sell assets to resolve cash flow difficulties. a rare setback for disney or the company's latest offering from the "star wars" film franchise had a disappointing opening in the u.s. and canada, taking and $83 million the first three days of the memorial day weekend -- first two days of the memorial day weekend, well low from estimates. that is your bloomberg business flash. mark: oil heading for its longest losing streak in him was four months as saudi arabia and russia discuss reviving output. they aim to ease consumer anxieties. the russian energy ministers is no one in opec is interested in
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seeing an overheated market. he spoke with bloomberg in st. petersburg. we discuss all, when this initially, we assumed would exist in june based upon market conditions. we reached preliminary agreement on that. what i would like to stress is that no decisions were made yesterday and today. we just discussed the possibilities which were always on the table. decisions will be made when all ministers are at the table in june. members like iran and venezuela will not see any benefit from others increase in production. how will you persuade them to support this proposal? all, before the final decision is made in june, we will once again look into the
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numbers and study them in detail before the discussion. in the opecbody group is interested in seeing an overheated market. there are many factors affecting that now and pushing the oil prices up, including deficit from unexpected production declines or from geopolitical factors. we know these factors significantly jack up the price. when it is very high, consumers could act differently. this could impact demand. that is why we are aiming to restore supply and demand balance with consumers and suppliers. we will structure that in the mechanism, which will ease or strengthen depending on the market. >> some countries may disagree. do you expect to some disputes when used or the consultation? >> i strongly believe that we
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will find a compromise. countries are interested in a stable market. >> it was said that the market could handle higher oil prices. what has happened now? is it trump's tweet, iranian sanctions, the venezuela elections? discussionsactor in which we had is the increased deficit, which we see, currently below the five-year average an entry-level, which was our target initially. 340 billion barrels of overhang which were there when we started the corporation have now turned into a -20. so we have removed the overhang. we continue assessing the lookingn, and we're into how the structure would occur when prices are too high. we all have experience and have seen demand destruction
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occurring the past. i believe that no catches are in and -- i believe that no countries are interested in a very volatile market. we need to carefully assess the situation. which we areactors looking into and which we see currently affecting the markets are, first of all, and the third quarter, we will see is seasonal demand spike by higher oil consumption. see it also significantly above 100%. april, about 2.7 billion barrels. we are expecting more declines in venezuelan output. these are the factors which we're going to need to look into and analyze how they affect the oil markets. >> brent recently hit $80 a barrel though. today it is down after a, just
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possibly easing the cut. what do you think the press should be or at least a range? >> we will continue monitoring the market and see how it reacts . at the same time, i will remind that we do not forecast the price, and we do not set the price here at that is what the market does. it is affected by a large number of different factors. fundamentals are indicating that the market is a very close to balanced or balanced already. as far as other factors, the risk premium in the oil price, the factor of unpredictability. this is a tension from iran deal. it is difficult to predict. mark: that was russia's energy minister. anthony depaulo from to buy is joining us. seems russia and saudia breath
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-- saudi arabia want to push ahead with the outputs, but at least two dozen other nations have to be taken into account. are they on board or not? >> they will have to meet in june and make an agreement on what the decision is and what the way is to go forward. what is clear is that the big in this group are saudi arabia and russia. seeink we will eventually other countries come around that. leewayy via has a lot of to act, because they have been under producing, according to their quota. a quota orld produce .ven a little bit beyond that saudi has some space to ramp up anyway.
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i think they were talking about adding a little bit more production to make up further countries that have not been producing as much as they should have been. that is leaving a little bit too much demand unmet by new production. strong the oil out of the stockpiles, which we here the minister speak of those stockpiles are down below the five-year average that opec and its allies targeted. mark: anthony, thank you very much for that update on oil and opec. anthony dipaola, bloomberg's middle east energy reporter. coming up, one companye-is in action in sports. more on the booming business, next. this is bloomberg. ♪
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mark: this is "bloomberg markets."
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i am mark barton in london. so e-sports, a form of competition using video games, has emerged as the fastest sports genre in the world over the past five years. it is projected to be $905.6 million business in 2018. a computer device manufacturer continues to overdeliver a strong gaming industry, providing the backbone for its growth. david westin said done with the chief executive to talk about the company's business. >> we are a portfolio of different categories and businesses and increasingly even for -- our biggest as mrs. today are -- our biggest businesses today are in pc, which is still a big business. the next biggest now is gaming. gaming is actually bigger.
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our gaming business as if this last year is now bigger than the original mouse. david: is that right? is that in terms of revenue? >> revenue. it is really exciting. it is made up of multiple categories. gaming is very big for us. our video, what we call our video collaboration business, is very big for us. that would be another.. gaming now would between percent, 22%. video collaboration, some of --cent, it 8%, growing fast 7%, 8%, growing fast. we have a bunch of different businesses. it is broad, and we are entering more all the time. we are not only in that the e-sports business with gaming,
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but we are in the real sports business, owning a brand called jaybird, which we started a little over a year ago. it is really focused on running. david: talking about gaming, we hear a lot about this but for those of a certain age do not do it ourselves. andfast is that growing, where is the sky? how big can it get? >> our gaming business grew 52% last year. now it is even bigger than our mouse business. i do not really think there is any visible limit for the next decade. last earnings our call, i think gaming e-sports today, for you and me -- i think i am older than you, but i think it feels like you are 1968 -- the very beginning of this. it is super exciting. the leagues are forming. it is just going to keep growing. david: explain how that works.
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how much is it just my son and his buddies playing in the basement and how much is it playing on the internet or in the cloud? how much is it physically together in a stadium? >> when it started, it was your son sitting downstairs playing his own game on a hard drive. today, your son and his buddies are playing on the cloud. they are bouncing things off of what you said, but they are line with people around the world. your son is probably playing with people from china, from russia, from all over the world. north korea -- maybe not north korea but south korea. they are playing everywhere and with everybody around the world, hundreds of thousands of people at a time. that has been an able by the cloud appeared so cloud-based forng, which is big e-sports, the big growth trevor, is where the action is today. where is it coming from? if people are increasingly spending time on e gaming, is it
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coming from the nfl or is it coming from the nba? >> i have a chart that shows where i think this is happening. is coming froms people that used to be watching "family affair" and "gilligan's island," and today they are playing stimulating e-sports, whether it is in the basement, their bedrooms, or the dining room, wherever they are. david: what would prevent you from becoming as big and as successful as you would like to be in gaming? >> we are in the luxury position, a little bit like nike and adidas in regular sports, that is where we are for e-sports. the equipment you use it bess cabal is a basketball and great shoes. in e-sports, it is the keyboard and some other things. we're innovating very aggressively.
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is our own risk execution. if we do not innovate well and do not stay close to the individual user, like your son or the pros who are driving this, the leading edge of the technology, then we could slip up. court, so ton our speak. david: what protects people that are playing? you talk about my son playing someone in china. that makes me nervous because i do not know who they are. the people in my basement, i can meet them. i cannot meet the people in china. >> we do not actually publish the games. the big game publishers, they are increasingly trying to create intervention processes where they can reduce the risk of somebody bullying. it does happen out there, just like in a regular sport. of course, it is much easier to do when you are not face-to-face with somebody.
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i think you will see more intervention from these companies to try to help guide the discussions away from those caustic and kind of negative experiences that people will always have in any event. i hope they continue to push the limits on that because i think there is no room for that. mark: david westin speaking to the logitech chief executive. it is a bank holiday here in the u.k. down. are political uncertainty continuing to weigh on sentiment here, both in italy and spain. the dax, the cac 40, and the all trading lower. this is bloomberg. ♪ retail.
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under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store
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near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. mark: 1:00 p.m. in london, 2:00 p.m. in france for it, it :00 p.m. in hong kong. from european headquarters, i am mark barton. welcome to "bloomberg markets."
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hair of the top stories we are covering from the bloomberg and around the world -- here are the top stories. spain, the future of prime minister rajoy remaining in doubt. in italy, the president has asked for government to be formed. the turkish lira is getting the most in the only three years today as a major policy shift. andre live in his temple, we -- and istanbul. we will hear from a canadian investment icon on why he sees opportunities. a look at what is happening to markets today. check in our wonderful gmm function, which gives you a big markets flavor or access to the global markets.
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the u.s. is closed for the memorial day holiday. u.k. is close for the spring bank holiday. italy is down by 2%. 2%.ce down by portugal is down by 1.7%. we will talk about italy in further detail in due course, but the economist, former executive director of the imf, has been asked to form a new government after talks over the weekend broke down between the populist and the president. stocks in italy falling. bond yields rising. the italian 2-year is up by 41 basis points today. the euro was rising earlier but is falling know, down by .1%. six straight weeks of declines. that is the euro's worst losing run for over three years. let's look at some of the corporate headlines out of europe today. anchor investor.
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endapsed talks marking the of nearly four months of deliberations about how softbank would invest, and two companies said they may agree to collaborate on some businesses. .6%.s of swiss three up by forget the biggest decliner in europe today, shares sinking earlier as much as 26%. biggest drop since 2009. the danish drug company said a key study for one of its cancer treatments was dropped after news over the week in his partner has stopped a phase two study of one of its treatment. a jefferies analyst pointed out there has been significant investor interest in these trials. the news affects sentiments. this is the turkish lira against
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the dollar, what a crazy week it has been. talking about last week when we saw the biggest declines in the lira against the dollar since 2010. today we see the biggest gain for the lira against the dollar the number of years after central bank decided to more than double its one-week repo rate to 16.5%. 1, and thisjune equalizes that rate with the current main funding rate. it is meant to finalize simplification of the turkish central bank's multirate monetary policy framework. the lira, lest week, slumped the most since 2010, sinking 4.7%. that is even after we had this unscheduled 300 basis point increase on the central -- from the central bank. but the for the simplification of the monetary policy framework
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now seems to have put a floor under the lira's declines against the dollar. check bloomberg's first word headlines with kailey leinz from new york. kailey: president trump has appeared to confirm that his summit with north korea pose a kim jong-un is back on, tweeting that he you esteem has arrived in north korea to make arrangements here at last week, the president of probably called off the meeting. the south korean president hold a surprise meeting with kim on saturday. moon could take part in the summit. president of italy has asked a former imf executive director to form a government. that would be an interim step before new elections. populistjected the choice of a eurosceptic germany bashing candidate as finance minister, leading populist leaders to end their attempt to form a new government. opec and its allies have concluded that the surplus in
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the oil market has streamed up. the excess in oil inventories plunged to less than the five-year average in april, sure to be the focus of a tense meeting next month. saudia arabia and russia say they want to boost output, but other countries who cut production disapprove. the european union is trend to work out a last-minute trade deal with the u.s. president trump wants to oppose tariffs on steel and aluminum imports this week. said it will retaliate with tariffs on american products. global news 24 hours a day on air and on tictoc and twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am kailey leinz. this is bloomberg. mark. mark: thank you. president sergio mattarella has asked the former director of the
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imf to form a government on sunday. lot rejected the choice of a eurosceptic finance minister. joining us is kevin castillo. tell us a bit about carlo kotter cotterelli.lo strict onuite budgets, a former director of the international monetary fund. he is very well known in italy. years ago,t if you he was in charge of a spending review. he is known here as mr. scissors for his interest in cutting budgets. mark: it comes as the populist want to increase the budget or some would suggest that on the fiscal side, and this is the opposite of what they probably would have hoped for. does this set up an never more
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likely clash between the populists and maybe the president? there was some suggestion of an impeachment. for how long can cottarelli provide some stability? to face a lot of resistance in parliament from the two populist parties, the five-star movement and the league. how things go on not certain, says he for sees elections either sometime after the month of august or in early 2019 as to where the country is headed. mark: look at the markets and talk us through the initial reaction after the president spurned the choice of the eurosceptic finance minister. stocks rise in italy. yields declined. it is a different picture now, isn't it? >> exactly.
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the spread of italian 10-year bonds against german bonds has now gone wider than any time in four years. certainyou have seen a amount of relief right after the talks with the populists collapsed. now a little bit of reality will be setting in. there is uncertain time ahead for italy. you forvin, thank joining us from rome. spain's prime minister mariano rajoy under fire after his former aides were convicted of corruption charges. he may be facing a no-confidence vote later this week. a bloomberg reporter's joining us from madrid. been said there? >> hey, mark. mr. rivera remember this party and spoke saying there are two options on the table. gets a one is rajoy
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dignified way out, meaning he gets to call when the elections take place. that has to happen before the autumn. if rajoy does not call this election, they want the vote to take place before the autumn and will have to back a vote of no-confidence along with the socialists. on whatl have to agree terms this vote of no-confidence takes place. it is clear from what we have heard from rajoy that he has two options, either he calls the election or he will have to face a vote of no-confidence. mark: talk about the market and economic implications. we looked at the spreads in italy blowout as political uncertainty plagued the italian landscape. is it fair to put spain in a different category, as many are suggesting? it is not right to put italy and
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spain together. right, mark. a good question. , the biggest market maker for the spanish treasure, put out a note saying you really have to make a difference if we gohe economics, back to fundamentals, the spanish economy has been growing above 2% for more than three years. the sterling in italy -- the story in italy is completely opposite. secondly, even if we were to go into new elections in spain, it is not something the market likes, but you have to look at the difference between the two countries. if you look at polls, both parties would win the elections of the polls are right. and they are in favor of the european union. some parties are very much in favor of the european union and the euro and those in italy.
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some of the market makers and spain are trying to point that out. you have to look of the fundamentals and what the party since for. spain is still a very pro-european country. mark: maria, thanks a lot. let's get to brussels. vince -- vincent juvyns joins us from j.p. morgan asset management. these things do look enticing? movement of today answers part of your question. only more uncertainty than a few weeks ago. the market hates uncertainty appearance a we need to clarify the situation. we see technocrat's coming to the rescue, as usual.
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we have seen several occasions in the past will result technocrats really putting the country back on track. but we need clarification. the coming days and weeks will be key. and the ability to form an interim government and also have more clarity about when the next election will take place. it is maybe a bit early. you might be catching a falling knife. could bring the country back on the right track. i would say also, pretty much like i heard about's lan -- about spain, that italy is in favor of the european project and the euro. this is probably one of the reasons why the eurosceptic finance minister was seen by the president as crossing a redline.
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so the ingredients remain there to bring back italy and the right track, but markets will need more certainty, more clarity about the plans about when this new government will be formed. in the short-term, no systemic risk, i would say. italy in the new government will still benefit and be able to and the on the world previous government, which has improved the italian government quite a lot. the country is still running a premiers a plus and managed to stabilize its debt level. it is even seeing some better growth momentum as we enter 2018. tok: i have a chart here show, the 10-year spread between italy and germany. today we are up to 224 basis
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points. we have not seen the sort of difference in yield since 2014. vincent, we are nowhere near the levels we saw at the height of the sovereign debt crisis in 2011. this bread was up to 5.6%. -- the spread was up to 5.6%. are we assured that a big portion of the italian bond market is held by domestic investors? and are we reassured by the fact that, hey, the ecb president, mario draghi, i know there are regional buyers, but we have the ecb backstop and the domestic bond buyers backstop, as well. should that rish her as -- reassure us to avoid any comparisons between now and the height of the sovereign debt crisis back in 2011, 2012? >> yes and no. but i believe so, yes. income debt bank
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then, so i remember very well the european debt crisis. but the situation has changed dramatically since then. most european countries have improved substantially. when you look at the amount, a number of countries which were under review by the european commission back then, only probably two countries left. and france is about to leave. from a budget perspective, european countries and italy included are much stronger today than they were a couple of years ago. from a macroeconomic perspective, the situation has improved dramatically. we are still expecting and above 2% growth in the euro area this year. growth looks much stronger and the unemployment rates are decreasing, including in italy.
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know about the backstop from the ecb, which was not there back in 2011, which us better. we are also improving the bank capitalization, also making sure it could be a negative feedback loop between sovereign and the banking system. this is not perfect, not finalized. that is maybe an aspect that is a risk in italy. decrease risk to have the majority of the debt in national hands. but at the same time, the italian banking sector is by far the largest owner of italian debt. we have seen that italian banks have been under heavy pressure. towardsbe vigilant italian banks at this stage if we have a sovereign crisis unfolding. we are not there yet. from original perspective,
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europe is today much stronger and much more able to cope with this type of thing, even more than 2011. vincent, we are going to come back to you in a second. vincent juvyns of j.p. morgan asset management is staying with us. another look at the euro today. this is bloomberg. ♪
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mark: this is "bloomberg markets." i am mark barton in london. still with us from brussels is vincent juvyns. the big unknown remains at what level the 10-year yield is going to finish the yield their depending on the answer, how is
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that going to affect the rest of the asset class space? >> indeed, that is one of the key questions for this year, especially from offender mitchell perspective. there are many -- especially from a fundamental perspective. roughly one join dollars of u.s. treasuries issued this year, fedation near were up, the with normalization of its monetary policy, less foreign buyers of u.s. treasuries. so the pressure is there to push interest rates upwards. the fed, we have seen again recently, if we have a risk off environment, treasuries remain. the question is looking at the next 12 months, and the 10-year treasure and -- if it goes too quickly,
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this could increase the pressure on assets, especially on debt. for safe assets and income generating situations like treasuries should lower the movement. it should be will organized movement towards 3.5%. -- thisance to be seen. remains to be seen. risk isest re-convergence of monetary policy somewhere in 2019. the ecb should follow the fed and normalization. year, there will be a headwind instead of a tailwind. this may bring us to an inflection point that we will need to monitor quite well. it will not be sufficient just in duration.
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we will need to be more vigilant also towards our in exposure -- yen exposure. mark: do you prefer equities in your multi-asset funds, vincent? >> at the moment, when you look at the position on multi-asset long em equities and debt. globally speaking, we prefer equities to bonds. in the fixed income space, and emerging-market debt is overweight. but it is to be active in this space. there is the example of turkey and argentina. it shows have critical it is to do your homework, be where you see macroeconomic improvements. 2013, many back to
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thoseies have reduced it. countries were then called the fragile five. many have improved their economic situations. idiosyncratic risks which drove all the attention. there was an indiscriminate ems.ff of the resilience of the equities was quite strong in the last couple weeks. staye many reasons to long emerging-market equities. vincent juvyns of j.p. morgan asset management will stay with us. this is bloomberg. ♪
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mark: a quick look at the markets. the and the u.s. is closed. that there is activity. the dax is lower, as is the cac 40. the ftse in italy is down. carlo cottarelli has been asked to form a new government. let's look at currencies. news out of turkey that has driven the lira higher. yes, the most among its peers to day. the central bank morgan doubling its one-week we pull rate. up by 2.6% after the biggest drop last week since 2010. this is bloomberg. ♪
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mark: this is "bloomberg markets." kailey leinz has more from new york. kailey: president trump's
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decision to cancel the summit with north korea's kim jong-un appears to be ancient history. the president tweeted a delegation is in north korea making plans for the meeting. there is talk moon jae-in may be part of the summit. he held a surprise meeting with kim on saturday. senator marco rubio says his proposal to block zte and other chinese telecom companies from operating in the u.s. would have super majority support in congress. president trump wants to let zte stay in business. rubio says chinese telecom equipment could be used to help hina spy on the u.s. in the southeastern u.s., subtropical storm alberto could cause more than $1 billion in economic losses. it is expected to come ashore today. the winds have hit 65 miles per hour and parts of florida, georgia, and alabama could get up to a foot of rain.
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boris johnson is putting pressure on prime minister theresa may over brexit. he repeated his call for the u.k. to make a clean break from the european union when it leaves the bloc. global news 24 hours a day, on air and tictoc by bloomberg, powered by more 2700 journalists and analysts in more than 120 countries. this is bloomberg. central bankers to the rescue. the turkish lira's leading currency gains, rising as much as 2.6% against the dollar after the central bank said its planning to simplify the monetary policy system. joining us is benjamin harvey, bloomberg's's temple bureau chief -- this gamble -- bureau's instanbulmberg's
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chief. >> at the same time, they have switched their benchmark rate and declared a new benchmark rate and equalized that with the rate that they have been using for the past year and a half. something i know investors have been crying out for, the lack of a single policy rate. it clearly sympathize the monetary policy framework. given the reaction in the lira, i am guessing investors have given this move a big thumbs-up, benjamin? benjamin: absolutely. this is something the prime minister has been promising to do and something investors have been asking for, to get more predictability, better outlook for turkish monetary policy. actually, the monetary policy has gotten more complicated over that time and today they are going back to a more simple policy. isk: is there a sense there
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some peace from the route we have seen particularly in the currency -- we have the emergency rate hike last week that did not stop the lira's decline. are investors putting more faith behind authorities to stem the route we witnessed in the lira? think they are. there is clearly a vote of confidence in what the turkish central bank has done. rate hike be another on june 7. there is a question of how much damage has been done, that this was a delayed rate hike and the lira has depreciated by more than 20% over the last year with most of that coming in the last few weeks or months. mark: thanks a lot, benjamin nbuley, bloomberg's ista bureau chief. how much damage has been done,
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yes, the -- seems to have been stopped today for the lira, but the decline has been a sizable one, particularly in recent weeks. how much damage has already been done? investors seem to have thrown the -- on total. forave this need clearly we hadnd the impression the central bank was behind the curve. definitely when we confer to the likes of argentina, which faced a similar situation and intervened massively immediately after and when we compare both, clearly turkey was the under curve. -- which way the
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central bank remains independent. this certainly needs to be clarified by the government as well because that is what investors want, forward guidance , clear monetary policy that we anticipate. we need -- this will need to be clarified. i know there is a road tour organized to reassure investors, but at this stage, they need it to race do -- restore the independence of the central banks. argentina, asnd you mentioned, have been set aside. is there a risk that the rest of is em space gets harmed that still over risk from these two unique em stories?
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maybe in the old days there would be a spell over, but they seem to have been separated. does that tell us about the inherent tells of the rest of the em space? vincent: i believe. first of all, turkey and argentina cannot be compared either. i stress the difference. we should also mention the argentinian government also se eked the help of the imf. generally speaking, we knew the country was somewhat weaker from some metrics than others and compared to 2013 or the end of the 1990's, emerging markets are no longer the same. they are much stronger in many ways, which make them better able to cape with this kind of -- cope with this kind of
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volatile environment. i have the occasion to hear from our emd desk not too long ago and we are still enthusiastic on the fundamental idiosyncratic stories like turkey, argentina, together with the possibility of a stronger dollar and higher interest rate in the u.s. are definitely a challenge. you will need to be very active in your positioning in this market to make sure you pick up the right country, the right corporate -- we still see plenty of opportunities in em. may was an important month with the fact that china joined the indices. the story is moving from that perspective in the right direction. we are still believing in the em growth this year getting raction versus --
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as an investor, you will still be able to capture somewhat higher growth. mark: great to see you and hear from you today, vincent juvyns. there going to hear from fairfax financial holdings chairman about where he sees opportunities in greece. it is a bank holiday today. this is bloomberg. ♪
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mark: this is "bloomberg markets ." london.k barton in it time for the bloomberg business flash. kailey leinz has more from new york. canada's from barnier is responding to the growing command for large business cabin jets. it will bring two new planes, one of which will be able to fly nonstop from london to hong kong. the global 7000 goes into -- the second half of this year. blackstone group is making a bid for a property company. they offered about $2.4 billion fund.vesta offer that represents a 13% premium to friday's closing price. there is new concern about the somet crunch facing
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chinese companies. he chinese energy confirms it hasn't paid a $350 million bond that matured earlier this month. china energy says it will sell assets to resolve the difficulties. that is your bloomberg business flash. mark: thank you. has invested all across the globe. in our exclusive interview with amanda lang, he discussed where those investments failed, where they might -- where they have been met with success, and why he sees opportunity in greece. investedece, we something like four years ago and we have had some terrific success in terms of euro life, which is a -- one of the few places we do life insurance from a really good management. we have a real estate company. your viewers know greece is
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going through a depression, worse than the united states and it is about 8 years no recovery. after four years, the united -- startedting recovering pre-to greece has had a really tough time. unemployment is now down to 20. there is a property company called gura valley a -- grav alia. greate 50% of that, investment. great guy running it. investmentte a big in there called euro bank and that has not been successful. it has gone through two refinancings and we supported both of them. there's only four big banks that are really big. in greece and affluence --
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athens and we have every expectation the greek economy recovers and unemployment goes down and housing prices goes up, that this bank will be successful. it is very cheap right now. amanda: are you looking at other places, italy comes to mind, where there is turmoil and might be opportunities? innda: in my office -- prem: my office, i have a little saying, it's a chinese saying. it is the same characters for crisis and opportunity, same characters, two sides of the coin. we do look at it, but we need to know more about. a spent a lot of time with chief investment officer, wade burton, he went there maybe 6 years ago and it's a small country, so we got to know a whole bunch of people and we think greece is on its way now the country will benefit, the people will benefit and as
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investors, we will benefit. we are one of the largest investors there. we look at every country. the one i really like his india. -- is india. 1.2 billion people and they are coming from a very low basis. amanda: how much will you deploy in india? prem: we have added about $3 billion, but we control because we have a public company and we own about a third of it. we control the two thirds. if you add all of that, we have about $5 billion invested in india and we have about 300,000 people employed there. lots of companies and i think, if you had to ask me over the next five or 10 years, we would have a lot more money invested their. fairfax india public at about $10 and we raised more money at about $11 and three
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quarters and it is about $17. the intrinsic value, much higher. amanda: where are you in china? prem: we are less invested. we have a small company, but less invested. we likedemocracy business friendly policies. mark: that was part of bloomberg's amanda lang's exclusive interview with prem watsa. connecting u.s. veterans to corporate america. one nonprofit has made that their mission. more -- this is bloomberg. ♪
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mark: heroes for hire, american corporate partners is a nonprofit focused on helping returning veterans found their next careers. vonnie quinn has more. vonnie: guaranteed this is one of the most important
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interviews of memorial day weekend. we have acp president kim kaufman, a former marine, but once a marine always a marine. now president of this organization we are going to get to called acp. this is joseph, the former vice president of investment banking at goldman sachs and one of acp's citizen roundtable members. what is acp. tim: thank you for having us this morning. is a one on one mentoring program. it was founded by the number one relationship banker for merrill lynch. reallyhis wife, amy, successful wall street folk. he was standing at the base of the world trade center and was affected by that day.
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from that point on, was trying to figure out what he was going to do to give back to the country he felt he owed for being so successful in business. around 2008 was the surge in amy were saying 20,000 people going off to war, what is going to happen when they get back and they will be looking for jobs. sid felt if you could go and serve your country and leave your school and family and job, that when you come back, you should at least be on the same playing field as when you left if not further ahead. his whole focus was on trying to find veterans meeting full -- meaningful employment. he reached out to some folks and acp was formed. pepsi was the first company that came on board. john mack of morgan was the first mentor and we are big brothers and big sisters to the military, but your little
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brother might be a 240 pound marine. vonnie: essentially it is a mentoring program that receives 200 to 300 veteran applications and places them with employment and meaningful employment. how does it work? >> it is a phenomenal program. i have been involved with five different veterans and these people are amazing. they come to you and they need very basic advice. it does not require a huge amount of your time. as one it is designed hour a month. it takes a little more than that in the beginning and different periods of time but acp provides you with the framework and a pro-vice way to handle it and the most amazing thing is to work with these veterans. you help them with resume writing, interview skills, job placement. it is not a job placement program, it is to help them transition into wall street, in
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my case, and it is a very important, very powerful and simple concept that doesn't really require that much time or effort, but the rewards are tremendous. vonnie: i want to show -- throw out statistics. 82% of these proteges have been in the same job at the same company a year later. retention rates are extraordinarily high, which speaks to the good job the mentors do. 200,000 a year will make the transition, that is the average per year. talk to us about how you figure out what they can do, what they are good at, where they want to be in life? tim: they are coming to us. everybody talks jobs. 70% of our veterans attribute their first job out of the military to the mentor -- mentorship. try toe coming to us to identify what skills they learned in the military -- and they might have taken advantage
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of the g.i. bill and gotten a college degree. in thells they learned military, how does that translate to the outside world? many of them never worked a day in corporate america and all of a sudden you give an hour of month over a cup of coffee saturday morning on the phone and giving guidance. they have never had anybody and you have already made the mistakes and learned so much and that is all you are relating to them. vonnie: can you give us one example of someone who succeeded and is now doing something meaningful and extraordinarily happy? you talk of retention numbers, the national average for a veteran, they come out of the military and they are unemployed day one. they are taking any job they can get an companies really want to bring these guys and gals on board. they know how to complete tasks and work in chaotic environments and show up on time. but he's really want them. the mentor steps in and makes
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all the difference in the world because they are giving them that acclamation before they even go there. when you talk about retention rates, which i think is so important, 83%. of therage rate is 60% veterans leaving that job in the first year. 80% are there after the first year because guys like joe step in and help direct them. vonnie: and it is only $1000 to facilitate a mentor ship and it can make all the difference in somebody's life. can you give us one example? joe: the first guy i worked with was a marine and he was at carnegie mellon is this cool finishing his first year and applying for summer jobs on wall street. it was a very difficult time back in 2010 and it was a difficult environment and i had to advise him about the landscape. he did not understand. he felt qualified, but did not understand why he could not get
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the job he wanted. we had a plan a and plan b and we went through interview skills and he ended up working at an agency over the summer, which got him into the job the following year. vonnie: it is the pipeline, you don't necessarily want to drop someone into a job they don't have the skills to achieve at. particularly now, almost every major bank has a veterans program. tell us where else you need people to come in and mentor from? what other industries? and we started with pepsi morgan stanley and now we have over 70 fortune 500 companies. our veterans, it comes and goes in different sectors. i really need tech right now. i need the adobes of the world and dell and cisco to jump up and provide those career paths our veterans are looking for. dayie: it is our memorial challenge to corporate america to get involved.
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tim: amen. vonnie said, tim cochrane and joe ziluca there. we are following the markets, stocks lower today. client today with the bank holiday in the u.s. bank holiday in the u k no trading in the u.s. as well because of memorial day. italy down by 2.4%.
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>> it is 2:00 p.m. in london, 3:00 p.m. in frankfurt and 9:00 in hong kong. welcome to "bloomberg markets." ♪
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caroline: here are the top stories we are covering from the bloomberg and around the world. a possible new prime minister. in spain, prime minister mariano faces a no-confidence vote this week. we will look at the investment implications. we will look at where oil prices are headed as there are fines from -- signs from saudi arabia that output could rise soon. let's get a check on the markets. bank.k. close, it is a holiday. we are seeing volume higher than the three-month average on the stoxx 600. off by .4%. currently having the worst trading day since may 24. germany down by 7/10 of a
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17% as we see it -- germany down by .7%. worstse off by 2.5%, the day for the january mid-since the ftse mid since january. look at italian bonds currently seeing the yield up at 2.68%, up 22 basis points, the highest inring -- borrowing costs nearly four years. looking at the impact of the euro because we were seeing a bit of a market afraid about how to react to this news the president is rejecting the finance minister candidate, pulling the plug for the seeing the prime minister designate, will he be able to form a government?
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it is likely and therefore we see the euro track lower as the news is digested. check out what is happening to the turkish lira, talk about geopolitics affecting eco-politics today. currently seeing the turkish lira strengthened versus the u.s. dollar. u.s. dollar weaker versus the lira, turkish lira having the best today since january 2017. the federal bank bringing some sort of clarity to an interest rate regime. clearly some hope for the turkish lira. let's get to bloomberg's first word headlines. it is kailey leinz from new york. kailey: president trump appeared to confirm the summit with tim john kuhn is back on -- with kim back on.s last week the president abruptly called off the meeting. moon jae-in held a surprise to our meeting with kim on saturday.
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another development in the political turmoil that gripped italy. the president has asked former af executive director to form government. that will be an interim step before new elections. mozzarella rejected the populist choice of the euro skeptic germany bashing candidate. that left -- haveand its allies concluded that surplus in the oil market has dried up. the excess in oil inventory plunged to less than the five-year average in april. that is sure to be the focus of the 10th meeting. other countries who are part of the agreement disapproved. the european union is trying to work out a last-minute trade deal with the u.s.. president trump wants to impose tariffs on steel and aluminum this week. the e.u. threatened to retaliate with its own tariffs.
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thegerman -- minister says -- global news 24 hours a day, on air and tictoc on bloomberg, powered by more 2700 journalists and analysts in more than 120 countries. i am kailey leinz. this is bloomberg. tumultuous start of the week for italy and spain. the italian president asked an economist to form a director of the international monetary fund to form a government. -- rejected the choice of a euro finance minister. in spain, prime minister mariano may be facing a no-confidence vote later this week. joining us, kevin castillo from rome. in italy,t with kevin
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we are seeing significant selloff in italian assets. talk to us about the decision-making progress -- process and that we are going to see another election as soon as november? kevin: mr. culturally -- culturally -- bections will either september or the early part of next year. he is going to face huge resistance in the italian parliament. caroline: huge resistance coming from those that were expecting a populist government to be formed? is this being digested as a move against democracy or are they pleased to see the president take a stand and may be listening to the markets more than the voters? kevin: i think probably a lot of italians are very pleased that he has chosen stability. the populist program was quite extreme in many ways and that is
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off the table. encourage budget cutting and is very strict and that is probably a good thing for italy right now. caroline: not a good thing for italian assets, we are seeing the worst day in the ftse mid since januarymib 2017. we are seeing a report showing this time -- potential vote of no-confidence takes us back to the uncertainty created in 2016. right, that is precisely what the government is trying to argue. governmentxpect the to say that because the situation for his administration looks dire. -- they are, the
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saying the prime minister should choose a dignified way out and call an election before autumn. biggestalist party, the opposition group is going to put a vote of no-confidence on friday. they will oust -- and form a different government. it is looking difficult for rajoy to stay in office. caroline: from that report, it looks as though the government is going to say this could hit gdp to the tune of 5 billion euros. we are not seeing such significant market moves in spain as we are in italy. if he is replaced, are we likely to see a focus to remain within the eurozone going forward? maria: that is right. moves, wesignificant saw a bit of a selloff on friday. have a note from
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what they are advising clients when you look at spain and italy, you have to make a difference between the two countries and realize they are not the same. spain has been growing a breath -- above 3% for years. when you look at partisan spain, they are clearly pro-europe and pro european union. to go back toe new elections, it is unlikely we get a government that would advocate for europe because everyone in spain is pretty much on board with staying in the european union. caroline: fascinating take from maria tadeo and kevin castillo in rome. , the head from paris of research at generali investments. italy, vincent, what is your view? we were clearly hinting at more political uncertainty. are you bracing yourself for yet another election come september?
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vincent: yes, the data is not clear, september or early next year. very clearly, this new government that the president is trying to push for is not going to have a majority and therefore, there will be a caretaker government and we are heading toward a new election. i see some positives behind the actions of the presidents yesterday. indeed -- a way to protect the country when it comes to the fiscal or european matters. question mark about the democratic process and this could very well support the and five star in the next election. caroline: we are looking at
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folks at societe generale and if a is september, it could be the fact though referendum on remaining in the euro. do you think that could be the case and with the italians -- would the italians vote that way? be ant: i agree it could referendum. the issue is that would be a referendum without a clear question. be a referendum for or against the euro? would that be for or against the president's actions? would that be for or against the government made of liga and five star? statedstion would not be very clearly. i do believe italians overall want to stay in europe and, therefore, they would vote yes, we want to stay. the question will not be stated very clearly and therefore the election appears very uncertain.
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the recent developments could actually serve both liga, which appears stronger in the latest polls, and possibly five star or so. caroline: maybe a further push for the populace and maybe this -- populists and maybe this is why we are seeing the move in the markets, the highest borrowing cost in four years for italy. this is the italian german ten-year spread currently at -- basis 230 braces points. how much higher to you see this spread going? you say it will remain under pressure in the short term for sure? , near term, i think the risk is biased. there are some mitigating factors. you still have the ecb buying. much smallerhave a
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share of foreign ownerships than you had in the past. that type of things are mitigating factors. i don't think the spread will explode to levels we had in the past like 2011 and 2012. nevertheless, the -- situation will be stressed. it will probably cool off when steps in,vernment even if it does not get support from parliament, which it won't. this government will have important decisions and actions to take. that could be a stabilizing factor, but then we will see stress again. more crucial will be to see what type of coalitions are being formed into the election. it seems there has been damage between leaguer -- liga and it is not quite clear they would campaign to the other. caroline: we are seeing stress on the ftse mib as well and
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italian banks falling a lot. looking at spain, far less impact on the markets. we are seeing the eye backs ball fall about- ibex .6%. are you worried about the vote of no-confidence possibly coming as soon as this week? vincent: yes, we are less worried about this for once. if you look at the polls, -- is getting stronger and clearly they are a pro-european force. they are much less concerned about what the remnants of an election would be in spain in terms of economic policy and circumstance that will most likely remain supported. therefore, i don't see that as adding much stress to the european concern that we have right now. the stormthe eye of
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in italy right now. is stayingigneau with us. take a look at the five-day chart of the lira. it has been one roller coaster ride for that particular emerging-market earned currency and currently having its best today since january 2017. this is bloomberg. ♪
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♪ caroline: this is "bloomberg markets." it's time for the bloomberg business flash. let's go to kailey leinz in new york. kailey: softbank has dropped its request to buy a stake in the reinsurer. the two sides had disagreed over
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the price and size of the stake, plus, they could not decide over how much management control would be given to the softbank founder. is talk of a merger in the health care equipment business. british engineering customer -- company swiss group -- swift group. icu acquired pfizer's infusion systems in a deal that more than quadrupled annual sales. some of china's biggest internet companies are voting on the biggest ipo since -- 2015. alibaba and tencent are becoming investors in foxconn. it is apple's most important assembler. if they plan to raise $4.3 billion and that is your bloomberg is this flash. caroline: thank you very much indeed. lira strengthening the most in almost three years on optimism
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the turkish central bank's decision to bring clarity to the interest rate regime is a sign it may be able to fight depreciation. stocks and bonds also rallying. generali investment's head of research is still with us. what do you make of these moves? should there be so much euphoria in the markets? vincent: i think that was a very toxic debate about the independence of the central bank and i think mr. and again -- mr. provoke thatd to the markets was not a good idea. i think the central bank is doing what they have to do eventually. aey will not have to avoid
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rallying down in the currency and a surge in inflation. caroline: one of the key issues has been the strength of the u.s. dollar. is that something that will continue? i think you generally will think there will be four rate hikes in the u.s. what kind of pressure does that put on emerging markets going forward? questionthis is a key indeed. created quite some weight in yen. idiosyncratic stories particularly in turkey or argentina, but also dollar strength clearly has put picks -- pressure on the yen currencies and the em debt spread and a bit of pressure on the equity markets.
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we have to watch the u.s. dollar very closely. what we have in europe right now -- nything which reports that would attend to support and put pressure on the em currencies. we will watch that very closely. that being said, we are not too worried on that point and, in particular, we are actually assured by the resilience of the cny. it is very correlated usually to the rnbd dollar -- and has been quite resilient. orfind that quite reassuring so, the fundamentals, there are some worrying stories here and there, but the fundamentals of em markets are much stronger in
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terms of current account situations than they were in the past. we are watching that. we do believe new term you could see strength, but overall, we expect the em market to look for some resilience. caroline: you mentioned the issues of argentina and turkey and, also resilient in the chinese renminbi. what other emerging markets could show this resiliency that is an opportunity for buying whether it be in the fx rates or other asset classes? want to overall, you look at the u.s. dollar, you want to look at the r&b and financial conditions overall. if you have a sharp rise in volatility across asset classes, that is not going to help. this is the type of thing we want to watch and you want to watch the fundamental data, especially in china.
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this is the elephant in the room. we will be watching exports from asia. this is the bellwether of the global growth outlook. we have had quite some negative surprises in terms of global walls -- role this year. price indices have dropped quite sharply in europe, but also globally. if that was to continue, that would be a concern. we expect a bit of a rebound and that would offer some support to the em markets. prettye: we have seen poor data coming out of europe over the last few weeks. what about this week for the u.s. data? gdpre expecting dd fee -- figures. will that offer concerns, do you think? gapent: there has been a clearly opening between the u.s. where there will be surprises, but not much.
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.uch less so than europe there is a gap that is clearly supporting and we expect this week, the u.s. data will be fairly solid again. typically the non-fund payrolls at the end of the week, we expect fairly solid numbers. supporting that view that the u.s. is being quite resilient. caroline: we will keep all eyes on that nfp number likely to come in at the end of the week and we will see how we see that shape up. vincent chaigneau will stick around. we are talking trade next. this is bloomberg. ♪
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♪ caroline: this is "bloomberg markets." we are checking the markets for you right now because it is a down day in the markets right we see aven though
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u.k. public holiday, we are percent.out -- by seeing some of the worst trading days in a year for the ftse mib. newng concerns about a election in italy shaking investors. month low onsh 6 the euro versus the dollar. turkish lira find strength on a central bank clarity to overall investment rate going forward. this is bloomberg. ♪
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caroline: this is "bloomberg markets." kailey leinz has more from new york. president trump's
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decision to cancel the summit with north korea appears to be ancient history. the u.s. delegation is in north korea, making plans for the meeting. there is talks that south korean president moon jae-in may be part of the summit. he held a surprise meeting with kim on saturday. a proposal to block cte and other chinese telecom companies from operating in the u.s. would have supermajority support in congress. president trump wants to let zte stay in business by paying a $1.3 billion fine for violating a sanctions agreement. rubio says chinese telecom equipment could help china spy on the u.s. in the southeastern united states, subtropical storm aberto could cause more than billion dollars in economic losses. the storm is expected to come ashore today in the florida panhandle. , and partshit 65 mph of florida, georgia, and alabama could get up to a foot of rain.
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ormer president george h.w. bush has been hospitalized in maine, being treated for low blood pressure and fatigue. mr. bush is 93. his wife barbara died last month. news 24 hours a day, and a tictoc on twitter, powered by 2700 journalists in more than 120 countries. and the head of research is still with us. a deal -- a deadline on friday about whether president trump will exempt aluminum tariffs. we look at the e.u. as trying to protect the u.s., to a certain extent. germany saying them want to reach some sort of agreement. do you expect one will be made? vincent: europe does not want the deadlines to be pushed back again, and rolled over again and again.
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it want to reach an agreement. reach anant to agreement. i am not too worried about this. obviously, there will be some flip-flopping from president trump. we are seeing that again with north korea. we have seen it before. occasionally, there will be some bad and worrying headlines. toould expect him for now develop a rather cooperative stance in europe, although currency ofhuge germany is an issue. at the end of the day, we are going to discuss steel, discuss autos, but the big, big topic here is intellectual property. this is china. more than europe. see meetingswill between wilbur ross of the u.s., in e.u. trade chief, and
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paris at the oecd meetings. discussed what we about china and u.s.'s relationship. what you make of that, going forward? you think this is an old war in some way, an old trade war the donald trump is fighting? vincent: no, this is something very strategic, effectively. we are talking about intellectual property. we are talking about technology eventually, down the road. we're talking about literary supremacy. strategic,ose are long-term topics were president trump wants to protect the u.s. interests. and of course he has some sympathy from some trade partners, including europe, japan. i do not think he wants to alienate those supports, those , at that stage.
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i believe u.s.-china will remain the core focus when we talk about trade. we have seen some small progress and some small steps from china. i am not quite sure this is enough to appease president trump. but that is going to be the major focus. there will be ups and downs, as i said. i think that already this has global growth.n there are concerns about the , but some companies are saying the uncertainty about trade is hurting. i do not think mr. trump wants to push that too far. caroline: meanwhile, the leader of germany, angela merkel, speaking and saying the e.u. is ready to talk trade in the absence of terrorist threats. -- tarriff threats. we have seen angela merkel
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become closer to president xi jinping, pushing against the auto imports. do think that is salvageable, the relationship between the e.u. and u.s.? he has antagonize them already, even if he does not want to do so further. vincent: yes, i suppose this is -- this is a way for angela merkel to push back, and somehow threaten the u.s.. the risk for the u.s. is that sanctions, thevy other countries will start negotiating new agreements between them. left out.ould be eventually, that would hurt the u.s. this is one way for europe to push back and tell president --mp, you need a sensor ball sensible approach. we have historical precedent, where the u.s. suffered from increasing tariffs.
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do not think the current administration wants that to be repeated. again, we are seeing geopolitics driving the market. great to get your opinion throughout. vincent chaigneau of generali investments, head of research. thanks for joining us from paris. in while, oil is heading for its longest losing streak in almost four months. saudi arabia and russia discussed reviving output. our energy reporter joins us from dubai. we are seeing a significant selloff in brent end of uti today, seems which seems to be stemming from comments from russia and saudi arabia. talk about what they outlined. pushing the prospect of production up from opec and anir allies -- really, alliance that has been cutting production over the last year of a half. bringing some that production back is
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pressuring oil. oil has been week already, from the middle of last week. heavy demand pushing prices up. it looked like prices were starting to run out of steam as we got to $80 a barrel. we have seen concern about the impact on consumers and whether that would hurt consumers and demand. russia and saudi arabia talking about raising production to ease the price back and make it more amenable for consumers. we'll see next month when opec does meet what they decide to do on getting out of that program of cuts, or just bringing on some more production within that framework. those cuts are supposed to run to the end of this year. opec had anyway been talking about easing back on them in 2019. we will have to see if that happens a little bit earlier. had heardanthony, we
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that potentially russia and saudi arabia were trying to make up shortfalls from venezuela and iran, with potentially more u.s. sanctions coming. any sort of fall off in oil price cannot be good news to those countries. our russia and saudi arabia going to get pushback? gotony: they already pushback from trump. the u.s. president tweeted last month that opec was doing its job again, getting the oil price back up. he was very upset about that, u.s. gasoline prices coming up toward three dollars a gallon. that is as we head into the u.s. driving season, the summer season. it starts with memorial day in the u.s. so there was already some pressure from the consumers on that. we have been in this kind of cutting market management phase ince oil started falling 2014. opec has been trying to play with the market, to impact production of shale, protect its
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own market share, protect its prices. we are really seeing a lot more alternatives to oil now than we were seeing four years ago. renewables are much more affordable. opec sees a lot of threats not only from u.s. shale as an alternative, but alternative energy sources like wind and solar that could damage its market. wary of letting prices go to high. they will want to keep prices high enough, but also protect their market share and their market. anthony, we have seen opec and the allies say they already cleared the oil surplus. is that something that is driving them as well, that is being read on the terminal today? anthony: that is a big factor. this is a five-year moving for stockpiles they have been targeting. having too much oil in storage with keeping the price down, so they wanted to basically under produce and get people to buy oil out of storage to take the
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extra weight off the top of the market. they have done that. they can say mission accomplished now. that gives them some additional flexibility to decide what to do to decide when they want to ease out of this production cuts. as you mentioned, venezuela, angola -- those are countries having production difficulties. we have potential risks coming iran.inst the saudis will have leeway to replace some of the quantities that are missing from them. opec can go a long way in adding additional output while still remaining within the targets they agreed to in 2016. so they could probably out about a hundred thousand to a million to als -- about 800,000 million barrels a day and stay
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within the target by replacing the output from the other countries you mentioned before. caroline: interesting. we will see the ongoing effect on the beauty i could. anthony dipaola, bloomberg middle east energy reporter. a swiss bank in discussions over a minority stake after four months. plan, next. angela merkel speaking at an event and talking trade. ♪
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caroline: this is "bloomberg markets." time for bloomberg business flash, the biggest stories in the news. that's go to kaylee line -- let's go to kailey leinz in new york. according to sky news, a sale of stock could be delayed by stock market issues. the u.k. owns 70% of rbs. during the financial crisis, the government injected $60 billion into the bank. canada's on barnier -- bombardier will build two new planes, one of which will be nonstop from london to asia. that is your bloomberg business flash. caroline: a new european union
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digital privacy law has just taken effect, the general data protection regulation. i spoke with dominic strowbridge , of petrolio. here is his take on the new rules. c: businesses have to change their privacy policies and make it much more transparent to consumers, how they use their data. they also have to make sure that consumers can download that data , ask for it to be erased. there are big changes in terms of the systems that businesses have to have in place. caroline: are these all challenges that had to be overcome, money spent, or are there opportunities in the new regulation? actually, it is the opportunities. you can imagine consumers are empowered with their information , able to find better deals. using that information in a collaborative way is going to cut out a huge amount of waste
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which is in the world of digital markets and e-commerce. caroline: you can own your own data. how can you get the right deals and make money on it? dominic: this is one of the lio does.r we have a price comparison site, and consumers can guess what they need, but also tell us exactly what they need. they will be able to do this across broadband, energy, all sorts of things. if they know what they need, they are going to be able to get better deals. caroline: what are unintended consequences of gdpr? the rule was announced in 2016. companies have had two years to achieve this. on the day it has rolled out, we are saying u.s. websites, such as that for "the chicago andune," "the l a times,"
9:47 am not able to be accessed by you citizens, because they have not taken on the legislation. our companies having to back away from consumers? dominic: i think it is probably a minority choosing not to be compliant, or perhaps they do not realize whether they are compliant or not. there are ambiguities. this is new legislation. it has never been tested. for example, companies have to choose the lawful basis for processing information. a lot of them choose consent. that is why in your email boxes recently you have been getting a lot of privacy notices, saying please click on ok so we can keep sending your stuff. but businesses could also choose reasons forsiness purchasing your data, and they do not have to ask your consent. those ambiguities have left some people wondering, are they compliant? are they not compliant? caroline: as privacy becomes a
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focus point for so many of us here, what do you expect in terms of new regulation? own datais passing its bill. but will there be further regulation from the e.u. about our data, our privacy? dominic: this is the main bit of legislation. i think what the regulators will want to do is see how it fits in , in terms of people clearing up those ambiguities. there is another bit of legislation going through, cookies. those cookie notices that pop up -- the information commissioner said she would like to see that legislation put into the gdpr stack, rather than having separate legislation -- putting it all together. i think that will make things much clearer for businesses and consumers. ctrlioe: bearing in mind is potentially going to benefit, feelr-term, what will gdpr like? how will our lives become
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distant -- different? dominic: i think consumers will trust companies a lot more in terms of how their data is used. i think today there is a lot of characterization between the good and the bad, the corporate that does unscrupulous things and perhaps the consumers who are very worried about their privacy. going to go away and you will see a lot more collaboration, were a website will say, just tell us what you need, and you will be able to easily pass on that signal, and the website will say this is exactly what we can offer you. caroline: dominic strowbridge, cofounder and chief product officer of ctrlio. afternoon before months of deliberations, softbank and swiss re talks have collapsed. swiss re said it would open -- would welcome an investor. rome.porter joins us from
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it seems there are plenty of stunned when blocks, whether the size of the state, and the control at the table. exactly. it sounded from very early on that they were not that close to each other. the issue of control. there was quite a lot of different reporting on how much the stake was about. talk to as low -- they talked about as low as 10%. what is interesting is that the idea of having an anchor investor seems to work generally for swiss re. i think that is what we have learned from that. i think it could signal that they are looking for someone who they can get the same kind of benefits out of -- maybe a price or deal they can accept better. caroline: this would help, given the volatility of the market -- the swings from year-to-year. that one of the stumbling blocks seems to have been how softbank would buy the minority stake,
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perhaps in the open market, with no discount. are we going to likely see anyone else say, i will do that if softbank won't? ross: i suppose it depends what the rest of the deal is. detailsot get a lot of on either side about how exactly this would work, and what swiss softbanks to get an expects to get from the deal. it sounds like a very high price to pay, to go out on the open market. that may have not been the only reason this deal did not go forward. not willing re are to issue new shares and make a deal, of course it will make it more difficult for them to find a partner who can maybe help in other areas, open up new markets. perhaps get a little bit of technology experience that they could really use. caroline: and take on the competition coming from emerging markets. ross larson, great to have -- -- larsen, great to have your take on the deal.
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coming up, is a hedge fund bullish on the markets? ♪
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caroline: the world's largest publicly traded hedge fund has said regent bond defaults from china are signs of regulators attempts to regulate the markets. we sat down with man group ceo luke ellis and talked about rates going forward. luke: rates are gradually drifting higher in the u.s., and equities are gradually drifting higher based on decent growth. as long as you have decent growth, equities can perform. the concern everybody has is, when do we get a change in the environment? ton do rates get high enough cause something that is a policy mistake that causes a collapse in growth? i think most investors spend too much time expecting tomorrow to be different than yesterday. most of the time, it is more of the same thing we have generally
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same. ,n february, clearly, december january, the equity markets got ahead of themselves. in february, a weird technical thing that it off. basically, people were too long. the same, you could argue, on friday. the bond market, we got a reasonably sharp selloff. so many people were short. the trend is still heading gradually higher in equities, until we get significant inflation. >> do you think we are towards the back end of that repricing process? when you look at the fed and its is there acycle, sense we could be closer to the end because we are nearing the end of the business cycle? luke: we're closer than we were at the beginning of the tightening cycle. but are we at the end? this more likely environment goes on for another 12 months then we suddenly get something different. the fed will keep raising rates,
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until they see a change in the environment. at the moment, u.s. growth is pretty good. the second quarter is clearly weaker in europe. there has been a few disappointments. people got caught up in the idea that european growth was going to be very strong and weaker in europe, but u.s. growth is pretty good. asian and chinese growth is pretty good. that provides a decent backdrop for equity markets. caroline: that was luke ellis, man group ceo. have a look at the equity markets. currently trading lower, particularly in italy -- it's worst day in 16 months. ♪
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caroline: it is 10:00 a.m. in new york. i am caroline hyde. welcome to bloomberg.
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here are the top stories we are covering from the bloomberg and around the world. back to the drawing board for italy. italian president sergio mattarella is asking carlo llight her rally -- cottare to form a new government. president trump seems to confirm a meeting with north korean leader kim jong-il and is back on track.g-un is back wti crude is on its longest run of losses in nearly four months after saudi arabia and russia signaled an increase in output. it is about 90 minutes to the close of trading in europe. look at were equities are trading right now. a public holiday in the u k and u.s., but volumes holding up today. political chaos swirling around italy. currently seeing volumes at 114% of the three-month average.
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we're seeing the stoxx 600 off by more than 1%. we're seeing falls in germany and madrid. we are looking for a vote of no-confidence as soon as this week. markets ashaking much political turmoil in italy. at one point, this was the worst trading deal in 16 months. italian yields spiking. 2.68 is where we trade on the 10 year, the worst borrowing cost for italy in more than four years. all of the surrounding the fact that president sergio mattarella vetoed the populist plans, instead getting an imf backs -- imf ex to form a government. that government is likely to be voted down by the parliament. could new elections brew as soon as september? i want to have a quick look at where the euro is trading on the back of this. it traded higher to begin with.
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toimism has turned skepticism. we are off by 0.3%. having a down day for the euro. meanwhile, slight optimism building into the turkish lira. we are having the best day since january 2017. of course, hope based into the central bank, giving some sort of clarity potentially on where central-bank policy will go in terms of rate policy. nevertheless, ongoing concerns about the strength of the u.s. dollar and what we will see from the elections, and what order and -- erdogan wants to do in monetary policy. attention back to italy. political chaos. italian president sergio mattarella has asked former imf executive carlo cota rally to -- cottarelli to form a new government. populace are railing against the european union, and many wonder arelli will last.
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what unfoldedh today. the populists vote for their finance minister. it seemed to get the backup of the president, and he has vetoed it. >> that is right. it was the ultimate standoff. the populists are furious. they want to impeach the president for allegedly violating the constitution. but according to experts, there is very little chance of that pulling through. out with the populists and in with the imf, or and and imf official. taskrelli has a tough ahead. the populist parties have more than 50% of the parliament and have already signaled they are going to vote against him in the vote of confidence he needs in parliament. cottarelli, in his acceptance there, already said he is to pave the way for early elections if he wins the confidence vote. the elections could be after august.
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if he wins the confidence vote, they would be early next year. caroline: when we potentially have that election, could we see the populist hand strengthened on the back of this? it seems to be a slight vote against democracy. john: yes, there would be a backlash, in the sense that the populace is already saying this decision by mattarella, discovering of their attempt to govern, is the result of the market pressure from abroad -- do you partners, germany, and undemocratic. the president said he was within his constitutional rights. point theo him to up ministers. they are suggested by the prime minister, but the final say is the president's. he was within his rights to veto a finance minister who he believes would have jeopardized the national interest. ofoline: john, kit juckes
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societe generale, says any election will be the fact of a referendum on italy remaining in the eurozone. is that the way the italians are digesting this? the last campaign before the march for vote, we did not hear much about europe. election, the five star movement toned down its opposition to brussels. now, all of that is likely to be very much at the forefront of the campaign. we will talk about the economy, about taxes, about the proposals which were in the government agreed to buy five star and the league. but europe, the euro, how aggressive the government should be against brussels -- that is very much likely to take center stage. caroline: i am sure it will, and you will be there to break it down. lain joininge -- fol us from rome. one of the challenges for the
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ecb, but do not expect mario draghi to say anything. it is the benefit of doing nothing clearly outweighs the potential of giving misleading chance. a chief economist says this is especially true with new tensions and financial markets, speculations about a potential new euro crisis, and may be contagion and bond markets. joining us in amsterdam is carsten. about potential contagion in the bond markets. the italian yields spiking to the highest in four years. the spread over germany, significantly higher. could this go to spain, to france, to germany? is this very much limited to italy's problems? carsten: i think right now it is an isolated italian problem. it could start hitting spain. the spanish economy is currently much stronger than the italian economy. debt is much lower. gdp growth is much higher. i think the politics are easier
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and less complicated than in italy right now. i think right now it is an isolated italian problem or story. caroline: let's talk about that italian story. how much does this political crisis become an economic crisis if we see elevated levels of borrowing costs? carsten: when you look at the outstanding amount of debt in the averagenk weight is still 3% in this. even now, with 10 year yield at 2.6%, i think it is not a problem for italian debt. this is not an issue where we could see a snowball effect on the public debt materializing. it is not a real problem. we could have a sentiment on an onnomy which is already slow growth, which already saw the recovery starting later than the rest of the eurozone. if this leads to a downward would lose more connection with the rest of the eurozone train, and that would
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elections,ussions on with voters in favor of populist parties. caroline: what is it spell for the ecb and the difficult balancing act an italian man, mario draghi, has? we already have slowing economic data coming from europe in general. this could be another headwind. is the foot off the pedal in terms of forward guidance in an que?o qe-- an end to -- qe? the soft patch, the start of a downswing in the eurozone economy. we know mario draghi will not comment on individual economies, but the italian problem in combination with other uncertainties calls for an open end of qe. the ecb will extend qe, not announcing it in june, robert july, but will refrain from
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coming up with a clear end date, because they want to buy time and be as cautious as possible. if you look further, you could see a situation with downgrades of italy down to junk status, with a digital problem. they could purchase italian debt over the qe program. ratinge: we had that from the agency on friday. we could see how it will be followed up. the euro off by a quarter percent at the moment. how much further could the euro today? carsten: i think it could easily drop under 115. it is the irony of the popping euro speculation. a weak euro helps the cycle. extent, italy could help getting to the soft patch and see the eurozone recovery going on that pass on the back of a
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weaker euro. caroline: the you have any concern that italy might not remain in the eurozone? we are hearing the election they are heading toward could be a de facto referendum on remaining in the eurozone. should notthink we over dramatize the issue. we have had so many new elections in italy. it is an italy's interest to stay in the eurozone. what it shows is, in the end, the european union lies in the hands of national voters. minister or finance your is in the bullet -- the ballots. this is what national voters want. do national voters want to stay in the eurozone or not? there is very little brussels can do. i think this is not the time to speculate about a new euro crisis. we have seen other things happening in the past, completely unexpected things happening.
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italy really needs to stay in in eurozone, because it is the eurozone's interests, but also italy's economic interest. brzeski isarsten sticking with us, i'm pleased to say. let's check in on the first word news with katie lines. -- katie lyons. hasey: president trump appeared to confirm his summit with kim jong-un is back on. a u.s. team has arrived to make arrangements. last week, the president abruptly called up the meeting. moon jae-in held a surprise to our meeting with kim on saturday. there are talks that moon could end up taking part in the summit . senator marco rubio since his proposal to block zte and other telecom companies from operating in the u.s., and says it would have supermajority support in congress. president trump wants to let zte stay in business by paying a $1.3 billion fine for violating
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a sanctions agreement. ruben says chinese telecom equipment could help china spy on the u.s. in the southeastern u.s., subtropical storm alberto could cause more than a billion dollars in economic losses. the storm is expected to come ashore today in the florida panhandle. .inds have hit 65 mph parts of florida, georgia, and alabama could get up to a foot of rain. it is foreign secretary boris johnson is again putting pressure on her minister theresa may over brexit. in the telegraph, johnson repeated his call for the u.k. to make a clean break from the european union when it leaves the block. he said may must resist calls to remain in the e.u. trading system. global news 24 hours a day, on air, and a tictoc on twitter am a powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. caroline: thank you. coming up, we will discuss oil prices and the ecb's inflation projections.
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ecb's road to tapering could be complicated not just by italy, but by the surge in oil prices. turning us from amsterdam is carsten brzeski. we're talking about how the ecb might have to pull away from any qe, butqe, -- any end to what about inflationary pressure as oil remains volatile? for the it is a problem ecb. on enormous increase since the march projections. they could easily add projection points to inflation.
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previously, they were at 1.4%. it could very easily shift the 2018 and 2019 projections closer back7%, which would bring discussion on the governing council, should they react to a higher oil price. the back of qe on lower oil prices. can they look through a higher oil price and focus on the core? qewill they be pushed to end , which in my view would be a mistake? caroline: markets tend to look through energy price differences, don't they? carsten: exactly. they normally do, which means they will focus on core inflation. oil prices are to some extent this inflationary -- di sinflationary, because people have to live through it. the uncertainty is also
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increasing on the back of geopolitical tensions, higher oil prices. italy will mean they will not do anything in june. probably the next announcement will be at the late july meeting. they will start announcing another extension of qe, at least until the end of december, or the end of that. iran, or maybe with saudi arabia and russia, deciding they will listen to the people and add supply to the market. that will ease concerns to the ecb, going forward. what about inflationary pressures globally? this is something the bank of england is having to look through. the fed is keeping an ionic. do you think that inflation has to get pushed to the back burner, particularly if it is affected by an energy crisis? for the i think except energy price, we do not see in inflationary pressure. look at the german economy, the u.s. economy, which are very independent.
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low unemployment rates. we do not see inflation, no wage increases, no inflationary pressure. a lot has to do with digitalization, which is keeping inflation low. also, globalization, competitiveness. i think we are really still in a long period of extremely low inflation, which poses a big challenge to all central banks, especially the ecb, which is an inflation target or. they will have to look at other things besides the inflation story. what do they look at? many feeling the phillips curve is broken. unemployment has changed for good. what do you look at in terms of fundamentals? what will dictate future policymaking? it is a horrible thing for the ecb, with the ecb started focusing on inflation. now, they have to change or adjusted. they will have to look at the output gap.
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how strong is growth? is growth -- the growth potential -- they will have to ask the question mr. greenspan asked at the fed decades ago. for how long can you have a goldilocks environment run? strong or solid economic growth, no inflationary pressure -- this does not argue at all for monetary policy to change. the only thing we might see is the further unwinding of qe. but when you think of traditional monetary policy tools like interest rates, i do not see that the ecb would start hiking interest rates anytime soon, because there is no reason for them to destroy the current goldilocks environment. caroline: how these extraordinary measures continue and history repeat itself. brzeskiresky -- carsten , glad to have you joining us from a sunny amsterdam. still ahead, president donald trump's tweet on sunday triggered speculation that his
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meeting with kim jong-un could be back on track. ♪
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caroline: it is time for the bloomberg business flash, a look at some of the biggest business stories in the news now. there is a report the british government may begin selling parliaments remaining stake in royal bank of scotland as soon as this week. the sale could be delayed by larger stock market issues. the u.k. still owns 70% of rbs. crisis, theinancial government injected $60 billion into the bank. softbank has dropped its quest to buy a stake in reinsurer swiss re. besides disagreed on the price and size of the stake, and how much management control would be given to softbank's founder. swiss re says it we continue to
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welcome an anchor investor. there is talk of a merger in the health care equipment business, a french engineering business in early talks about combining its health unit with u.s. manufacturer icu medical. i see you medical acquired pfizer systems last year in a deal that could drupal its annual sales. that is your bloomberg business flash. off-again, on-again. after abruptly canceling a historic meter -- meeting, president trump appeared to say the summit with kim jong-un is back on. the president tweeted that the -- that the u.s. team has arrived in north korea. "i truly believe north korea has ." rilliant potential for some clarity on the situation, i want to bring in margaret talev, from washington.
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thank you for joining us on your holiday. talk us through it. ofre seems to be a lot flip-flopping here. in general, do we feel june 12 is back on? margaret: i would stick with plan a, or thereabouts. it might slide a day or two past them. it could get scuttled again. ,his is a little up in the air depending on what the advanced team on the ground now in north korea, at the dmz, is able to ascertain from their discussions with the north koreans. it is the president's goal to get the summit back on for june 12. it seems that is the current korean leader's goal as well. caroline: why does he want it back on? he has had mike pence called stupid by the chinese decision maker who has flown over for this meeting. on a very basic, got level, the president, as you
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know, likes a good show. the optics of this, his ability to do something that none of his predecessors have been able or willing to do -- in part because kim himself is a relatively new leader, although his family has been empowered now for decades, but partly because past u.s. presidents did not think it was prudent to do it. thought it was more important to start at lower levels and work their way up to a summit like this. president trump thinks that flipping the script is the way to go. there china or south korean maneuvering behind this as well? what do you expect going on from an international perspective? margaret: within the region specifically, you can see a lot of movement now. movement out of south korea has been the one paving the way for this to be possible. we saw moon meeting with kim
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yesterday and floating the idea that he could be part of the summit. perhaps he could be a three-way summit, or he could come in for round two. we are seeing reports out of japan that the japanese leader and president trump may head the summit. we still waiting for confirmation. china's involvement to some degree threatened to scuttle this whole thing. the interplay among the u.s.-china trade issue, versus the u.s.-china national security -- it is all in play right now. the bloomberg white house correspondent breaking it down. thank for joining us on your holiday. ♪
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caroline: this is bloomberg markets. let's check in with the first word news. katie has more from new york. >> president trouble me with
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japan's prime minister before a summit meeting with north koreans -- north korea's kim jong-un. the u.s. seems in north korea working on the summit. in italy, the former i am at the executive has -- imf executive is asked to form a new government. he says he will plan for elections as early as this fall if his government loses the vote of confidence. populist leaders are rallying against the president and european union for blocking their bid for power. trying toan union is work out a last-minute trade deal with the u.s.. president trump wants to impose tariffs on steel and aluminum this week. the eu has the eu has threatened to retaliate with a tariff on its own products. the eu is ready to agree but the u.s. on points and necessary to avoid trade fight. city, maryland,
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one man is missing after thunderstorms caused flash flooding. the nearby weather station recorded almost 13 inches of rain in three hours. global news 24 hours a day on air and twitter, powered by more than 2700 journalists and analysts in more than 120 countries. leinz, this is bloomberg. caroline: thank you. euoing trade tensions in the -- and the eu is seeking a last-minute deal to avoid these steel and aluminum tariffs. peter told reporters earlier we had to try to avoid high tariffs of possible and we are ready to agree with americans on points necessary for a mutual interest. joining me is the empire global ventures president. what do you make of this, germany seems to be willing to make concessions. it doesn't mean the rest of the eu is. trump runs a secular
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religion and what he says, he writes down in the liturgy and expects everybody to follow it. if you don't, you are tried, hanged, quartered and burned on the state on twitter. now he is in this contest with eu and wants them to change policies, but not everybody wants to do that. caroline: it is mainly germany that has got is in balance but they seem to be coming round to ensure these tariffs come off the table. do you think we will see a bending to donald trump will as he draws headquarters them on this twitter stake? angela merkel has an enormous respect for the relationship between the u.s. and germany. it goes back 75 years. i don't believe donald trump is a similar level of respect. iswants what he wanted he not always fully flexible in trying to get that. angela merkel is used to dealing
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and negotiating with vladimir putin on issues and she is using that relationship and experience to try and deal with donald trump. it's interesting the empire global ventures is all about helping those seeking opportunities in markets that are complex and untested. donald trump himself seems to be relatively untested and throwing complex situations into the work. what you talk to those trying to navigate these when such changes are made all the time. and indeed the auto industry? >> i think you are exactly right. donald trump gives to the business community and he takes it away. in theld trump offers united states a tax reform that hasn't been seen in 30 years that allow large u.s. companies to repatriate profits, offer dividends and do stock buybacks. they also offer -- they are also
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in favor of deregulation. what he has taken away is something like stability, something like predictability and now that he has learned that a new toy in his arsenal is threatened tariffs, the business community in the united states isn't quite sure what's going to come next. they are pleased with attack package,- with the tax but they like stability and predictability and they won't get that from donald trump. caroline: he is trying to also take on china, particularly when it comes to that. what we are seeing with this erratic behavior or willingness to bring in tariffs is a change in the relationship. we are seeing germany and china becoming closer. china potentially becoming stronger. how does this playoffs for the desk layout for the u.s. long-term? is a conference in the u.s. is when they brought allies and partners to the table
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for international association rate that's how the united states. the general agreement on trade. and's how they created nato the imf and world bank. the irony is that donald trump has undermined this very tenants by alienating most of the u.s. allies on economic issues. most pointedly on the issues of with drawing from the trans-pacific partnership. in fact called the partnership a rape of our country. a few weeks ago donald trump told senior economic people to try and get the u.s. back into the partnership. but having alienated many allies , which is a very aggressive word, now the united states stands alone in negotiating with china issue by issue and that's a difficult place to be. caroline: he does seem to be more willing to build bridges with north korea the moment wanted to bring that in the meeting in singapore back on.
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how do you negotiate that? how do you digest that move coming from donald trump? >> the problem is he has a lot of stories to tell but is not willing to tell them one at a time. when he's in negotiations with china and trying to allow the chinese company zte back in the market. broke u.s. sanctions and sold communications technologies to north korea and iran. so donald trump is not able to focus on one issue at one time. he would like to have a summit with north korea and the big splash reality television show on cable news and television networks. he is just having a hard time focusing on one issue long enough to make that come true. they have to be multitasking. see do you therefore first for comfort -- foresee. what does this mean for global
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ventures when you see such global ramifications of donald trump? >> donald trump has been great for business i'm sorry to say. u.s. companies are very anxious to understand what the challenges are in a world where the president of united dates isn't maintaining stability and creating chaos. u.s. companies come to us and ask how do we best enter europe and china? what should we be thinking about, what is the best thing to do? foreign companies who wish to enter the u.s., many british companies understand relations will be challenging as a result of brexit want to come to the united states but they say president trump is saying all these things, what should we take seriously and ignore? our televisions or dust telephones are off the hook because -- our telephones are off the hook. caroline: we will be digging into the brexit debate next time.
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coming up, it's a brewing brexit battle. taking aim at theresa may once again in an op ed calling for a clean brexit. this is bloomberg. ♪ . ♪
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caroline: calling for a clean brexit. boris johnson is again pushing prime minister theresa may for the u.k. to make a clean break from the eu. the tactic he has used before. he explained why may must resist for the u.k. to remain the eu trading system. sam, what do you make of once again boris johnson trying to
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force theresa may's hand and trying to vent the fact that those who push for the exit are worried by the tactic she is deploying? caroline: watching it from here -- sam: watching from near is like watching a monty python movie and say theresa may say it's only a flesh wound. then to compound that, boris johnson writes this op-ed that is very impressive. he talks about in the op-ed about how britain's the second-largest investor into peru and the british and focus on investing and getting a closer trading relationship with latin america. gdp is $5.6a's trillion a year. the eu's gdp is $17.1 trillion a year. so when it comes to boris johnson, he clearly didn't read math. caroline: he is a man often
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driven by passion and statistics and data. you talk to them about the most terrible and self-inflicted wound being that of brexit. just how deep will this wound and up being? where you see the agreements going? will they end up in some way in the eu trading agreements well past 2019 what you feel we will have a clean break? >> i don't see a clean break coming and i do think theresa may is trying to make the best of a bad hand. see interesting for me to if british leaders throughout andory with the country kingdom or their own personal insurance. 1153 signed a treaty that put countries -- the country ahead of his personal interest. in 1829, the duke of wellington forced catholic emancipation through the house of commons.
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this is a moment where they focus on progress rather than personal interest and at this moment, the brexiteers are focusing on chaos rather than progress. caroline: boris johnson might like your handling of history. oil does global ventures president, thanks for joining us. the billionaire ceo of canada's fairfax financial holdings has invested all across the globe and in an interview with bloomberg, he discussed where these investments have failed, and they have been met with success and why vcs opportunity in greece. about four years ago, we have had some terrific success in life/property run by really good management and so
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we've got that. we have a realistic -- for eight years, no recovery. so greece has had a really tough time, unemployment is down to 20. company thatperty worked through all of this, survive this and we have 30% of that. a great investment, great guy running it. we have quite a big investment in the bank called euro bank and that hasn't been successful, it .as gone through two refinances we supported both of them.
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we have every expectation that the greek economy recovers, unemployment goes down. that this will be successful. it is very cheap right now. looking at other places, italy comes to mind where there might be opportunity? >> in my office i have a little , it is chinese say that has the same character for prices and opportunities. two sides of the coin. we do look at it but we need to know more. we've spent a lot of time, chief investment officer went there and maybe six years ago, we got a bunch of people.
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the country will benefit, the people will benefit and we as investors will benefit. we are one of the larger investors there. we look at every country. the one i like is india. you areig country and coming from a very low basis. >> how much will you deploy in india? about 3 now we have had billion, we control with a public company, we own a third of it. we control two thirds. we have about 5 billion invested aboutia and we have 300,000 people employed there. next five or 10 years, we will have a lot more money invested. , which ofne well
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fairfax india public about $10 and we raised money. -- intrinsic value >> where are you on china? >> we are less invested. with a small company there. , we likeemocracy business friendly policies. that was part of amanda lang's exclusive interview. still ahead, it is memorial day in the u.s.. we remember men and women who sacrificed their lives in the line of duty. you are looking at live pictures of arlington cemetery in virginia. this is bloomberg. ♪
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caroline: it is time for the bloomberg business flash. canada possible body a is responding to large business debt. large the largest business jet goes into service the second half of this year. blackstone group is making a bid for one of australia's most -- property companies. -- $2.4er two point billion. it represent a 30% premium to the closing price. directors plan to recommend that unless is a better offer. disney.etback for the latest offering from the star wars film franchise have been disappointing opening in the u.s. and canada. o: a star warsl
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the worst start to a star wars movie since disney's release. better bloomberg business flash. as we celebrate the servicemen and women who have sex with their lives in the line of duty, we want to pause and reflect -- livesve sacrificed their in the line of duty. we want to pause and reflect. equality, business of the ongoing conversation about lives impacted by diversity. i found out i was a distant young, the charles highest-ranking african-american in the army until his death in 1922 so i started learning about history. about nursesbook
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in world war ii and had a chapter on black nurses. that was something a want to unpack and delve into. >> what did you learn about the conditions that lead a lot of black women to become nurses for the u.s. military during world war ii? obviously they had other options in the cities where they were living. was to work at a city funded, underfunded usually hospital for blacks. they knew they would be paid the least amount and so the army -- that that said a lot of black women to the nurse corps, on top of being patriotic. >> were there a lot of women that signed up for this kind of job or was this something the military could not recruit enough? had wanted tos join long before world war ii and because of discrimination,
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they were largely shut out. with public pressure and civil 1941, 56 black nurses were enlisted. that's the first time they were officially listed. >> this is a love story, but it's a lot more than that. fort start as a prism history. what we most surprised to learn about as you doug through all the archives and talk to different people? >> when i was reading this book i discovered who eleanor powell was, a nurse of interviewed for the book and it said the war help fund memories for her because she met and later married a german pow in arizona. so than when i started digging and digging, it turns out we detained him of 390,000 german pow during world war ii in the united states. >> what was the inter-chat --
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interaction between these german pow stanley black & decker's is -- and the black nurses? >> largely the relationship was fine but there were instances where there was a lot of determination with encounters from their american officers. where jima moment crow is the law and the military was segregated. >> why is this story so important for people to know about right now? >> given the divisiveness of the world, why is it an important story? >> i think we should always be excited and interested in our history and this is a moment we haven't touched on. specifically i was drawn to it because it was about black nurses who served in this war in the military, i knew about the tuskegee airmen and the black battalion units. i did not know about black women , i thought it was important to reveal their story. >> the protagonist of theirs to
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your story, what happened? >> they fell in love and had quite a journey to find a place that would accept them. you have an african-american, a german soldier and mixed-race children. they had to move very often, and finally settled in a wonderful place in connecticut. it is called village creek and was specifically advertised for that. >> speaking of mixed children, that brings me to the next chapter, you have another book you are working on about mixed race children of black soldiers in german women during the u.s. occupation. it's a must like the reverse image. >> they were referred to as the brown babies and what was happening is they were ending up in orphanages in germany because let's think about the time, york a lot of returning nazis coming.
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no one wanted to adopt these children. the mothers were going to be stigmatized. a woman whose husband was in the military knew about this and actually people were saying can you help and so she started generating resources in the united states and african american started to adopt these babies. they were raised as americans, so it ends well. that was the enemies in love offer with scarlet fu. -- author with scarlet fu. we are following stocks less than 35 minutes until the end of trading. this is bloomberg. ♪
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left in theutes trading day in europe today, for bloomberg's european headquarters, i'm mark barton.
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♪ mark: here of the top stories we are covering. italy and spain in political limbo. the future of the spanish prime minister remains in doubt. president is tasked to form a government. lira gained the most in nearly three years as the central bank makes a major policy shift and fresh supply concerns weighing on oil. wti crude is on his longest run in nearly four months after saudi arabia and russia signal an increase in output. have a look at european equities. we are 30 minutes away from the monday session. a quieter day today, a bank holiday here and the united dates we have a memorial day holiday.


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