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tv   Bloomberg Daybreak Europe  Bloomberg  June 11, 2018 1:00am-2:30am EDT

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>> good morning. from bloomberg's european headquarters, i am anna edwards. stories. today's top trump turmoil. the rift widens between the u.s. and the rest of the g7. they forged closer ties. arrives -- after the storm. trump arrives in singapore. crunch. bitcoin slumped after a south korean exchange is hacked, extending this year's selloff to more than 50%.
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good morning, everybody. this is "bloomberg daybreak: europe." i am pleased to say that this morning, i am joined by haslinda amin in singapore. you.morning to trying to keep track of president trump his movement. what are we expecting for the next couple of days? with, just astart year ago, he was talking about fire and fury, and he called kim a littleretty much rocket man. a year on, here he is with little rocket man himself, talking about the prospect of denuclearization. there has been a huge gap in the definition on both sides. a have the u.s. asking for complete and speedy
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denuclearization. we have north korea wanting a more phased-in denuclearization. security tont their be guaranteed. whether those compromises can be made when they meet tomorrow remains to be seen. trump said he's optimistic, but remember that over the last few weeks, he's tapered down his expectations of this meeting. obviously, he's not expecting the moon and sky. anna: the excitement of the g7. poised to see what this can deliver. but have a look at where the markets are and how they are digesting the news flow from the g7. the standoff with trump and justin trudeau. if this was confirmation of a trade war within the g7, it does not seem to be very negative for asian equity markets. the msci asia-pacific is up by .2%.
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in keeping with that, we see the dollar on a resurgence against the yen. the yen in retreat. we have been pretty range bound for the yen ahead of this morning, ahead of the key talks between trump and kim jong-un. it's a busy week. we need to not lose track of the market moving events on the agenda. the fed, ecb, boj. we will hear about of course the brexit conversation in particular tomorrow. that looms large on the horizon. what's not looking with gone is the reaction we have seen in the canadian dollar following that fallout between trump and trudeau. trouble for trudeau. we see movement, fall in the canadian dollar this morning as a result of what was said. let's have a look at the futures. this is where it looks set to open up. a pretty mixed picture. markets waiting to see what
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trump and kim can deliver. maybe we are range bound. maybe we are waiting for other market moving items on the agenda. there are many of them. talk about what's coming up during the program. we will hear from beatrice, a great voice to have on the program. the executive director of the international campaign to abolish new your weapons. what are her realistic expectations, hopes and dreams, for this summit, i wonder? haslinda: i spoke to her earlier on. said she was waiting with bated breath. let's see what happens. people want to be optimistic but also realistic about what can actually come out of the summit tomorrow. themore on that, let's get first word news with juliette saly in singapore. jules. the trump
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administration stepped up its war of words against canada as the foreign minister condemned insults aimed at justin trudeau while germany and france criticized their comments. personal attack on trudeau came in the wake of a stream of tweets from president trump. >> there's a special place in hell for any foreign leader that engages in bad faith diplomacy with president donald j. trump and then tries to stab him in the back on the way out the door. and that is what bad faith justin trudeau did with that stunt press conference. reaffirmed -- has speaking at the shanghai cooperation organization, his message was in dark contrast to the disarray at the g7 summit in canada. the world must maintain the rules of the wto, support
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multilateral trade, and build an open, global economy. singapore, donald trump and kim jong-un and theiams are preparing for tomorrow's historic summit. the two leaders flew in amid heavy security yesterday and i set to meet at the capello hotel. point will being denuclearization. the white house's stated goal for the meeting. kim would demand the u.s. remove its weapons from the region. a planland has rejected to change the way banks lend money in what is seen as a victory for thomas jordan. he has been a prominent critic of proposals that opponents that would make switzerland less attractive for investors. option would have ended the system of allowing only the s&p to create money and
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require checking account to be backed by assets with a direct claim on the monetary authority. in the u k, the millionaire brexit backer will be questioned in parliament over his contact with russian officials. whether banksnow profited from the meeting and whether he used the money to fund his campaign. that follows revelations that he repeatedly met the russian ambassador. biggests one of the donors before the 2015 election and has reportedly given more than 8 million pounds to leave. eu. powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . it was a muted start to the trading week in asia, but things are looking brighter in late trade. ,ou had weakness in the end suggesting investors willing to take on risk. the nikkei up by about .6%.
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general positivity coming through from hong kong and chinese stocks. it nor the weakness from australia, has its out of action for the queen's birthday holiday, but you are seeing some coming through in the em's including jakarta, down by 1.9%. that have a look at some of these stocks we are watching in the region. south korean talks really leading this rally. you have a huge jump coming through in a lot of the construction and engineering stocks. if we do see a form of denuclearization from north korea, there could be a lot more interrelations between the north and south korea's. up 25%. the fence stocks are starting to lose some ground. they have been underperforming what we've been seeing earlier in terms of the tourism stocks in south korea. also worth watching, consumer stocks in singapore. singapore airlines are higher. the taxi company also tracking higher. a lot of focus on the line this
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week. anna. anna: thank you very much, juliette saly in singapore. the turn our attention to the g7. president trump of course has aimed a broadside at american allies by refusing to sign a joint date meant that his administration had previously agreed to back. the u.s. president lashed out at canada's justin trudeau, ratcheting up trade tensions. germany and france criticized the comments, but trump officials kept up the war of words with canada. >> there is a special place in hell for any foreign leader that engages in bad faith diplomacy with president donald j. trump and then tries to stab him in the back on the way out the door, and that is what bad faith justin trudeau did with that stunt press conference. >> he really kind of stabbed us in the back. he did a great disservice to the whole g7. heated. -- yes, he did.
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they were united in the g7. they came together. anna: peter navarro and larry kudlow joining us now on set. very good morning to you. to you falsely ominous task of making sense of the g7 and what it means to the globe. it seems markets are focused on the reality of -- the mood music is not good. >> if you look at the sizes of the terrace and workout that will do for inflation in gdp, you will he minimal effects. for now, the market seems to be doing ok in this sort of climate of uncertainty. the problem i have with donald trump and his policies is he looks at trade from a naive point of view. he looks at bilateral imbalances and decides that the result of some agreement ordeal between those two countries instead of looking at what causes imbalances, which are imbalances
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internally. the difference between two countries imbalances is reflected in trade. the u.s. does not save enough. it has to suck in cash from abroad. not too long ago, we were talking about how economies were firing on all cylinders and we have what's happening in g7. what -- saidwith about global growth being in balance here? kallum: that's a good question. if you take the contrast, compared 2017 to 2018. undermine economic fundamentals are broadly the same. we are not much further ahead. there are no major signs of excess that would lead me to think a corrective recession should happen anytime soon. we have all the elements for
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strong above trend growth. have crept back onto the agenda. the risk factor for the global economy is trade wars. to understand, imagine brexit for everyone. the mere thought that the u.k. could damage trade with its biggest market ways on economic growth -- weighs on economic growth. that is threatening the global economy. so that would be interesting to see how that goes. i have this chart which underlines the tension. extent talks about the to which each of the countries relies on the other for trade. it goes over that particular
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border. the current global upswing -- to what does that extend for growth in global trade? what happens to growth? kallum: the global economy is so interlinked. the world index for equities, you will see a very close correlation over time. perform the tasks we do best. countries can specialize. by damaging trade ties, we force countries down the productivity curve and it hurts long-term productivity growth. to markets -- can they live with this? they probably can. i worry much more about europe. the u.s. has a hedge against the trade wars. it has a big fiscal stimulus which can offset any -- anna: a domestically driven economy. kallum: 15% of u.s. gdp is
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driven by exports. anduntry like germany europe, it's almost 40%, and you don't have the fiscal stimulus to hedge against this. kallum pickering, senior economist at behringwerke stays with us. still with us on the show, more on the historic summit between trump and kim in singapore, where i am joined by beatrice from the international campaign against nuclear weapons. we will talk to another guest. don't miss that interview. this is bloomberg. ♪
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anna: it's 1:20 in the lion city. 6:20 in london. juliette saly in singapore. jewels. juliette: a cryptocurrency
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exchange hack and south korea jolted holders in digital assets that fueled a $46 billion rout and extended this year's bitcoin slump. have brought an abrupt end to and reignitedalm concerns about the security of lightly regulated crypto exchanges. rolls-royce is expected to cut around 4000 jobs. giant'sdetails how the restructuring will work. 10% of the staff could go. rolls-royce is struggling under an estimated one billion pound bill to manage the problems. airlines are being forced to ground planes over concerns the engines could cut out in flight. shares in the world's biggest maker of electric vehicle batteries jumped on their trading debut as investors bet on rising demands for new energy cuts worldwide.
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rose by 44% in shenzhen, atuing the chinese company $12.2 billion. the manufacturer sold a 10% stake on may 30. that is your bloomberg business flash. anna. pres. trump: the year of strategic patience with the north korean regime has failed. they will be met with fire and fury. man is on a suicide mission for himself. i really believe that it makes sense for north korea to come to the table. we are going to make a great deal for the world, for north korea, for south korea, for japan, for china.
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anna: the stage is set. and president donald trump kim jong-un have landed in singapore ahead of an historic summit between the two nations set to take place tomorrow. they will focus on denuclearization. a managing editor joins us from singapore with the latest. what do each of the two sides want to get out of the talks? they are not necessarily on the same page. daniel: that's right. the u.s. is looking for a very quick timetable for kim jong-un to give up his nuclear weapons. they are looking for something called complete, verifiable, irreversible denuclearization, which is considered the gold standard. kim is really looking for a step-by-step, drawn out process, something vague where he can do
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certain things and get sanctions relief and eventually be recognized as a nuclear power himself. haslinda: having said that, you know, trump has indeed tapered his expectations in current days. thanks so much for that. i want to bring in a guest right now. we are joined by beatrice, executive director of the international campaign to abolish nuclear weapons. beatrice, good to have you with us. how optimistic are you that something will come out of this meeting? beatrice: it's very difficult to tell. anything can happen. what we really want to see is these twonnot rely on individuals to solve a problem of such global nature. i mean, just look at what happened with the g7 summit.
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he unraveled the deal that was made there. what we really need to do is bring in the whole international community, put international law at the heart of solving this problem. way forward that means we don't just have to rely on the goodwill of two individuals. haslinda: it's important that both sides come up with a roadmap. beatrice: absolutely. we are here to help with that roadmap. we have developed a plan that relies on international law to solve this problem and completely denuclearize the korean peninsula and make sure nuclear weapons are not used ever. anna: good morning. what are you getting from the trump administration on what you're planning here? you said you like the existing treaty framework. use of international law to fix this. trump is not necessarily a fan of existing frameworks. how much is the administration working with you? welrice: while, --
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would like to meet with them here in singapore to discuss it. that this is exactly why international law needs to be involved. this needs to be a deal that puts the security of the world at the heart. cannot be worked away at by one reader. haslinda: there is no clarity about north korea's capability for tests at this point of time. this is what we are terrified about. see a failing of the summit and the back to where we were. that's why it's so important the rest of the world does not remain passive in watching these two but everyone contributes to the rejection of nuclear weapons and to strengthen international institutions and law.
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no nuclear weapons for any country should be the norm. anna: how much do you think you understand kim jong-un's motivations here? what will success look like from these talks from a north korean perspective? beatrice: i think that's it's in north korea's interests to denuclearize. they have an economy to get started. we have really take this historic opportunity. it would be a real shame to waste it. there hoping this will be beginning of a longer process. it's hard to see that we will come up with a huge deal tomorrow, but this is a commitment to start working with international agencies, with international law and other governments to create a sustainable path towards denuclearization of the whole korean peninsula. haslinda: this is not the first time we come so close -- 18 years ago, it happened with kim jong-un's father as well. are there any differences between then and now that can make us more upbeat that this could translate to something?
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beatrice: i believe the historic treaty that was adopted last year makes a contribution to this. that's something north korea can do immediately and south korea can make sure they don't threaten to use nuclear weapons. that can create sustainable peace in the korean peninsula and protect the people here. what is the very least we need to achieve in the next day or two then? you are not expect this all to be done within 48 hours. what is the very least you want to see achieved by these two men? i hope they will come out of the meeting tomorrow recognizing the catastrophic consequences of any use of nuclear weapons, acknowledging there are no winners in nuclear war, and they will work together to solve this problem. there are simple things that ratifying -- at the united states has to do. north korea commits to working towards a verifiable plan for
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nuclear disarmament. haslinda: both leaders have flip-flopped ihuge way. you think kim is in particular in wanting denuclearization? put on thatt us to is the basis for their security and their existence in the world. threatening to mass murder civilians is not a sustainable security strategy, so at some point, we have to work towards denuclearization of the korean peninsula. in this way, we can help the north korean economy and open up the north korean society. it's definitely in the interest of north korea to pursue this. anna: thank you. the eyes of the world on singapore. executiveihn, director. bitcoin tumbled and takes other cryptocurrencies down with it. we will tell you why. this makes significant the losses we have seen your two dates in bitcoin assets.
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we will tell you why this is happening. what does this have to do with the korean peninsula as well? that's coming up after the break. this is bloomberg. ♪
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>> its 1:30 here in singapore, six: 30 in london. let's do a market check with nejra cehic. >> thanks so much, haslinda. offti in asia shrugging any geopolitical risks that might be coming after the g7 has .rapped up overall, this is a picture across the region. trading markets close today, but overall, we are seeing some .ains also, if we switch the chart, you will see not much risk
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preston at the moment. near abond risk hovering decade low. b.n.p. paribas asset management saying this is a really good hedge because cds is likely to rise no matter the outcome of the trump-kim summit. if you see a good outcome, there could be concerns around south korea's fiscal finances and a bad outcome will weigh on investor sentiment, so you might think about hedging this according to b.n.p. paribas. the bloomberg dollar index , treading water somewhat ahead of the big week for the world economy as well. the fed, ecb, and boj meetings this week but in terms of fallout from the g7, it really was the canadian dollar hit hardest. the worst-performing g10 currencies against the greenback in today's session, but i just want to show you over the past few days to give you a little bit of context. yes it is weaker in today's session, but it's not even
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hitting the low. if you go even further back to the fifth of june, you can see it is not as weak as that yet. risk potentially theng out of the g7, mexican peso is already priced in for investors and the dollar-frank we have seen perhaps will lose momentum. if you look at what gold is doing, unchanged today. but gold and the dollar are the sinceegatively correlated the financial crisis. is if we do see some dollar softness come through, that could mean gold gets a lift. >> thank you very much. important context around these market moves here at a huge week for the global economy, including tomorrow, brexit legislation returns to the house
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of commons where lawmakers will vote on a number of amendments recommended by the house of lords. the u.s. federal reserve is forecast to raise rates on wednesday. we will look with interest at what they have a say. the next day, the is expected to discuss the end of its asset purchases. the bond buying program, what will they say about the timing of all of that? and we round up the week with announcements from we will see the russian president meeting with the south indian leadip as well. let's put the week into context. i've got this chart, which shows how inflation in many parts of the developed markets, i suppose, is not running above target. the bank of england has a bit of a headache, driven by very specific factors that we know very well date back to 2016. you talked to me in the break about how the central banks are
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the buffer. if we are worried about trade and protectionism, the central banks are still the buffer. what do you mean by that? >> any time confidence or demand looks soft in the post-limit upswing, central banks have simply delayed the normalization . there have been no major signs of excess in credit, in inventories, in wages, and inflation, and this is the key chart. this chart is essentially telling us if in the middle of this year we saw a major in europe,f demand in the u.s., central banks, the ecb, the fed could simply signal to markets they will delay the pace of normalization. that should be enough to's for on confidence and expectations that liquidity will be ok, and that should then boost demand. if central banks indeed acted and the ecb, say, extended kiwi beyond thextended qe
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horizon, that would be a major boost to global demand. they could still act as a buffer, but they can do that only and if inflation is below target. >> speaking a ce banks, asian banks have been trying to stay ahead of the curve. are they in a good position right now ahead of the fed ecision? >> i guess the fear is that if the fed hikes interest rates, it puts a lid was strength on the dollar, some asian economies may come under some pressure -- it puts a little more strength on the dollar. the federal reserve is very direct and they are normalizing policy. the worry for me would be the fed would have to step on the brakes so much that u.s. demand would slow. that would matter more than anything that could happen with the dollar, but they are currently so far away from that.
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this is for the fed just a gradual normalization of interest rate policy. i don't think it will do much if anything to slow down u.s. demand growth, so long as the fed does not see this in inflation or wages. the fed will not be looking to, say, create unemployment in order to meet its inflation target. looking at the current pace of u.s. demand and considering the risks coming from the fiscal stimulus, i would say the fed could run into a situation where it thinks the u.s. economy could overheat, maybe in 2020, 2021, and that would read my best guess for when we would see a correction in the u.s. because the u.s. cycle is ahead of the cycle in europe, head of some asian economies' cycles, we would have to think about a correction over here, too. >> a couple of weeks ago, we were all very obsessed with what was going on in italy. the ecb meets this week and no doubt mario draghi will talk endlessly about how the italian situation changes their
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deliberations around qe and the like. i got this quote over the weekend from the finance minister in italy. "there's no discussion of any proposal to leave the euro. ent is determined to block in any way any market conditions that would lead toward an exit." this will surely still can't -- dominate the conversation on thursday. >> they will have to discuss what will happen if risk from italy were to spread elsewhere. if one major economy runs into trouble, you can see risk spreading elsewhere. for the ecb, that would be a matter of how much will it hit demand, how much will that affect inflation and should we deviate from our course? the question of if the ecb should step in to save italy, that is a matter essentially for the diplomats in brussels to decide if italy is sticking to the rules. the ecb would care more about
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other economies. italy andr a while, get away with undoing if you reforms, spending more than it should. that will not affect the wider eurozone economyduring the nexty may run into a little bit of trouble. >> ok, we will have to leave it ere. thank you so much for your insight today. remember that bloomberg users can interact with the chart to catch tv up on analysis, and if you wish to save the chart for future analysis, you can do that as well. >> absolutely. steal them at will. let's talk about what is going on in bitcoin because it fell the most in three months after a hack on south korea crypto exchange coin rail. virtual currency has slumped more than 50%, four times that of a theory of -- and theory of
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eum and ripple. what is going on now at coin rail? >> we have been keeping an eye on what they've had to say. they've been very moment -- m the details. they call it a cyber intrusion on the system. about 70% of the cryptocurrency they had in their umbrella was basically taken off servers so the internet cannot access them anymore. the other 30% for the programs that were affected, and of that, above 2/3 were recovered, leaving about 10% that is unaccounted for, and at this point as far as we can tell, is what was stolen, but in terms of dollar value, we do not have a specific figure yet. we also do not have details on how the attacks were done, who perpetrated the attacks.
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there's a lot of questions right now. the company said they are cooperating with authorities and other exchanges to try to get to .he bottom of this >> obviously, thfety of the currencies are the key concern. what can an exchange due to ensure that? >> there's one method we talk about. i mentioned cold wallets. that's part of the issue with what we saw with coin check back in january. they kept their tokens in what was called a hot while it was connected to the servers, and you know, there's potential for saying should you keep your assets off the service when they are not being traded, but one part of the issue is that this is a recurring issue, and it's maybe one of the reasons why we the scowling today, the very nature of cryptocurrencies is that they are anonymous and untraceable, so it makes it a lot more difficult to protect them. talking to a security expert earlier today who pointed out
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that ultimately, the blockchain industry is going to have to find a balance between security and protecting your own personal information. that is a balance i think the industry is still working towards and we have not exactly gotten the answer to yet, but in the meantime -- and things like this do not help the kind of investor confidence in cryptocurrencies. it has been a little bit shaken over the past few months where we have seen repeated attacks like this. >> thank you very much. the latest on bitcoin and the cryptocurrency, the important balancing act taking place there. bloomberg radios there for you when you are traveling to work perhaps. tune in live on your mobile device or digital radio in the london area. that now available, too. come.s to coming up, we bring you more
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ahead of donald trump's historic summit with north korean leader kim jong-un. later, a huge week for the global economy. we continue our discussions on the fed, ecb, and that boj. this is bloomberg. ♪
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>>'s 1:40 five in blistering singapore, 6:45 in london. air-conditioning, a cryptocurrency exchange hack in south korea jolted investors assets and extended bitcoin' slumped to more than 50%. it brought an abrupt end to two weeks of calm for the biggest virtual currency and reignited concerns about the security of lightly regulated crypto exchanges. rolls-royce is expected to cut around 4000 jobs.
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the ceo tells how therestructur. reports suggest up to 10% of company stock could go. rolls-royce is struggling under in estimated one billion pound manage its new engine. and lines have been forced to ground planes over concerns the engines could cut out midflight. the u.k. government has revised its merger and takeover rules to make it easier to block takeovers of companies when officials are concerned about risk to national security. the methods that take up last that -- the methods that take computerday include hardware. the department's of business, energy, and industrial strategy feel the changes will help keep the country safe and sustained its reputation as "an open trading nation."
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that is your bloomberg business flash. >> i wonder how they will divine that national security test. thank you very much. shares in the world's ggest maker of vehicle electric batteries have jumped by the maximum 44% in china, valuing the company at about 12 $.3 billion. it comes as investors are heading on rising demand for new energy cars worldwide. what does the surge in the share price show us then? i apologize. it seems we have no audio from our friend there on the electric car story. let's move on. i will bring you back if we are able to. u.s. president donald trump as
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we were saying and north korean supreme leader kim jong-un have landed in singapore ahead of an historic summit set to take place tomorrow. it will focus on denuclearization of the korean peninsula. joining us here in london for more on the summit, global research director at control risks group. great to have you with us this morning. your expectations as we head into this. how are you managing to contain your expectations for what we will see? >> that'precisely right. this is all about managing expectation. i don't think we will see much more than a very expensive total opportunity coming out of this summit. this really is a getting to know you session, and of course, this plays beckley into the hands of president trump' approach, which is all about developing personal relationships, especially with key world leaders -- this place it directly into the hands of president trump's approach.
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>> he seems mighty to like him, doesn't he? he certainly talked about how he will know in the first minute is kim is going to do a deal. i guess the two personalities involved is credit and perhaps a look to market to the risks of having these two medassets jilly -- essentially on their own in a room. >> quite unconventional at a summit of this level of importance to be alone in a room without any sort of diplomatic assistance. to just be one-to-one with translators is unconventional. we're not sure we will get a full record of that conversation, but, yes, we have seen a real 180 and the president's attitude. remember the tweet storms from earlier in the year that had personal insults in them, and now he is calling kim jong-un honorable and saying there is great prosperity ahead for him. there is, of course, significant
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risk the tables will turn exactly back in the opposite direction if they don't get along. >> the u.s. wants irreversible dismantling of north korea's nuclear site. is there anything irreversible at all given that north korea already has the knowledge and know-how of putting this together? >> that's absolutely right. the problem here, the sticking point in all of these conversationsill be this notion of denuclearization and exactly what it means. absolutelyere is zero chance that can trump and will dismantle or destroy or completely denuclearize his capability. this is the only guarantee he regime and ag his staying in power, so the chances of any sort of success on denuclearization we think are incredibly low.
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>> that's interesting. you talk about this being little more than a photo opportunity, contrasting with the south korean president, speaking now saying he hopes for a big agreement to be made tomorrow. >> anything between these countries is going to be significant and talking is better than hurling insults or eyring missiles at each other. i think the most we will get if they sign any sort of paperwork will be some sort of agreement to be -- to keep talking, to keep an open dialogue, and perhaps we will get a setting or announcement of further readings down the road, but as far as an actual mechanical denuclearization plan coming out of this meeting, the chances are next to zero. >> taking into account what we've seen over the last few days, i've seen some analysts writing about how we've learned more about how trump decides things and changes his mind perhaps and raises questions about what his word means heading into a summit of such significance. we saw his about turn over the
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g7 communique, he would say because of what justin trudeau said. we saw him change his mind about this very summit on the 24th of may, said it wasn't going to happen, and a lot of people then said it might still, and indeed it does. what do we know about trump and his ability to stick to his word as we go into the summit? >> i think we know and i think the diplomatic community understands that these sort of shooting from the hip reactions you get your mitts on television or various statements, they individually do not move the dial all that much, and that it is always worth waiting for things to calm down, waiting for the dust to settle to understand the president's true intention. to forget even though he is the president of the united states, we hope there are still strong institutions around him that either will bolster the broad direction of travel and american geopolitics and help mute some of the peaks and troughs we see coming from the president.
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>> or we get navarro jumping on criticize.on to >> that was quite uncharacteristically particularly when you consider it is aimed at america's closest ally and neighbor. north korea, close relationship with china. what role can china play? >> i think china's primary goal in all of this is to seek a stable situation on the korean peninsula. china is going to do everything sure kim jong-un stays exactly where he is. the last thing they want is any kind of severe external shock or regime change in north korea. enormous course, has leverage over north korea. china is interested in making sure nothing dramatically goes wrong at this summit, but this is all part of very complicated global calculation that includes both the politics of the korean peninsula and the
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balance of trade negotiations between the united states and china, and i think china will try to make sure that the pressure is applied in the right area so they get what they want out of trade without giving up too much north korea. >> thank you very much. thank you for joining us so early in london. let's try again with one of our top corporate stores about electric vehicles. shares in the world's biggest producer of electric vehicle that arrays have jumped on the trading debut. let's get the latest from our bloomberg auto reporter. what does the surge in the share us? s really show >> definitely, this shows how investors are bullish about the best companies along the supply is one of thel best companies they could find on the chinese market, but probably the reason for the
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surge is probably also because of the government's cap on ipo stocks p/el as new ratio. it's having to cut its valuation by more than half to comply with the government's unwritten rule of keeping their price-earnings ratio below only three times. currentbably means the share price is undervalued, and it's very likely the share price will keep rising in the next few trading days. >> what are the challenges, the risks for the company? has really grown, really had fantastic growth in the past seven years since it was established in 2011, but the real question is -- can the and becontinue
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maintained in the next few years? you can understand there are a lot of challenges lying ahead. the government is dialing back in the market is gradually opening up to foreign makers. tesla is building cars as well as batteries in shanghai very tl's, and also, one of ca domestic rivals, byd, is going othern production for makers other than just itself. >> thank you very much for joining us. on thatto keep an eye electric vehicle battery business. big reaction to that ipo. we're getting some lines coming from the south korean president,
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expecting a big agreement, as we said, but say north korea nuclear issues cannot be resolved in just one meeting. we will talk about the vast array of expectations heading into this key meeting in singapore between trump and kim. this is bloomberg. ♪ retail.
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>> good morning from singapore. from bloomberg's european headquarters in the city of london. these are today's top stories. >> the rift widened between's the g7. and the rest of at the white house steps up its attacks on canada. meanwhile, it's all smiles in china. calm after the storm? 's historic meeting with kim jong-un. can the north korean leader be
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persuaded to give up nuclear weapons? and bitcoin slumps after a south korean cryptocurrency is attacked, sending it down within 50%. -- more than 50%. >> good morning, everybody. this is bloomberg daybreak: europe. the geopolitical set piece defense do not end there this week. we head to singapore for this key summit between trump and kim. expectations high. said there is a risk that this turns into nothing more than a photo opportunity. >> precisely. paving the way for a major disappointment.
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we heard that denuclearization cannot happen in just one meeting. that are indications denuclearization could take as long as 10 years, so when trump says he wants immediate complete denuclearization of the korean peninsula, that is almost impossible to happen. it will take time. whole processof a for denuclearization. >> yes indeed. we're watching what is happening in singapore really closely this week. we will also watch, though, all the other macro events that are taking place. the fed, the ecb, the boj -- plenty of cenks meeting this week. with all of that in mind and as we digest the news from the g7 of a falling out between trump and trudeau in particular, this in europe. are seems we are pretty flat, pretty mixed, things for to much in keeping with what we have seen in the u.s. overnight. pricey and not much movement in either direction really, slight
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downward in futures. but not much.let's have a look e e. i will show you where we are on if this is what the trade war looks like, if that is the message that markets have taken from the g7, perhaps this is not the full extent of it because we're not selling off vastly in asia by any stretch. we have actually seen a little selling in the yen. that has been one of the teams of the session. we saw selling in the canadian dollar as a result of the tensions expressed between trump and trudeau. trudeau really getting himself into hot water at the end of the year with the g7 statement he made. "stabbed in the back," special hearing notl we are
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just from trump but from the trump administration. >> in the u.s., the trump administration has stepped up its war of words against canada even as canada's foreign minister condemned the insult saying that prime minister justin trudeau, while germany and france also criticized the comments. the white house trade advisor's personal attack on trudeau came in the wake of a stream of tweets from president trump. >> there's a special place in hell for any foreign leader that engages in bad faith to policy -- diplomacy with president donald j. trump and tries to stab him in the back on the way out the door, and that's what bad faith justin trudeau did with that stunt press conference. >> china has reaffirmed its claim to be a free-trade leader, criticizing what president xi policiesalled selfish
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speaking at the shanghai coopern organization. his message was in stark contrast to the disarray at the g7 summit in canada. in singapore, donald trump and kim jong-un are preparing for tomorrow's historic site. the two leaders flew in amid heavy security and a staying at a secluded hotel. an early sticking point of the likely to be how to define denuclearization of the korean peninsula. demand that the u.s. removed its own weapons from the region. a planland has rejected to change the way banks lend money in what is seen as a victory for central bank governor thomas jordan. he has been a prominent critic of proposals that opponents said would make switzerland less attractive for investors.
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in the u.k., the billionaire be raisinger will parliament over his contact with russian officials. banks want to know if the bank profited from the meeting, following revelations over the weekend that he repeatedly that the russian ambassador. ukip's biggest donors before the election and has reportedly given more than 80 million pounds p a global list with a four hours a day on air and on twitter, powered by more than 127 journalists and analysts in more than 127 countries. you can find more stories on bloomberg. >> a little bit more of a muted start to the trade here in asia.
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the yen weekend, so suggestions of perhaps a little bit of risk, but look at the selling you see in china and hongate trade. indonesi us trillion out of action for public holidays. we see a little bit of a pick up in the indian market, and a lot of focus on the south korean market, up by .7% there. with that in mind, let's look at some of the stocks we are following. you are seeing a lot of momentum coming through in construction stocks today as well as tourism stocks. if there is an agreement reached regardingearization, you could see the north and south work more closely together. are seeing a switch out of defense plays, which is very interesting, and of course, starting to see a little bit in terms of risk of their. looking at this stock i know you were covering earlier, but hitting the daily limits on chinese battery maker catl.
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that is a look at markets here in asia. >> the year of strategic patience with the north korean regime has failed. they will be met with fire and fury. man is on a suicide mission for himself. >> i really believe that it makes sense for north korea to come to the table. we are going to make a great the world, for north korea, for south korea, for japan, for china. >> there is a lot at stake this week as trump meets kim. we are getting some lines coming
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out of the u.s. administration on the ground. mike pompeo, the u.s. secretary of state, saying u.s. president trump and team are looking forward to the summit. he says trump is well prepared for tomorrow's meeting. the u.s. position remains clear and unchanged. those lines according to mike pompeo this morning, speaking from singapore. bloomberg's chief north asia correspondent is in singapore with the latest. good morning to you. what is the latest? anything substantial on this very warm, i understand, day? >> it is a very warm up day. haslinda mentioned this as the calm after the storm, the storm being quebec, but this is more like a hurricane or typhoon in asia. it stormy at the beginning, then there's all, and storm on the backend. beforehe calm
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potentially another storm. we really do not know what the deliverables are going to be tomorrow. both sides jockeying for a poon, as you said, mike pompeo saying the position has not changed. verifiable,mplete irreversible disarmament of kim nuclear armament. but how far will kim jong-un go as far as giving a timetable, and will he reveal the extent of his arsenal? following what we believed to be an h-bomb test in september that prompted the latest round of united nations to curate he counsel sanctions. he will also, e, be alleviation of at least parts of those sanctions. lots and lots of drama like that opening sequence alluded to, but this now, a bit of calm on witty, sunny day. of course, the katella is right
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behind us. we have a perch looking over the summit venue. >> trump has talked about attitude. he says that is what is important and he can detect that within the first minute. >> yeah, that's right. donald trump thinks those first two minutes of face-to-face one-on-one chat and the handshake at 9:00 a.m. in the building behind me is going to determine a lot about kim jong-un's intentions. we are already getting signs there's a little bit of tension because the u.s. ambassador to the philippines, who is acting as a key negotiator with the north koreans for donald trump -- he had a meeting with his north korean counterpart at the ritz-carlton here at singapore this morning from 10:00 a.m. until about noon when they adjourned for lunch. our reporters on the scene said little bitcame out a gloomy faced, if you will, for lack of a better description.
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i don't want to read too much into that, but the mood was not necessarily to jubilant. also, you saw the video of donald trump and his handshake with the prime minister of singapore. not many words being spoken. donald trump not too smiley today. >> thank north asia correspondent joining there from singapore. grews, as he s of the venue right behind him. we will keep you posted of all the movement going on in singapore. joining us now for market perspective on what we expect, the head of financial markets research. market expectations set -- are they high or low heading into this? how are we positioned? >> if you look at with the market is doing, it does not have any idea. what is interesting is what you just showed, some of the defense stocks and korea, which is far closer to this than anyone else,
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coming up in construction stocks going up and that is about as positive and argument as you could possibly make. from a broader perspective, though, i think people are just pretending it's not happening. >> having said that, how do you play this uncertainty, the geopolitical concerns coming our way? i think we have a plethora of them at the moment. obviously, trump/kim is at the ry front of our minds in terms of just given how explosive it is in multiple dimensions, metaphorically and literally, but, really, i think that the market is, as i said, failing to understand just how dramatic some of these potential shifts could be. i fully understand if you are out there trading day today, given the fast-paced scenario if things go wrong, you do not necessarily want to be the first one selling everything and running for the door.
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it's an expensive proposition if you are wrong, but i certainly think it pays to be a little bit more cautious and hedge your bets a little bit more than people seemed to be doing so far right here at the beginning of the week. >> yes indeed, and if yo about where we come from over the weekend with the g7 as well, it's not just been around the events at singapore book looking back at what we've seen between trump and trudeau and the ongoing rhetoric against prime minister trudeau we have heard from the white house. other names using very strong linkage, peter navarro and larry kudlow and particular -- using very strong language. >> again, i keep repeating world whereive in a we have to expect the unexpected. scotland just beat england at cricket, for goodness sake, so absolutely anything is possible at the moment. justin trudeau's eyebrows may be fake and fall off in public.
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the number of strange stories the pressesing off that the market seems able to just shrug off. this is just the beginning of it, and i think we really have got to start too get a more holistic view of what it will mean and gradually start to price for it, but we are not doing that yet. >> we have the fed, the ecb, geopolitical concerns, and our treasuries prepared for this? fed really seem to be shrugging off just about everything. if you look at what they have been doing consistently over the past couple of years in the face of numerous little mini crises in the past which are rumbling on now in the background geopolitically, it is basically to shrug and say, "unemployment is low. we're doing the right thing."
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i don't think you'll see a shift in that this week. andview is they will hike flag it at least once more this year. >> if this is the new world order's and off the new world order, what does the main event really look like? does it look like a trade war or half a percentage point off gdp? hat does it look like? >> i would be very, very surprised if you look at the long run of history and how global power shifts tend to play out when you get a new power imaging on the scene, so just china, for example, in contemporary terms, if all it means is half a percentage point off gdp. i think we can paint a very broad range of scenarios of the worrying to the downright terrifying, and it is obviously very perplexing to try to weave a path through that as a narrative for the market, but certainly volatility should be baked into the cake, and china at the moment is playing nice.
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as part of the surprises we are seeing, you have the headline i just saw on bloomberg a few moments ago, xi jinping announcing that once again china and atavor of free trade the same time, you have to say canada is the u.s.'s biggest threat to global security, and opposites in be terms of credibility. i think we will see some market swings on the back of that. >> the head of financial us.earch will be staying with week on thea huge global economy. we discussed the fed, ecb, and the boj. more ahead at the historic summit between donald trump and kim jong-un. this is bloomberg. ♪
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>> i really believe it makes sense for north korea to come to the table. >> this is historic. communication is something that is a positive step. >> we need to see what conditions emerge during the talks. >> piece first -- that is the number one killer. >> we're going to make a great deal for the world, for north korea, for south korea, for
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china. >> how long will it take? i think within the first minute i will know. i think very quickly i will know if something good is going to happen. i also think i will know if it will happen fast. presidents u.s. donald trump speaking on the eve of his summit with north korea's in the he will know first minute the two gentleman and in the room alone with the translators before their advisors arrive. we had a mixed fairly flat picture being painted by the futures a moment ago. looks like we're in positive territory right now. euro stocks appear to be pricing in some moves higher for european equity markets, despite the rhetoric fm the g7, the
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about turn from trump and his administration, in particular versus canada. big week for the fed, the ecb, the boj. lots to look out for their. look at where europe looks set to head at the start of the trading day. quick check on italian yields because you have some movement here as well. just as that risk on picture was being painted in equity markets, looks like we are seeing something similar coming through in bonds. france and germany lower in the bond market, italy significantly higher. italian 10-year bonds jumped. it is a huge week for the global economy. we are looking at what is happening in singapore but also brexit ahead to proposed legislation return to the house of commons where lawmakers will vote on a number of amendments recommended by the house of lords. will the government the defeated
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this week is the key question. the u.s. federal reserve is forecast to raise rates on thursday. all 37 economists we have asked ahead of the meeting say that is what the fed will do. also say the ecb is expected to discuss the end of asset purchases. what kind of timeline will they give us? we round up the week with announcements from both japan and russia. when we look ahead to the week, a really busy week. dealt with geopolitics of little bit. let's deal with some of these macro events, these central basing -- central banking events. all that is seven economists say they expect a rate rise from the fed. .- all 37 economists >> the move itself is already priced in and provided there's no risk of nuclear war getting the background, will be looking at the language, if they are predicting more hikes to come. seeing if there is any
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shift being shown. it is all incremental. this particular move is not going to be a surprise to anybody. it is where we go from here. here? e do we go from [laughter] where do we go in singapore? where do we go in italy? where do we go anywhere? the fed will continue to tighten. we think they are going to go this month and one more time this year, than we think they will go on an extended hiatus. we don't think they will do anything for quite some time after that. if you look at how the yield curve is flattening, if you look at the global geopolitical backdrop, if you look at the worrying underlying data in the u.s., there are lots of , but if we do get an indication that will not happen,
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the dollar will be forced a lot higher and we're going to see some very unhappy emerging markets. >> lots at stake for them this week. let's talk about th u.k.. i know you watch this globally. i have a chart that shows the pound becoming more volatile as the brexit debate approaches. from where you sit in hong kong -- i know you watch this very closely -- do you think the u.k. and u.k. assets softbecause of hard versus rhetoric, or is it certainty versus uncertainty that moves the pound and everything around the u.k. story at the moment? >> you flatter me very much by saying i watch that particular cross closely, but i have to say i think the rhetoric is important and seems to be very headline driven. if you ask anyone what the relationship between the u.k. and eu is going to look like two of years from now, five years from now, 10 years from now, everyone has a broad range of opinions.
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it is all still headline driven at the moment. this week could see some significant developments that feed into both headlines and fundamentals at the same time and their conjunction could definitely made a big swing in sterling, but let's wait and see. maybe the can will be kicked down the road and nothing happens again. >> very quickly, your assumption for the dollar. where do you stand death of >> we still think the dollar is likely to do quite well until the market realizes the fed is going to be dialing back, and that won't be for quite some time yet. that will be much later in the second half of the year, but concurrently, it -- if you look at the geopolitical tensions that are increasing, the shift toward potential is him -- potentialism particularly from the u.s., that really is dollar positive. bubblely, the euro had a of late because of what is going on in italy, and this does make a compelling argument we will
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cvm continue to weaken. .> thank you so much that is it for daybreak europe. it has been great to see you this morning. we will do it all again tomorrow in the run-up to the crucial summit. thanks. ♪
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europeane from our course. i'm mark barton alongside matt miller in ireland. matt: asian stocks shrugging off the fallout in quebec. australian markets shut for a holiday and all eyes on president trump in singapore. the cash trade starts in less than 30 minutes time. mark: donald trump backtracks on the g7 agreement and lashes out at trudeau. the looney


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