to bloomberg markets. this is the european open. we are live at the european headquarters in london. markets rising for the most part, with a slow drop in china. european markets could gain as well. the tax trade is less than 30 minutes away. ♪

>> bloomberg exclusive. the ecb could be looking at the june meeting to potentially start a discussion about ending qe. could instantly get in the way thataly gets in the way of process and what will be a italian numbers look like? -- the italian numbers look like? could conte make the numbers add up? american currency hits a record low. theouth african economy cracks the most in nine years. hear exclusively from the new indonesian central bank governor. matt: than half an hour away from the start of european cash trading. let's take a look at where

futures are trading. a slightly positive open this morning. points.up 26 basis take a look at the 10 year yield. a little bit of a drop, kind of a recovery from yesterday. in today's session, yields are rising. investors are selling debt and it cld be more of a risk on day. rising nicelyi is overnight. i want to walk you through what is happening in emerging markets. the brazilian mark yesterday, riyadh down 1.67%. brazilian 10-year, five-year, two-year, the bond set off quite

aggressively by yields. the central bank tries to deal with its currency issue. it is struggling at the moment. a disappointing number coming out of south africa. the firststory with central bank in indonesia and malaysia. an awful lot is happening. is this the moment to get in or out? the trade story is overlapping that as well. asoth market trading down, matt said. the australian dollar is trading up overnight. to show you what is happening, this feeds back into the emerging-market story. the bloomberg quality index trading up, and crude up by

1.11%. let's get to bloomberg first word news. juliette: the white house wants kim jong-un to commit to a timetable to surrender his nuclear arsenal when he meets donald trump next week. the president has been advised not to offer him any cns put the honest on north korea to make the summit successful. to walk awayrmined from the meeting if it does not go wel a follow-upbe summit at his mar-a-lago resort if they hit it off. the world bank is warning global growth is said to slow over the next two years. a new report says the world -- fall backexpand slowing oees further

growth in 2020 as trade and investment wayne as the economy achieves full output. learned a june deadline for imposing tariffs on chinese imports. washington is finalizing a deal to call on china to resume -- c hina's zte to resume purchasing from american suppliers. main opposition party has proposed a plan to stay in the european union single market, which could nudge the country are keeping close to the block after brexit. jeremy corbyn put forth an amendment to make's flagship brexit plan to be voted on next week.

maglobal news on air, 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. euro is spiking rights now on the back of comments b's chieft of the ec economist in berlin. he is talking about the asset purchase program. bloomberg talked about how the meeting on june 14 in latvia could discuss ending that program. the gap is something we will talk about. on ending this program ultimately hinges on inflation expectations. has a single mandate, and that is inflation.

also, he is saying market expectations have wane you can have ve getting -- waned. you can see the move getting as a resulof the single currency. takingne meeting is place in luck to you, which is interesting in it self -- in la tvia, interesting in it self. -- itself. will bring you the details of what the chief economist is a saying. this is also available on live go. >> you have active monetary policy to lean against the consequences of the financial shock worldwide, not only in europe. forget about monetary policy. -- the we disentangle

secular trends long-term it? i am sure all of you are aware? i don't need much time to go into that. the way i organize my brain is simple. futurerm rates r real rates and expected inf lation. it also represents the term also be which can comprised of the real term premium and inflation term premium. left represents the first moment of the statistical distribution. other part represents the other moment of the distribution. at is important to focus on when you want to have a few -- have a view of the future.

if inflation risk premium, if de fears, not actual or expected deflation, but fears about the possibility of that picksand -- if up, the inflation premium changes dramatically. it could become negative at some point. we would address rates, that could be one of the ingredients. this part which exerted a negative impact on rates has totally disappeared. i will come back to that.

i think a very important point for you in the room, we can talk about these is the real term premium. what do we mean? the easy thing is about the expectations of real interest rates. as an indicator, the long-term what doxpectations, people think in 2003 about long-term goals? in his 2003 -- you have been listening to the chief econoe ecb speakingberlin currently. if you want to continue listening to what he has to say, live go on bloomberg will give you opportunity.

mark cranfiens us now from markets live team. you have the convergence of the ecb story, potentially talking gram, ending the app pro and then they will start raising rates down the road. overlap aoing to diagram with -- and diagrams them with what is happening in italy. you wonder how these forces will end up colliding. ecb could give a message to the italians. ratese planning to raise next year, we are going ahead and you have to get in line with us. ecb will not help you. a plan to gethis and we are kee. --t could be reason why

there could be a message to italy. they need to revise their inflation probe -- forecast. as quite lower on inflation, which is why he was talking about the risk of negative real rates. there is quite a few balls in the air it irt of -- balls it is part of the question. hurt will that help or going forward if the european union puts up a hard stance versus italy anput a -- e ward the european union? isn't that bad for the common currency? mark: not necessarily. the could be willing to look past one player. italy is one country withia large group. the northern european countries are growing nicely. if they are willing to do that, that is a good sign for the euro. the ecbld be caving in for

just one member, that is dangerous and a negative thing for the eur i think ien positively. matt analyst put this up on facebook yesterday. i thought it was fascinating because it shows the ecb bond purchase, the white line is germany and the yellow and blue are france. german debt and into the crisis not supporting italy? isn't that interesting? mark: they would have their own internal limits, as well as the ecb. it would be gauged on the size of the economies and that's markets. -- debt markets.

it could well be they have already kept their limit for italy sometime ago, so there is not much room. pointtaly is trading two 799% on ear --- 2.799% on the ten-year. we're going to that number be if the ecb was out of the market -- here would that number be if the ecb was out of the market? how much of a cushion is italy dealing with? >> much higher. relationship between the italian and h bonds. spain also shows improvement. the tenure difference between spain and italy, italy dropped.

it's got was 73 basis points over spain -- wide st it got was 73 basis points over spain. that is one thing be will be keeping an eye on, the difference between spain and italy in the months going ahead. that is where the relationships will be in the rest of the eurozone. theat means for germany,l is 300 basis point or possibly even higher. if i am trying to understand the gap between any , ithe atp and raising rates have had conflicting reports out on this subject. abouts have been talking tbw short ong a gap the a -- how does it to be play into

that story? is it six months, a year? the market will try and figure out what is happening. what will be fed be doing in 2019, 2020? ark: what ever ecb does pull ill be playing vanilla -- w not be playing vanilla. ecb give thethe ack into app. they will give the criteria to say, if it doesn't go smoothly, we will give a criteria for ending the app. cranfield, joining us from our markets team. if you want to join the debate, go on your live bloomberg.

up next, the nato secretary general will be talkg to us about security. a lot going on at the moment. about thelk to them trade impact. this is bloomberg. ♪

to bloomberg back

"bkets european open -- loombergt marktes; european europen." "bloomberg markets: european open." hasfailure to push trade been a source of frustration for global leaders against donald trump. it is we have the former eecretary general of nato -- w have the former secretary general of n u so much for joining us. a pleasure to have you. let's start with the underlying question. donald trump has shaken the world order with his denial of climate change, his decision to

quit the paris accord with his denial of the ipo on deal and -- of the iran deal. is this making the world a more dangerous place? >> and more uncertain. is a clearis disruption from what was seen, created by president truman immediately after the second world war. presidents, i would say, president george w. bush, adhered to that principle we should have a rules-based world order led by the united states. this is what is at stake. othershat are the roles were following before president trump came to office? it was a pledge they made to gdp on the their

fed. i have a chart showing what the u.s. spends in purple,e gdp.f the germany is barely able to make out 1.2% of spending. they don't have any working subs and they are missing 20,000 they are not dng their fair share to defend the free world as they promised. about theireel refusal to stick to this pledge? i find it embarrassing the european allies do not pay their fair share. this is why we decided in4, at the nato summit, during the next decade, all allies, weibo all live up to the pledge -- we will al live up to the pledge.

many countries are walking in the right direction. eight out of the 29 by the end of this year will live up to the 2% pledge. note, ito important to is not only a question about how much money you spend, but how to spend it. some of the european conflicts that do not live up to the 2% are actually quite active when nato request assistance. kingdom, always pitching in to help -- -- >> and denmark. when nato requests deployment, denmark is going to do it. you havespend money wisely and efficiently.

att: how will this play out when the united states seems to be isolating itself from the rest of g7 and nato? will the others band together and create a new world power? how does this play out by the end of trump's term? dissolution -- disillusiohas led the world since the end of the second world war. policeman tods a restore its law and order. the world is on fire, where ever need a --nflicts, you wherever you have conflicts, you need a bold policeman, and i don't see a reliable candidate. -- this is where

autocrats like putin and xi lie, they have an easier game to play than before. when the u.s. and the democratic world retreats, they will leave which will be filled by the bad guys. matt: guy? rasmussen, what do you make of the president's decision to use national security as a way of restricting trade? isi don't think it legitimate to use national security considerations in that respect. said traderump has wars are easy to win. i do not agree. trade wars have no winners. there are only losers.

: thank you, former nato secretary-general. go untile minutes to the start of trading in europe. this is bloomberg. ♪

minutes to go until the start of cash trading. the euro went up and it is now coming back down. we are seeing dollar strength elsewhere. the pound is coming back down as well. maybe a dollar story with what is happening with the single curren finishing up absolutely flat. europe was softer yesterday. t indidual stocks. we will talk to them later on.

futures at the moment not giving us any indication about going any higher. the market continues to focus on what is happening with the italian story. you start to work out the mechanics of the exit. seeing stabilization in the minors. keep an eye on sky. ibec, smi, ftsem trading today. ibex up by 2/10 of 1%. health care, consumer discretionary, financials on offer in europe. a bit of a drag this mor

the ip rally continues in the u.s. it will generate straight in europe. -- strength eure. not very big. matt: as far as gainers to losers, 324 -- 112 d as far as the leaders, holding the index, we have told towel -- up, a bp rising, ripo great story with the integrated oil companies getting together to bed $9 billion for shale assets. they are leading the sector. losers, thee british american tobac, the biggest defensive stock on the stoxx 600. unilever and diageo are

following. -- are falling. among thethese are very few companies going ex dividend. guy: europe is just opening up a little bit higher. not much. yesterday, the s&p finished kind of flat. have the global head strategy at bnp paribas joining us. the market today seems calm. italy is the biggest story and could have a big application. we don't know yet. the market seems to be looking through the trade story. why is the market as laxs it is? look at equity marthey are ofteo react.

the risk is always there. the reactions are not exactly an -- extreme. ro is nothing dramatic. italian btp is blown out. we ought to wait and see. assume the italian come to somell sort of agreement with the ecb and european command. get everything they want, but they will find a compromise. and thets something, european union does not have to get everything away. guy: the ecb decides, we cannot make policy first for italy. you are one country. but we made policy for germany.

--many has significantly ngignificantly higher rates than it has now. we are going to end qe? point comesesting at the end of the year. the year we end of expect the ecb to say we are done with buying bonds. becomes, who buys all the btp issuance? not th there has to be private investors and the private sector. will they step up and if they do, at what price? the federal reserve is not going to be buying those bonds. i think for financial markets, that is going to be one of the biggest questions out there. who will buy these bonds into next year?

att: 2.84% above 40 basis points on the bond. we have seen a much bigger spread in the past. the italian 10 year recently traded for 8% are in the real eurocrisis. what do you think about the bonds at that level? i was in italy late last week. i was talking to a few italian professors. their own money, they were buying one and two eurobonds. -- one and two year bonds. is going to happen in italy, it will not happen within that time span. i will get my real yields and who knows what will happen in 10

years, but i am staying at the short end of the curve. it is attractive, as it has become attractive in the united states. ar the first time in europe, big bond market is offering a short term yield at the short end of the curve. italy is one factor in europe. factor, andnother the euro. how do i as an equity investor in best and -- invest europe? do i think this potential where -- will carry on and double will get decent profits out of companies? and i will get decent profits out of companies? where do i put my chips? the banks have not delivered yet.

dmund: the first act has bee ry much the end of last year. gangbusters everywhere. europe continue to do well. things have slowed down this year. we have decoupled from the united states. ?hat's next typically be third act is a the third act is a reversal. economists are now more realistic as to what they expect for growth. we have a new chance of achieving these lower growth estimates. what happens to the equity market? equities over six months in

europe typically outperform dramatically. whenusually go up by 50% you come across such extreme low levels. us to have you here. more with edmund throughout the hour. move,t, the stocks on the that willthe company not be making a bid, and yet the stock is up 3%. this is bloomberg. ♪ this is the european open.

we are 11 minutes into the trading session and up across the board. all of the european indexes are gaining with the exception of stockholm. malaysia' central bank governor has resigned in the latest shakeup following the prime minister is a surprise victory last month in the election. the new indonesian central bank twiceor has hiked rates in two weeks. we are expecting freight decisions in india today and turkey tomorrow.

rate decisions in india today and turkey tomorrow. et me show you this chart, the latin american fx index. it is a record low. happeninging whatis in brazil and argentina and the mexican peso under pressure. it is responding to what is happening with the trump administration, the nafta talks. it continues to be under pressure. we have seen what has happened as well in south africa. the growth coming out of south low, int a nine year terms of the latest numbers. that is not the only bad chart. matt: you know how much i love a

cross when the 50 day moving average comes down through the 200 day moving average. ,et't this chart the msci emerging markets index. you did see back in 2015. of 2015, you saw an amazing rise from 700 toell over 1200, approaching 1300, all of the doubling. cross,have another death and where do we go from here? the global head of equity derivatives strategy at bnp paribas is still here. what is your take on emerging markets equities? mund: on a global basis, it is not the place the would be

putting -- putting money in on a tactical basis right now. the stronger u.s. dollar is causing a block of stress across the emerging-market complex. that will probablyontinue for a little bit. we make it back to ing before te year. -- may get back to dollar weakening before the end of the year. late last year and early this u.s. retailers were very bullish on emerging markets, pouring tons of money into pm equities. still that money that can come out in the short term. the dollar remains strong, when you stop seeing stretches of early market economies, it is probably time to wait. seeing this divergence

in the performance between the technology stocks in the u.s., breaking all-time highs, and yet it has caused the e.m. fangs, to go in the opposite direction. many ways, i would argue the technology, the greater innovation is with the chinese rathe ited state guhis synchronized last between asia over the few years and the united states, both driven on an equity basis. absolutely left behind in that kind of space. i, am i incorre about asian e.m. as being e.m.?

these are technology companies that are comparable with those that are being generated as the united states. there are many different ways of looking at it. are we looking at emergis globa? edmund: would you think of e.m. equitiesclasses, are very china dominated. look across the sovereign bonds. creditross the corporate . the corporate credit universe is very different. you are buying very different universes. on the one hand, with pm equities, you are buying much more innovation. -- em equities, you are b much more innovation.

-- not comparable to seeinglsewhere.change we nto chinese technology.ut it is a different universe/ . tal matt: what do you think about the 10-year gilts -- yields in yellow, the dollar in blue? how does that play with emerging markets. a lot of them hold with dollar denominated debt. does higher oil prices are difficult fope with arese higher oil prices

difficult for them to cope withe .orrelation between e.m> equities and oil has been positive, not negative. countries, asian like china, suffer a bit more from a high oil price. i don't think we are at the point where demand destructiois. at $100, it becomes an issue, particularly e.m. we can go higher from where we are today with oil prices. that would be a positive for for instance, russia. shing.mund

with us. we have not talked about derivatives yet. as we carry on conversation, let' to the toocktop stock -- stories. you get unexpected things happening at the open. fit kappa is smur confident 2018 will be materially bette 20 17. it is referring the strong outlook for 2017. international pursuit of paper ending as kappa rebuffed two takeover offers. the stock is gaining perhaps as the company says it has superior profits as a stand-alone business.

an acquisition is targeting a margin of 11.5% with thales. performer is rpc grou p. down 4.4% year. it will continue to access acquisition opportunities. let's check in on how the indexes g. it does not look bad across europe. go type in wm go. you will see a world map and get a picture of slight gains on the iberian peninsula, as well as france andermany. bear gains in the u k and ireland. with the exception of italy, currently down 8/10 of 1% after giuseppe content -- conte said he wanted to expand $130 billion

taxes at the same time, until is feeling pain right now, but europe is doing quite well. other countries are above water. new prime minister passing the first hurdle. he won the no-confidence vote in the senate, but the markets didn't like what they heard. saw a backing up of yields in the bond markets yesterday. the market is looking at a spending plan. we see significant repricing of italian assets. we are getting a potential down like. -- down leg.

how does what we are seeing in italy stacked up -- stack up against the historical pattern? >> investors have this sort of attitude, all in, all out, on markets. the word comes from embezzle, their victims don't ow they are being preppef. when you know, you all of a seven we price. if you chart what happened on the italian yields with some of the other assets that are more toys "r" us,s micro markets that have big moves into you do not

expect this on something like you do notds -- and expect this on something like italian bonds. matt: in blue, steinhoff. replacement. our italian bonds looking more conventional, which is why you you saw that quick recovery? dani: these markets are moving quite a lot. one way to look at it, if you compare cds on italy to emerging markets, you are assume emerging markets will be more risky. italian bondsnt, -- coming closer to being about even at this moment. previously, we would have

run through a whole gamut of on this single currency. that seems to be not there in the same way. print the markets being complacent? -- aren't the markets being complacent? ani: the markets are saying this is the worst that could happen in terms of affecting other assets. domination risk, they stand around 90 basis points, about double from where we saw months ago. guy: dani, thank you. edmund shing is still with us, the global head of derivatives strategy at bnp paribas. what is the best strategy for dealing with italian risk in europe? maybe we should think about how dividends work. maybe we should think about how company payouts are going to be

reured. that provides us with a more bond like cash flow stream that allows us to protect ourselves. something weis have looked at and we worked a lot on dividend futures. who wants ator, cheap way to protect themselves if the italian situation turns dragsomething worse, and si equity markets down, one mple way is to buy put options of the euro stocks 15. at some point, dividend payouts will be hit and investors will run for cover and futures will react very badly, very quickly. volatility is very low on dividends compared to the underlying equities and the cost of that production is much

cheaper. matt: what do you want to do to play the ecb meeting coming up? the question is whether they will decided to tell us whether they will end quantitative easing or keep us guessing. the italian tuation, they may opt to give , andfew hints, but no more not being too definite. they want to be themselves a little bit of leeway as we run toward the end of the year. things are still fluid in italy. they want to tail off by the end of the year. they probably will not be too definite about it just in case they need to change the story once again in the coming weeks. guy: edmund, not quite done yet. he will be joining the global

radio t that will be live on london dab and around the world. could announce the dates of asset purchases. ♪ what's a gig of data?

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italy's new prime minister passes his first parliamentary hurdle, but with a maiden speech pledging spending increases and tax cuts, can giuseppe conte make the numbers add up? the ecb's june meeting could finally see an announcement on when it will end its bond bind program. the convergence toward inflation to the target has improved. emerging-market pain. latin american currencies had a record low. south africa's economy subtracts the most in nine years, and e.m.

see a death cross. a closely watched rate decision comes later this morning. gum morning -- good morning and welcome to "bloomberg markets: european open." i am alongside g at the european headquarters in london. guy: europe in equities are going nowhere in a hurry. point.down on the stoxx 600 b e i think the downside is more interesting, but merlin entertainment trading higher. let me take it to the downside and show you what is going on. italy remains front and center at the moment. we have got some of the banks circa 2% atn by the moment.

the banks could be an area where withe some impact, both what is happening politically in italy, but also remember what is happening with the ecb story. the fact that the ecb could use the next meeting to start that conversation about exiting the asset purchase program. rpc, a design engineering group trading done by 11 points -- down by 11 points. free cash flow don't 11% year-by-year touchdown 11% -- down 11% your by your. let's get a bloomberg update -- year by year. let's get a bloomberg update. >> the white house wants kim jong-un to commit to a time tumbled to surrender his desk timetable to surrender his hisear arsenal -- surrender desk timetable to surrender his --.ear arsenal -- surrender

trump is determined to walk out of the meeting if it does not go well. alternatively, he is toying with the idea of offering kim jong-un a follow-up summit at his mar-a-lago resort if they hit it off. european central bank policy makers holding a pivotal discussion at their meeting next week that could conclude with a public aent on when the intended to seize asset purchases. euro area officials have told bloomberg that president mario draghi's governing council is likely to treat the gathering in latvia as an opportunity to debate wanting down -- winding down bond buying. purchases are expected to happen until september and ecb spokesman declined to comment. italy's new prime minister has pledged in his maiden speech in of window change -- wind change based on a pan drawn up

by the five-star union in the league. giuseppe conte also used his speech to the senate to reassure investors that the eurosceptic administration has no plans to leave the euro. >> leaving the eurozone was never up for discussion. it is not up for discussion. this is no issue that is part of the government's contract. this is not an objective we're trying to follow. >> the world bank is warning that global growth is set to slow over the next years as a central banks raise rates and fiscal stimulus starts to fade. a new report says that the world economy will expand 3.1% this inr, falling back to 3% 2019. it says growth will further slow by 2020 as the global economy output.es -- saudi arabia is now allowing women to attend all sporting events.

it is just another step toward modernization. the events that the kingdom carries out now allow women to enter. we are approaching women driving , women have gotten a lot of their rights in this time and this bright era. we just don't want to give an excuse to those that want to take is backwards and delay is in the issue. we are protecting our customs and traditions, and our religion before everything. >> global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. indeed.nk you very much ecb policymakers may announce a firm date for the end of the asset purchase program as soon as next week. the governing council is likely to treat the gathering in latvia as a live debate on quantitative easing. purchases will run until at

least september. we have the chief economist of the ecb speaking in berlin this morning. he certainly seemed to add alitt story, talking about that meeting being important. we also have the italy issue and understanding the numbers there could come back to that debate surrounding the ecb. with us toiscuss all of this is stephanie flanders, the head of bloomberg economics. good morning. stephanie: good morning. they have wanted to start this conversation in june or july, and they wanted to be clear about what they're trying to do. they want to get us in the mindset where we think more about the conventional tools, the interest rate is it which respond to this sort of immediate ups and downs of economy, and not the asset purchases. even with a slight slowdown in the economy, some of the things that we have seen in the last few months, they are still quite keen about going ahead with

asset purchases. whether they can get their with the degree of slowdown that we have seen, and still some questions about the economy, i think that is a question in their minds. guy: how does the italy story feed into this? is what this story is about -- kind of communicating, you went -- up theay be --up re. stephanie: i think what they are keen to establish and remind people of is that now they have the outright monetary transactions. that structure that was put in place ars ago that was never actually used. that means you should not have a conversation about the asset purchase scheme and italy in the same breath. they woulday that is completely separate. you have monetary policy and

that you have this potential tool that you may use. we could debate about whether it is the right tool, but they see total separation now. the kind of conversations they might have theythey did not have omt, do not have to get into, because they have got something else. tohink if there is anything takeaway from italy, the expect monetary policy to come to the rescue or really have any contact with what you're doing. matt: anyone who plays the bloomberg quiz, it if you type it in on the bloomberg, every week we give you a quiz for fun. you know the omt that people are speculating about the ecb using, but they do not even use their bond buying purchase program that is in plate to support italy, or they didn't before. k out this chart, stephanie. from an analyst who

posted it on facebook. the white line is ecb purchases in german bunds -- of german bunds. the yellow line is ecb purchases of btp's of italian bonds. they are not even supporting them in a conventional way going into this crisis. stephanie: their argument would be that they had a plan that was for month-to-month purchases, which overtime they are still ting to be applying the -- -- capital key. there was i love german bunds -- a lot german bunds coming up that they knew there was going to be this hump. their argument would be that they have their plan for asset purchases and has nothing to do with what is going on in italy, when we are the other. -- one way or the other.

guy: what do we know in totality about the spending plans -- if the spending plans are going to deliver? when you look at the numbers, what is the vibe you're getting back? nie: with our senior euro economists, we had a good look at the numbers. at their main spending proposals, which is rolling back on the retirement age, having a minimum income, and having the flat tax, which the new priming to talked about yesterday, is in the range of -- it is in the range of it could be a hundred 20 billion extra billionending -- 120 euros of extra spending. it is completely unsustainable. whether he is going to do that overnight, we do not know.

it is quite hard to get things done in italy, but easier to spend money usually than do anything else. something -- there will be pushed back from president -- the president and other members of the congress. guy: the marketo be relying on that athis point in . stephanie: when and see -- wait and see. that is 2027. guy: thank you very m indeed. stephanie flanders, the head of bloomberg economics. fox gets approval for its bid to buy a u.k. company. we will bring you the latest on this tangled and convoluted media story. that is next. this is bloomberg. ♪

♪ matt: welcome back to "bloomberg markets: european open." we are 44 minutes into the trading session. international paper has ended its pursue of smurfit kappa group after the irish packaging manufacturer rebuffed on offers and refused to engage in talks. with are joined by the ceo. morning.or your time this , whener why -- i mean

somebody wants to buy your company, don't have a duty to at least engage in talks? >> i think one of the things that you should relies as that-h international paper and we met with them once by telephone and once in person. we received their proposals and their reality -- the reality was that they were far away from what we thought was a realistic point to start talking to them. there is no point to talk to someth value that we think the company holds. with are very clear on that -- we are very clear on that, that they were far away. if they wanted to make another proposal, we would have listened come but they didn't -- listened, but they didn't. they were far away from what we wanted. guy: guy johnson in london. good morning.

expectexpect -- do you this to be the end of this process? would you expect that you will once again fall under the spotlight when it comes to the m&a story? think that reality ishat when you are a public company, you are always available for someone to talk to you and make an offer for your company. it is up to the board and shareholders to decide if it is a reasonable offer. we are not for sale. our company is actually a consolidated itself. we just recently bought something in the netherlands, and we continue to look for acquisitions across the globe. we operate in 35 countries, and we have a very unique culture smurfit kappa group and that is something we want to build on. the somebody comes up with a large enough offer, we are going

to consider it. that is the reality. matt: the shares are up 20%, i think your today -- year to date. 40% over the past 12 months. what do you --hat is a reasonable offer? >> i don't want to go there. shareholderto build value and we were up strongly last year. the sector is in very good shape. the trends of our business with regards to replacing plastic packaging is only starting. you start with the area of e-commerce, and that is again in see -- nasc-- mason ency here in europe. we feel very strongly about our position in smurfit kappa.

guy: how distracted were you buy this? where would you be if this had not happened? do you feel you have been held ver the la few mas sult o oer that has come in? >> i think that obviously in a sense i was double jobbing over the last few months. we delivered a record of the first quarter and we exphave a r and beyond. i think our business is in very good shape. we have run the business i think very well, in the sense that we have concluded a fairly sizable transaction at $460 million in the second quarter. it is business as usual, but i would be lying if this issue of international paper has not taken a lot of our time. it certainly has. matt: let me go on a completely

different subject, on a trade war. would you think of the moves by is a trade were going to be a appa?em for smurfit k >> i think a trade war would be a problem for everyone, and i hope the adults take over and make sure nobody is hurt. history has shown that trade business, buyor for global economies, and e security of nations. i sincerely hope that the adults take over. that is obviously something that we would hope does not happen. guy: thanks for your time this morning, tony smurfit, the ceo of smurfit cakappa. let's talk about the battle for sky. the u.k. approved fox's bid for

skype, but all -- sky. u.k. tv provider -- pay-tv provider from the u.k. htforward. to do something what is going on here? these two stories are interacting. stephanie: yes, you have fox essentially reprising the attempt to buy out the minority although it had effective control. theast came in and bit for whole of sky. disney is saying they want to buy a very large portion in the fox, including the stake in sky. it would be the whole of sky if fox gets it.

comcast has said they are going to potentially make an offer for that sin collection of assets -- that same collection of assets. you have a strange situation where comcast is now bidding against itself. complex is a terribly world, the media world. it all seems to be interrelated and at the same time, competitive. what is the importance of these news agencies, as far as the democracy of the u.k. is concerned? i think that is probably the main thing that government agents are discussing. how important is sky to giving information to voters? stephanie: we have a pretty broad provision of music services in the u.k. bbc, and some are provided by the same people. obviously we have international news as well. don't thinksay -- i

it is necessarily as influential as the fox news situation, for example come in the u.s., but sky is seen as a neutral counterparty -- or sky news is seen as it neutral counterparty. the more news you have the better the voting population is kept informed. guy: what happens now? does rupert murdoch races offer for sky -- raise his offer for is the next move, i am going to raise the offer, or at least i have to match? yes, so the market is expecting that fox is going to raise its offer. at the moment their price is higher.

obviously there is a regulatory question around whether disney would be able to -- a lot of this hingesthe at&ts out, in terms of if that do is blocked, or the probability as to whether comcast would be able to buy fox versus disney. if you are fox, you also have to think about come a happens if nobody is allowed to buy me? in which case, how much am i prepared to pay for sky as a standalone entity? that has to go into the consideration part. it must be an interesting process of decision-making going on over there. matt: how do you expect year to play out, as far as m&a in your sector? it is so hot right now. is this one of the hottest years that you have seen for media m&a? -- doxpected to continue

you expect that to continue? is such a giant sector with many areas of business. there is obviously the sky deal going on. we certainly expect to see more consolidation in terms of digital classifieds, food marketplaces, anythingcontent. there is obviously a global rush for content. w i-tv last year. you have individual companies doing strategic reviews. we are expecting a lot more m&a to happen. , when he wasead trying to decide whether to bid for sky, he got shown around the front end.

that was the bit that sold it for him. i him wondering, what is the defining feature that makes sky? is it the content? s it that makes sky such an attractive business? where does the value like? -- lie? sarah: i think the customer base. they make original content, but still rely on other things. the technology is not -- there particularly i thehow, over-the-top distribution. largeviously has a very over-the-top platform. the key asset is the fact that they have a lot of u.k. customers, and they have a germany and italy, and have now pushed into spain in a small way. it is the race for the consumer, i think. matt: sarah, a pleasure having

you with us. she is a senior media analyst at berenberg. ecb chief economist confirms that the central bank will debate an exit from quantitative easing at its june 14 meeting. we were speaking earlier this morning -- he was speaking earlier this morning in berlin. >> it is clear the governing counci have to make this assessment. the assessment of whether progress so far has been sufficient to warrant a gradual unwinding of our net asset purchases. matt: all right, so that will be fascinating to watch how it plays out. i am going to go. miss a chance to visitatvia, or the meeting. it will be interesting to see, especially as the italy saga plays they want to spend more money than they have.

the germans of course have more money than they are willing to spend. guy: absolutely. last time i went and it was ecb related, i have to say it was very cold. up next is bloomberg surveillance with fran lacqua. i will join the radio team. this is bloomberg. ♪

francine: e policies. and economists strike a more hawkish tone. >> it is clear the next governing council will have to make an assessment of whether progress so far haseen gradualnt to warrant a unwinding of our asset purchases. toncine: beijing is set consider buying an extra $25 billion of goods this year, will it be enough to avoid a trade war? tesla shareholder sithe chieasis board rejects a proposal