tv Bloomberg Markets Bloomberg May 27, 2019 7:00am-11:00am EDT
tokyo. the president call the relationship between the two countries "ironclad" and said a potential trade deal with japan could come later this year. pres. trump: i think they probably wish they made a deal earlier, before they try to renegotiate it. they would like to make a deal. we are not ready to make a deal. we are taking in tens of billions of dollars of tariffs. and that number could go up very substantially, very easily. >> president trump added that china's, neighbors including japan, have benefited from the u.s..disputes with the he also expressed optimism that the world's biggest economy would eventually reach agreement. the chancellor of the extra or has a warning for conservative leadership candidates who want to replace theresa may. he tells the bbc that the prime minister trying to force in no-deal brexit risk being brought down in a no-confidence vote.
he said parliament strongly opposes leaving the blah blah without a deal and he does not support a deal against the government with such emotion. this millionaire businessman is recovering after a health scare. the quicken loans chairman saturdayspital care on after experiencing stroke-like symptoms according to a company statement. he is said to be recovering. , but no other details are provided on his condition. global news, 24 hours a day, on air and at tic-toc on twitter,. powered by more than 2700 journalists and analysts in over 120 countries.. this is bloomberg. ♪
>> good morning. 7:00 a.m. in new york, 1:00 p.m. in the afternoon in berlin, i am matt miller. the markets. the euro is steady after mainstream european union parties held their ground against populists. and an industry jolt -- fiat chrysler proposing taking control of her know in a merger to create the world's biggest carmaker -- taking control of renault. and the huawei founder and ceo strikes a defiant tone. , then,ll ignore trump with whom can he negotiate? if you calls me, i will not answer. more from our exclusive interview with the billionaire huawei founder ahead. markets in the u.s. and the u.k. are closed for a public holiday, but we still see currencies trading here as well as european stocks.an individual
take a look first off at the japanese yen, weakening against the dollar but almost a hundred for one greenback. bitcoin on the other hand, strengthening in dollar times, $8,732.33. and we see the ftse mib, the italian benchmark index, up higher by carmakers. in fact, automakers are the biggest gainers of the industry groups across europe. if you look at the stoxx 600, the auto's index is up 1.9% right now. two of the key players are obviously fiat chrysler and renault after fiat has come out and said it wants to propose a 50-50 holding company, a merger it.quals, some are calling but of course, it would be fiat
chrysler taking control of renault. the question is what happens to the nissan alliance? a look at the other industry groups on my screen? i have the screen pulled up for the stoxx 600 that shows you the returns.ks auto parts are the biggest gainer. and you can see the losers, few and far between. banks, a group that was strongly gaining earlier at the open, falling a bit. travel and leisure also a little changed as well as media down about 1/10 of 1%. for the most part, we have wins no. matter where you look most companies in the stoxx 600, about 500 of them, 450 of them k and almost all of them are gaining. mainstream european parties seemed to have held their ground against the assault from populist parties in the european elections. pro e.u. liberals and greens
did better than they have in the past, in a vote that saw the highest turnout in decades. maria tadeo joins us from brussels. maria, give us the biggest winners and losers. what was unexpected? maria: good morning, matt. this was framed is almost the ultimate test between the establishment and nationalism and populism. but the story is much more newest. we saw a fragmentation in the european parliament. the christian democrats of angela merkel won the election but lost many seats. same for the social democrats. a particularly bad night in germany. but that was counterbalanced by a surge in the liberals and the greens really the star of the knights, and now, potentially a ke kingmaker in the elections. it is much more of a national
individual country story for the populists. the won in italy and france, a step back for emmanuel macron. but the big picture if they were actually contained overall. the pro-european majority in the parliament is still very much holding the light, and that explains the market reaction .oday matt: who is poised to take the most important job in terms of the people that you talk to every day in brussels, the people who are running this union? maria: the election is now an old story to read and a lot of composition today is who will become the next commission president to replace jean-claude juncker. if you look at the election results, european leaders look like they will stick to those results. weber, the christian democrats who is linked on the marco needs a majority to become the next commission president,
but a lot of people i speak to say that it is not clear that he will become the next president. the christian democrats did not have a good night yesterday. it was not a good night for the cdu in germany. so you could get a compromise candidate. his opponent made clear yesterday that she is interested in the job. and you do see them on omicron, who came in second in his --ction -- eminem macron macron will speak to the spanish prime minister today along with other leaders will gather in brussels. it is clear he things that at the very least, someone like michel barnier should be in the list to become commission president. mariathank you very much, . joining us now to talk more about this, a strategist at commerzbank. sther, let me get your first initial take.
we saw a lot of young voters turning out to back the green party, we also so the liberals outside of germany get a lot of voters, though it has to be said, the stp once again with a disappointing showing in a germany. what is your take on what we saw in terms of the european election results? guest: i think the most important point for the market was that there was no overwhelming victory of e.u.-critical parties. instead, the establishment party lost, but those who gained are parties, suchean germany.eens in so the important thing for the market is that there is no overwhelming shift towards e.u.-criticism. i think it triggered a small but significant relief rally this morning. matt: relief rally because the right wing populist parties did
not have a great showing. outside of france, it has to be said, they did quite well in france. if you consider the brexit party , they did very well in the u.k.. why do you think they did not, though, as a whole, have a better showing? do you think it was just the bigger voter turnout for those in the center and the centerleft? esther: i think there was a bigger show out for younger voters in particular, which made an impression, and had consequences for the results, but i also think there is in general, a shift to the left, less-extremist view towards the eu. in some point, it might be due to the brexit chaos. even critical parties in france and italy are no longer calling for referendums, whether their
countries should exit the european union. so i think this also matters. matt: what about the big losses that we saw for the spd? what does this mean to you, what does it mean to the german political environment that the drops from 27% to 15%, and it looks like the greens took their votes? trend we havea seen for several years and it seems like it will continue. that this is also what the markets will now focus on. how does the european election affect national politics, and whether we will see more turmoil in the weeks ahead due to the european election results. matt: esther, thanks very much for joining us. we will get a little more from you, because there is a lot to evenabout, a lot of news
bloomberg stephen engle has the details from tokyo. stephen: president trump in a joint conference with his japanese host, prime minister shinzo abe, saying that he is in biggest to resolve the challenges, north korea and the u.s.-china trade dispute, in addition to the news earlier that they are not going to announce details until at least august, of any u.s.-japan trade deal. on north korea, which dominated, he said he was in no rush to have a deal with kim jong-un. he says sanctions are still in been any there has not nuclear test out of pyongyang for the last couple of years. he says kim jong-un realizes the economic potential of his mission. he said, quote, i am happy with the way it is going/" on the u.s. china trade war, he said he is not ready to make a deal with beijing, saying that perhaps beijing should have made the deal earlier when it had a chance. on the u.s.-japan trade front,
he said nothing specifically on tariffs.t about auto shinzo abe, though, says he hopes for a win-win trade deal with washington, d.c. trump again acknowledging that there is an unbelievably high trade deficit, with japan, but he says quote "we will have a deal with japan, we will have a deal with china sometime in the future." stephen engle, bloomberg news, outside the palace in central tokyo. matt: on saturday, the head of china's banking and insurance regulators, warned traders about shorting the yuan, after a recent slide took the currency to the brink of the critical seven cents per dollar level. this came from the highest level officials. joining us from hong kong to explain is enda curran, bloomberg news chief asia economics correspondent. nda, does the market not it's
liked just as the market not expect the you want to go through the crucial level? seems like a pretty explicit warning to the traders who are turning bearish on the ,uan that the line invest and the pboc seems to be drawing it at 6.9 cents against the dollar. it reinforced the view that piling in on a bet that the yuan is going south, the authorities seemed determined on keeping a stable. various reasons, for their own financial stability. but it had emerged that the yuan was going to drop because of the big down in the trade talks. is seems as though the authorities are very keen to put the message out there that not so fast, there is a ways to go before it breaks the seven level. matt: just yet if the trade deal does not turn out well, isn't
canyuan one way that china really tightened the grip on trump get some leverage in negotiations or by selling off its treasuries, which would do the same thing? enda: i think on the currency, you are absolutely right. there is a view that this message that the yuan will be stable will probably hold at least until the end of g20 at june and see if there is a deal on the table. if mr. trump ahead with higher or additional tariffs, like he spoke about again today, there is a feeling that the macro fundamentals would merit a weaker currency from china, but also that the authorities would be happy to take the edge off the tariffs on exporters. the big question becomes about the pace of the decline before the authorities can put a floor
under it. right here right now, the expectations for a near-term break of 7 or diminished, but if we get to a point where there is no trade deal, we will be back to the market speculating on whether or not the 7 level will be breached. matt: and a fish -- and that fish -- , thank you so much for joining us. we are still with esther reichelt. 'se you think that china warning, do you see the yuan will weaken further? esther: i don't see the yuan weakening further or past the 7m because there are several risks to further depreciation. on the one hand, if it deteriorates the relationship with their, united states, but it would also make imports more
thensive, at a time when chinese government actually wants to increase domestic consumption. most importantly, it could trigger another capital flight, as it seems like the government would lose control of the currency. so i think for now, particularly as long as both parties are still negotiating, c the yuan's weakening much further. matt: the dollar has really maintained its strength fairly well. even in light of the market expectations for the fed to cut rates. needs to comet than a bit, or do think the chinese would sell treasuries? asked are: i think that dollar could come down a bit but not due to the pboc selling treasuries, because in the end, right now, the u.s. dollar is in demand as a safe haven. so there should be enough
buyers. however, i am much rather safe haven status of the u.s. dollar is justified, because we might see the fed cutting rates in particular if the trade confidence continues. matt: what about the yen? even when we have concerns about the u.s.-china trade war money doesn't flow into the japanese currency which normally is seen as somewhat of a safe haven. has it lost of that status or is it just the negative yields you get on jgbs that discourage investors from going there? esther: i think it is still in demand as a safe haven, but that is hidden a bit because of the u.s. dollar also appreciates in terms of risk. the yen as an asian currency, it is right in the middle of the regional turmoil, and the low economic demand in the asian region, triggered other trade conflict.
so that real economic , may be the market might be a little more cautious with respect to buying it as a safe haven. matt: can i ask you about your expectations for the euro? mario draghi is set to finish his term and pass the baton. they want it to normalize, but it doesn't look like the ecb will do that, in light of the lack of economic growth. what do you expect for the euro, and who do you expect to take over? esther: i believe the euro will remain rather neutral for the time being. they wanted to normalize, they can't, there is no demand, inflation is not picking up. there is not much of the ecb can do on the expansionary side, so we don't think they have the firepower to weaken the euro considerably. for the longer term, there might
be a large take over from mario draghi. the outcome of the european elections last week and might matter, because whoever might -- thee au commission au commission, they might determine who could take over the ecb. because in the end, all european jobs are all jobs at the e.u. level, and politics comes into ecb. also the case for the matt: esther, thank you so much for joining us. esther reichelt, currency strategist from commerce bank. today.eciate your time still ahead, part of our exquisite interview with the founder and ceo of huawei, the chinese telecom banned by president trump. he strikes a defiant tone in the face of the ongoing trade war. trump, then,ore with whom can he negotiate? if he calls me, i may not answer. ♪
♪ matt: live from berlin, i am matt miller. this is bloomberg markets. markets that are open, it is a holiday in the u k and the u.s.. we check on the markets with dani berger. dani: markets in europe are higher. the au elections were the center parties did not do well. but what is really sustaining the gains here are what is happening in the auto sector, up more than 1.5%. fiat chrysler proposing and merger with renault. both companies shares moving a lot higher, helping the sector. s&p futures little changed with the cash trading closed. looking at currencies, we are seeing the pound weakening a bit, losing some of its gains that we saw monday, after theresa may put in her resignation.
u.k.'s chancellor of the exchequer warning against a brexit. little change in the yuan, posting gains after officials want against shorting the currency. finally, i want to show you the final market map. bitcoin,at you like gaining today at a one-year high, finally at green for the year, matt. , thank you very much. but interesting story on bitcoin, almost doubled in the past month. still ahead, the latest jolt to the auto industry. fiat chrysler proposing a merger with renault to create the world's third-biggest carmaker. ♪ ♪
pro a you liberals and the greens where the main winners. two major exceptions are france and italy where the nationalist parties one but my vote in one-third. and in france, macron's party is headed for defeat against marine le pen's national rally. his coalition partners in the nationalist freedom party today lined up a motion to oust him. -- austria will likely be rolled by a coalition government until elections in september. attorney general william barr posted to uncover what the white house is: corruption at the fbi and the department of justice. president trump has given him authority to declassify information for more than a dozen intelligence agencies, and a review of the miller investigation. by the white house says he will
likely consult with the intelligence community before releasing sensitive material. global news, 24 hours a day, on air and at tic-toc on twitter,. powered by more than 2700 journalists and analysts in over 120 countries. i am risking good tech. this is bloomberg. ♪ matt: live from berlin, matt miller. this is bloomberg markets. we're looking at markets that are rising after assurances, being assured, it looks like, that the populist, right wing attack has not won over voters elections.pean indeed, the liberal pro-business party's one of the strongest showings of all. joining us is manus guest, vice president of the alliance of liberals and democrats for europe, and the candidate for you presidency.
luis, thank you for joining us. why do you think of did so well across europe, and come as an addendum, why do you think the fdp did so poorly in germany? >> i think people who see see that party as a party that has the ideas and the convictions to provide change. doing things as we have done in the past few years will not stop the populist rise. we need change and reforms in europe. in the 40 that most identifies with reform is the liberal party , and i think we have the agenda for change, and i think that is what people are looking for to confront populism. matt: what are the most important items on your agenda for change? what is first and foremost for from as in europe, aside
closer connection as opposed to breaking up of the union? with --u have to start much closer to the citizens. job creation and creation of equality is a foremost concern. that means being competitive in the european industry, being the forefront in the digital industries and artificial intelligence. right now, europe is falling behind. the top 20 firms are american, and almost none a european. we need this agenda for industry and for digital. we need to have an agenda for climate change, and finally, the agenda for migration. and all those things, europe has fallen behind. we also need to conclude the european monetary union.
and aagenda for change, lot of things that we need to get going in the european parliament. matt: how do you reduce bureaucracy? europe is pretty much the definition of the rocker c. i am here in berlin, where bureaucracy is life, and that is the point of brussels. how can you be a liberal in europe? is that difficult? : good question. rotate like to start by the european parliament meetings. every month, people move to brussels, which is extreme inefficiency. but there is a lot more to do. overwhelming agencies for intellectual property, for example, there is one in alicante, another one in another country , there are lots of
if you look at small and medium enterprises, there are maybe nine agencies which are in charge of that. that is a lot of duplication. i think our liberal candidate to the commission presidency, i think she should be the one, she could do that. matt: she is the one. can you see a situation in which marking with -- working with possible?ber could be luis: we want to change, and we find it hard to envision change working with him, to be honest. matt: what about michel barnier? to be really clear, we are going to push -- as the commission president. we think she really embodies this idea of a renewed europe. i think she has a good chance, i
hope this is going to be feasible. , thethe coalition you need working majority in europe includes the european popular party, the social democrats, and without that, you cannot get to 376 majority, and we think within those three, she will be the one getting all the support. matt: it is great to get some time with you, the lease -- with you, luis, we hope we can get some more time with you. vice president for the alliance of liberals and democrats in europe. foring about vestager president of the au commission there. now, a proposed merger with fiat chrysler and renault could create the world's third-biggest carmaker, renault says it will
respond but it has interest in the opportunity. we have bloomberg's milan bureau chief and the author of the recent autobiography on sergio , tommaso. >> i thought it interesting that we are discussing european politics and today, it is a real european giant which could be created by fiat chrysler and renault, even if cs chrysler is mostly an american company, in terms of profit, the family is based in parisp i find this uninteresting. yes, if this goes essentially in cheone trywhat mar
to do, create a global carmaker able to resist the transformation the auto industry is facing. he did an analysis calle where e argued that the car industry needs to stop overspending and duplicating investment. in this analysis, he had some companies with whom the synergy would have been greater for fiasco is. first place, gm, second, renault-nissan. now, there is a deal with a renault. this is clearly a way to save a lot of money. they say, 5 billion euros a year. >we are just at the beginning of the merger process, so we will see. matt: what is the likelihood of this actually happening? i am sure you have been talking to industry insiders about this today.kend and all day
what are the reactions? tommaso: let us say, first of , renault thought the reaction was positive, they say it is a friendly offer. we did an interview in weekend with talks between renault and fiat chrysler, that they have been going on for a while, that this proposal is not out of the blue, it was somehow agreed with renault. the board obviously has to review it carefully. unless in the strange things happen, you know, there are politicians involved. france is the biggest investor with nissan into renault, the french government, so they are involved. we have already seen some italian politicians say at this point, we also want italy involved in the stake of the new holding company, so there will be a lot of months of discussions.
manufacturers to be the many factors to be evaluated. cia has said they expect to make more than one year to complete the deal. but it looks like it will happen. matt: excellent reporting. thank you so much for joining ebhardt,berg's tommaso who wrote the book on sergio marchionne, who wrote the book in english. kim wait for it to come out in english. meanwhile, this company is reworking its battery purchasing plans over concerns with the supply deal with simpson. it is a big plan, worth 50 billion euros. that is how much the push for volkswagen into electric cars will cost. joining us now is european autos reporter for bloomberg. what are we talking about?
as a proportion of this $56 billion push into electrification, how important ?s the samsung hardship "bloomberg best yes, lots of stories today in the carmaking industry. here in volkswagen's case, it is supplies.ery the carmaker has four major suppliers and samsung is one of them, so it is a major continent or to the 50 billion euro supply deal that they need until 2030. we have learned that some sun, after pledging something around -- to supply vw with, they have stepped back from that fled and they will only supply a fraction of it. electrics that as this car revolution is getting underway, there are cracks in this case, in the area of battery sales supply,
and maybe even limited from materials. tot: who else is a candidate get some of these big-money contracts? investors surely are looking around to try to see who else will get paid billions of euros from batteries. elizabeth: there are, of course, the other major suppliers such also sk's cstl and innovation. in the development last week, rid of the says it wanted to start building its own battery cell capacity and has pledged $1 billion to start making battery cells in germany with another junior partner. matt: elizabeth, thank you very much. elizabeth behrmann, covering one of the massive auto stories in europe today, lots going on in the industry. coming up, huawei's billionaire
survival. in an interview, he dismisses president trump's suggestion that restrictions on huawei may be part of an eventual trade deal with beijing. he talks to bloomberg's tom mackenzie from the company's headquarters in shenzhen. the u.s. has never bought products from us. even if the u.s. wants to buy our products in the future, i may not sell to them. there is no need for negotiation. i will ignore trump. then, with whom can he negotiate? if he calls on me, i may not answer. but he doesn't even have his number. i think it is laughable because contradictory. of companies that supply huawei with components but also software that are now cutting off supplies is growing -- qualcomm, google, panasonic. the question is, for how long can huawei survived without
those supplies of both components and software? -- translator: the u.s. manages its own companies. the u.s. is not the international police. they cannot manage the whole world. the whole rest of the world decides whether they can work with us based on her own interests. if some companies don't want to work with us, it is like a hole in the airplane. we work to fix the hole, but the airplane is still able to fly. we have been using, half are from u.s. companies and have we produce ourselves. if the u.s. imposes further restrictions on us, we will reduce our purchases from the u.s. and use more of our own chips. if american companies have permission from washington to
sell to us we will continue to buy from them. tom: what exactly have you put in place in terms of contingencies? translator: we might have contingency plans for the core of the airplane, the engine and the fuel tanks, but we may not have a plan for the wings. we need to review the situation and fix those problems. you can come back to interview us into or three years to see if we still exist. into a threee years, please remember to bring a flower and put it on our graves. tom: you talk about having a two these in terms of 5g against your competitors. does that lead get eroded? translator: definitely. if we slow down because the wing of the airplane has a lot of holes. if we fly slowly and others fly
fast, they can catch up. but we will fly fast again once all the holes are fixed. tom: how much damage do you expect in the consumer division of the business best smartphones and laptops, which depend on u.s. chips but also u.s. software? we might miss our expected growth targets, but we are still growing. being able to grow in the toughest battle environment just reflects how great we are. rights. have bragging earlier this year, you overtook apple as a number two smartphone maker, you saw smartphone sales jump about 50%, and you have the goal of becoming the number one smartphone maker in the world. does that goal have to be shelved now? : we can become bigger or smaller. we are not a public company. we are not only pursuing growth for profit. it is good enough for us to just survive.
tom: there have been calls by some in china for beijing to retaliate against apple. is that an action that china should be looking at taking? ren: that will not happen first of all. second of all, if that happens, i will be the first to protest. apple is the world's leading company. if there was no apple, there would be no mobile internet. without that, we would not see the beauty of this world. apple is my teacher. it is advancing in front of us. as a student, why should i oppose my teacher? i would never do that. tom: critics of warwick say you got to where you are through intellectual property theft and government support. warwick --ritics of critics of huawei. what do you say to that? tom: the u.s. has not developed
the technology, so where should i steal it? u.s.. leading the if we were behind, trump would not need to make some many efforts to attack us. he attacks because we are more advanced than them. matt: that was the huawei enfeier and ceo, ren zh with bloomberg's tom mackenzie. it can catch more of that interview this tuesday with bloomberg special huawei, connected and contested. still ahead, if you want to have lunch with warren buffett, the bidding on ebay is open. details next. i can tell you, it will cost you millions. this is bloomberg. ♪
, turn for the bloomberg business flash some of the biggest business stories in the news right now, and for that, we go to radhika. >> thanks, matt. a date with warren buffett will cost you at least $25,000. bidding on ebay started sunday with the billionaire investor offering a chance to pick his brain over lunch at a new york steakhouse. raising over $30 million for a san francisco charity whose programs address hunger, poverty and homelessness. ♪ this retail startup is finalizing a deal to raise $100 million, an evaluation of $1.1 billion. the price tag for the singapore-based firm could make it the second most valuable startup in the city state. is in debt financing three acquisitions.
the company is aiming to go public in the next 18-24 months. new zealand will buy 787 minor aircraft from boeing, the order is worth $2.7 billion at list price. but the auckland-based airline says it has negotiated a significant discount off the sticker value. the carrier will use the planes to upgrade its long-haul fleet. air new zealand's statement says it has an option to buy it these 12 more of the aircraft. that is your bloomberg business flash. tot: how much would you pay have lunch with warren buffett? >> that is a very good question, matt. i think they have eight bids so far and the highest is that $2 billion -- $2 million. not sure i can compete there. matt: i feel like there is a lot you could do with $2 million. but lunches i guess one option. that.you so much for
markets in the u.s. and the u.k. are closed for public holidays. we do have gains in continental european indexes pretty much across the board right now, being driven up by automakers, .art -- party renault-chrysler and putting up some real gains -- we see fiat chrysler and renault putting up gains on the merger being for proposed. when we come back, more about this. this is bloomberg. ♪
soundly defeated in european parliament elections. it was their worst result in decades. the anti-brexit cap took 40% of the vote. the more people voted for a second referendum than and no deal split. romania's most powerful man is heading to prison for corruption. he received a 3.5 year sentence after the country's supreme court upheld a previous boat rigging conviction. the ruling against roman is to factor leader comes as its government clashes with the european union over concerns it is curbing judicial independence. the european union is signaling it would reject any white house effort to curb imports of you and auto parts -- eu auto parts. dismiss president trump's recent caution. voluntary restraining exports is
legal under wto rules. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more 120 countries. this is bloomberg. matt: good morning. 8:00 a.m. in new york, 2:00 p.m. in berlin. welcome to "bloomberg markets." holding their ground. the euro studies after mainstream european parties held their ground against populists elections.the eu at an industry jolt, fiat chrysler proposing to take control of renault to create the world's third biggest carmaker as manufacturers and more money,
plus ghosting the president. billionaire huawei founder and ceo striking a defiant tone. i will ignore trump, then with him can he negotiate? if he calls me, i may not answer. matt: more from our exclusive interview coming up in the program. first, taking a look at the markets that are trading. u.s. and u.k. markets are closed for public holidays, but it is always good to look at the end to see what kind of safe haven bid we are getting. the answer is none. although the dollar has been a bit of a safe haven currency. nonetheless looks very risk on today. $8,771 as up $650 to coin. italian benchmark index, being driven up by automakers. take a look at the stoxx 600 automakers index, the biggest gainer among all of the stocks
-- stoxx 600 indices. we see fiat chrysler and renault rising substantially. fiat chrysler putting out its proposal to take control of renault. we also see gains in daimler, bmw, and volkswagen as well as peugeot. mainstream european parties seem to have held their ground against populists parties in the european elections. for a eu liberals and greens pulled better than in the past in a vote which saw the highest turnout in two decades. from brussels. maria, give us the winners and losers and what were the big surprises? maria: good morning. a lot of surprises. this is almost framed as the ultimate test between establishment and nationalist populist. when you look at the results, there are many shades of gray. the christian democrats won the election but lost seats.
the same goes for the social democrats. particular in germany. the greens and liberals did better than expected and potentially the european parliament when it comes to the populist, we did not see that up manyncredible pick had expected. this is a very individual country-specific story. we always knew salvini would do well in italy. for macron difficult but he did not lose by that much to marine le pen. that reaction in the market europeanplains the pro- bit hold in this european parliament. matt: who do we see getting the top jobs? we just spoke with a man who said he wants us to jerk to when it. -- vestiger to win it. maria: that is the big debate. if you look at in principle the rules and almost common
knowledge, you would think the leader of the christian democrats who won the election, but did lose seats, should take the initiative and lead those negotiations. but many people i've spoken to told me this morning it is difficult to see him at the top of the european commission. that could pave the way for compromised candidate for someone like vestager who is very well respected. macron, he will tell you at the very least, you need to consider other candidates. he did speak about bannier last week. he is very well respected and has been doing a bit of campaigning himself over the past year. that has the negotiation that will start tomorrow when leaders gather here in brussels. matt: maria, thank you very much , covering the results of this
four-day long exercise in democracy. , global investor, european equities chief investment officer. thank you for your time. what do you take away from the results of the european elections? first of all, i would say the voters say clear they are voting for europe. they vote for democracy. they vote a little for populism, and a little for new politics. something else, something going forward and not stay where we are at the moment. for me at the moment, that is the best answer to your question. matt: the greens had a great showing across europe, but an amazing showing here in germany, beating out even the spd to come .econd to angela merkel's cdu does this have an effect on the way you look at markets, the way you look at investing? the kids are out in full force every friday here in germany,
and now they are voting as well. i have boys aged 15 and 17. they make it clear what the old parties offer, it is not what they like to see. they like to see digitalization, climate change. they do not like to give up on that point. yearsd say we give in 25 our roles to the young generation. at the moment, we're not doing a good job so we should not wonder if they elect in a different direction. of thehat do you make great showing that the liberal to my kratz had throughout europe -- democrats had throughout europe, but the poor showing the ftp had here in germany? does this show may be the difference between germany and the rest of europe?
more theit is a little people behind it. i was it a good thing in that boat is the people not only vote people, they really vote for the topics behind the party. they make it very clear. i've not seen a lot of the liberals here in germany doing the election campaign. maybe in that point, the traditional parties have done a good job because showing from people on things that was easier for them. i'll make it clear what we now need is more coalition, different coalition. people have worked harder together. i will say there is not a secret , go may be liberals and evp together i would say with the old social democrats. so that seems for me the way, but you have to find now for each and every decision more partners in the parliament. be the ftp here was
not trying hard enough. they got only 5.4%, which is half of what the afd got an a tie withd elinka. was it anything that changed your views in the market? when you came home at the end of last week and then you saw the results today, is there anything you saw that made you think of investing differently? big message at the moment is the populism is in the parliament. it may be democracy has to be there. for me, i would say very clear that with these results, the british parliament has to do a better job because people seem to be fed up of what they are doing. for me, the message is italy. italy, especially, what to do
now with the idea of the populism to spend their money. that could go in a different way. for me, the message is france at the moment. wins not that ring le pen the election, she loses even the roof for. for me, it is more parties to come they really try to have some of the power. i would say the biggest fears that populism no longer there. the positive news is, if there is a positive, there is some other news to see how to handle that. i would say that makes investment interest, it makes active investment interest in that is what we have to do the next weeks. matt: what do you think about this cdun results -- holding fairly steady around 30%, the stp sliding off the map. maybe forecast the change in the spending policies of berlin?
i would be cautious about that because you need something to make pressure. another way to make pressure is one of the coalition partners threatens to go out of the government. moment we had new elections and came out with 30% -- i do know, 15%, 20% with the they will beats, out of the next government. i'm not sure that could be a good idea for them. so that means they have to be louder, have to be louder to make their voters very clear for what they are staying for. i would say the weapons they could use or maybe not so hot and not so good as they thought at the moment. will keep you with us. we have a lot more to talk about, including what you know for me is the most interesting story of the day.
matt: live from berlin, this is "bloomberg markets." fiat chrysler says it is proposing a transformative merger with french competitor renault. it would create the world's third-largest carmaker and possibly the biggest in the world when they get together with nissan. renault responding earlier saying it will study the proposal with interest in the opportunity. joining us now to discuss further is benedikt kammel.
first off, i hate the term "merger." i remember when i first started in this business, daimler bought chrysler and promised everybody was going to be a merger of you goals. of course it was not. daimler was in control. who is the buyer here? >> at the time they also said it was a marriage made in heaven, and we all know how that went. a lot of caution around the world of the word "merger." the fee outside is to some degree in control. however, you have very powerful stakeholders on the renault site. they go to great links to describe this as a 50/50 merger of equals. they say the renault side said today they see this as something that is friendly, not a hostile takeover or anything. but we will see how it plays out in the next couple of weeks and months. some people inside the company said this could take a year to get over the line. matt: kris bryant, bloomberg
opinion columnist whom i love, has said he is not so sure it is a good idea. in fact, historically, big mergers don't often turn out to be good ideas. , the late chrysler ceo, was behind industry consolidation because he argued towould cost so much money electrify the fleet, develop autonomous cars, car sharing. what do you think? >> you are right. hashistory of the car world examples of mergers not having worked out. we talked about daimlerchrysler. that blew up. there was the attempt to go with suzuki and vw. matt: ford bought every brand under the sun at a loss. >> absolutely. however, we're in a situation where the car industry is under huge pressure. there is great of people. towarde wants to go
electrification and autonomous driving. or that, you need scale. around europe in particular, a lot of comedies do not have this do not havepanies this scale. scale is wanting these companies want. spirit is alive. he's been probably the last 10 years china look for a partner. we know he originally tried to do it in the u.s. gm said i'm a no thank you, we are happy alone. now he is come closer to home, looking just across the border, and for no is his partner. matt: we're seeing not only -- sharesares and renault arising, but others are doing well, too. is this just excitement for consolidation do you think? >> there aren't that many players left in the field, so it is difficult argue this is sort for a massting gun
consolidation. you might see more of a going forward, you might see more loose partnerships. it will be interesting in this context to see what nissan does. nissan and renault are linked in the alliance. right now are out in the cold on this and very much contingent .pon the fiat and renault deal see morerobably consolidation in the industry going forward just because the upheaval is here. matt: it will be interesting to see what nissan does. i think renault owns a bigger nissan ineon then -- the sun does in renault. the japanese might feel a little pressure here. you could say they have no one to blame but themselves, actually. onedikt kammel joining us this big auto industry story. for more on the sector, let's go back to joerg de vries-hippen, european equities cio. what do think about autos as an investment right now?
the consolidation play may be a good one for some. but there are not a lot of players left to get snapped up. on the other hand, the future does not look so bright if you consider falling sales, the diesel problems, lawsuits still to come. what do you think? >> i would say the automobile is not a dying sector. it is only the situation they have to change now. i would say to buy a car at the the one side of the discussion to we need four doors or two doors? on the other side is a branding i would say luxury object. there yet to be very cautious. you have to build something the people like to have, that they like to own, that they like to buy. i would say it is not only still luxuryapest thing, it is
good and yet the cell that as a luxury good. a you have to sell that as luxury good. companies going together, they have to fit together. technology has to fit together. then they could build the right way. that is not easy. i would say even modern technology like electric cars or something could give that spirit. sector ist say the dead. it is in the changing process at the moment. matt: that change will cost a lot of money. we were talking about volkswagen investing 50 billion euros to electrify the fleet. no doubt everyone is going to have to be looking at double-digit billions to do this. do you wait until after the investments are made to see who the leaders are before you wade into the sector? >> i would say in the end, if you have a company that is able to spend these big amounts of money, you will be the winner. that is the situation at the moment. i would say for me, it is
another question. it is a more of a question of what these companies have done in the past, i would say electric cars -- i would say new things. don't forget the first real cars 150 years before was electric cars. the technology is now modernized, but i would say the idea to have an electro engine and better in the car is nothing new. to ask what this company has done the last 20 years. there they have done a little bit sleepy and not done the right things. all in all, if you find a company that spent out of the normal revenues, the normal cash flow, all of the money to spend in the modern technology, that will be the winner and the future. no question about it. matt: we can see electric cars at the mercedes museum, over 100 years old. thank you for your time.
live from berlin, i am matt miller. this is "bloomberg markets." on's check out what is going in the index is open and the markets trading right now. it is a holiday in the u k and the u.s., but dani burger has a latest on the continent. the break, you're talking about fiat chrysler. i wanted to give you an update on where those shares are trading because this is what is driving the market higher.
renault with a 14% gain, its biggest gain since 2008. for fiat, 2014. theyolding parent ,exor, are gaining a lot. currencies having some action as well. the yen is folly against the dollar so we're seeing some risk on. in crude, shares fall. iron or is the real standout here. prices surged past $100. mainland china shipping ports, supplies drop. that is really propelling some of the gains. i want to show you what is happening in greece. they've called for a snap election. ons in white fall to a record low as stocks in blue see their biggest gains in two years. interesting chart. that could win the battle of the charts. i encourage you to enter it later on. time for the bloomberg business flash. a look at some of the biggest business stories in the news right now. china has advised traders
against shorting the yuan after recess light of the currency to the brink of the critical level. trade tension with u.s. and signs of a stuttering economy have added downward pressure. chinese bankers and insurance regulator had says losses are inevitable for speculators betting against the currency. a report in the financial times has bankrupt british steel has drawn interest from several potential buyers, but no formal offers have yet been made since the business was put into liquidation on may 22. this is bloomberg.
committee fed after garnering less than 10% of the vote. she called the results disappointing but said they would refocus parliament on getting the u.k. out of the block with minimal economic turmoil. is on thehancellor track to be ousted. this after his coalition partners and the nationalist freedom party today lined up behind a motion to dismiss him. is no-confidence vote against him and his cabinet, austria will likely be ruled by caretaker government ahead of elections planned for september. billionaire businessman dan gilbert is recovering after a health scare. he sought hospital care on sunday after experiencing stroke-like symptoms according to a company statement. he is now said to be recovering comfortably, but no other details were provided on his condition. global news 24 hours a day, on
air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more 120 countries. this is bloomberg. matt: this is "bloomberg markets." ank could include capital increase according to sources. we go to frankfurt for the details. stephen, we are right at an all-time low for deutsche bank and now they want to raise money again. this is going to be difficult, isn't it? investors have been burned so often already. absolutely, matt. that is right. this is the big problem they are facing. they don't want to do it for the
reasons you have been outlining, the share price is at an all-time low or near to an all-time low, and has been declining for many years. investors who have participated in previous capital raises have been multiple over the past 10 years, they have been burned. so asking them for money yet again to cut investment bank that will be extremely difficult. what does christian sewing want to do the money? has he given us the complete plan, detailed plan b or just sort of the rough outline that he provided at the agm? >> exactly. it is been more of a rough outline. last week at the agm on thursday, he told investors he is planning basically to cut the investment bank. he said "prepare for tough cuts to reinvestment bank." it is clear that is what he is
planning to do. he highlighted a few areas he wants to grow, including the transaction bank and the asset manager. but if you want to cut in investment bank, if you want to cut is strongly, you basically need to take assets off the balance sheet. and those will then be reevaluated. that can create a very strong capital need. be is underill debate and how much of the capital needs that will entail. that is the discussion taking place within deutsche bank at this moment. matt: what is the m&a situation here? for a bank that was trading at almost 90 euros a share 12 years ago, now it is going or six euros a share and change, does anybody want to come in and pick it up or is it just burdened with too much cost, too many employees, and too many problems? think would be difficult for any bank to come .n and take deutsche bank over
one of the reasons is one you just mentioned, it is difficult to value the bank will stop it has a very big balance sheet. what is on the balance sheet is hard to put a value on it. and there is the german government. deutsche bank continues to be the biggest bank in germany. for anyone to take it over, i would think would be something the german government would not like most of this low share price has attracted new investors. the latest is a former jpmorgan cfo who came in last year because the book to price ratio -- sorry, price-to-book ratio is so low. there's the chance or activist investors could come in a put more pressure on the management. matt: speaking of management or really of the board, what kind of pressure has paul at geithner been under? he did get shareholders voting to support him, although i think of his only 72% support he got,
which is a very low amount for a german agm. and he has overseen four or five different ceos and the stock just absolutely imploding. how safe is his job? good question and a difficult one for me to answer. i don't exactly know. you are right, the vote at the agm last week was not good for him. he was not voted out, however. 71% approval he got is the lowest for him in his role ever since he took over in 2012, but it is still more than 50%, the majority of investors continue to back him. there is pressure for him. we reported large investors would like him to at least initiate some sort of succession planning thomas of their is possibility at least he may resign -- planning, so there is the possibility he may resign before 2022.
if that actually happens is difficult to say at this point. matt: it will be interesting to see what the austrian born professor actually ends up doing with this bank. his legacy is on the line. steven, thank you for your reporting. day when you're covering donald trump. the president is on a state visit to japan where u.s. trade deals and relations with north korea top the agenda for discussions with the japanese prime minister shinzo abe. stephen engle has the details from tokyo. >> donald trump in a joint has conference with is japanese host shinzo abe said he is in no hurry to resolve to this region's biggest challenges, north korea and the u.s.-china trade dispute. in addition of course to the news we got earlier they are not going to announce details until at least august of any u.s.-japan trade deal. on north korea, which dominated the joint news congress, he said
he was in no rush to have a deal with kim jong-un. he said sanctions are still in place and there's nothing in a nuclear test out of pyongyang for at least a couple of years. he says kim jong-un realizes economic potential of his nation. he said "i am happy with the way it is going." on the u.s.-china trade war, he said he is not ready to make a deal with beijing. you see it said perhaps beijing should have made the deal earlier when it had a chance. on the u.s. and japan trade front, he said nothing specifically on the threat about auto tariffs. shinzo abe said he hopes for a win/win trade deal with washington, d.c. trump acknowledged there is an unbelievably high trade deficit with japan, but said "we will have a deal with japan. we will have a deal with china sometime in the future." news,n engle, bloomberg central tokyo. matt: on saturday, the head of
china's banking insurance regulator warned traders against shorting the yuan after recent flight to the currency to the brink of the critical seven per dollar level. the remarks came from the highest level financial official to publicly comment since tensions between the u.s. and china escalated this month. economicia correspondent joins us from hong kong with the details. >> chinese absorb these are sending a clear signal to spectators that a breach of seven will not be tolerated at least in the near-term. we had a signal from a top regulator of the central bank that the authorities will punish speculators who try to push it further south, and there seems to be a line in the sand around the 6.9 level against the dollar. and really that is because there was just it is in china's interest to keep the currency somewhat stable as a trade go shenzhen continues, they don't want to show they are
deliberately weakening it and they do not want to destabilize their own financial system where they have to start spending their own reserves to prop up the currency. i think there is a killing among mark watches the currency -- market watchers the currency stable.y still -- stay if there's a deal on the table, perhaps the stability will continue in terms of a broader trade truce. if no deal is on the table, mr. trump goes ahead with tariffs, the net would put more downward pressure on the yuan to see more intense speculation about reaching the seven level again. 'stt: coming up, huawei billionaire founder stands to find in the face of u.s. sanctions to threaten his compass survival. hear our exclusive interview next. this is "bloomberg." ♪
matt: chinese markets did well, european markets are up, u.s. futures are down but the u.s. and the u.k. markets are closed today for a holiday so that is more indicative of what will happen tomorrow in new york. i am matt miller. this is "bloomberg markets." it is time for the bloomberg business flash. egypt is considering offers from blackstone and malaysian power producer to take over three of
its power plants. the move could cut the north african nation's debt while bringing in much needed foreign investment. the plants were co-built by siemens and inaugurated in july. they're part of a series of large-scale infrastructure ofjects under the president assisi. the president of united airlines is the grounding of boeing 737 max jets has impacted the federal aviation administration's reputation according to reuters, citing scott kirby's comments at the forum asia conference in singapore. kirby added that he believes the regulatory system in the u.s. and elsewhere is likely to emerge stronger as a result of the grounding. buy 8787 --and will 10 dreamliner aircraft from boeing. the order is worth $2.7 billion at list prices, but the auckland-based airline says it
is negotiating a significant discount to the sticker value. the carrier will use the planes to replace and upgrade its long-haul fleet. air new zealand statement says it has the option to buy as many as 12 more of those aircraft. your bloomberg business flash. huawei founder and ceo ren zhengfei is a defiant tone in the face of u.s. sanctions that threaten his company's very survival. in an exclusive interview, he dismisses president trump suggestion that restrictions on huawei may be part of an eventual trade deal with beijing. he talked to tom mackenzie from the company's headquarters. the u.s. has never bought products from us. even if u.s. wants to buy our products in the future, i may not sell to them. there is no need for negotiation. i will ignore trump, them with him can he negotiate?
if he calls me, i may not answer. but he doesn't even have my number. i see his tweets and i think it is laughable because their self-contradictory. tom: the list of companies that supply huawei with components, but also software, that are now cutting off the supplies is growing. so i guess the question is, for how long can huawei survive without those supplies, components and software? the u.s. manages its own companies. the u.s. is not the international police. they can't manage the whole world. the rest of the world decides whether they should work with us based on their own business interests and positions. if some companies do not want to work with us, it is like a hole in the airplane. we are working to fix it but the airplane is still able to fly.
of the chips we have been using, have are from u.s. companies and cap we produce ourselves. -- half we produce ourselves. if the u.s. imposes further restrictions on us, we will reduce our purchases from the u.s. and use more of our own chips. if american companies have permission from washington to sell to us, we will continue to buy from them. tom: what exactly have you put in place in terms of contingencies? >> we might have contingency plans for the core of the airplane, the engine and fuel tech, but we may not have a plan for the wings. we need to review the situation all over again and fix those problems. back to interview
us in two or three years to see if we still exist. if we are gone in two or three years, please remember to bring a flower and put it on our grade. -- grave. tom: you talked about having a two-year lead on the 5g in terms of your competitor? does that get eroded? downff eller, if we slow it is because the wing has lots of holes. we fly slowly, they can catch up. we will fly faster against once the holes are fixed. tom: how much image do you expect to be felt in the consumer division of the business, smartphones and laptops, which depend on u.s. chips but also u.s. software? we might miss our expected growth target, but we're still growing. being able to grow in the toughest battle environment just reflects how great we are.
have bragging rights earlier this year. numberrtook apple of the two smartphone maker, saw sales in the first quarter jump by about 50%. of course you do have that goal of becoming the number one smartphone maker in the world. does that now have to be shelved? we can become bigger or smaller. we are not a public company. we're not only suing growth of profit will step it is good enough for us to just survive. tom: there have been calls by some in china for beijing to retaliate against apple. is that in action that china should be looking at taking? that will not happen, first of all. second of all, if that happens, i will be the first to protest. apple is the world's leading company. if there was no apple, there would be no mobile internet. if the rest of apple to help show us the world, we would us
of the beauty of this world. apple is my teacher. it is advancing in front of us. as a teacher, why should i oppose my teacher? i would never do that. tom: the critics of huawei so you would have gotten there from government support. what is your response to that? the u.s. has not developed the technology. so from where should i steal it? ours more likely they steal technology. now we are leading the u.s.. if we were behind, trump would not need to make some efforts to attack us. he attacks us because we are now more advanced than them. matt: that was huawei founder and ceo ren zhengfei talking with tom mackenzie. havoc up, brexit wreaking on u.k. politics, both conservatives and labor scoring their worst resorts -- results
matt: live from berlin, i am matt miller. this is "bloomberg markets." evidence of a deeply divided electorate in britain as voters vote on brexit. we go to westminster. amory, we have heard from with -- the labour leader. what is he saying? -- theas jeremy corbyn's closest he has ever come to saying he support a second referendum. he said he would like to see a public vote on any brexit deal. he did say public vote. that gives him some wiggle room in terms of his stance. it comes after the main party,
labour and conservatives alike, suffered a huge blow in these eu parliamentary elections. we saw many from his cabinet, senior level of his cabinet saying labor really needs to be clear and have a little more clarity on where they stand because that lost votes two parties. both parties lost votes to others like brexit, the green party because they were unambiguous and very clear about where they stood when it came to brexit. brexit was what divided this election. it is widening the gap here in the u.k. they werepoint out, not even supposed to vote in this election. the whole brexit is reminder to them they have yet to successfully have a deal with the european union because they were never supposed to be in this you election. matt: what is the breakdown -- i know the brexit party did the best and were touting the strong showing of the liberal democrats as well, but didn't of brexit party really just stopped everybody else?
-- stomp everybody else? >> yes, and they did not have a lot of time to do it. the liberal democrats did well as well and along with some other parties, they made up a strong stance to remain. you can see the country still very much divided, but brexit certainly made a showstopper in this election. this is the daily telegraph this morning. it says " farag humiliate stories and eu poll." the conservatives -- a lot of conservative voters took those tory voters to their side. telegraph, daily boris johnson writing an op-ed today. the next question that after the eu parliamentary election is who is going to secede theresa may? boris johnson is a front runner. he is a favorite of the bookies. already with the brexit party doing so well, a really is going to galvanize someone like boris johnson and these other brexiteers to succeed may.
matt: the other interesting thing, the brexit connection to the populist and far right parties is being touted across europe, but when brexit actually happens some of those members will no longer be in european parliament. isn't that right? >> yes, that's right. and nigel farage is saying they have to be there and they're going to be there until october 31, that he wants to have the brexit party have a main stake in these negotiations. i think one thing we should make very clear leading up to the fact that really the next big event in the u.k. is going to be the tory leadership is the fact that while you have these hardliners saying we will accept a no deal by october 31, the new deadline for the u.k. to leave the eu, over the weekend you have the u.k. chancellor coming out and saying, well, if you
want to go on a no deal brexit, you're going to risk a no-confidence vote in parliament because parliament has made it very clear they don't want to leave the european union without a deal. matt: annemarie, thank you. doing a job covering the eu election results down on the green for us in westminster. that does it for me. and edwards will be up next with "bloomberg markets." coming up, more of the road ahead for the european auto sector. fiat chrysler proposes taking control of for a note and a merger degree the world's third biggest carmaker. this is "bloomberg." ♪
9:00 a.m. in new york, and this is "bloomberg markets." i am an edward. -- i am and edwards. mainstream parties held their ground against populists in the regional election. trade tit for tat. president trump says china wants to make a deal, but the u.s. is not ready. merger monday. fiat chrysler is proposing to take control of renault in a deal to grade the world's third-largest carmaker as manufacturers consolidate. good afternoon from london, 2:00 in london, this is a special edition of bloomberg markets because u.k. and u.s. markets are closed today. european markets are out in force. continental european ones, that is. merger00 lifted by that monday story a was talking about. you can see the renault share price up. we see fiat chrysler going higher as fiat proposes a merger
with renault. and also the fact we have not seen another escalation in trade .ensions over the weekend three weeks of negative moods for global equities as a result of those trade tensions. we put the chinese currency on the board for you as well. we have seen the yuan gaining a little bit. economic officials in china warning they should not sure the chinese currency, and that gained quite a lot of attention and the earlier asian session. that is where we are on the european story right now. european equity markets making slight gains. mainstream parties seem to have held their ground against the assault from populists in the elections. in the better than past a saw the highest turnout in some decades. maria joins us from brussels. we are going with this narrative that suggests the populists have
not done as well as some have suggested, but there are couple of countries in which they did really well. maria: good morning. many shades of gray in the election as you mentioned. we did the national is posh -- italysts do well, but would do well, which many in brussels told me they do not consider this as part of the european election. very different narrative. inhad macron come in second france. when you speak to french officials, they will tell you it is not as bad as they thought it would become especially when you take into account everything that has happen over the last year or two. when you look at the more establishment forces, we did see the christian democrats when the election, but lost seeds. the same for the social democrats. early bad performance, particularly comes to germany. there was a surprise for the markets today which was the
support for the liberals and the greens now very much a kingmaker in the european parliament. the bottom line is the pro-european majority managed to hold strong even though we did see a lot of political fragmentation yesterday. get more detail later in the program on the specifics of the u.k. story and brexit, but i want to pick up on the italian dimension. i did see headlines crossing right now from the leader of the five star party, doing very well. he also and government with the leak. they were not rewarded for their achievements during this election. they were hammered at the polls. he is in the five star party heads did not ask him to resign. whoever is leading five-star perhaps slowly tangential to the rise of the leak and the fact we could see further standoffs between rome and brussels in the months ahead. yes.:
this was a very important election because the balance of power in the coalition could change, indeed has changed. if you remember the league with self it -- the whole dynamic has changed. so being israel much on top. very much on top. overtaken by the classic, normal traditional left in italy. this changes the dynamic. had some say the results are isd for salvini and that he been given a mandate to cut taxes. that will put him in direct confrontation with brussels because already the economics of it, the italian economy are not looking good. you do see a deficit. you see that big pile of debt, on the gdp on a country
verge of recession. that is not going to be good. the what you read this, i bet mandate to cut taxes. one of here today is this is difficult and could potentially lead to another confrontation. anna: maria, thank you, live on the ground for us in brussels. picking up the thread from the european elections that took place last week and over the weekend. we welcome david cole. good to have you with us. maria talking about how in many places the populists have not done as well as some had thought they might. the euro is pretty stable. do you go with that narrative or do you reflect on the fact populists are going to be more influential in this european parliament than the last? david: i agree with the analysis.
to go step further, is this really something which drives the currency? for currency markets, they seem -- this the selection election, had been more driven by the media basically outside of financial markets. uro move.se the e what is important is after the elections, how they see the new personal in your look. who will be the next commission president, the next ecb president will matter the most for the currency and from this clinical outcome -- political outcome. anna: david, i've a chart that shows what has been happening with the euro. you mention the performance and what is actually impacting it. this is the euro dollar. the euro hitting lower and lower weekly highs.
is this all trade nervousness and the extent to which germany and other parts of the eurozone are exposed to trade tensions, or is there another story here? talk to me about where the euro heads next. >> it is something that has to do with the trade tensions, but also slowing growth. the euro is perceived as the most cyclical contrast to the u.s. dollar. when there is not a strong economic cycle, it is not only germany, not only europe, but global economic cycle. this is needed to help the euro for higher exchange rates, and this is not happening. right now we have quite weekish figures. with the trade tensions, it makes it much more difficult the global economy can recover from. anna: the currency is caught up
in the global trade narrative of the tensions between u.s. and china. what about key a pointless to the ecb? i have been reading the politics that we've seen play out over the weekend could delay some of those key appointments to the ecb and other european roles. how important is succession of the ecb to you and your view on the currency? david: there are basically the talks that went a german becomes the head of the ecb, policy will be -- the outlook for the policy will be more hawkish. we doubt the ecb is even with the german. the head of the ecb, even then the all over economic prospect for the eurozone. and this is not so good. we doubt next your this will become better. so the ecb is really limited by their choice what to do with policy and really to bet on a very hawkish ecb policy even after the change at the
presidency, we will doubt that. but there is rumors and probably at least as some point the currency might react on that. david, you don't still seem to think that european politics story over the weekend place much to the currency, doesn't impact the currency very much. does it throw up other trading opportunities perhaps longer-term? we have snap elections in greece, the extent to which the populace are in charge -- populists are in charge and italy. long-term?ect david: in italy, the biggest opportunity, one the clash between the italian government and brussels. you will see that very quickly on the government bond market. first they will lose in terms of value and they will be basically the limiting factor the at sign
government, how far they can push this -- a giant government, how far they can push this. too really markets get nervous terms of sentiment about -- low debt because prices, you can trade these opportunities. anna: david, thank you very much . let's check in on the first word news. >> president trump and japanese prime minister shinzo abe today held a joint press conference in tokyo. the president called the relationship between their two was quick"ironclad but set of bilateral trade deal with japan could come later this year. the topic soon shifted to asia's top economic power and cheap rival to the united states, china -- chief rival to the united states, china. pres. trump: i think they probably wish they had made the deal on the table before they tried to renegotiate it.
they would like to make a deal. we're not ready to make a deal. we are taking and tens of billions of dollars of tariffs, and that number could go up substantially very easily. >> president trump at a china's neighbors, including japan, have benefited from the trade dispute with the u.s. he expressed optimism the world's biggest economy would eventually reach an agreement. the european union is signaling it would reject any white house efforts to curb imports. european trade chief meeting in brussels dismissed president trump's recent caution that he could see quotas on the automotive exports to the u.s. for national security reasons. voluntarily restraining exports is a legal under wto roles. roommate's most powerful man is heading to prison for desk romania's most powerful and is heading to prison, 3.5 year sentence after the country's supreme court upheld a previous vote rigging conviction.
the ruling against romania's to factor leader comes as its government clashes with the european union over concerns it is curbing judicial independence. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more 120 countries. this is bloomberg. very coming up on the program, we are not ready. president trump says the us is not ready for a trade deal with china. more coming up on global trade. this is "bloomberg." ♪
welcome back. let's get a check on the markets. inthe cash market is closed the u.s. and unfortunately in the futures market, not that much action either. so all of the action is occurring at the stoxx 600 autos. european autos gaining majorly today after proposed merger between fiat and renault. that is helping carry the main .3%.y gauge up about let's which of the board because there's more interesting moves happening in currencies as well. a lot of this has to do with the strengthen the dollar. the pound moving lower, euro after those elections. at the yuan is moving higher today, mostly thanks to some job officials warning speculators against shorting the currency. i also want to take into my terminal to show you what bitcoin is doing because it is at a high for the year. this is the one year rate of return. you can see for the most part, over the past year or so, it is the negative. if we look at what has happened recently him as bitcoin spikes up has $8,800, finally for the
past 365 days, we are finally back in the black. anna: thank you very much, dani burger with your market update. president trump talks trade a broad, speaking of joint press conference with the japanese prime minister in tokyo. president trump says the u.s. is not ready for a trade you with china. pres. trump: i think they probably wish they had made the deal that they had on the table before they tried to renegotiate it. they would like to make a deal done deal. not ready to make a we're taking in tens of billions of dollars of tariffs, and a number could go up very substantially very easily. president trump speaking overnight in japan. still with us is david kohl. i'm interested in your thoughts on trade. i know you see the escalation in the devices we have seen employed as being interesting, moving from talking about tariffs, as we heard president trump speaking come to sanctions
and boycotts. how much more damaging is the later than the former. >> the tariffs, most of the it would can live with increase prices and you see the effect on the margins. talking about 25% tariffs, you can caution that by exchange. this is digestible and manageable so we would see that as a trade dispute which is manageable. once you go to sanction, you're really targeting the supply , and, global supply chains destroy them irreversibly. this is a much harder impact we see. so far we have seen this limited to some technology firms in china, but really when this broadens, then probably also the economic impact will be much more broader, more global, and also harder to digest than the current increase of tariffs. of a david, the subject
weaker chinese currency, very topical overnight in the asian session. after one yuan jumped official in china warned speculators against shorting the yuan. i'm showing the impact we saw in options market as a result, the three-month risk reserve -- reversal spiking. david, what do you see in the chinese currency? do you see it going through seven? does that matter to you? all, it is aof managed currency, so what the chinese authorities want is mostly what you see then on the market. i think from an economic perspective, it would make perfect sense to employ the currency, a weaker currency to counter it of the negative effect from the tariffs were also to counter the tariffs themselves. the chinese are quite careful here. they're not ready to employ the currency as a policy tool.
the defense of seven, what we're hearing there, we don't see actually the aggressive need to do that just when you look at the capital flow, you don't see massive capital slide. but there is a sensibility -- sensitivity and the chinese authority's not to let it go too far. the: so you don't think have any appetite to go beyond seven, even as you suggest, there would be reasons for doing that to boost exports? >> yes. so far they don't have this appetite was to probably they're holding back this tool not to escalate the trade conflict even more. these are all speculations about that. from an economic point of view, it makes sense to weaken the currency for the chinese. but so far we have to stick to the guidance we get from the chinese authorities, and this is not to do too much on this front. anna: david, thank you so much. still ahead, the latest jolt to
london, this is a special edition of "bloomberg markets." u.k. and u.s. markets are closed today, the rest of europe in action as usual. let's talk about the auto sector. fiat chrysler is proposing a transformative merger with renault. it would create the world's third-largest part -- carmaker. renault's and it will study the proposal with "interest" in the opportunity. bryant oned by kris the story. good to have you with us. does this sound like a deal that makes sense? >> well, if you ask shareholders
today, i think the answer is partly yes. stocks of fiat and renault burgeoning today off the back of that news that they are considering a merger. in many respects, this is a deal that makes sense. very complementary carmakers, fiat strong in the u.s., strong in suvs and truck's. renault very strong in emerging markets am also very good in electric vehicles. there is a lot to be said for bringing these companies together. a lot of risks surrounding the deal. not least in terms of governance. although yes in the stocks rise today, they are not yet pricing in all of the cost savings fiat that has promised. anna:, about those cost savings and where they could come from if this were to happen. because there does seem to be a suggestion this is not about playing closures, things coming from joint purchasing and shares
research and develop meant, i'm guessing, as well. a sense that you share the cost rather than take layers of the operation outcome is that a fair reading? >> yes, indeed. that is a fair reading. automakerselieve was waste enormous amount of capital duplicating. so if these companies were to merge, you would expect them to pursue all available opportunities to develop technology together, therefore not spend as much money. at the same time, it was important that when fiat prevented this merger this morning, it did not talk about job cuts as that would unions and get trade politicians. upset. so far we have seen italian and french politicians get this deal a cautious welcome. some people would think perhaps there is a need for bank lows are's in europe given -- plant closures in europe given the overcapacity and some fiat plans are operating under capacity.
so far there are stressing the positives of the deal, which clearly will be very important to getting this merger over the line. say they are deciding. does it look likely they will agree? we are seeing big reaction and share prices today. they are given as a cautious welcome this morning. i think it is fair to say the two companies have been in talks prior to this, though it was a big surprise this morning when fiat cannot propose not just a limited partnership, some sort of crash your holding, but a full-blown merger. i think all sides are trying to digest this. nissan will, too. until now, reno and nissan have been in a partnership and lately that is been very fraught due to the charges against mr. ghosn and his imprisonment. renault wanting a deep integration step nissan pushing back against that. it is not easy to say how much nissan new about what was coming this morning.
they might have mixed feelings about this. anna: thank you very much. kris bryant with bloomberg opinion. breaking news, this has to do with italy and its budget come a conflict with brussels essentially. italy risks up to $4 billion in eu penalties over 2018 debt. these headlights just coming to us in the last two minutes and now having an impact on some of the assets in the market. you can see the euro dollar fairly stable on the back of this. 10 year yield, 2.62. this is "bloomberg." ♪
parties mostly held their ground against nationalist forces. pro-eu liberals and the greens looked to be the biggest winners after the highest turnout in two decades. two major exceptions are france and italy. matteo salvini's nationalist won a third of the vote. france, police arrested four suspects following a blast in the city of leon. authorities launched a manhunt after a device excluded friday on a busy pedestrian street in france's third-largest city. no group has claimed her sponsor ability yet. this after his coalition partners a nationalist freedom party today lined up behind a motion to dismiss him. it is a no-confidence vote. -- ahead ofly be
parliamentary elections planned for september. israel's parliament is drafting a bill to dissolve itself. it wouldll passes, face it second election can been in a matter of months. wednesday marks the deadline for benjamin netanyahu. global news -- global news 24 hours a day, on the air at tictoc, on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. anna: let's return to our top story. mainstream european parties seem to have held their ground against the assault from populists and the european elections. pro eu liberals and greens polled better than in the past in a vote which saw the highest turnout in two decades. still with us is david kohl,
head of currency research and chief economist in frankfurt. program a to the policy ceo in rome. good to have you both with us. reaction toet your the strong showing that we saw for the populace parties in italy? how is it going to change italian politics that the league has such a strong showing? salvini, thetteo great winner of these elections, is now reading from a script. salvini has already gone on record saying he is not interested in a cabinet reshuffle or additional cabinet position. all he wants is reforms. the kind of reforms he is dreaming of our reforms which are hard to swallow for his coalition partners. eventually, the conditions will
be there for a government breakup. chances ofare the the government breaking up here? we have see the balance of party between the two parties in the thernment, the major ones, league and the five-star, the balance of power is in danger of shifting as a result of the league doing so well and five-star less so. francesco: you're right. the tides are shifting. it will be extremely difficult to say where we -- stay where we are today. i think salvini is considering an exit strategy. he is at peak performance. he is under tremendous pressure from his own party fellows, especially those from the traditional bastions of the as longto pull the plug as that is possible.
he is creating a case for that to happen. getting back to your question, the chances of a breakup are high and growing by the day. the big? mark -- howuestion is the head of state going to position himself in all of this? is he going to play along or is he going to put conditions? in case of new elections, it is up to the head of state to decide whether to dissolve parliament and hold new elections or not. what the head of state is looking at is the final quarter of this year, when we have a budget session, in which this year will be a particularly daunting task. anna: you mentioned the budget issue. david, i want to come to you on that. the elections were held over the weekend. a standup had been brewing between brussels and rome over the budget. ye just broke the stor
suggesting italy risks a $4 billion eu penalty over failure to rein in debt. we have seen reaction to that in yieldrkets, the btp taking upwards of 2.611. your reaction to that ongoing standoff between rome and s -- doesn't just intensify from here? david: it could, particularly when you have early elections. is not defined the come from brussels that are the real constraints for the italian government. it is what the market does on that and how you sell this story. they are counterproductive for italy. they want to help salvini and not constrain him. it is when the financial markets start to react and when the
financial market says any fiscal spending are not good for the economy, this is the real constraints the government of italy is facing. we learn from history that when this constraint bites, the italian government reacts and finds compromises between italy and brussels. anna: what will become or might be between what financial markets react to and the needs of the italian economy? this is an economy that has underperformed and many suggest it needs something to boost economic growth in italy. can it come for more government spending and investment in infrastructure? the underperformance of the italian economy in the past had not been due to too much fiscal spending, so it is a way that can be tried. in italy, you can try to spend more, but they usually are experiences are it is not the money that is missing.
achieveo complicated to with infrastructure, but it is a route that had not been tried in italy and is worth a try, particularly new keep in mind that from a monetary perspective -- when you keep in mind that from a auditory perspective it is not working in italy due to the greek baking system. going for fiscal policy is the lever to try. see some general attitude toward trying fiscal policy. that brussels does not want to give salvini the win on that. it is more politics. we saw last year there had been a compromise possible between brussels and the italian government. anna: how do we craft a compromise between rome and brussels on this? do you see infrastructure
leading to economic growth? is that the way the narrative plays out from here? francesco: possibly. it is premature to say. if we recall what happened last year, i think a last-minute compromise was only reached when paris was on fire. when the yellow vests in the streets of paris wrecking havoc. i doubt this will happen this year. i hope this will not happen this year. normallypromises happen at the last moment. if we look at the timeline, i think everything will be up in the air by the time of the session. i think we will only have a president of the eu commission by november 1. this.i is betting on because of politics, he will have more leniency from russell
-- brussels. ona: somebody has called governments around the world to do more is mario draghi, the ecb president. he is often bemoaned the way he has to step up monetary policy and he wishes governments would do all kinds of things. do you see a role for mario draghi in italian politics? his time at the ecb is going to come to an end soon. francesco: i think mario draghi will want to wait another year. probably waiting and seeing what happens next in italy, what happens with the new european set up. maybe he is even waiting for the next u.s. presidential election before he makes any move. certainly he is held in highest s who considern him a savior and would like him to stage a comeback to rome.
it depends on what exactly he could do. probably the best fit for him would be the office of head of state, but it is unclear what parliament would be casting that vote, whether the current one or a new one. anna: you mentioned the head of state in your previous response, talking about their role and how they are going to be crucial in deciding what happens next and whether the government in rome can stay together. what do expect from the president -- do you expect from the president? headesco: i think italy's of state will try to convince detail salvini that this is -- matteo salvini that this is not the time to abandon a house that is potentially on fire. salvinil try to force to stay where he is now in government, in power, and do his homework, the budget, before
considering elections. knows it is sort of a performancehis is at the time to go for the jugular is now. we will have two conflicting agendas, the one of salvini, who is creating a case for a divorce, and he's asking for reforms but knows probably well tot his partner is unlikely accept those reforms, and on the the head ofe have state, who is trying whatever it takes to keep this government in place until the end of the year. david, clearly the euro has not been all that moved by the stronger showing of the populists in the elections over the weekend. if we saw a move toward early
elections in italy, is that something that would have an impact on the currency? is it the bcp we look to? i think the btp is the first instrument you would look at your the euro, not so much. first look at the euro exchange rate. bit in favor of the swiss franc and is approaching the level which is uncomfortable. currency which would typically look at escalation between brussels and italy goes further. when you have the elections in italy. anna: thank you both very much. thank you to david kohl and francesco galietti. coming up on the program, huawei's founder stands defiant
and business it depends on from the united states. huawei in a fight for survival, being blacklisted at the united states on a 17. ren spoke with bloomberg. the u.s. manages its own companies but the u.s. is not the international police. they cannot manage the whole world. the rest of the world decides whether they should work on us -- with us based on their own business interests and positions. if some companies do not want to work with us, it is like a hole in the airplane. we will work to fix the hole but the airplane is still able to fly. the chips we have been using, have are from u.s. companies and how we produce ourselves. half we produce ourselves. if the u.s. imposes further restrictions, we will reduce our
imports from the u.s. and use more of our own chips. if american companies have permission from washington to sell from us, we will continue to buy from them. >> what exactly have you put in place in terms of contingencies? we might have contingency plans for the core of the airplane. the engine and fuel tank. but we might not have a plan for the wings. we need to review the situation and fix those problems. you can come back to interview us in two or three years and see if we still exist. if we are gone and two or three years, remember to bring a flower and put it on our grave. >> how much damage do you expect to be felt in the consumer division? smart phones and laptops depend
on u.s. chips and software. miss our expected target, but we are still growing. being able to grow the toughest environment let us reflect how great we are. have talked about having a two -- two year lead in terms of 5g. does that lead get eroded? .> definitely if we slow down, it is because the wings of the airplane have lost their hold. if we fly slowly but others fly fast, they can catch up. we will fly fast again once we halve the hole fixed. anna: that was the huawei founder and ceo ren zhengfei. fascinating conversation and great aviation metaphor. worth digging out on the internet if you would like to.
we have a breaking news headline that has just crossed the bloom lurk -- bloomberg. a little distant from the brexit conversation, from the u.k. politics story, but he is at the home office. he deals with all things to do with home affairs in the u.k. right now. he has a great backstory. his father was an immigrant to the u.k. from pakistan, a bus driver. he went on to work in the city with a job in finance. hes is part of the story will give to the party and to the membership as he unveils his candidacy to replace theresa may. still ahead, stocks are rising in europe following eu elections . we will dive into that next. this is bloomberg. ♪
anna: this is bloomberg markets. welcome back. i am anna edwards, live in london. we are getting breaking news from the home secretary in the u.k., sajid javid. he says he will run to be the next prime minister to replace theresa may. westminster, and -- annmarie hordern has been tracking the story. let's start with the race to be the next leader of the conservative party. sajid javid throwing his hat into the race. had a # already for
him. he is currently at the home office. as you are saying going to break, he has an interesting and colorful past. he is the son of pakistani immigrants and has worked as a managing director at deutsche bank. he has an interesting look into politics and is announcing this on twitter. that is where we are hearing the news about wanting to take on the leadership for the conservative party. this is going to be the next big thing. i am just pulling up his twitter. it says i am standing to be the conservatives and prime minister of our country. foreed to restore trust, unity, and create new opportunities across the u.k.. it is a very interesting day for him to do this, especially since the conservatives lost so many votes last night in the eu parliamentary election. anna: the whole political establishment shaken by the rise
of the brexit party, put together by nigel farage. tell us what kind of response we are getting from establishment parties in the u.k. to the results of the voting last thursday. annmarie: first, we should talk about the conservatives, given that they were incomplete catastrophe for them last night -- that they were a complete catastrophe for them last night. boris johnson talked about the failures to deliver brexit and this is why they have lost the vote. he is saying how next week he -- set his stance to succeed pry minister theresa may. we recently heard from jeremy corbyn, the labour party. i thought was interesting how he used this term. he basically was backing a second referendum, saying he would back a public vote on
whichever brexit deal comes to parliament. he is very careful with how he wiggled his words around. that comes after many and his party, senior leaders, called for more clarity from the labour party given the fact that they lost so many of their votes. many people did not know where the labour party stood when it came to the one thing that really was the dominant topic of , brexit.iamentary vote they were not even supposed to be in this election but it was because of brexit that they ended up having this elute -- eu parliament remote -- parliamentary vote. anna: time for a bloomberg business flash, he look at the business stories in the news. the automaker is poorly concerned that a supply deal with samsung might unravel.
different views on production volume and schedule have emerged during negotiations. deutsche bank is considering options of a capital increase as part of a wide overhaul that it plans to unveil in the next two months. tapping investors for cash is said to be deutsche bank's least favorite option. it could trigger a backlash. that is your bloomberg business flash. a check on the markets. the european equity markets are trading higher today. this is bloomberg. ♪
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york. the u.s. markets are closed for memorial day holiday. u.k. markets also closed. the rest of europe is "open exchange." i'm an aedwards. welcome to qut bloomberg markets." the e.u. votes, mainstream parties held their ground against regional elections. italian bonds extend decline, and the euro falls following a report that the e.u. is considering a disciplinary procedure over its failure to rein in debt. and merge irmonday, fiat chrysler is proposing to take control of renault, creating the world's third largest carmaker, but citi group calls the proposal puzzling. let's look at the markets. welcome to the program. the european equity markets a little bit less volume probably than normal as a result of london being closed and also u.s. markets also closed. stoxx 600 up by one-quarter of 1%. we've had this story out of italy, they're risking a substantial fine from the e.u. over failure to rein in debt. as a result we see eye yalian
10-year yield climbing to 2.61%. there there you've got the yield in there. m&a monday is helping. you've got the renault share price up by 15%, a move in one session as a result of the approach by fiat chrysler. we did see the ftse pa reits gains as a result of some of the headlines. the ftse was up and is now fairly flat on the day. italian assets in focus as a result of those headlines, a bloomberg scoop around the budget. european elections have come to a close with the mainstream european parties holding their ground against a populist push. pro-e.u. liberals polled better than in the past. in a vote which saw the highest turnout in two decades, for more, senior economist joins us now. very good to speak to you, thomas. do you go with this narrative that suggests, yes, the liberals and the greens have done better, but so have some populists, in particular in france and italy.
what grabs your attention from all of the news flow created by these european elections? thomas: well, i think it depends on whether you look at the glass half full or half empty. it's true in the previous election there is a rise in populist parties at the european level. that being said, i think the result was below expectations, so that is the good news in the european elections. i think the other pose of information is that there's still a resilience of pro-e.u. parties, which i think is also positive. now you have to look at the country by country status, and, you know, there are some worse news than others, i think. if you look at some countries like greece, where new elections weren't called as the party actually dropped massively in the polls, or other countries like the u.k., or even germany, i think there are national consequences there. at the european level, i think
it's not as bad as feared with regard to pop you're lists, that national consequences could be important. anna: national consequences could be important. that's always the difficult thing in interpreting the results of a multinational poll, i suppose. low turnout was at a 20-year high. it's still in the 50% range rather than anything more significant. where do you think the results might have an impact on the growth story in europe, in your poll as senior economist, is there anything you saw in the results that's going to move the dial on growth in italy, greece, or is it too early to say? thomas: the key point is about the u.k. the big thing is what happens with regards to brexit. i think there's still a risk. i think there's a rising risk of a hard brexit in october. the new deadline is by the end of october. they need a new deal or the
u.k. will get out of the european union without a deal, and that would be potentially really disastrous for the u.k.'s economy, and also for the european economy, because those two economies are really intertwined, right? and what you saw in the u.k. is that the brexit party actually did quite well. yes, it is true that the renamed party did overall better than the brexit party, but the problem remaining is they are really divided, and i think that's the problem number one. problem number two is that the tory party could be galvanized by the farrage brexit, and i think that could veer the tory party toward a more tougher stance with regards to brexit, and the new leader of the tory party could go towards a hard brexit as a way to deliver on the brexit referendum. i think that's a key risk to the european flow in the coming
months, on top of the trade tensions globally. and, of course, we're all watching italy, where the coalition is looking very fragile. anna: you mentioned the possibility of a no-deal brexit, and we certainly heard some of the contends for the leadership of the party talking about their appetite for that, or at least they would tolerate that as an option. how weak would that send the pound? i'm looking at a chart that shomes the weakness we've seen in the pound, in particular against the euro in recent sessions, even if not today, so i've got here the euro pound cross rate, which has been on the rise. how weak do you think the pound gets against euro or against the dollar, if we did see a no-deal brexit or increasing talk of a no-deal brexit? thomas: yeah, definitely we are seeing talk about a no-deal brexit in october, and why is that? the leader on process ongoing,
and that's going to take you all the way to july. i think that's going to be a long-lasting process, and, you know, that talk of a hard brexit could continue to dampen the pound. so if there was a hard brexit or scenarios that the pound could drop to 120 against the dollar, so that could be still some leeway down on the pound, i think the mere talk of a hard brexit could also continue to dampen sterling in the near term, so that's something to watch to. now, if you see -- you know, the other problem with regards to brexit is, you know, what happens with regards to elections. if we have fresh elections and a change in party at the top, that could also weigh on sterling potentially so. that's something to watch closely. it's difficult to make a strong, bullish case about sterling right now, even though on the long-term basis, it is true that sterling is cheap, but it could get cheaper. anna: and there isn't another general election on the horizon
right now, but we certainly heard both the brexit party and labour party talking about how they are either preparing for one or want one to happen. in italy, 34% of the vote going to the league, five star collapsing. do you expect the eye yalian government to survive? -- italian government to survive? thomas: our best case is the current coalition will survive, but we must say it is on a fragile footing. and if you look at the northern league, it actually did quite well in the polls. and actually the other partner, the five star movement didn't do so well. so i think there is a -- sword over this coalition. in italy, it is complicated to call early elections, so the coalition could stay. the other thing is that there's no really reason for the northern league to go for new elections just ahead of submitting the budget to the european commission. so that could a reason why they stick together, but in the
medium terges i would say that coalition looks increasingly fragile. anna: some people have linked the results of the election, the rise of populists, and the way that the established parties are under threat, and maybe we've got some transition governments in place in europe or lame-dumb governments, some are suggesting this could delay some key appointments at european level, including who takes over for mario draghi. what are your thoughts on who takes over and how quickly that ecision comes? thomas: well, i think there's a lot of trading. many top spots are up for grabs, including the european central bank president, currently mario drag eefment he's going to -- mario draghi. he's going leave soon. now included in this big game of musical chairs at the european level is complicating his successor. mario draghi was quite key to the survival of it in recent
years. i think he did very well in terms of the communication of the central bank. he was quite innovative also in terms of putting his foot forward. he did save europe at the time when europe was in trouble, really at the height of the debt crisis. and really, there's a lot of hope with regards to his successor, so will we be watching that closely? the problem again is that it's part of this big trading at the european level. anna: thomas, thank you very much. he stays with us here on "bloomberg markets." let's check the news now. for that we go to new york. >> thanks, anna. a $1 million contribution to president trump's inaugural committee is under scrutiny. real estate mogul franklin haney made the doe mission as he sought government approval in his bid to acquire an
unfinished alabama nuclear plant. deal still hasn't closed more than two years later, but federal prosecutors in new york are investigating whether any donors received benefits after making contributions. the european union is signaling it would reject any white house efforts to curb imports of e.u. cause and auto parts. european trade chief meeting in brussels dismissed president trump's recent caution that he could seek quotas on the bloc's automotive exports to the u.s. for national security reasons. voluntarily restraining is illegal under world trade organization rules. and u.k. chancellor phillip hammond has a warning for conservative leadership candidates who want to replace theresa may. hammond tells the bbc the prime minister trying to force a no-deal brexit risks being brought down in a no-confidence vote. he said parliament strongly opposes leaving the bloc without a deal, and he did not rule voting against the
government on such a confidence notion. billionaire businessman dan gilbert is recovering after a health scare. the quicken loans founder and chairman sought hospital care on sunday after experiencing stroke-like symptoms, according to a company statement. gilbert is now said to be recovering comfortably, but no other details were provided on his condition, a diagnose or prognosis. global news 24 hours a day, on and air on twitter, powered by more than 270 journalists and analysts in more than 120 countries. this is bloomberg. anna? anna: thank you very much. stale head -- huawei founder and c.e.o. strikes a defiant tone in the face of u.s. sanctions, the latest from washington. ♪
anna: flive london, this is "bloomberg markets." let's check out the market action. dannyberger is here to do that. the u.k. is closed, u.s. closed, but quite a lot of action. >> definitely a holiday kind of feeling in the markets today. volumes are off in european stocks as much as 50%, but even so, as you say, that news helping to propel markets up .2%. we had the e.u. elections, also seeing haven assets coming off the yen, falling just a bit against the dollar. and we're also seeing iron ore, one of the standouts, surging past $100, up about 15 bits. as we switch it up and look at some of the movers, one of the standout stories today is what's happening in autos. a planned merger between refault and fiat, both surging. for renault this is the biggest
gain since 2018. 2014 for fiat. i.s.s. to the downside. they might be losing a contract near the end of the year with novartis, a cleaning company. it's about 3% of their revenue. that would certainly be a hit. i want to stick with the election story and show you what's happened in greece after the prime minister's party face a big defeat. he's called the snap election, and the markets seem like they've agreed with that. so if you look at what bond yields have done in the white here, they've dropped to a record low. stocks, this pickup at the end here, this is the biggest surge for stocks now heading for about two years. so certainly some gains in this market. definitely bond markets, the interesting one to watch today, anna. anna: certainly a lot of fallouts from the election results. dani, thank you very much. huawei's billionaire founder stands defiant in the face of u.s. sanctions that threaten his company's survival.
>> i will ignore thump, then with whom can he negotiate? if he calls me, i may not answer. anna: the bloomberg trade reporter joins us from washington. very good to speak to you. to the extent to which thank you sway wrapped up in the bigger, broader trade tensions between the u.s. and china, it's an interesting one. trump has suggested that these things are connected. the huawei founder doesn't think so. give us the latest there. >> right, so trump has last week said the two could merge in some kind of trade deal, which is a very big concern for trump's own advisors, his intelligence advisors, his national security advisors, who have for a long time actually said that huawei is a national security risk, and if you think back about last year when the u.s. took action against a similar company than huawei, his advisors were very, very adamant about the fact that the two are very separate.
this is a law enforcement action that we take against the company that is threatening the national security of the united states, and it has nothing to do with trade talks. so trump again muddies the waters, which is a very big concern here. and the talks, of course, have stalled last month, and since then u.s. has ratcheted up the pressure with actions on huawei, threatened even more actions against other chinese companies. it's really a big question mark where we go from here. anna: as this plays out in a sort of tit for tat way, we haven't yet heard from the chinese in their latest retaliation against u.s. companies -- sorry, against u.s. action that put huawei on the blacklist. what do we expect from the chinese next? >> yeah, it's really interesting. so we've seen, since the talks stalled and definitely since the huawei action was taken in the u.s., a lot of nationalistic tones in chinese media really ramping up, saying the u.s. is intervening in the market and is using state power
to intervene in the chinese company and how outrageous that is. but we haven't seen anything but vage statements from the chinese government, which, you know, so far has only said we'll take whatever measures are necessary to defend our national interests. we haven't seen anything concrete, if they're thinking about any kind of action maybe against apple. we haven't seen that. interestinging enough, the huawei founder said he would actually fight any action against apple if the chinese government were to ice out that company from the market, which is really interesting. anna: it was interesting, i thought so too. he said apple is his teacher. he would never oppose his teacher. jenny, thank you very much. jenny leonard covering the trade beat for us there in washington. let's have a quick check of what's going on in currency markets. let's think about the currency markets and talk to thomas costerg, who's been listening
in on that, here to give us his thoughts on trade. interesting to reflect on the fact that we haven't heard yet from the chinese. we're expecting, i guess, further retaliation. what is the next stage of the trade tension for you? thomas: i guess the next stage is really all eyes are on osaka, where the next g-20 will take place in june. and i think the question there is whether there's this handshaking or not between he and trump. our feeling is that there could be some sort of symbolic handshaking there, at least trade talks will continue. however, we should not expect a full-fledged deal. why is that? because we know it's more than just trade, as you pointed out. it's also about tech, about technology. china is at the forefront of some technological aspects, including 5g networks, for instance. definitely a very complicated issue.
i think there's a lot of geo politics into it as well. fine view is that there's potential handshaking in the medium term, i think trade tension is likely to stay on for quite some time, and even we think that in the coming months, there's still a risk that the u.s. could go ahead and put tariffs on the rest of chinese imports. i think that's the risk is increasing as we've peaked even that there are some deep and complicated issues at stake here. anna: give us your thoughts on what impact the trade war has on the policy decisions being made by the fed. a lot of people discussing where is the bar four a rate cut from the fed. thomas: what's interesting with regards to the fed, they are more worried about low inflation than they are worried about trade tension. if you listen to recent comments, they've been saying, oh, we're worried about the
inversion of the yield curve about, low inflation expectations, but we think trade tension could be actually solved. i think that's probably too optimistic an assessment. they're likely to be removed. and therefore, you know, these trade tensions are likely to continue, and that, i think, could put additional pressure on the fed in the coming months, in the sense that at some point the pressure to ease policy could increase. so even though our view right now is that rates will stay on hold for quite some time, there's an increasing risk that the fed could end up cutting rates, not only because of low inflation, low inflation expectations, but also because of trade tension. anna: what does that do to the dollar? on a day when the dollar is on the rise, up .2%, the dollar index, broadly speaking, through 2018, 2019, we have seen the rise of the dollar. hat do you expect?
thomas: that's a complicated one. two currencies cannot fall at the same time. i think there's some pressure on many currencies so far, including those affected by trade tensions. some countries are more open than others, but what we see in the u.s. is actually quite a closed economy. the u.s. economy is actually doing better than most other economies, including, for instance, europe, and that's benefiting the dollar. the question is, do we move to a risk mood that would actually move the dollar, or do we swing back to an environment where global growth could actually regain sneem it's a complicated outlook out there for the dollar. our view is in the medium term that the dollar should gradually decline. however, we must seat risk increasing and the dollar could gain further steam in the very near term. anna: thooms, thank you. -- thomas, thank you.
ann: live from london, this is "bloomberg markets." time for a bloomberg business flash, some of the biggest business stories in the news right now. we start with the warren buffett. it will cost you at least $25,000. bidding on ebay opened on sunday evening in the united states with the billionaire investor against offering a chance to pick his brain over lunch at a new york steak house. buffet has raised close to $30 million for a san francisco charity with 19 years of annual auctions. they benefit glide, whose programs address hunger, poverty, and homelessness. bitcoin jumped as much as 10% today to almost reach $9,000. the cryptocurrency extended the best one-month rally since his historic surge in 2017. rival coins were also stronger at the start of the week.
like coin added more than 12,000. is raising track money at a prevaluation of about $1.1 billion. the price tag for the sing abore-based firm could make it funding, financing three acquisitions and trax is aiming to go public in the next 18 to 24 months. quick check of the markets, we are up by around .8% on the stoxx 600. u.k. markets not trading. u.s. markets not trading. but pleasant toy talk about the european elections. this is bloomberg. ♪ ♪
minister shinzo abe are in talks over recent north korean missile testing. the president said he was not personally bothered by them, but japan is concerned about short-range missiles because of the threat they pose to the island nation's security. abe said he plans to pursue bilateral talks with kim jung and you know has u.s. support. labour leader jeremy corbin promises to give them a vote. his comments came after the u.k.'s main political party was soundly defeated in european parliament elections. it was their worst result in decades as pro-brexit party took 44% of the vote. the anti-brexit camp took 40%. though more people voted for a second referendum than a no deal split. romania's most powerful man is heading to prison for corruption. he received a 3 1/2-year sentence after the country's supreme court upheld a previous
vote for conviction. the ruling against the de facto leader comes as its government clashes with the european union over concerns that it's curbing judicial independence. and u.s. attorney general william barr will seek to uncover what the white house is calling corruption at the f.b.i. and department of justice. president trump has given barr broad authority to declassify information from more than a dozen intelligence agencies as part of a review of the mueller investigation. the white house says barr will likely consult with the intelligence community before releasing sensitive material. global news 24 hours a day on and air on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. anna: sprump on a state visit to japan where u.s. trade deals and relations with north korea topped the agenda for discussions with japanese prime minister shinzo abe.
we have the details from tokyo. >> donald trump in a joint press conference with his japanese host, prime minister shinzo abe, said he's in no hurry to resolve two of this region's biggest challenges, north korea and the u.s.-china trade dispute. in addition, of course, to the news that we got earlier that they are not going to announce details until at least august of any u.s.-japan trade deal. now, on north korea, which really dominated the joint news conference, he said he was in no rush to have a deal with kim jong un. he said sanctions are still in place, and there's nothing any nuclear test out of pyongyang for at least a couple of years, and he said kim jong un realizes the economic potential of his nation, he said, "i'm happy with the way it's going." on the u.s.-china trade war, he said he's not ready to make a deal with beijing, and he said that perhaps beijing should have made the deal earlier when it had a chance. now, on the u.s. and japan
trade front, he said nothing specifically on the threat about auto tariffs. shinzo abe, though, said he hopes for a win-win trade deal with washington, d.c. trump again acknowledged that there's an unbelievably high trade deficit with japan, but he said, "we will have a deal with japan. we will have a deal with china sometime in the future." stephen engle, bloomberg news, outside the palace in central tokyo. anna: stephen engle there talking trade. that takes us to the currency markets. let's check where we are right now. the pound is weaker against the dollar, ongoing interest in what's going to happen to the u.k. conservative party after the -- after at least amay leaves and who is going to lead that party, be the new prime minister of the u.k. the euro also a little bit weaker, down by .1%. interesting headlines out of italy over the last 24 hours or so. generally we see a day where
anna: this is bloomberg markets. european party seem to have held their ground against the assault from populists in most european countries, but far right groups gained significant ground in france and italy n. an opinion piece in politico from last year, fabrice pothier warned the only way forward, a
strong, united europe, is stuck, retrenchment and nationalism become a dangerous temptation. he joins us now from brussels. fabrice, some insight there from you last year as to what could happen, nationalism on the rise. do you think nationalism is still on the rise, or have we reached peak populism for europe? fabrice: peak, i don't know. but clearly nationalism now is going to be a big force in this new european parliament. i think if you put all the nationalist forces together, a bit more than a fourth of the next european parliament, so no, they don't represent the majority. but they're clerl fog an voice to reckon with. anna: what kind of difference is it going to make to the policy agenda in europe? do they actually affect change in the direction for the european union? fabrice: i think two things.
one, on topics like migration, clearly in france and italy, in other places, even in spain, migration is now a very central issue, and mainstream forces will have to deal with that issue and will have to come up with europe and response that is more efficient, more convincing than what we have had over the last few years. and then i think it has also narcotics way, a positive effect, because it pushes the mainstream groups like the socialist, the conservative, the liberals, to actually come together and form a coalition to keep the mainstream european construct to work well and to deliver what basically they have all promised for europe and others. anna: do you think that the populist movement poses an existential threat to the european union, or does this just change the nature of the conversation for the e.u.,
shape the agenda for the e.u. in a different direction? fabrice: i think first you had the highest turnout across europe that we have had for the past 20 years. so there's a clear vote of confidence in the europe and democratic process. that's the good news. however, having engaged with people on the ground in france, in spain, i think there's an expectation that this is a bit of a break european parliament in the next five years. so i think there's going to be a real pressure on the mainstream parties to really deliver and to show that the european union can mack a difference. if not, i think we could expect the next european elections will be much tougher and we will see probably more disruptive forces. anna: i know that you are a member of emmanuel macron's party, a foot soldier to the party, as you describe it, fabrice. i know that recently, unconnected perhaps, you went on a sort of road trip from france into northern spain,
trying to gauge people's opinions of the european union. what was the biggest takeaway from that project? what did you find that people thought the european union delivered for them? fabrice: actually, interestingly, most french people i met on the ground were not against the european union, but they were just not convinced by this european project. so france is generally a euro skeptic country, and yet what i heard on the ground is, yes, we get it, we need to be playing collective, we need to be bigger when we face forces like china and the united states, but what you have proposed to us so far is not really convincing us. so again, i'm coming back to my point earlier, it really is about whether that next european commission, that next european parliament can really deliver and show to the french people i met on the ground that europe can make a difference both in terms of economic future but also in terms of
defense and security. anna: what have we learned about the way that politics toward europe is evolving in eastern europe, fabrice? we've seen the rise of the right within the political establishment in hungary and in poland, in a way that does seem to be confiding the east from the west. what have we learned about that from these elections? fabrice: well, that it's not one bloc. look at poland, the more conservative, the governing party won in a pretty big way, but you still had the governing party, a european coalition that still managed to get good score. slovakia, which until recently was considered as part of the populist, reactionary in central europe, is actually the party of the newly elected president who made the best score. so, yes, there's hungary where the party made a very high score, and i think we'll have to deal with that. but i don't think we can treat
central europe as one, and we have other hot spots. take italy, for example, i think this is a much worrying picture, given thatity slee called to the eurozone, a founding member of the european union. i'm more worried about what's happening down south than towards the eastern part of europe. anna: what do you think is going to be the result of the rise of the league in italy, fabrice? they've doubled their score this time around compared to the most recent elections in italy, and clearly on the rise versus five star. do you think that the eye yalian government holds? -- italian government holds? fabrice: that's a good question. we have to see. i also understand that they don't do as big a score as expected, and he's not going to be able to form that great alliance he wanted to form between le pen and the polish governing party. so he's not going to be necessarily such a big force in european parliament, but clearly he's the leading man in
rome, and the future of italy is a real question mark. the good news is that the party actually didn't do as badly as expected and could be the beginning of a new opposition that might open the future for italy beyond the populist forces. anna: fabrice, thank you. thanks very much for your time. fabrice pothier of rasmussen joining us from brussels. still ahead -- the latest jolt to the auto industry. fiat proposing a merger with renault to create the world's third biggest carmaker. this is just in today's session. this is the m&a story is doing to the car sector just today near europe. more next on this. ♪
anna: mainstream european parties mostly held their ground against nationalist forces, but there were some important exceptions. one of those is in france. we're joined now by our reporter in paris. very good to have you with us. explain to us how macron faired yesterday against le pen. he didn't have a great night, id he, or a great weekend. > he dent, however, this was actually by a narrow margin, so it was a narrow defeat, meaning that there will be no cabinet reshuffle. it is not going to call for dilution of parliament, like marine le pen has asked last night after the victory of the national rally in this e.u. election, but still, this is a setback for emmanuel macron at home and in europe. at home, it will make it hard
to carry on. the next one being the jobless benefits reform. it might also give another boost to the yellow vest social unrest that we have seen, that's been fading over the past few weeks and in europe. of course, it will make it harder for emmanuel macron to push for further eurozone integration. anna: because he painted this as a revision. it was his vision against the marine le pen, formerly -- now the national rally. it's difficult to work out what we've learned really from the results based on how everybody voted, because it seems, on the one hand, macron held on to his base and her base isn't really expanding. she took a lower percentage, this time than last time. does it really answer the question about which of these two competing visions for france wins the day? >> clearly there is a few lesson from this.
first is that the president of his coalition defeat respectable, they only have one seat difference between the national rally, who will get a seat in the parliament and who will git others. it is a narrow margin, but the other big lesson from this is that the main stream party in france, the republicans and the socialist party, are in total disarray. the republicans only managed to take 8% of the vote. this is much lower than what was expected and the socialists are less than 7%, so they almost didn't make it to the e.u. parliament. and if you look at the front page of the french newspapers today. the big bang continues, meaning the mainstream parties are totally out of the picture, and now this is really a battle between the centrists and the
extremes. this might actually make it easier for emmanuel macron to n for a second term in 202 french presidential elections. because obviously if he manages to eliminate the republicans and the socialists, he has bigger chances to win against marine le opinion, again, in a runoff in 2022, if that was going to happen. anna: assuming that does happen, take us forward to 2022. it seems that there is a way you can put a fairly positive spin on what happened over the weekend, and his chances in 2022. >> that's right, and another big lesson is the result of the greens managing to get 13% of the vote. this is something that emmanuel macron's party could easily win over, and if he manages to get the green vote and whatever is
left of the center in the republicans and in the socialist, that makes it easier for him to have rematch in 2022, so clearly, these elections were seen as a referendum in favor or against emmanuel macron, like a midterm, if you want. there will be no other national elections in france before 2022. and clearly this makes it like a good chance for emmanuel macron for a second monday in 2022. anna: thank you very much. caroline joining us from paris. let's go from the politics to a corporate story that's really moving markets this morning and into the afternoon here in europe. fiat chrysler says it's proposing a transform active merge wary french competitor, renault. it would create the world's third largest carmaker. renault saying it will study the proposal with interest in the -- with interest in the opportunity. joining us now from milan is
bloomberg milan bureau chief. and dan, very good to speak to you on this subject. this is something that's really moving the markets, really moving the share pice of both fiat chris scompler renault. what do you think is the motivation behind this from fiat chrysler's perspective? >> from that company's perspective, clearly the former c.e.o., who passed away last july, was a big proceed opponent of consolidation, and i think the representative of the family of the biggest shareholder was carrying the ball forward. we've reported in the past about overtures made about i tually a partnership, so ink clearly this italian-american company had been considering alternatives for a joint venture for some time.
anna: we, of course, renault has existing alliances. this is a global business already. what do we know about their appetite for this then? approximate t seems we're joining the story fairly early on in the sense that renault themselves decided what to do. dan: exactly. the company put out a very short statement after the board meeting today, said they would review fiat's proposal. they considered it a friendly approach to create this merger. , the he component arrangement with nissan, for example, is a complicated factor in this whole thing. fiat is apparently pushing that nissan's share holding obviously will be diluted, but the c.e.o. today said that he would like to be able to offer nissan the benefits eventually of this merger when it gets
approved probably approved and constructed, if you will, in more than a year. anna: in the auto secter to today, it's suggested that v.w. is working its $66 billion factory business, and this just goes to the heart of why consolidation within the auto sector might be so necessary, the ability to pool r&d cars, to pool purchasing. that's one of the key drivers. i think the synergy behind the deal includes being able to purchase the stuff you need to make cars more cheaply. dan: exactly. the number that they put out this morning in the announcement, fiat estimated that the synergies would help them save about five billion euros, as you mentioned, joint purchasing, the huge investments that must be made o produce lower emission cars.
investing in self-driving vehicles. so they're hoping that, rather than job cuts, closing factories, won't be necessary. anna: thanks very much. dan liefgreen joining from milan in a story that really moved the sector today. now we look at some of the other big business stories making the headlines this hour. a report in the "financial times" says bankrupt british steel has drawn interest from several potential buyers, but no formal offers have yet been made since the business was put into liquidation on may 22. a group of potential suitor social security said to include one of india's biggest steel makers. egypt is considering offers from a blackstone unit and power producer to take over three of its power plants. the move could cut the north african nation's consistent, while bringing in investment. the plans were co-built in
july, part of a series of large-scale infrastructure projects under the president's sitting. iron ore has established a strong foot hold above $1 hundred a ton. the recent surge comes on concern of a global shortage in the sea-born market. it rallied in china today after mainland port holdings posted another steep decline and a handly of banks upgraded their price forecast. that is your bloomberg business flash. coming up, nigel farrage's brexit party toppingt knowles e.u. elections. we're awaiting comments from the party leader at a post-elections news conferences. he's already been saying today that he is prepared for their general election. he also wants the brexit party to play a role in crossing and shaping brexit, even though, of course, his party is not in government here in the u.k. he says he wants his party to be involved, to have a seat at the table, given they will have m.e.p.'s in place in europe.
members of the european parliament, that is. let's talk to you about what's going on in the markets. it is 3:55 in the afternoon near london, 10:55 in new york. you can see the european stock markets are up by just a fraction. we've seen yields in italy going higher. this is an interesting story over the last couple of hours. italian yields going higher. we've been covering a bloomberg exclusive story that suggests there could be a fine in it for italy if they continue to fall out with the e.u., and renault is surging as is fiat chrysler on the back of that consolidation story in the auto industry. so lots to talk about here on bloomberg markets, even if the u.k. and the u.s. markets are closed today. ♪
anna: it is 4:00 in london, and this is "bloomberg markets" live from bloomberg's european headquarters in the city of london. i am anna edwards. farrage in first, nigel farrage's brexit party comes out on top with 32% of the e.u. vote. he is expected to speak in just a few moments. italy has failed for to have rein in debt. italian bonds extend declines and the euro falls. and away from politics, trade tit for tat. president trump says china wants to make a deal, but the u.s. is not ready. welcome to the special edition of "bloomberg markets q.u.k. and u.s. markets are closed today, and various holidays taking place in those two locations. but dani berger is here with an update on the markets. deny ani: i started off with the stoxx 600, which is gaining, but really, i think
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