President trump says hes considering sanctions on streamrom ii nord ii. Their handsies get on 5g services. Watch Telecom Stocks at the open. Lawmakers say they wont discuss controversial extradition deal as tensions remain high and hong kong between protesters and police. Matt less than half hour from the start of european trading area look at the trading. Look at the spike of oil, a tanker fire in the gulf of oman leading to a 1. 5 gain. Oil had fallen to a fourmonth low and is bouncing back up on this fire. Futures are down. Dax teachers often little bit or a little bits off more than a quarter of 1 . Looks like a risk off day. Anna the risk off story writ large. We are selling off on stocks, not to an enormous extent. The treasury market is gaining ground. Yields are weaker. We see money going into the yen. Hong kong is weaker once again, tensions still on the radar of investors. More broadly, the concern is around the trade story. President trump lashing out at Angela Merkel in the guise of a spat over nord stream. Hes also talking about a deadline for china she says is in his head for china which he says is in his head. The cpi number yesterday just weak enough to enable them. Lets show you the other side of the gmm to underline what matt was saying about oil prices. Wti crude up by 2 . Both of those spiking, in an reports mood amidst of that fire on the tanker. I want to start with our question of the day. Awaiting what is going on, fires issuesers off oman, surrounding hong kong come a really important story. Away from all of that, the market is trying to get clarity on what u. S. China trade talks could lead to. What odds are markets pricing in freetrade deal . For a tradecing in deal. Mark no one is expecting one eminently, but there is an expectation that there will be a trade deal next year. There was a very large divergent in expectation. U. S. Investors seem to be thinking it is purely down to trump and he will want a trade deal before the election to drive higher. In asia, people are much less convinced there will be a trade deal. They think that china is prepared for a long fight. Their stimulus measures show they are ready for a long thing. In europe, people are bit more aligned with the u. S. , more optimistic, less sure on timing. You are seeing a divide globally. How assets are trading in different time zones. Equities have traded worse in asia u. S. Equities have thand worse in asian hours asian equities have traded in u. S. Hours. Matt we also see asian stocks not doing as well. Sengn site and the hang thanhe nikkei are up less u. S. Benchmarks year to date. We heard last night from paul is the fedat more important markets than a trade deal . Mark i think shortterm, yes. Even the optimists dont think we will get a trade deal before the g20 at the end of the month. A trade deal is a much bigger story overall, bigger negative story. It is something that plays out slowly over months. It is never dominant in one day, is constant in the background. The fed will be a more relevant story as to how markets will. If you go to the fed meeting next week, people will be keen to see what they say. No one is inspecting a cut next week but much of the market is expecting a cut in july. How that communication comes around will be very relevant. In the short term, that is relevant. Overall, the trade war is a bigger story. Anna what about what is going on over in hong kong . The tensions are quite shocking yesterday and they did have a bit of an impact on markets. Today, we see stocks weaker and money going into fixedincome. How about the hong kong dollar . I know you have been talking about this in the asian session. Mark people were speculating about the hong kong dollar peg, whether it would be vulnerable. They knew that protests were likely they knew likely coming, they knew there would be geopolitical pressure. Whether this is something that triggers severe pressure in the hong kong dollar peg is a different issue. People present compelling arguments for how leveraged the hong kong economy is and how the peg is sustainable. Also some of the arguments like the pbocs 3 trillion stand. I dont think the hong kong dollar is under pressure anytime soon even if you are complacent about it, you will have time to change your mind. This is not a view that anybody needs to be repositioned f preposition for. Matt we will talk in just a moment more about trumps threats to Angela Merkel on the nord stream 2 pipeline. We see lng contracts trading for the trading for dirt cheap. Oil trading at fourmonth low before the spike this morning. What do you think about commodities as they relate to nord stream2 . Mark i think the natural collapse the natural gas collapse all year, it has gone further than many expected. Our gas expert here in singapore actually said in january that it will continue to fall for many months. I think it has gone further than his expectation. Recently, oil has been coming down a long way and that is much more than expected or anticipated by us on the mliv team. Overall, we are probably at a ofoman at a bottoming prices for oil but we dont expected to bounce significantly higher. With merkel, this is a new worry. It does seem like trump picks new fights every week so each marginal one loses the impact. I think the mexico tariff announcement was the biggest shock we would get this year, hopefully the biggest completely black swan shock. That means any subsequent shock is more marginal and people expect it to be unwound as well. Mark, marketsu, live managing editor. A u. S. China trade deal, what do you think the markets are betting on and what do you think in your analysis . Lets get the bloomberg first word news. Japanese Prime Minister shinzo abe has urged iran to avoid conflict at all costs. He is a rare friend of both washington and tehran and has pledged to do his utmost to ease tensions. U. S. Isit comes as the shows little sign of reducing section. Bernie sanders has lashed out at jamie dimon after he criticized socialism. The j. P. Morgan chief executive said government control of companies would be a big mistake for the u. S. The president ial candidate said he didnt hear jamie dimon criticizing socialism went the u. S. Government filled out wall street. A 200 billion increase for me year earlier, a sign of revenue boosts from president trumps tariffs on imported goods. Launched three canadian satellites that will take daily scans. The falcon nine rocket took off from a military base in california. The Canadian Space agency says they will provide 250,000 images a year to help monitor the environment and assist emergency teams dealing with natural disasters. Global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. Bloomberg. Humphrey in, dudley dubai. Up next, troubles in the pipeline. President trump threatens u. S. Sanction to block the nord stream 2 project. Actually, those are bipartisan sanctions, a bill being written by ted cruz and a democrat. Trump says he might move soldiers out of germany and into poland. Bloomberg is live on your digital device. This is bloomberg. Anna welcome back to the european open. In minutes to go until the start of the cash Equities Trading day. It looks like it could be a gloomy one. U. S. Futures down to 0. To 0. 2 . We will want to keep an eye on anything dependent on the oil price because we are seeing big moves in oil. The big spike higher in oil today up by nearly 3 , it actually just takes us back to where we started yesterday. The reasons behind this are important to explore. Lets do that with annmarie hordern. We have this in the nord stream pipeline debate with trump and merkel. Lets talk about what is going on off the coast of oman. We just learned day vessel with capacity for about 250,000 barrels of oil, is on fire. A vessel next to it was also damaged and what was a suspected attack. The reason we are seeing the price of oil move, any sort of geopolitical tension in this region so much oil moves in and out of the strait of anythingnd cause and cause a drastic change in oil prices. This is where the two vessels are. The first one was loaded up and uae and headed to taiwan. The second was going to singapore. Matt im looking at the lng contract that i have pulled up, l at least forul this contract but there has been a massive slump in natural gas. Im wondering why this isnt being moved by trumps threats to merkel and germany to stop the nord stream 2 pipeline. Annmarie we have seen lng prices low basically the whole year. Theres a lot of supply there. I think the reason you are not seeing movement in those prices is that we have trump say this before. Yesterday somade significant was the fact that he used the word sanctions. We have seen rick perry use sanctions and other people across the administration. He was sitting with the president of poland, one of the countries that gets transitory fees when russia uses the other pipelines. I think that is one of the main reasons why you wont see massive in the markets massive movements in the markets. Matt what about in terms of the companies that were on nord stream 2. Many others, partners of gazprom. Are they all concerned that merkel could give up her support for putins pipeline . Annmarie in the past, they have said they are not concerned and they want to continue. We havent heard from them after this latest trump statement. If they were to sanction the vessels that lay the pipeline, that would be a domino effect for the entire project. There were there would be some worry if they were to put up all these funds to construct this pipeline, which is supposed to be done by the end of the year. That is very optimistic, likely not until 2020. Some say this is just trump trying to stir the pot to get more lng from america shipped to europe. Anna thank you very much. Everythingrdern on energy for us this morning. Lets get the Bloomberg Business flash with deadly humphreys in dubai. Is stepping up efforts to unveil a multimedia empire, with new video games related to some of it shows. Game,er things 3, the will come out on the same day as the third season of the drama. The company is licensing the characters to outside studios. Neos electric vehicle sales are plummeting and stock price cratering. The founder and sheik objective and chief executive doesnt see what all the fuss is about. He says investors need to understand that developing new vehicles costs money and the company will be profitable within a few years. You can ask a fouryearold or fiveyearold to make money. If you look at tesla, it has been established 16 years. Established been four years. Im sure we dont need over a decade to make profit. Matt thank you very much. Minutes away now from the start of trading. Next, we will take a look at your stocks to watch at the open including German Telecom companies, set umpire after the set to bump higher after the 5g auction. This is bloomberg. Anna this is Bloomberg Markets european open. I want to bring you the latest on this story about incidents taking place in the gulf of oman. The u. S. Fifth fleet says two tankers were damaged in the sea of oman in an incident there. A fire reported on one vessel and a reported attack on another. Lets give you stocks to watch from around the newsroom. Dani burger a is looking at German Telecoms. Paul is covering tesco and morrison. Annmarie hordern is covering Companies Involved in the nord stream 2 pipeline. You have taken us through the energy story but of course this has links to companies that have vested interests. Annmarie a number of companies that have financial interests. Keep an eye on the open of omb, royal dutch shell, gazprom, juniper. These are companies that could tension the move off of that could potentially move off of trumps comments. Matt news on morrison working together with amazon . Paul lets talk about tesco. Two bits of negative news. First quarter like for like sales are below estimates. Also the news separately that morrison is expanding its packed with amazon. Withpanding its pact amazon. Tesco shares have massively outperformed so far this year, up about 12 while the other supermarkets are down. Anna denny, lets come to you on what is going on in the Telecom Space in germany. The conclusion of the 5g auction. They were expected to rise. In order of companies that won the most megahertz, vodafone, telefonica, United Internet likely to rise. Matt the open in just two minutes. A minute to go until the start of cash Equities Trading. Lets take a look at how markets are positioned. This is over from asia. Concern about trade. Optimism in some quarters about what Central Banks will do about that. Oil prices taking a leg upward. They took a leg downward yesterday on concern about excess supply. Today, the story is about disruption to supply as a result of incidents taking place in the gulf of oman. The u. S. 10year yield in focus with the risk obsession today. Demand for treasuries and yields coming down. S p futures suggesting we could be weaker at the start of the u. S. Trading day. ,uropean futures weaker suggesting we could be weaker at the opening of the trading day in europe. Once again, markets weighing up skepticism around trade tension and what they expect Central Banks globally to do about that. Lets have a look at how European Equity markets digest all of that latest trade news. There are some real specifics around the way trade tensions play into europe and geopolitics and we will talk about that with the north stream pipeline. We could see oil majors going higher on the oil price. We could see Energy Majors being hit by exposure to the north stream pipeline. By 0. 1 . 100 down euro stoxx generally in the red. On a risk off day, we have the japanese yen up by 0. 2 . Lets have a look at the sector perspective. Things are mixed in the energy space. On the one hand, you have trump putting nord stream 2 in the spotlight. On the other hand, you have an oil price bouncing compared to the selloff we had yesterday. Energy markets are digesting that divergent news flow. Much of that sector in the red. Consumer discretionary being sold off. Staples being sold off. Other industrials. On a risk off day, you might expect to see appetite for health care. That is not the case. Telecoms, you wonder whether the german stocks are going to be in there. You heard about the relief rally for the 5g bidders. Matt . Matt im looking through the downside. 333 stocks are losing. 187 stocks are gainers. If you take a look at the winners, sap is one of the biggest gainers. Then you have the oil stocks as the price of crude rises. Total, bp, shall. Im going to interview the ceo of wirecard. Stay tuned to bloomberg for that. On the downside this morning, you see tesco. The british supermarket operator down 2. 5 right now. Well astrailing as sanofi. Wpp going ex dividend. Nine stocks are going ex dividend today. Wpp. Among others. For the most part, stocks are down. Not a huge aggressive downside. Just about three stocks downfor every two that are up. Anna indeed. European markets opening lower. Investors are reassessing the latest trade developments. Oil is rebounding as the u. S. Navy says two tankers have been damaged in the gulf of oman. Joining us now is our guest. Great to have you with us. A bitalk about it more in detail about the fed later on. Lets get your big picture thoughts. In, the markets pricing number of voices at the white house seem to be downplaying that we could get a deal at the g20. Trade . You price in for were expecting a trade deal of some sort. We are expecting progress this year and into next year. This is not something that is going to happen at the g20. The trump rhetoric will continue. It is having an impact on sentiment. As we get progression toward some sort of deal resolution, we would not be surprised to see markets rally quickly and sharply on the back of positive news flow. Thumbsup on the trade deal. That is what the market is expecting. Matt doesnt it seem as though donald trump may have pushed is look at little bit too much . The chinese seem to be offended to they dont appear to want go back to the preliminary agreement that they ditched. Trump bothchina and need a trade deal, so they are going to work toward it. I think china, there is a lot of pride at stake. With trump, hes got to think about an election in 2020. I dont think either pushed their luck. I think it is just rhetoric and it is noise in the runup to a deal being reached eventually. The market knows that and is expecting that. Markets of 16 year to date. China up 17 year to date. You have positive q2 earnings expected with Revenue Growth of around 4 . If you look at gdp growth in the u. S. , 2. 9 with core inflation around 2 . This is not a market that is worried about no trade deal. This is a market that sees good growth globally, far from what was going on in december 2018. The view here is this is noise, this is rhetoric, it is like a game of chess that needs to play out. Anna is it noise and rhetoric when it comes to president trumps thoughts on nord stream 2 . Adjusting to be effort to take action against companies that are attached to it. We have had developments on that front overnight and we dont see all of those stocks straight down. Do you take that kind of threat seriously, where he warns europe against its dependence on russian gas . Is that the next leg for these tensions . Yogi i think trump is looking for attention in the runup to the election in 2020. I think you do have to look out 18 months. He will be picking on lots of things going forward. This is one good example. He has been attacking everybody and anybody that he can to get news flow and a positive vibe from everybody in america. Look at what is happening. Matt look at what is happening in mexico. It seems to be a big bluff in the end. As far as i can see, he did not get very much other than a promise to hold asylumseekers on the mexican side of the border. Bluff, does the rest of the world now see that the art of the deal is not very good . I think whether we have a deal or dont have a deal is up for debate. I think what happened with mexico was again noise. I think we really need to go back to what is going on in the u. S. As far as the economy goes in terms of earnings, in terms of growth. I noted the budget deficit yesterday has widened by 25 . Fiscal spending had increased by 9. 3 . Those are the things that drive growth going forward. That is what markets stay focused on. They are looking at earnings. Earnings drive share price appreciation. There was the expectation the dollar will weaken and the u. S. Economy is doing well at 2. 9 and that is reflected in the equity markets. I cannot remember such a strong start. I know we are halfway through the