Transcripts For BLOOMBERG Bloomberg Surveillance 20240714

Surveillance. Goodning orbit more afternoon or good morning. We saw a bit of a lift in asian stocks. Now, the stocks europe 600 down. 27 . It always honest President Trump and xi jinping can find a solution. They will sit down and we will see if we have something at the g20. The u. S. 10 year yield, the story of the day, actually, the year. The nymex at 54. 12. We understand opec may have found a date with a could meet, the first of july. Coming up, we have an allstar guest lineup. At 930, we have an excuse of interview exclusive talking luxury and the chinese of watching. At 11 30, we are joined by blackstones chief executive Steve Schwarzman. And later on, we speak to the facebook coo sheryl sandberg. But first, lets get straight to bloomberg first word news. A bloomberg scoop. President donald trump asked white house lawyers to explore his options for removing Federal Reserve chairman Jerome Powell. Happened earlier in the year, less than two months after trump discussed firing him. Lawyers examine the legality of stripping powell of his chairmanship, leaving him as just a governor. It would beed questionable to fire the chairman without cause. May impose sanctions on turkey for buying a Russian Missile defense system. The administration is considering three sanctions packages. The idea with the most support is to target several Turkish Defense companies. Is turkish president erdogan likely to ask trump to back down at g20. Boris johnson extending his lead in the race to become the uks next Prime Minister. He looks poised to pick up more votes as the hardest brexiteer in the contest has now been eliminated. The next two days will see the field whittled down. Those candidates will be voted on by Party Members to determine the winner. To japan, where exports fell for a sixth consecutive month, adding to concern of the impact of a prolonged trade war. The value of shipments fell 7. 8 from a year earlier, less than forecast, amidst a trade deficit of 8. 9 billion. Men iseuropes richest just joining the exclusive senti billionaires club. Chief executive sits alongside jeff bezos and bill gates as the only people in the world worth more than 100 billion. , ishis fortune, just his now equal to more than 3 of frances economy. Global news, 24 hours a day on air, on tictoc, and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. This isre bloomberg. Francine . Francine thank you, the anna. Viviana. Jinpingt trump and xi will meet at g20 for what they call extent talks. To say what trump had about it as kicked off his Reelection Campaign in orlando. I spoke to president xi, terrific president , a great leader of china. Spoke to him this morning at length, and we will see what happens. We will have a good deal and a fair deal or not have a deal at all, and that is ok. Francine meanwhile, the u. S. May impose sanctions on turkey for buying a russian selfdefense. The administration is considering three sanctions packages. The idea with the most support is the target of several Turkish Defense of these companies. The turkish president erdogan is likely to ask trump to back down at g20. So lets keep it on global trade and g20. Joining us is our guest. Thank you for coming on. Trumpt know if president is planning multiple fronts or if it is just tweeting by storm for his election campaign. I think it is both, nothing particularly new. There is plenty on the agenda coming. He is launching his campaign, we might see more of this, i suspect. Francine might see more of this translating into policy . If you look at turkey today what do you sell the lira because they have sanctions or do you dismiss it as a mexico with president said were going to fight hard and then they find an agreement . Wolfango the sanctions on turkey are coming. This is not a process just by the white house, but by congress. This is a mistake they are making him a believing they can reach a deal with trump over this sanctions process related to the acquisition of the s 400. The moment in a rise in turkey, turkey will face sanctions. The president has to choose five out of the remaining 12. Can a mixture between strong and self, but that is basically the baseline at this point. Francine what does that mean for global trade . Does this get worse or better quickly . Wolfango the sanctions, they are obviously a big deal. A nato country sanctioning another nato country is a big deal in terms of bilateral relationships. But terms of global impact, i dont think it will have much of an impact whatsoever. It is a very specific issue. 400, the u. S. Has already sanctions china and nobody has noticed. Francine what does it mean for global trade . I ask every time if it will get fixed or get worse. Wolfango . Yeah. Yeah. It is not just global trade. It is not just about the trade deficit, it is much more than that. It is the u. S. Asking china to reinvent its economic model, which is not going to happen yet. So in terms of the shortterm, we know they will meet next week. Best Case Scenario will be a restart of the trade talks. Nothing more than that. It is still early. There is pressure on both sides because the economy is slowing down. We have seen the u. S. Payroll, we have seen data from china. Politics was in the driving seat, maybe the economy would apply more of a role, but there is no would play more of a role, but there is no easy solution. Francine looking at centralbank policy about does the world need more stimulus where are we just creating another problem . Wolfango anything that central bankers can do would not fix the challenges that we have. We need a buffer to soften the impact. And even that buffer is incrementally becoming thinner and thinner. But the Central Banks cannot even fix the fiscal issue. Certainly, they cannot fix the much bigger issues in the global agenda. Francine what do you worry about in the global agenda . When you look at supply chains, are they really being tested or is it just tough talk . Wolfango i think there is a mix of the two. We have already seen decoupling. Google is now producing u. S. Bound motherboards in taiwan. Foxconn is producing more and more iphones outside of china. Companies are adapting themselves to the new reality. ,ts challenging, its costly but i think it has been signaled for a very long time. This trend will continue for the foreseeable future. Francine how much do you worry about the middle east . The region seems much more unstable now and that could have a huge impact on oil prices. Wolfango we dont believe in a conflict between iran and the u. S. Chances of that are very low. People are talking about an accidental war, wars do not happen accident, to my knowledge. Sanctions will continue. Maintain ae the u. S. More active role in patrolling the streets of hormuz, but nothing more than that at the end of the day. Francine thank you. Wolfango from teneo intelligence stays with us. Has weighedump legality of pushing Jerome Powell out of the fed chair. Later, we bring you the fomcs latest policy decision followed by powells news conference. Thats coming up, this is bloomberg. Francine economics, finance, politics, this is bloomberg surveillance. But get straight to the Bloomberg Business flash. Boeing and coming back with a showstopper of a deal at the paris air show. British airways owner iag signed a letter of intent for 200 of the grounded next jets. Billions. S, values at it gives boeing the opportunity to turn around the narrative of the biggest source of profit. Walshchairman william personally vouch for the planes, saying he would get on board tomorrow. Christian sewing is planning sweeping changes to deutsche ,anks top management considering replacing the chief of finance and the Investment Banking head. He may takened control of the Investment Bank on an interim basis while the lender searches for a permanent successor. Plan for a new cryptocurrency faces angry pushback from lawmakers. The u. S. House Financial Services Committee Chairwoman Maxine Waters urged the company to Halt Development of the token. Some are questioning if the coin called libra would have sufficient oversight. Francine today marks the end of the ecb form and portugal, following the end of Mario Draghis tenure as ecb president this autumn. Though he is on the way out, he has not been holding back. In the absence of improvement such that the sustained return of inflation is threatened, additional stimulus will be required. We remain able to enhance our foreign guidance by adjusting its bias and conditionality to account for variations in the adjustment class half of inflation. Path of inflation. I just said that we are ready to use all of the tools to fill the mandate and we do not target Exchange Rates. Further cuts in policy and mitigating measures to maintain any side effects. We see that the path of conversion is moving more slowly than expected. Will use all the flexibility within our mandate to fulfill our mandate. Bloombergs matt miller is in portugal where he is joined by guest. Over to you. Here with one of the founders of this European Central bank. Before we get to the successes you have achieved here, i want to ask about the things mario draghi said. First off, that he does not target the Exchange Rate. We take him at his word, but it must be important as an economist to think about the value of your currency. Our approach was always that the Exchange Rate is one of the most important variables in the an open especially in economy, as the euro area is. It as an exotic this element or try to influence ementhis is exogenous el or try to influence it, this is different. I spoke to peter pratt, who was also chief economist. He said trump started with this trade war that started this trade war, we are dealing with these issues because of the trade war. Do you agree . Trump is extending it is not a trade war, it might be. But these trade tensions to the currency field, another field for battle. I think this is very bad. If a a big difference central bank is manipulated the Exchange Rate, like the chinese did. They intervened heavily, buying dollars, keeping the Exchange Rate down. Or Exchange Rate changes which are the consequence of modern policy. This makes a different big difference. The ecbs 20 Year Anniversary can be considered a success. We all treat of the central bank as if it was normal and has always been there, of course, it hasnt, and you know that well because you started. What do you think about it now . Does mario draghi have the tools and credibility to reinflate this economy . He has proven he has the ability to do that. But we would like to point to the fact that this is still the youngest central bank in the world. When we started in january, 1999, this was a big success. There was so much skepticism about the start of this institution. And if you look at the data and inflation expectations, nothing happened. Such a tremendous regime shift in the world of central banking, especially in europe, and the euro arrived extremely smoothly. I think this is a Great Success which could not be forecast. Francine is it possible matt is it possible to be repeated . We have a story on bloomberg which is that facebook is starting to start their own currency. It sounds farfetched, but they have 2 billion users. And you helped to start this Euro Currency which we all use today in 27 countries. I would not put crypto on the same level. This is competition, this is market driven. Cryptocurrencies, etc. We have still to see how they compete with currencies issued by Central Banks. What you need for a currency to be a success as credibility, trust in the longterm existence , and the stability of the currency. I think cryptocurrencies have still to prove they can do that. Att let me ask you about the next moves you expect from mario draghi. It seems the market is already pricing in a rate cut. Will he bring back quantitative easing . Will he change the rules if he needs to . You could observe from his that a change in , wedirection of commitment will see what the council will deliver. Matt thank you for your time. G, one of the founders of this institution, celebrating its 20th anniversary. Francine thank you so much, matt miller at the ecb forum in sintra, portugal. Lets get back to Wolfango Piccoli from teneo intelligence. Haveis the concern you from either the way to ecb is set up for the eurozone . We finally need a Banking Union or Capital Markets union . Wolfango my concern, coming from the political side of the story, is the more mario draghi does, the less are the chances all the things you just mentioned, which are badly needed, a Banking Union, eurozone budget, whatever fiscal capacity, will come. We have seen this in 2012. In the sense that you take off the pressure by intervening in and some politicians get distracted, lets put it that way. The drive, the impetus to push forward, which is already a difficult impetus given how difficult politics are in multiple countries, but the moment you believe the pressure, the chances to get progress are basically close to zero. Francine peggy so much. Wolfango piccoli from teneo intelligence thank you so much. Wolfango piccoli from teneo intelligence stays with us. Bloomberg has learned President Trump explored how to remove the federal chairman. We bring you that story next. This is bloomberg. Francine as the fed meets today , markets have conviction it will cut rates this year. Investors are refreshing their portfolios for a return to global dovishness. With the details is bloombergs dani burger. Dani the qe trade is back on, given rocket fuel ecb yesterday about saying they would cut rates as the first line for added stimulus. So as we look into what people are doing, we are seeing a lot of the qe favorites. That includes debt from spain, italy, and france. We had a french 10 year bonds hit zero, even though yields are coming back. But curve flatness, that tends to be how these take shape. We are also seeing the return of tina. We are seeing equities do well, but especially u. S. Credit. Finally, playing defense. We are seeing the u. S. Dollar do well and bets that the dollar can survive the latest cut cycle. That means gold is doing better as well as defensive sectors, francine. Francine thanks so much, dani burger with the latest on what we could see. Where are getting some big news at of nikkei out of nikkei. Thinking about shifting 1530 of output from china. This is because of possible supply train supply chain concerns. Up next, a roller coaster ride for investors. We talk luxury. This is bloomberg. Xi will sitump and down. The u. S. Ways new sanctions on turkey. Asks lawyers about. Willieof confidence, walsh says he gets on board a max tomorrow. 2 . Ation rates falling to a little anxiousness on the markets. As expected, it is coming in at 2 . On whothat will depend becomes the next Prime Minister. Yesterday we had the debate with the tory candidates left. Fromt breaking news nikkei. Citing several unidentified people, apple is asking suppliers to evaluate the cost implications of shifting 15 to 30 of its production from china to southeast asia. Lets get back to the director of research. We understand this is because of trade tensions between the u. S. And china. They are worried they would escalate. This has not been confirmed. Majoryou assume any company with a presence in china would do the same . It is already happening. We were discussing it before the news came out. Ofgle is moving production motherboards in taiwan. It is not just about trump. Are on china. This will not disappear. Companies have to factor that in. If china is on the losing side, who wins . Going to do better on this front. It is positioned to profit out of that. Thailand, the demography is not great. The philippines, not a match because the environment is not the Business Environment is not great. Shifting 15 ,e, 30 away from china, do i bring them in because the spaces lower . You plan for worst, but can you ring them back if you need to . Wolfango it depends industry to industry. The companies have realized the issue of trade is salient, it will remain on the agenda for the future. They cannot take that risk. You move it elsewhere and you will see it later on, depending on sector on sector. Not taking action now is somewhat foolish. Francine you would look at alternatives or do you think they should be doing it . Wolfango they need to do both depending on where they are, which items we are talking about. Not everything has been sanctioned. Options is a for must. Secondly, you might need to act if you are in the sanctioned list. Francine thank you. Wolfango stays with us. The past year has been a roller coaster ride with escalating trade tensions and uncertain demand picture in china. Against the trend, a Company Continues to manufacture its range exclusively in italy. Asia has been a key driver of sales, accounting for 40 of revenue. I am delighted to be joined by the chief executive of salvatori ferragamo. Give me a sense about how much you worry about the trade concerns. Does it hurt the demand for Luxury Products . Do you have to look at your supply chain and how you move things in and out of countries . For giving me the opportunity of touching this point. This is a peculiar moment for the industry in general and the as heavydustry as much tension between the market. Lucky enough, considering 100 of our supply change is based in italy. For the time being, we have not been affected. There is an interest from the who areconsumer delivering a certain quality of products as well as a certain list of values. Assisting attention from the Chinese Consumer, when in the past, all of the luxury industry has been benefiting approach. Se there is an impact coming from the repatriation of the purchases of some of the chinese ansumer as much as from particular attention connected to a certain type of values the brand starts delivering. Francine give me a sense of whether you are opening more stores in china. They continue to buy their products, how will they shop differently . Will they shop more locally . Are you Opening Physical Stores or is it through alibaba and things like that . Is it through Internet Sales you will continue to sell to chinese and china. . Observe for what we can , they are very active in terms way wehases and the approach through internet, there is and still remains a level of sensitivity to the price point and the different market of the world. It is true that considering some of the restriction introduced by in someese government, level ofthis sensitivity to the price point is getting a lower sense of importance for the Chinese Consumer. What is in that respect more important for them is to try to identify some of the values of the brands to reconnect to the brands through the values that the browns wolfango that the brands are proposing. Maturitya sense of that the Chinese Consumer are getting, which is making them more cautious about what they need and what they want. Respect, it is dependent on the logodriven item. The majority of the Chinese Consumer that are approaching with aury industry start sense of entering into the luxury world with the sense and need of recognition. It is making reference to a status symbol and the brand and logo as an element that is allowing identification with the brand. Francine is it tough to compete with the big french groups . It is a big group. You have had a change of management. Do you feel you are a takeover target or it would be simpler being a bigger group . I would say there are some aspects of being part of a big group that, in any respect are making this easier from case to case. Some of the negotiations, thinking about the negotiations advertising spaces, as , theas the Negotiation Department store. There is a leverage of many different brands that can be played on. This is something that is facilitating the big groups, but beenld say ferragamo has strong in creating Strong Partnership and relationship with local partners. Recognized toing the brand and is making the with linked and connected local communities in a way. A leverage power we have when we have two discuss and make negotiations. I would rather believe for brands making special point of view and creating a special connection with the customer and delivering special values, there will always be a space. And theustry is crowded consumers are bombarded by many different brands. More and more, in the new generation, there is the need of connecting with the brand value. Francine thank you so much. Salvatore ferragamo chief executive. Lets go to Jeanclaude Juncker. Jeanclaude you can move markets with a single line in a speech. Every word counts. Marioswhy i admire speeches. It is sad to say i am better be a politician. I can say what i think from time to time. Me to tell you the story, my story, which is different from yours. I am privileged to have been part of this from the very start. It is my personal experience and vision i would like to share with you today. Witnessed who has every twist and turn of the last 30 years of european politics, i can confirm the road has not been easy. I remain astonished by the strength and relevance of the project. It is full of crisis and lessons learned. Too often, we lose sight of how far we have come and the true value of that success. Clock i want to stop the on six moments in time. These six lessons in history that have shaped europe and European Union as we know it. One, euro is a political project for our grandchildren. It goes back to the crisis of the european Exchange Rate mechanism in 1992. This story starts one year a financehen, as minister, i was in charge of the economic and monetary aspects of the conference. This led to the treaty of december 1991, which paved the way for single counts. This is a time from which there are only two survivors. The euro and myself. [laughter] only one of us is here to stay. Two years after the fall of the berlin wall, the signing of the treaty was a proud european moment. With the launch of the single of 1989, the treaty was about creating a new future for europe. It was about europe taking its destiny into its own hands. Willrope, our collective was put to the test under the pressure of the markets. The United Kingdom chose to leave the European Exchange mechanism in september 1992. , may 1991, the british opt out from the single currency of the year before. Now, the United Kingdom was leaving the Exchange Rate mechanism. Parting of ways was the start of the journey that led to brexit. Other countries also faced market pressure. In 1993, the finance ministers of germany and the netherlands also wanted to leave because they believed economic fundamentals were stronger than those of france and others. Minister, a finance luxembourg, a country with better fundamentals, this put me in the uncomfortable situation. Our currency was the belgian franc. Luxembourg would be under pressure to follow. Putting belgium in great difficulties. Wasng the negotiations, it the british chancellor who woke us up. Loud, if you let germany and the netherlands go, you will never have a single currency. Personally, i would like my grandchildren to be able to pay and euro one day. A eurotish counselor, statesman. He was right. Andad to find a solution look at the bigger picture. This is what we did, by widening the intervention terms of the Exchange Rate mechanism terms make theto 15 , to system less vulnerable to speculation. It was a difficult moment. [indiscernible] francine that was Jeanclaude Juncker speaking in reference to the need for centralbank independence and reference to Mario Draghis speech yesterday that was a market mover, he said central bankers can move the markets. We will have more from Jeanclaude Juncker if he makes any breaking news on brexit. More breaking news on apple. Apple is asking suppliers to evaluate the cost implications of shifting 15 to 30 of production from china to southeast asia. Here is alex, who covers technology. Wolfango is still with us. Factre talking about the most Major Tech Companies would do the same. Do we know, if you are looking into it, the way apple operates, that they will actually do it . On the u. S. L depend and china. They are evaluating the cost implications so that if there is tensions,g of those they will probably pull the trigger on this. About 15 toing 30 of Production Capacity in china. Apple gets 40 of its revenue from the u. S. Like thehat are things app store and other services. That means 40 of iphone sales are also in the u. S. A huge chunk would still be made in china and imported at high duty if that were to come about. Francine if you take the manufacturing away from china, doesnt mean the chinese by less apple phones . Already seen them buying fewer apple phones. China has been low to has been loathes to crackdown on apple. Apple employs millions of people indirectly in that country in its supply chain. Some of that is taken out of china, it may mean it is easy for chinese regulators to say we are going to impose retaliatory measures on apple, given what the u. S. Is doing to huawei. Francine thank you. Boris johnson has extended his lead in the race to become the u. K. Prime minister in the second round of voting. He picked up 120 six votes, nearly three times as many as jeremy hunt, who came in second. We will have plenty more on that with wolfango. When you look at yesterdays debate, it was a shift. They were going after rory stewart. A week ago, no one cared what this outsider did. Suddenly he is seen as a rival. Does he stand a chance of becoming u. K. Prime minister . Wolfango i do not think he does. I agree with you there was some gagging against him by them. Overall, if we look at the performance there, a loss of touch from reality. Remainst runner here johnson at the end of the day, unless he implodes between now and the 22nd of july. Underne what does policy Boris Johnson he will go to the eu and try to renegotiate. What does he do next . Wolfango we have another extension and an early election. We are changing one of the characters. The play remains the same. The issue now is the majority. Hey have in parliament the referendum, nobody wants it. At the end of the day, getting to a referendum is complicated. At the end of the day, the moment we are going to go to an impasse, and i think we will go to an impasse by the end of october. The only way out is what everybody yesterday was denying. Francine does he have a chance of winning . That is the problem, nobody seems to be set to wind a majority. The reality is the u. K. Political system is imploding. Election. European here we are supposed to use a system that is prone to create majorities. Impasse. Have an francine thank you. In the meantime, we continue listening to Jeanclaude Juncker in portugal, saying it is unfair to attack centralbank independence, a reference to what trump has done today. This is bloomberg. Francine trump is launching his reelection bid in orlando last night as he tweeted about the european. Tweeted about the European Central bank. Joining us now, Stephanie Baker has been following the Trump Administration closely. Stephanie, he has launched his campaign, tweeting about the European Central bank. Does he get more votes . Stephanie Hillary Clinton is it going to be on the ticket, think he wants to run on the economy, he wants to run on record low unemployment and he keep americatheme, great, which sounds flat. To keep his base fired up, make sure they turn out. He does not have a strategy for expanding beyond that. In 2016. Arrowly won if he is going to win, he needs to expand beyond his base of support. Francine thank you for joining us. We are going to talk about whether jay powell should be worried about his job, as well. Limerick surveillance continues in the next hour. Tom keene joins me and we will talk to the blackstone chief executive, Steve Schwarzman. This is bloomberg. Francine all or nothing. Trump and xi will sit down as the u. S. Waives new sanctions over turkey. Powell, the legality of demoting the fed chairman. A vote of confidence, boeing wins a plane order from iag. Willie walsh says he would get on board a max tomorrow. This is bloomberg surveillance. Tom keene is in new york. It is fed day. We speak to Steve Schwarzman and the impact it could have on education. Different fed day it is after what we have seen over the last 24 hours. Difference thea day makes. Viviana donald trump launching campaign, his speech warned of what would happen if he loses. Telling a crowd in florida, democrats would strip americans of their rights. He promised to be tough with china on trade. I spoke to president she, a terrific president , a great leader of china. We will see what happens. Have a good to deal, a fair deal, or we are not going to have a deal at all. Viviana they were scheduled to meet at the g 20 summit in japan. Impose sanctions on turkey. The administration is considering three sanction packages. The idea with the most support is to target Turkish Defense companies. Erdogan is likely to ask trump to back down. Apple is considering whether to move up to 30 of its Production Capacity from china to southeast asia. Asked majoraker suppliers to evaluate the cost implication. Apple decided the risks of relying on chinese factories is too great. In hong kong, lawmakers question the Government Security secretary over allegations of police brutality. Police using steel batons and tear gas during demonstrations against the controversial extradition bill. They defended decisions made on the scene. Boris johnson extending his lead in the race to become the next Prime Minister. Of 126 won the votes members of parliament, almost three times as many as the runner up, jeremy hunt. Legislators voting the next few days. They are winnowing the field down. Global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Trump to the rescue. What a grim take yesterday. The president out with his conversation with president sx i of china president xi of china. Futures dont know what to do, curve flattening big time over the last two days. Saw. Nowhere near what we vix, 15. 06. Green on the screen. Two basis points higher in yield. This is critical. Does notn tenyear move, even off the trump statement on china. Francine this is why we need to look at the other moves happening. Futures seem to be taking a pause because they are expecting the fed to be more dovish or talk about the timing and the potential for cuts. I am looking at anticipation growing policymakers will signal lower rates across the world. At corporateooking stories across the world. Facebook, we talked about it at length, premarket apple. They are trying to figure out whether they can move 15 to 30 to other countries. After a big lift order from the Parent Company of British Airways. Inflationis the four orver the last five months. Here is a today bounce up and what we have seen. This is a similar chart, looking at the fed and what markets are predicting. The fed will keep Monetary Policy steady at its meeting today. Figure out that. The central bank is trying to figure out how strongly to signal rate cuts. Lets get onto the fed and what we are expecting today. From thelenty more pimco euro strategist. I am looking at my chart, markets are expecting two rate cuts. Are they coming . Are they going to be small cuts . Gene it depends on what happens g20. E the challenge will be to avoid invalidating what has been priced into the market. Meeting,o no harm preserving optionality. If there is a restart to trade talks, there will be a tremendous amount of relief in the market and we will push out rate cut further into 2019. It is also the case, given the potential for this administration to flipflop, there is going to be a premium in treasuries and the u. S. Curve , expecting rate carts rate cuts if something goes wrong. There is a lot of debate over what are the analogs for the current easing cycle or if we have an easing cycle, will it be one and done . If they start cutting rates, it will be an extended cycle. Cycle economy. You have the slowing on the trade side. Not that effective at this stage. You are working with markets that are highly inflated. Effectiveness as well. If central bankers know the efficacy of what they are doing has come down to a minimal amount, what is the other institution that is going to help . Of comes to the rescue draghi and powell . Gene feelslike waiting for godot. Tom godot is on the show tomorrow. Who is going to come to the rescue . How we are waiting to see fiscal policy comes to the rescue or if it comes to the rescue. Way ins a constructive which it comes to the rescue. Or, it can come reactively, as it has been the case. Growth outcomes are weaker. You may end up in the same place but with the front growth outcomes. It has already been early, if anything, in the u. S. Tom adam pozen yesterday with peterson institute, he was brilliant on this policy debate. Coming up, scarlet fu and the team have put together a great. This is bloomberg. With begin our campaign the best record, the best results, the best agenda, and the only positive vision for our future. S we will protect our second amendment. We will push onward with new medical frontiers. We will come up with the cures many,y, many problems, to many diseases, including cancer and others. The disastrous iran nuclear deal, and impose the toughest sanctions on the number one state sponsor of terrorism. Path toharting a stability and peace in the middle east. Together, we will make america wealthy again. We will make america strong again. Again. Make america safe we will make America Great again. Thank you, orlando. Thank you, florida. Tom the president in orlando, and 20160 with a 2015 effort, including going after secretary clinton at some point. Much a redux of what we saw four years ago. We have a trade war now. Point 8 gdp. Jp morgan is down at 1. 5 . How great again is the Great American economy . There were secular drivers for how we ended up at sub 2 thed growth that preceded Trump Administration. Whether we like his policies or not, the question is what do those policies do to growth in the future . On the trade side, you are right, if we do not like to percent, we are going to like 1 less. Moving towards protectionism will deliver us to that outcome. It is not a foregone conclusion. We do not want to prejudge the g20. It is clear large parts of his administration are hawkish on trade. Trump wants to get reelected. He wants a deal. That means you have to leave open the possibility that you get some kind of deal in the trade dispute. The heart of the trade dispute sits on the back burner. Tom secretary clinton and trump are against tpp. We will have a conversation with Stephen Schwarzman in our next hour. He is the great china freetrade advocate to the president. Ear. S the president s how critical is it for freetrade people to step up and brief this president . Gene it is important what you find when you go to beijing and you talk to foreign Business People is that i am not sure they are believers in freetrade. It is the question about how do you deal with the perceived unfairness . Do you force china to open its markets and play by a certain set of rules or do you close down access to the u. S. Market to penalize china for not playing by the rules . That is the distinction here. A focus prefer to see on opening chinas markets and forcing it to play by international rules. That is what the focus has to be at this stage. Francine how much do we know about whether the democrats would be tougher on china . Wants a deal, but if he asked if he acts tough, it may give him popularity. A democratic president may be tougher on china. What to the markets do with that . Gene they price and uncertainty premium. This is a cycle that feels like it is being killed by a thousand cuts. It is whittling away at confidence. Uncertainty increases over whether or not how supply chains evolve in the future, whether it is a bifurcation or something more extreme. The way businesses react is by not investing. Asset markets react by suffering. It means you are going to have a hit to earnings from some combination of weaker growth and the cost of creating new supply chains and with a certain degree of uncertainty of what the operating conditions are once you move. Taxes change, tariffs change, nontariff barriers change. The point is, there is going to be uncertainty. Francine thank you. We will get back to you. Gene stays with us. Coming up, we will speak to the blackstone chief executive, Stephen Schwarzman at 6 30 in new york. This is bloomberg. Get the Bloomberg Business flash. Opec Committee Sees Oil Inventories shrinking by half a Million Barrels a day. That is only if the group restrains supply and the second half of the year. Opec and partners will decide whether to continue with the cutbacks, a shaky demand outlook has led to weaker prices. Adidas has lost a battle over its stripe logo. It was battling over rights to a trademark. The case concerned the use of three stripes in any direction on shoes or clothing. Making thewarzman largest donation to Oxford University in the schools 800 year history. Group isof blackstone giving oxford 188 million. It will be used for a new humanities building and an institute to study the ethics of artificial intelligence. Schwarzmanth stephen 6 30 a. M. Boris has extended his lead to become the next u. K. Prime minister. Votes, nearly26 three times as many as jeremy hunt. Genne and dave. There was a debate with the five left candidates. As Boris Johnson the clear winner . What could happen between now and the end of july so he does not become Prime Minister . Out which twofind candidates are going to go forward with the runoff vote. Boris johnson looks unstoppable getting onto that ballot. Listening to the debate last night, he did not step on landmines. That is why he has been kept out of the public view so far. Was a slightly strange spectacle, everyone talking over each other, no clear winner. No one is actually going to catch mr. Johnson in this race. Captured the imagination of u. K. Citizens. A person one touted as who could beat Boris Johnson. Can he . Dave he admitted maybe this format did not work for me. He kept saying things like i am different, i am going to tell the truth. At one point, he ripped his tie off. Saying things like i am not going to go down well with the conservative members, i am never going to cut taxes, i am going to put that money into public services, none of these will endear him to the constituency he needs to speak to. He has a massive mountain to climb to catch mr. Johnson. Pip the younger, going back to the 18th century, he said let us imagine the first day of the new pm. What does the first day of Prime Minister johnson look like . Dave a bit of a reality check. He was unable to articulate how he was going to get a deal out of the European Union, how he is going to solve the Northern Ireland border question. One of the interesting things he hinted at was the question of when youre going to have to change the numbers in parliament, have another election. He did not rule it out in the near term. That is something he will have to face if he is going to get anything through parliament, he needs a different parliament. Votingare thinking of him in because he is a proven winner. He is going to bet maybe he is the one who can call a big election and regain a conservative majority. Minister johnson advantaged by having an october 31 date . Looming. Deadline is he said last night they have to get brexit done by that point. If there is a possibility of a deal happening later, he is able to rub that out. That deadline has been written down. It clearly isnt. We have delayed brexit twice already. There is no reason they will not do that again to avoid what everyone agrees would be a evident a damaging no deal exit. Tom i could go as pip the younger for halloween. Francine take your bowtie off, tom. Take it off. Tom stay with us. Is with us. This is bloomberg. Were the slowskys. We like drip coffee, layovers and waiting on hold. What we dont like is relying on fancy technology for help. Snail mail we were invited to a y2k party. Uh, didnt that happen, like, 20 years ago . Oh, look, karolyn, weve got a mathematician on our hands check it out now you can schedule a callback or reschedule an appointment, even on nights and weekends. Todays xfinity service. Simple. Easy. Awesome. Id rather not. Morning, everyone, bloomberg surveillance. Stephen schwarzman and Gita Gopinath coming up. Right now, we go to a store that has been pieced together in the last 10 or 12 hours. It is all over the blogs, less so the zeitgeist of the mainstream media. Up to speed always on facebook and the chairman from california. Not saying we predicted it, but wow, has it been fast and sudden. Democrats and republicans are really going after stable point stable coin. Is libra dead on arrival . Alex it has not arrived yet and ultimately it would be a risk. Any new area facebook or google push into will become the subject of a huge amount of regulatory appropriation. Libra ase issues with facebook is calling it, nobody really knows what problem it is solving. Mind, what problem is it solving with facebook . I think it is absolutely an appetizing play. You competitor them to amazon. Compare them to amazon. Amazon knows when you buy something and facebook does not. Libra knows you purchased a product. Tom all of these things are a pet project. Who is this a pet project of . This does not sound like a sandberg project. Is this zuckerberg . Alex i think it is. David marcus, former head of messenger was also head of paypal. We have a tictoc story on this, the genesis was dave marcus pitching this to zuckerberg, who said, i have been thinking about similar things. Facebook has a fave Payment System called facebook credit and that tops out about 2 of revenue. Just because it has got new bells and whistles and is in the blockchain, perhaps that is why there is as much skepticism. Francine well it put out a business because of the sheer clout facebook has . Alex that is clearly part of their attempt. There is also the remittances business, sending stuff to africa and the far east. That would be their explanation for why you just dont have sending dollars or pounds, but having a neutral currency. I am not entirely persuaded by that view. It seems to be doing it because they can, rather than having it clear and competitive. Francine Bloomberg Opinion columnist, alex webb, and we will get back to jean from pimco. Lets get straight to the bloomberg first word news. Viviana it was a preview of what to expect at the president ial campaign. Donald trump launching his reelection bid in orlando. Grievances filled the 78 minute long speech and he warned the audience what would happen if democrats won control of the government. They would strip americans of their Constitutional Rights while flooding the country with Illegal Immigrants in the hopes it will expand their Political Base and they will get votes someplace in the future. The president discussed his upcoming meeting on trade with chinas president xi. He says there will be a fair deal or no deal. President xi jinping is calling for the start of a new chapter with north korea and makes his first trip to pyongyang. It is expected to be a show of unity between the longtime allies who have been the target of Trump Administration anger. Boeing will have to it according the fixes, to a memo from the faa. Software designs are underway and boeing says they will complete the fixes months ago. In canada, Prime Minister Justin Trudeaus government gave the green light to the construction of a Major Oil Pipeline that will run from alberta to vancouver. Stricty it met requirements on safety and consultation with indigenous groups. Global news 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am viviana hurtado. This is bloomberg. Francine thank you so much. Jean freda is still with us gene freda is still with us. Ahead,ohnson is so far it looks to be his to lose. What would be the implications of a Prime Minister Boris Johnson . What does it mean for investments in the u. K. . With theseems like exhaustion around theresa mays deal and the success of the brexit party in the elections, that you move toward an outcome that is more likely to be less positive for the u. K. , some kind of no deal brexit, the odds of that have gone up. That has made us more cautious on u. K. Assets, more negative on pound. As you go through this campaign and start a renegotiation, i think you are ruling out some of the good options. A second referendum is not entirely ruled out. Some kind of deal along the way along the lines of theresa mays deal is not out, but whoever leads the tory party will be intent on getting this done and getting it out, even if it involves no deal. Francine what happens if there is a general election . Corbyn as Prime Minister could potentially be a headache for investors than a no deal brexit. Ite the way we think about is in terms of ruling in potentially challenging outcomes and ruling out bad outcomes. If there is a general election, there will have to be some pricing of corbyn risk. That is a material shift in Economic Policy which would not be friendly for either u. K. Stocks, credit, or the currency. Francine gene frieda of pimco stays with us. On pushingi is set the limits of the ecbs firepower until he leaves office. He pledged new stimulus for europes flagellating academy economy. What is the outlook for the year over your and the ecb policy this year yearoveryear and the ecb policy this year . Matt i am here with Guntram Wolff of bruegel. You think of first of all, the interaction between mario draghi and President Trump . Issident trump saying it unfair that draghi offers the possibility of stimulus, weakening the euro and giving europeans an advantage in trade. Guntram if mario draghi does his job mario draghi does his job by reacting to the Economic Situation and he has signaled we need to act if the situation deteriorates and we have the instruments to target the inflation rate in the euro zone. You wonder why does he have to do this . He repeated several times, uncertainty is the reason why he has to react and send the statement. This uncertainty is down to President Trump, comes from donald trump. Donald trump is complaining about himself. I thought mario draghi was replying in an excellent way, saying we dont target the Exchange Rate. Just do our job and target the inflation rate in the euro zone. We just react to the conditions in europe. Matt do we take him we take him met his word when he says he will not target the Exchange Rate, but an economist has to think about the value of a weaker currency in global trade. A guest this morning said if you want to create growth, you have to steal from the future or steal from your neighbor. What you think about the value of the euro in light of the fed meeting . Matt certainly was guntram certainly was welltimed by mario to send the signal yesterday. I expect the pressure on the fed has increased with that, so we are seeing basically a new round of stimulus on both sides of the atlantic, which uses monetary and financial conditions further. This is not the optimal way and the way i would like it to see. I would like to see stability on the trade front, no trade war. I would like to see the Structural Reforms we need and more on the fiscal policy front. Jean Claude Juncker spoke about this today. We have a trade war and we have all these problems and uncertainty. Only game out is Monetary Policy. Matt it is always great to talk about the independence of the central bank, but they do not operate in a vacuum. You are in a fantastic position to judge political and legal implications of Something Like quantitative easing. Could mario draghi start asset purchases again and can he expand the program or has it reached its limits . Guntram from the legal point of view, the European Court of justice has been given a broad mandate to the ecb, and the ecb can go much further than they do today. Three 33 nder issuer limits, these are selfimposed are the ecb governing council, not the court of justice. There is scope to go beyond an increase. The biggest obstacle will be political because in germany and other countries, one looks at this with quite some nervousness. Any bond purchase in addition is something the Northern European countries will be quite worried about. Day, the way the qe is designed, it really tries to do as little risk sharing as possible by letting the Natural National Central Banks to the purchase. I think mario draghi may be right. There is some ammunition and he can use it. Matt let me ask about the struggle between brussels and rome. How do you expect this to work out . Draghi made a plea for more fiscal action. Rome is trying to expand its spending, its budget, but it cant because it has run up against the rules. Saying theyconti will obey the rules but they need to be changed and i felt like there was a push on the ecb as well. Guntram mario draghi said countries that have fiscal room should act, not there ones not the ones with their backs against the wall. Emphasized juncker that the rules are interpreted flexibility already. It is not the rules that limit italy, but market pressure. Italy has through its confrontational stance, increased spreads by 100 basis points, which is bad for the italian economy, which is undermining their recovery and which is limiting italian fiscal space. Italy has to send strong signals it wants to do the right thing. The Structural Reforms, and then they will have the fiscal space to act. Wolff, theam director of bruegel. Tom matt miller, thank you so much. Why are we not in sentra . We could do brexit. Francine should we go to cannes . Tom Caroline Hyde in cannes later. Us, imfinath will join director of research. Thrilled she will join us. This is bloomberg. Surveillance, francine the london, tom keene Francine Lacqua in london, tom keene in new york. And gopinath will join us Stephen Schwarzman will join francine. Later today, the fed decides. Pimco,ieda with us of with a lot of experience knowing how hard it is to game the many pairs of foreign exchange. It is all too simple in the media. Tell me about the ambiguities of the u. S. Dollar and what is the pimco call . Gene there are a lot of ambiguities. It is not dissimilar to the bond market. We think we are close to the end of what has been an eight year dollar appreciation cycle, and this is coming as a function of u. S. Growth slowing. As you know, a big part of any call on the dollar relates to rate differentials. Rate differentials in favor of the dollar peaked six months ago. We think validation by the fed of loser policy would be an accelerator for a turn in the looser policy would be an accelerator for a turn in the economy. From a growth perspective, this seems to be an important turning point. Against that, we would say some of the elements of what would mark a more significant selloff of the dollar are not there. The current account deficit is not expanded significantly despite u. S. Outperformance. It is not so much that the u. S. Dollar will lose its advantage anytime soon, the advantage will just compress. What do you want to sell the dollar against . Francine answer your own difficult question. Gene we would sell it against the combination of things. We find the yen very unique in that it is a safe currency that is cheap. Typically at this point in the cycle, you were not expected to be cheap so we find the yen an interesting vehicle. Almost like a complement to being long fixed income. Typically at this point in the cycle, you have more overvalued emergingmarket currencies and in this cycle, they are undervalued about 15 by our estimate. We would like to be long. Tom the president went after mr. Draghi yesterday and eurodollar, everybody went mental. What did the president get wrong . Really allenge is the challenge is really in how do you fear the dollar weaker without effectively undermining your own growth cycle . I think he feels like he can badger other countries to change their policies. I am not sure it is clear to him that imposing tariffs on other countries should make their currencies depreciate against the dollar rather than appreciate. It is one or the other. There was a brief realization with mexico earlier in the year where he seemed to kind of understand that, but the concern Going Forward is the policy of mercantilism expands in the currency space, and you get inclusion of currency manipulation somehow linked to tariffs. There is a Commerce Department proposal to that effect. Francine we will talk more about that next, gene frieda of pimco. Tomorrow, we will be speaking to the norges bank owner. We will talk about negative york, 5 30 a. M. In new 10 30 a. M. London. This is bloomberg. We expect to happen before the end of the year, so we are making good progress, but i dont want to give a timetable. We will take the time necessary, and we expect it to happen this year. We are looking at every dimension of our design and certification products s and have some process and have some improvements we are implementing. Francine that was the boeing chief executive before he struck a commitment with the British Airways owner. Johnson, the anchor who did that interview joins us. He is a little bit of an expert. We call him a plane spotter. Guy Jonathan Ferro does. Francine a week ago, we were talking about how this was a concern and there were investigations into the crashes, and suddenly it is a stamp of approval. Guy at comes from one of the worlds most respected airlines. Pilot, he has been in the simulator and has fun with the changes and seems comfortable. The number is the critical one to focus on. Willie walsh is in no way paying this price for these aircraft. 120 millionr circa dollars, 130 million apiece. It is reminiscent of the Michael Oleary deal struck with bowing and ryanair after nine boeing and ryanair after 9 11. Is it basically so bad they gave them away . Guy it comes close. Nobody expected this transaction. It came from left field. Everyone was waiting to see if the aircraft would get back in the air and they would get orders, but i suspect i had to give away any profit they are going to be making. Tom American Airlines it is rumored will have executives find on the airplanes to build trust. Our British Airways executives going to have to fly the new 737 max 8, never they name it . Whatever they name it . Guy you wonder if willie walsh will fly it himself. He is very confident in the aircraft. I draw your attention to what happened with the 787. Remember the fires that grounded the aircraft . People were concerned about flying it. A few years on, everybody flies the 787. Tom guy johnson, great coverage from paris. In the next hour, Stephen Schwarzman will join you. Francine i am looking forward to that conversation, after he gave 150 million to oxford. All of the talk about ai that is disrupting the economy, this is bloomberg. This morning, it is a fed day. It is a fed day after mario draghi stuns markets, patients required as chairman powell deals with american disinflation. Correctand the imf were as the trump trade were buries emerging markets. Gita gopinath of the International Monetary fund. It is the ultimate trump whisperer, Stephen Schwarzman on free trade. Stephen schwarzman on the path from m. I. T. To oxford. This is bloomberg surveillance, live from our World Headquarters in new york. I am tom keene, Francine Lacqua in london. What will chairman powell do . Francine what will he do and what will the markets react to . I have a great chart. It is an 87 chance of a cut in july, and today we are hoping to have more of an indication on the timing and commitment to possible cuts. Tom we are thrilled to bring in dr. Gita gopinath and Julia Coronado, and then conversation with Stephen Schwarzman. Trumpa president donald formally launching his Reelection Campaign. His speech warned of what would happen if he loses, telling a crowd democrats would strip americans of their rights. He promised to be tough with china on trade in a meeting with their leader next week. , i spoke to president xi terrific president , great leader of china, spoke to him this morning at length. We will see what happens. We are either going to have a good and fair deal, or no deal at all. Viviana the president s will meet at the g20 saint g20. Bloomberg learning the administration is considering three sanctions packages. The idea with the most support is to turkish target Turkish Defense companies. There president is likely to ask trump to step down. Apple is considering whether to move up to 30 of its production from china to asia. Nikkei saysor because trade tensions, apple decided the risks of relying heavily on chinese factories is too great. Global news 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am viviana hurtado. This is bloomberg. Tom thank you so much. What an odd 24 hours it has been on data. Draghi with a bombshell, markets with blue, the president gloom, the president reverses it with tweets on china. Now we turn. Turn. Churn. , three basisyield points higher. Showingany 10 year negative yields in europe. Francine i am looking at what is going on with the price of oil. The yield on the 10 year treasury rose to 2. 08 while japans benchmark hit a three year low. The pound gained for a second day. The pound gaining on the back of that debate yesterday. Opec probably has a deal. We will see whether they can stick to the agreements between russia and saudi. American crude at 53. 82. Tom it is about economics and the search for theory. She follows in the footsteps of isneth rogoff, Gita Gopinath the chief economist at the imf, and joins us for the soiree in central portugal. Thank you for joining us. There is a search for a theory out there in central banking right now. Bankers such as mr. Powell, mr. Draghi, mr. Carney of the bank of england, are they flying blind, are they making it up as they go, or is there actually a theory . They are absolutely using a framework. They are following the data closely as it comes in, keeping their mandates in mind and using the instruments they have at their disposal. The amount of space they have is more limited than 10 years ago, and that is something they have to Pay Attention to. Precisely, thet amount of space. What is the to do list from you and your team for central bankers trying to assist their economies back to something approximating normal . Outlookven the economic we are seeing in many parts of the world, we welcome the accommodative stance of central bankers and we expect them to continue to be datadependent, and to communicate transparently their plans. Certainly, they are responding appropriately. We are flagging the importance of making sure financial vulnerabilities are not building up. That is a concern, and their should be macro protections used to make sure such risks do not build up in the Global Economy. Francine does the World Economy really need more monetary stimulus, or are you worried about the secondary effects . Should we focus on Something Else like dealing with the trade war . Gita it is absolutely essential to deal with the trade war. We say, do no harm. Trade risks are the number one risk to the Global Economy that is spilling over to technology tensions. That is something we worry about. Deescalating on the trade tensions front is valuable, and would do a great deal of good for the Global Economy. Francine do you think the World Economy also needs more stimulus , or cut it do more wrong than good longerterm . Could it do more wrong than good longerterm . A the two goal together go together. It depends what the policymakers to and there is tremendous uncertainty. This is the kind of scenario we are talking about now. Monetary policy will have to take a role and other policies will have to come in, including fiscal policy for countries that have fiscal space. Madame lagarde said in a recent speech we need time to gauge the balance of risks. The continuum of time, what is the urgency of central bankers to act to stimulate the economy, or do they have time to be datadependent and get to this , does thes meeting American Central Bank have time to wait . Economy is doing quite well. Unemployment is that 50 year record lows, so there is a good argument to be made to continue to be datadependent and see how the risks play out. At this point, what we are seeing a Central Banks signaling a willingness to step in may be sooner than we thought. When actions take place, that will be dependent on the numbers. Tom i mentioned in my introduction, the wonderful work of Kenneth Rogoff at the imf. That comes down to our first mark until list, mr. Trump mark until is hi mercantilist mr. Trump. Kenneth rogoff wrote a paper about the wonderful value of free and floating currencies. Is the president overdoing the threat of currency manipulation . A very natural side effect of using Monetary Policy is it extract affects your Exchange Rate. At a time when Interest Rates are pretty down to zero, the effects are showing up on Exchange Rates more. Have isfinding that we that small movements in Exchange Rates on the magnitude of 1 will do very little for the competitiveness of a country. We would be having the talk about bigger movements before we need to worry about loss of competitiveness. Tom an open question from the World Economic outlook. The green book on financial stability, how does the imf gauge the left tail of the Global Financial system . We are in a world with very high levels of debt in the private and public sectors. It is unevenly distributed and in some countries more than others. On the plus side, we are living in times of financial conditions that are comfortable in the sense that Interest Rates are low. Central banks are accommodative, so that helps. Risks are always there. With the path of the yield curve reversing, that signals concern for the outlook. It is important to use macro prudential tools to be sure these Financial Risks do not keep building up. Francine thank you so much for joining us today, Gita Gopinath. This hour, our conversation with Stephen Schwarzman, blackstone chairman and chief executive at 6 30 a. M. New york. We will talk about education and why he is giving 150 million to oxford. Every six weeks, one of my favorite moments, the sides being with you always is scarlet fu besides being with you always, is scarlet fu and the fed decides. They have lined up a great set of guests. Conversation shifted 24 hours ago. Chairman powell, a different press conference. I thought Michael Mckee was brilliant and his questioning completely changes to chairman powell after the draghi comments. You need to be briefed on what we may see transpire. Dr. Julia coronado has all sorts of experience on this, including being one of the major house economists who nailed Economic Growth. I want to go to jeffrey frankel. There is all this recession said,y and frankel procession and jobs, ok. Really look at Economic Growth. How are we looking at Economic Growth . Julia there are two dimensions. The u. S. Economy looks to be moderating. Jobs growth has slowed but still looks healthy. The consumer looks fine, but the Global Economy is a lot more worrisome, a definite slowdown around the globe. Tom i want to cut to the chase. Mario draghi nailed it yesterday when he said he is not the United States. Does chairman powell have to amend to being central banker of the world today rather than orlando, florida where the president spoke . Julia the fed is the main central bank setting policy for the Global Economy so they have to look at the global backdrop and take that into account. We have seen a slowdown in trade well before the next escalation of the trade conflicts. That worrisome set of risks, we had some encouraging tweets yesterday but we have no idea how that will translate into trade policy. Francine we also had some tweets saying mario draghi is gaming the system. What does the fed do today . Are they more dovish because of president draghis speech . Julia i think president draghis assessment of the situation will not be dissimilar from the feds. The rulebook when you are this close to zero on Interest Rates as you do not necessarily wait for risk to materialize before taking action. That is what we saw with resident draghi and what we will see with the fed. They will open the door to a recalibration of policy to a more dovish stance, and while the growth data look fine, inflation has been soft. Inflation expectations have been soft. That was a key feature of president draghi speech, but they have to act. That is a signal recalibration is warranted and something they need to take seriously. Francine is the dollar overvalued . Julia the markets will tell us. Assessment iss that that is how it works, when Central Banks recalibrate currencies move around. I do not see there is not manipulation. This is market economies in action. Francine Julia Coronado stays with us. Cannot Caroline Hyde in in conversation with chiefs with facebooks chief operating officer, sheryl sandberg. She will ask her about privacy and cryptocurrency, coming up at 12 30 12 00 p. M. In london, 7 00 new york. This is bloomberg surveillance. We are looking at premarket for apple. We had news from the nikkei the apple is asking major suppliers to evaluate the complications of offting 15 to 30 production from china to southeast asia, because they are worrying about heavily manufacturing in china. Apple still gaining some 0. 5 . Us, Julia Coronado was with is with us, getting ready for the fed. Here is the simple surveillance measure. Linear is a straight line. Curved is nonlinear. This is a big deal between the lines of the press conference, isnt it . The momentum forward on lousy trade wars, on no degrees of freedom to raise rates, et cetera. The nonlinearities are front and center. Julia they are what we mean when we talk about insurance. Any direct impact of tariffs we see today is minor if you look at the linear translation into prices. Tom full disclosure to ,resident trump, his linear people like you are nonlinear. Julia he can make the world nonlinear if there is a loss of confidence and the point of this is to shortcircuit that. They restore confidence after the draghi speech . Julia the same message, we will do whatever it takes to sustain the recovery and we will take these conditions as they come and recalibrate as necessary. That is the message. Francine what is the message for treasuries . How low can they go . Julia how low can treasury yields go into terms of the yield curve . We are already pretty low, so the trick for the fed is that the markets run well ahead of where they are. It is a difficult press conference for chair powell to manage because the market is anticipating this action from the fed. Have seen the yield curve flattening and invert. Today,s not going to cut will that satisfy the market that is already pricing in several adjustments downward . Danger, at athere precise time where President Trump is impacting its independence, will be a slave to the market . Julia being a slave to the market and reading the tea leaves, there is a fine line between those. Fed is looking at data flow that is not great but not terrible, and markets anticipating a further deterioration in fed action. The fed has to show a degree of responsiveness, but not being the slave to the market and that risks the Market Reaction and or disappointment if they dont cut that line exactly right. Tom lets go to first principles. Patiencr our audience e. Break, atience is a pause between whatever comes next. We are not in a hurry to just policy. When it was first put in it was the next rate hike and now it is the next rate cut. Tom the vshaped was so nice. We dont know where we are going, do we . Julia we dont. We expect that word will be taken out of the statement today, saying we do not have that break and they are willing to take action. Tom how do you respond to 50 basis points . Dartmouthche low of is that the ultimate surprise . Julia that is the reason they expect that, one of the rules in the playbook as you surprise the market to the dovish side to inject some insurance. The question is, do we need that now . I dont expect that we need that. We dont have a market emergency or meltdown, or a data emergency. If we are doing recalibration now, it is anticipation of those things and gives you room to go slower. Tom an important conversation coming up on the desk in london. Francine very important conversation, Stephen Schwarzman , just walked into the building. Pounds, 188illion million to Oxford University. This is bloomberg. This is bloomberg surveillance, tom and francine from london and new york. We always need a brexit update. Bee candidates wanting to the u. K. Prime minister debating yesterday on tv. Boris johnson is ahead. Insiders in westminster say it is his to lose because he is so far ahead of the second candidate, and in the evening standard, we heard from dominic rob, that he is backing Boris Johnson. Tom that is good to know. Ofi have said, i am in awe the short campaigning process in the United Kingdom. That is not the case in these United States and no doubt the president will go off. Here is the president last night. We begin our campaign with the best record, the best results, the best agenda, and the only positive vision for our countrys future. We will protect our second amendment. Newill push onward with medical frontiers. We will come up with the cures to many, many problems, too many, any diseases, including cancer and others. I withdrew the United States from the disasters. A disaster, the disastrous iran nuclear deal. Imposed the toughest ever sanctions on the worlds number one state sponsor of terrorism. Toare charting a path stability and peace in the , wele east, and together will make america wealthy again. We will make america strong again. America safe again. America greatke again. Thank you, orlando. Montage produced in london. Sarah decided she was so fed up with brexit she spent four hours piecing together the president s discussion in orlando, florida. No one on the planet better to speak of this then kevin cirilli, who has seen this too many times. You are the expert. What is the difference between what we saw last night versus what we would have seen five years ago . Kevin now he has a record and something to talk about. He is not just dealing with one democratic opponent 20. This is President Trump fired up, ready to go. Sources close to him throughout the last couple of days say he wants to be on the campaign trail, wants to get out and keep going. You are noticing he spoke from teleprompter last night. There were moments when he went off, but there were thousands of people. Just remember, they are getting the data on all of those people, because they view them as voters that will get him reelected. Tom could he give that same speech to the same effect to wisconsin, pennsylvania, and michigan . Kevin florida is a key battleground state, so there is a reason why he is kicking it off there. Michigan, wisconsin, pennsylvania, and ohio. Francine you have great insight into washington. There is a belief President Trump may be in his methods too trump on china. Do you have any idea how a democrat would deal differently with china . Kevin the populist streak on the left is just as much rampant on as on the right. Should Bernie Sanders or Elizabeth Warren become president , they have more in common with the populist rhetoric than they would with joe biden. The rocky populist waters should a democrat be elected are still very much alive and well. Bob lighthizer testifying yesterday and today on capitol optimisticling he is nancy pelosi advance the usmca. Tom Julia Coronado with us. Now for a briefing on the two americans john identified. The tension we saw in that orlando video. Those people feel the elites have the game. How does chairman powell speak to america and not the stereotype that he is only managing for the elites . Julia that is a tough challenge, and chair powell has tried to do that more conscientiously, both talk to the public, doing town halls and listen events, recognizing the public needs to understand their mission and what they are doing as well as the market. Tom i get more mail on this than anyone else. There is a huge body of america that feels underemployed. Can any Central Bank Effect change . Julia the only way they can effect it is to let the labor market stay as strong as it is for as long as possible, to reengage those people. The stronger the labor market is, the longer it runs strong and the more the people who lost out the most will gain training and jobs and real wage gains. , to is the job of the fed keep this recovery going. Francine Julia Coronado, thank you. Up next, Stephen Schwarzman, blackstone chairman. We talk about his gift to oxford, 150 million. It will bring together the to havees faculty ethical issues regarding artificial intelligence. This is bloomberg. Latest in a is the string of megadonations to higher education. Given onehwarzman has hundred 50 Million Pounds to Oxford University, the largest contribution in its history. Tophen schwarzman is close donald trump and is a scholar when it comes to china. I am pleased to welcome the blackstone chief executive Stephen Schwarzman. Thank you for coming in. This is a faculty hub that rings bringsties faculty the humanities faculty to speak about artificial and telegate artificial intelligence. Stephen it is bringing together the humanities faculties where oxford is ranked number one in the world, and they have never been together. It has all been separate buildings, and now they will be combined to get the benefit of cross disciplinary stuff. We will have a Major Performing Arts Center that will enable certain themes in the humanities to get played out. As i was learning about what oxford was doing, i realized their capabilities in humanities and philosophy in particular played right into my concerns about what happens when you introduce ai globally, and what happens, the displacement of workers, all kinds of other unexpected consequences. Ofusing these oxford core western civilization to figure out what is human, as you make decisions, what should be implemented is i think the second piece beyond just the technical. Francine the politicians no longer listen to the academics. They no longer listen to the global elite. Why would they listen to anyone from oxford . Stephen the reason is in the intersection between technology, about which governments know pretty much next to nothing. And the real world where workers can be adversely affected, which changes how Society Works and can change political things. It is important to have somebody who is an arbitrator who can make recommendations to government, who have knowledge thatroach the two areas they are naturals. Just leaving this to the government, as we can see in the the issue of, as privacy is quite difficult. Francine there are so many concerns about ai and how so many countries like china process and use the data to profile their citizens. Stephen that is chinas right. The west has a different set of core values. One of the things is we are going to be running into this issue of what really are the core values we care about . Other societies with different cultures will do things differently, and we cant make them do what our values are, and vice versa. At Stephen Schwarzman come the library at oxford going back to 1602 has tomorrow down article out analyzing a modern article out analyzing the tweets of the president of the United States. You are the sole remaining free trade are here. , butw has done a great job larry has been ill. Trade. It on free how do you not the first mercantilist nudge the first mercantilist towards freetrade . Stephen what is underlying that and i have no responsibility for any tweet, by him or anyone else. What i think the president is looking for and i am not his spokesman is basically equivalence in terms of open markets and tariffs and trade. Not a real desire to entrench the United States in some way. It should be fair competition. All of these issues that are being used as tactics, if you will, are done to bring people to the table so you can get to equal. The best products when, the best wins. , the best price if the u. S. Wins, that is good. I dont think there is another agenda. Developedvolution as Market Countries like china get to parity. Tom i dont mean to interrupt, but this is really important. People do not know that you have given not only to m. I. T. And also oxford, but have donated substantial money toward the education of china. You are a great listener of the leadership of china. What are you hearing from the leadership of china if they go to g20, as they deal with this president . What is the nuance you can give us . A time where of things are impenetrable. The negotiations that have been going on basically were stopped by the chinese side. Each of the two countries, as you have seen, we have all seen, seems to be bifurcated, going to their corners and scaring the Business Community and creating an adversarial situation. That will continue unless it is changed by the two president s. The meeting in japan is quite important because they have the ability to reset expectations, close, but for some reason sort of disappeared. If that can be put together in terms of framework, then the trade negotiators can go back to work and perhaps get something done. Francine for our global audience, listeners, and viewers , we are with Stephen Schwarzman from blackstone who has given 150 Million Pounds to Oxford University. What would be top of your curriculum, job displacement or ethics . There are a variety of things, seven different areas ranging from english and history to theology. The core curriculum of the liberal arts, if you will. That will be taught. In addition, we will set up a new oxford will set up a new wontics activity which just use the humanities, which oxford. Nusual asset at it will use other parts of the university. Oxford is typically ranked in the top five in the world. If you can bring that to bear, we will have better outcomes. Francine do you worry about brexit . You are giving at a moment we do not know if we will attract talent to this country or if students will need visas. Stephen the u. K. Has been around a long time, at least 1200 years. Things in the shortterm are not nearly as important as what we are trying to do in the long term. Brexit will take its way. That is up to the british and the parliament, the government. It is so well covered, nobody knows how quiet it quite how it will turn out. What is important is we set up the right structure for 100 years, 200 years. Francine if you look at the program tom was mentioning, the schwarzman scholars program, has the trade war affected that . Stephen that program as sort of except we take Extraordinary People and instead of going to oxford, going to china and teaching them about how china works. It started with the endorsement of president xi and president obama, and thus far we have not been affected. Education more generally in china has felt somewhat of a chill, as there are a variety of issues whether they are trade or other things affecting china, leading it to more of a nationalistic approach. I think schwarzman scholars is viewed as a window on the western world and for the west into china. I think it serves everyones purpose to have schwarzman scholars thriving. M i have got to play off a wall street journal article on the size and success of your blackstone. In the last 10 years, Stephen Schwarzman has not done Goldman Sachs by 1007 hundred 42 basis 1742 basis points, 20 a year, a stunning outperformance. Are you getting too big . Can you move the deal needle on deal transactions anymore with the scale you have invented . Stephen the answer is sure, or we wouldnt do it. We are not in the business of trying to hurt customers and investors. We are trying to help them. The way you get bigger in our world is not to go into one strategy and make it so big it cannot perform anymore. The approach we have always have had is to have new ideas, and they should be right sized, and we should catch an opportunity where there is really great returns, and we keep our more mature funds. They grow, the world grows. Their job is not to grow at an accelerated rate. We also do not need many deals in each of our funds. In a normal year, maybe we would do 10 transactions for fund, just a little range on either side. In private equity, we have 250 people around the world. If we cant do 10 really interesting investments, we are doing something wrong. Tom buried in the thought at oxford is an ancient gothic book from 1640, what do we do with Deutsche Bank . It is a great book. What would you do with Deutsche Bank . Stephen this one is sort of a tough one. I dont know that they were writing about it in 1640, but they certainly are in 2019. The issue there and i dont work at Deutsche Bank they basically have an Investment Bank and a Consumer Banking system, and the Consumer Bank is not real profitable and the Investment Bank is suffering really from this endless questioning. It is hard to keep any service , as yoution together ask that kind of question, which reflects questions everybody is asking, including sort of shareholders and board people. If you wereancine in charge at Deutsche Bank, would you consolidate . Stephen i would not be in charge. There are certain things we can pick and life and that is one pic i would not choose. Francine would you be fed chair and do you believe the world needs more stimulus . More troubleg ahead by stimulating too much . Know, sort of three economic blocks. You have china with its own issues but is still growing area,ere in the 5 to 6 despite the current levels of tariffs. The u. S. Has slowed down a little bit. My own guess, nobody knows these things, they will keep being revised anyhow. They were reported around 2 to 2. 5 . Given that europe has running negative Interest Rates and slower growth, the issue is really europe. The currencies start adjusting to these negative rates and u. S. Slower growth. It is sort of logical that u. S. Interest rates might come down a little bit. We are slowing, but we are not anywhere near approaching a recession. Tom i want to talk about 2020. Explained to disaffected republicans why they have to support President Trump for a second term. How do you and the president get disaffected gop to support him . Stephen i am not a political election expert. I am like everybody else, i watch this stuff. I think what will drive the republicans to come out as which democrat is the nominee is which democrat is the nominee. To the extent that democratic toinees prove threatening middleclass or other people. Woncally last election was pretty much by suburban women who went to the republicans in 2016. At the moment, that is not the case. It depends on the issues they are facing. If they think democrats have gone too far left, they will wont know whowe that person is. We wont know what they really believe until later. Francine what does the u. S. Economy need now . What kind of policies does the u. S. Economy need from the president . Stephen i think the only change in policies we are already running really big deficits, so there is not a lot of room on the fiscal side. You could move Interest Rates down a little bit, but they are actually pretty low. Whether they get a little lower is great symbolically. It is not going to change what is this decides to do. It just gives you confidence. I think the type of thing that would work was if some of the trade issues were resolved so people could have the confidence to know what is going to happen. That is what slows and economy. An economy. Francine that is Stephen Schwarzman is a pledge of 150 Million Pounds to oxford. Tom this afternoon, scarlet fu relating our coverage, the fed decides. Hey im bill slowsky jr. , i live on my own now ive got xfinity, because i like to live life in the fast lane. Unlike my parents. You rambling about xfinity again . Youre so cute when you get excited. Anyways. Ive got their app right here, i can troubleshoot. I can schedule a time for them to call me back, its great you have our number programmed in . Ya i dont even know your phone anymore. Excuse me . what . I dont know your phone number. Aw well. He doesnt know our phone number you have our fax number, obviously. Todays xfinity service. Simple. Easy. Awesome. Ill pass. Pres. Trump we are either going to have a good deal and a fear deal, or we are not going to have a good deal at all, and that is ok too. Alix xi and trump repair to meet at the g20 after a month long stalemate. Apples big move. Detect giant reportedly askings largest suppliers to ship 15 to 30 of their china to shift 30 of their production from china to southeast asia. David welcome to bloomberg daybreak on this wednesday, june 19. Happy fed day. A lot of expectations for the fed here. Alix i feel like no matter what, it is sort of like being a parent. You are going to say the wrong thing and upset somebody. [laughter] david in the m