Give speeches in portugal. 5 15 this afternoon in washington, President Trump and give s Prime Minister joint statements from the rose garden, right after their meeting at the white house. Day, ur top news of the theresa may finally seals the deal. Youve got sterling advancing his morning after the u. K. Prime minister struck a deal with Northern Ireland. Or more, were joined by ben stills of Bloomberg News editor who joins us from madrid. Us. Thanks for joining what kind of position does this leave theresa may in now on his week where theyre going to vote on the queens speech in house of commons . A modicum of ides after ty for theresa may a rough few weeks since the election t. Means shes going to have the support from this irish party, which will allow her to prove program on thursday and at least begin the process of putting her government in place. Alix good news on monday, but the weekend was pretty tough for theresa may. You have the sunday times tories want to cellor fill i am hammond take over. As those rumors still percolating throughout the. K. . Ben i think this is going to e a kind of constant back drop for may as long as she remains in power. E election result really destroyed her credibility, i , nk, with much of her party and the main reason for keeping moment is e at the march to do with the fact they were not in a position to take on the turbulence of another rather than ection any actual support for her. Vid the reason most of us are focused on this side of the atlantic is what it means for the brexit negotiations. Ow firm is this majority going to be in terms of really Brexit Issues that come up . Ben thats a good question. The deal has been very specific as far as we know the details kind of oint are still emerging. The deal is to give theresa may brexit on the legislation. That said, the tory party is , and divided on europe the election result is going to ruptures traditional within the party, which brought thatcher, really meant the end of cameron. Theresa may is going to be ealing with a very, very turbulent parliamentary party, s she goes through these negotiations. David thanks so much, ben stills reporting from madrid today, for Bloomberg News. Those on what complicated u. K. Politics may mean for theresa mays plans i must be hungry. Stinche. Ned by bob really, the question is, what es this mean for brecks knit theres been so much uncertainty, bob. Are we getting through it at all, or is it still all in us . T of bob i think were getting through the uncertainty in of the shortterm shock to the marketplace. Weve seen that over the the italian bank rescue, the relative stability ow in the u. K. Politics. But i think the bigger issues till lie in front of us, and that is, what kind of a deal can they negotiate . I still think the u. K. Is not situation, because they, in fact, are a major importer of goods from the u. K. From the u. E. One of the things that gets and bout immigration Everything Else is that the two export destinations for e. U. Products are the u. K. And the u. K. U. K. Is a close second to the u. S. And i think if the deals dont get done as we go forward, hear a lot from European Companies to their government that is we have a ot at stake here in terms of export markets to the u. K. We dont to want lose those. Economic there are arguments that suggest that the k. Has some standing in this negotiation. David we dont hear much about that, actually, certainly from the european side. Is that because we havent got tonight question of the tariffs and the trade yet . Ght now were dealing with european citizens in london and the price that they have to pay to get out of it. Dealing with kind of the highprofile issues, but we avent got be to the nittygritty economic issues. When it comes down to it, i think the issues are very, very particularly for european exporters. Alix at 9 30 eastern, theresa to lay out the rights of citizens, 3. 2 million so wanted to look at the details, but the response from europe was not very positive. How did you read theresa mays interpretation of this as a fair and good deal . It negotiating tactic . Are europe and e. U. Just that far apart . Bob i think we have to assume that everything at this point is a negotiating tactic. Very good. Everyone says bob well, frare their perspective. I think were going see this forth, back and forth. The e. U. Doesnt to want give anything up front. They want to be very aggressive. They dont to want make it easy in case. K. To leave it creates expectations that others could leave also. But its a much different issue who are in the common currency and the u. K. Isnt. I think thats kind of a false issue. I think these are negotiating stances, and as we economic to it, the realities will set in for both sides. David its not the economic but this first issue, the european citizens, and what rights they have in the u. K. , indicator whether people are going to be pragmatic or a matter of principle. Whether the e is European Court of justice will be able to decide the rights. Weekend, you had david days saying well have rbitration, youll appoint a person. Thats a sort of pragmatic solution. The European Union goes long be that, may that encouraging . Bob it could be encouraging, but i think the one thing we careful about is that this is i think this is probably going to go into overtime. Extra time before playing european football. Dont think theyre necessarily going to get this done in two years. So knowing each little nuance see now is going to get dragged out, potentially enegotiated down the line. Alix whats fascinate sergeant lack of reaction in the market. Implied volatility of sterling, and you can see the it really peaks, financial crisis, scottish referendum, and three months to the e. U. Referendum. Increased a little bit, but its low. Is this the world were in, the same thing with the u. S. , where headlines, talk about them, but then when youre a trader you ignore it . Im afraid we have this settling in for the summer. I was just looking at voluntarily at this timity, seven. Er these are very, very low levels of implied voluntarily at this timity, which just suggests not a lot of convictions in the marketplace. There are some positions in the market that i think are going up. Et squared the market has been bearish the dollar, a little bit too llish, the euro, and i think the mexican peso. But other than some position squaring, it doesnt seem like of catalyst out there. David wer that time and time with various assets, theyre trading within a range, whether its f. X. Or bonds or stocks. Whats the cause of that . S it the fact that the central bank has interviewed so much on the monetary side . Bob i think a lot of it is and lick ccommodation liquidity. Think whats happened over the last two or three months, which is important in terms of ow volatility and market direction, has actually been the slullishness of inflation. Its not just in the u. S. , that in the en eurozone, and, of course, japan. But with inflation coming down just extends it this visibility of how long the central bank is going to be le to maintain this level of accommodation, so i think what we had was markets that were going up for catalysts into this period, whether it be, you know, the u. K. In tion, or it was going on the Financial System, the french elections, Italian Financial system, and what gotten is those hurdles have all come down, and at the same time, weve gotten this bit of a slowdown of inflation, which has everyone saying, wait a second, the go on bank could another three months, six months, with these policies, without any major changes, and changes that are catalysts, the market volatility and market movement. We continue to see investors call for shorting on bonds. I mean, the latest is blue bias management saying theyre want to go short. Theyre overvalued. They said theyre overvalued, they think the 10year yield is going to rise because inflation is going to pick up, oure going to have more fiscal easing. Its the same story, and investors keep getting the timing wrong. The going to change dynamic . Bob what could have changed ould have been tighter markets, labor markets, the product market, and higher inflation. Gotten is weve lower inflation a little flucky ere in the u. S. With Telecom Charges and the like, but now weve added a big drop in oil prices, which is going to bring Inflation Numbers back down again. Core Inflation Numbers are pretty well behaved. We keep waiting for these tight markets to produce higher inflation. It. Not getting i think that gives Central Banks more visibility. E. C. B. Is going to have to make a decision probably in september about what they do for their asset urchase program. I think they kind of wish they did you not have have to make a september, because theres no clear evidence that they need to tighten policy. But theyre probably going to make a decision two or three months in advance, because it does end at the end of this year. Really think its this little sag in inflation thats the market a reassessment of all these asset markets. Equities, ans is with any kind of growth, continue to get bid up. What do i always tell you . It all has to do with oil t. Didnt take bob that long to me that. He confirmed it. Bob, youre staying with us. Gorsky, Johnson Johnson chairman and c. E. O. , will be joining us on business, tax reform in d. C. Chief he staff bucks Financial Officer will join us as well. This is bloomberg. Italy will commit will clean up two failed banks after months of talks with regulators that friday. Brussels punting and left the decision with italy after the banks aid that the two were insolvent. After an emergency cabinet prime in rome, the minister told reporters that there was no better alternative the bailout debris. Alternative better than this debris . From the point of view of the stability ies, the of the Financial System . I wish the people who criticize would tell me what a better alternative could be, because, frankly, i dont see it. Alix joining from us milan is dan. Winners and gh the losers. Who took the hit on this bailout . Dan obviously italian taxpayers are going to take some of the hit on this. Big winner is bank intesa. The countrys second biggest bank. Has wide distribution throughout italy. Its market presence in this northern region, one of the in italy, was slightly weaker than its biggest rival. Dictated essentially the terms of this operation. To find taly tried other private investors to partial state, private solution, that didnt happen. Intesa came forward with an that practically guaranteed that its capital ratios will remain unchanged. To maintain its dividend policy. They might even be able to nerate eventually some profits out of this to help boost its balance sheet. Alix and what about the senior versus junior shareholders . Walk us through whos losing there. Well, the senior bond holders are going to be protected. There also will be some eimbursement for the juniors as well, particularly small retail bond holders. Be some reimbursement there. Intesa has said it will help gap on that. Protecting senior bond was a priority in this transaction. David dan, why did italy get its own . S on it was all about having to go through brussels, european clearance. Goes off on its own and bails out their bank. Dan well, im not sure if on its own is completely accurate. The e. C. B. Came goes off on its out friday night and declared that these banks essentially were failed fail. T to and then when we quickly got the approval, the signatures of other regulators, the. S. B. , and then the European Commission last night gave its sign off to state intervention. Italy, its belief is that it ollowed the rules. Whether or not this was the tension of european regulators rewrote the rules, and in an attempt to bring Banking Union closer together, that remains to be seen. David thanks so much, dan. Of italian banks has been hanging over europe for some time now. Oining us to give us his broader perspective is the global strategist for amherst. Hat about this more global perspective . Whats talk about italy first. S i hear it, these two banks are the 9 only ones with trouble. Whats yet to come . Bob i think these are the two forefront een on the for the last 18 months. And it was clear that something had to happen. But i think, you know, as your colleague mentioned, this has roader implications. This was a situation that should have fallen under the. Ropean banking regulator i dont think in the midst of these, beginning of these they ations for brexit, wanted a distraction by having another negotiation and one cation going on with of the big members of the euro. Quickly that they just sort of, you know, did away with the rules, said you with it yourself, because they didnt want any potential conflicts. Italy and ween brussels. N a sense, i think this is a setback for the banking Regulatory Environment in becomes a that if it real big problem, just push it back to the local government. David exactly. Stand now . After the financial crisis, they had a resolution of together, sort of like here, that was going to take care of the europeanwide system. They have a crisis, oh, dont Pay Attention to that, then whats left of regulation . E bank bob thats a very good question. I think that part of this was this was a problem that had been brewing for years, long before this regulatory into place. Put i think it does raise a very important issue as to and eanwide sharing Regulatory Oversight versus if theres a problem, the problem local to the government. Now, in this case, its very anageable. Italian nominal g. D. P. Is about trillion, so 17 billion if its the total amount, if they even use that much, a little 1 of g. D. P. Thats very manageable. Instructive t is that when you come up to this really kind of the first situation where something, where maybe the second we had spain, where something happens, it gets pushed back and you recollect let the local deal with it, because they dont want to deal with the political implications potentially losing deposits, investors losing on their bonds, so it goes back to rather olitical issue than an economic issue. Alix you look at the markets, over re seeing a rally in italian stocks. But if youre an investor, how do you parse the difference . Be that perspective, youd better off buying shares or ebt in some bad banks, mediumsized bad bank in italy, capitalized, tronger bank in spain. Bob i think thats where you get into the minutia of the but certainly im sure there are some investors who think a portfolio be a er banks might not bad investment. But again, youve got to spread your and diversify risks. But clearly this sets a the ent that you allow local political government to get involved in these issues, an overarching European Bank regulator. Ix i dont know, im like what . Come on. You just youre kidding me his. T david bob is going to stay with us. Johnson , alex gorsky, johnson chairman and c. E. O. , will join to us talk about changes at his company and what tax ealthcare bill and reform could mean for his industry. Live from new york, this is bloomberg. David this is bloomberg. The global Food Industry has been teeming with change, and loebs third point added to the churn over the weekend, when Bloomberg News reported it had purchased a 3. 5 billion stake in nestle, the argest food company in the world. Here to take us through why dan loeb is interested in nestle it may means is ed hammond, who broke the story. Joining us from london is from bloomberg intelligence. Bob is still with us. Ed, first of all, break. Lations, for the take us through it. Why did dan loeb make this big acquisition . Acquisition, is in his own words, because he thinks this is a rare opportunity of having a huge ompany, which is still a really con glom late in terms of brands, where theres get big y to divestitures, raise ton of money by doing sales, and eturn the money to shareholders. He also think i think hes knocking on the door. s have a new c. E. O. Who shown a willingness to be a bit more progressive and change the direction of the company. Loebs plan is i come in, i work alongside this guy really improve this monstersized company. David as you point out, they headed in this direction. What does he have to add . He has is he at has very specific thoughts in terms of things that he can ivest. He mentions in this letter loreals stake, which the worth about 25 billion. Talks about them lifting their debt ratio, its much lower than some of their peers, and more broadly making divestitures. At we dont know yet is what loeb is going to ask for. Who the is guy advising him on this particular process. He was previously involved in sara lee. Experience in europe. It wouldnt be a huge surprise as a board ed him member to push through the changes. Tom really speaks to the fact a t the Food Industry, package Food Industry, is really struggling. Whats going to be next for that group . Not just nestle thats come under fire. The previous speaker is absolutely right. Hes pushing on an open door. Whole reason that nestle hired Mark Schneider was to actually change the culture business. I think the whole of the european is global and has to exactly the same, because a lot of small local Companies Share in the Food Industry. Food has always been local. But in the last few years, its shape. Aken the organic growth isnt there at the moment unless these change the way theyre growing their business. Best hich companies are positioned to take advantage of that, and which are worse positioned to take advantage of hat . Duncan i think hes got a rong market share, and nestle, to be fair, is global number one and probably leads top 10 Fastest Growing food markets globally. In a good position to drive itself the next few years. Some specific areas where its strong, but obviously got some weaknesses as well it needs to address. Two large the european players. Eryone else is really pretty much niche compared to those in the europea