If you happen to be watching from the u. S. It is a bank holiday in the u. K. , too. Chinese markets are closed as well. The stoxx 600, pretty flat there, bearing all that in mind. The dollaryen, pretty unchanged at 111. 31. We did see a little strength earlier after those comments from John Williams. Cable is up. 2 . That has been moving fairly strongly ahead of the u. K. Election and a sterling did have its worst week this year last week. And keep your eyes on the 10 year italian yield. It looks like it is down two basis points. It was moving higher earlier, after comments from the Prime Minister. Lets get the bloomberg first word news. Reporter north korea has conducted another missile test. South Korean MilitaryOfficials Say the missile, which appears to be a scud variant, was fired off of north koreas east coast. It comes just days after World Leaders vowed to take tougher measures against kim jong un. British airways says many of the Computer Systems a running again. That is as the carrier pushes to recover from the Massive Technology failure that disrupted hundreds of flights and stranded thousands of passengers worldwide. B. A. Says it will run a full schedule today and intends to operate a full schedule from heathrow. I know this has been a horrible sign for customers. Some of you have missed holidays. Some of you have been stranded on aircrafts. Many of you have been stuck while you waited for information. On behalf of everyone have British Airways, i want to apologize for the fact that you had to go through these very trying experiences. Reporter the u. K. Home secretary says there are potentially more suspects at large regarding the investigation into the terror attack in manchester. Amber rudd said the investigation is still in full tilt. Salman abedi tilde 22 people last monday. People last monday. John williams says three rate hike this year makes sense. He said the u. S. Economy is growing nicely and is close to the feds twin goals. I think the data has been very good. 08,000 jobsng about 1 every month and unemployment is below 4 . I think the economy is doing well. We have got good momentum. We have a little bit to go on our inflation goal, but i am optimistic. We need to continue the process we started. Chinese industrial profits rose 14 in april from one year earlier. Int bill bonded the 20 march and an 8 rise the year before. South african president zuma has survived a bid to oust him. They decided yesterday not to vote on a noconfidence motion in him. Pressure has built on zuma to quit after his decision to fire the finance minister. Global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries around the world. This is bloomberg. Nejra german chancellor Angela Merkel has given her strongest indication yet that europe and the United States are drifting apart. Speaking at an Unit Campaign rally, she suggested reliable relations forged since the end o f world war ii are coming to an end. Times in which we can fully count on others are somewhat over. Say we why i can only europeans must take our destiny into our own hands. Of course, in friendship with the United States. In friendship with great britain. With good neighborhoodly relations whenever possible. In burkhard bring varnholt, joining us from zurich. Thanks for joining us on the program. Burkhard, do merkels comments cause you any concern after this g7 meeting . Thank you and good morning to you, too. No, they do not cause may concern. In a way, she is only stating the obvious. It has been quite visible for a period of time that the interests of the United States and europe are moving further apart. Interestingly, this might turn out to be a blessing in disguise. What usually happens when the world outside of europe looks more unpredictable, europeans might at this point in time move closer together and address what has been missing for so long, namely institutional reform and a way forward for the European Union and the eurozone in particular. Nejra so, you see this could be a positive for europe on the one hand, but what about the rest of the world . Are we going to look at this g7 and see it as a turning point in history in terms of International Relations . No, we should not read too much into it. Most7 used to be the powerful economic countries in the world. Those times are long gone. Nowadays, when you look at the g7 economies, these are not the seven most powerful economies in the world. They missed much more important ones, namely those from asia and emerging markets. That is why the g20, if anything, is more relevant and important than anything. What the g7 really is about is, its about countries that share similar thoughts and philosophies on values, on governments, institutions, the rule of law. And the only thing you can read into this from a markets perspective is that europe must get its act together to step up security and that is from a markets perspective. It is good news for the defense and security companies. Nejra that is what you are focusing on from the markets, the security aspect. What about protectionism . Protectionism is a real and present challenge. It remains to be seen how that will pan out in the years to come. Without any doubt, protectionism is not good for growth, prosperity, and markets to say the least. But so far, so good. This has mostly been talk, not action. This year global trade is actually moving up, not down. But we must remain very vigilant about this. There is cause for concern that we must monitor with the protectionist rhetoric we have been hearing u out of the current u. S. Administration. Nejra Burkhard Varnholt stays with us. And stay with surveillance. Coming up, John Williams aims for what he calls a goldilocks economy. But is that just a fairytale . Plus, passenger pain. British airways apologizes after hitits huge i. T. Meltdown. How much could end up costing the carrier . Nejra you are watching bloomberg surveillance. Lets get the Bloomberg Business flash. Reporter 200 air italia flights were grounded. The union urged the government to nationalize the airline. The government has already ruled out the option and is looking for a buyer. Vietnams dominant airline is in talks to become the First Company to list the shares abroad. It has been approached by london, hong kong, and singapore and will meet with officials in new york later this week. Received shareholder approval to boost the ownership to 49 from 30 . We have been approached by some foreign stock exchanges, including london, hong kong, and singapore, which expressed their interest in our stock. We dont want to hide our hope to become the first Vietnamese Company to lift shares overseas. Reporter saudi arabia could attract tens of billions of dollars in Foreign Investment if the stock market is added to the msci emerging markets index. To 35ticipate up billion of inflows. Largest oil exporter is looking today for his a fight its economy out of looking to diversify the economy out of fossil fuel. Nejra John Williams says three rate hikes this year make sense, including the one we had an march. He said the u. S. Economy is growing nicely and is closer to the feds twin goals. I think the data has actually been very good. 08,000 jobsng about 1 in the u. S. Unemployment is below 4. 5 . I see it going even lower. We have got really good momentum. We still have a little ways to go with our inflation goal, but i am optimistic. I think we need to continue the process we started of getting Interest Rates back to more normal levels. Nejra still with us is Burkhard Varnholt, deputy chief Investment Officer at credit suisse. He joins us from zurich. You heard the comments from the San Francisco feds John Williams, talking about we are as close to the feds mandate goals as we have ever been. Could we read that as, this is the best we will get in terms of inflation for a while . Fornflation seemed gone quite some time and what really killed inflation clearly is not be federal Monetary Policy, but it is the internet, the sharing economies and the network economies. Companies,flationary who really transformed most companies in most sectors into prize takers, rather than prize setters. With little inflation in sight, John Williams is right. This year Monetary Policy will be about walking the talk. Ast means two rate hikes, they have guided the public to expect. But that is a small step in not a big picture because the big picture is Capital Market yields remaining lower for longer in the absence of inflation. And also in the presence of demanding success, securities from aging ofulations who are in need longterm government security. Nejra certainly a lot of people saying, it is those demographics weighing on the longer end of the yield curve. I want to bring up this chart, you cant see it, but all it shows is the 10 year treasury yields at 2. 25 , near those lows for 2017. It is tracking treasury volatility, which has been coming down. The treasury market is stuck in a doldrums and we have the yield coming down. Are investors underestimating the impact of fed a tightening, given where yields are right now . Well, one thing investors might be underestimating is the risk or opportunity, whatever way you want to look at it, that u. S. Capital market yields could be trading at a very low range for a considerable period of time. That is, for a few more years. That is a scenario investors might not be fully prepared for or pricing in. It is a serious possibility when you look at the mediumterm outlook. Despite the Central Bank Rate hikes we do expect for the remainder of this year, set by John Williams. Nejra very quickly, i have talked to a lot of people about the fact that the phillips curve does not seem to be working. If we get a sudden uptick in inflation, what could that do to bond markets . Im sorry, i am not sure i got the question, but when you talk about the phillips curve, something we all learned in academia, it brings to my mind something from ben bernanke. Somethings work in practice, but not in theory. I would not rely much on theory because sometimes it works and other times it does not. Nejra ok, Burkhard Varnholt stays with us. Up next, with 10 days to go until britains general election, polls suggest the race is tightening. We focus on brexit and the u. K. Election. This is bloomberg. Nejra you are watching bloomberg surveillance. Im nejra in london. British airways says many of the Computer Systems a running again following the weekend of chaos caused by a Massive Technology failure. Thousands of passengers were left stranded worldwide. Iag have a follow this morning. The airlines ceo, alex cruz, apologized for the disruption. I know this has been a horrible time for customers. Some of you have missed holidays. Some of you have been stranded on an aircraft and some of you have been separated from your bags. Many of you have been waiting for information. On behalf of everyone at British Airways, i want to apologize for the fact that you have had to go through these trying experiences. Campbell that it Benedict Campbell joins us from berlin. Give us the latest. Hi, from berlin. The latest is, the system appears to be more or less back to normal. A couple cancellations here and there, maybe about one dozen, but that is nothing compared to what we saw over the weekend, 300,000 passengers stranded. You all saw the pictures of heathrow airport, which looked terrible. We all saw the ceo speaking. He is that it was a horrible week and for everyone and im sure he is including himself in that. He is looking at a couple of horrible days, if not weeks, going forward, thinking about and trying to explain how this could have happened. We know that it was a power outage of sorts, but we do not know the details. Therell will be a lot of questions, how a power outage, as a simple as it sounds, could disrupt a company the size of b. A. Nejra talk through how disruptive they could before the companys reputation as well. Yeah, there is obviously the financial fallout and the reputation fallout. Alex cruz has had this job for about one year now. He came on board from the welding low cost unit of the parent company. Those are the main assets there. And he took on the job about one year ago and coming from a low cost company, that was in his dna. Already you are thing that sort of seep through some of the coverage now in the u. K. They are saying, what happened here . Did they cut too close to the bone . On the financial side, the stock in madrid is trading down quite materially today. We dont have reliable numbers yet on what it might cost iag. If you think about 300,000 customers demanding compensation, that is potentially a hefty bill. Nejra managing editor of global business, thank you so much. Lets stay with the u. K. With 10 days to go until the general election, polls suggest the race is tightening. According to our online points, may is 8. 5 over the opposition party. You can see all the latest information on your bloomberg. Lets get the thoughts of Burkhard Varnholt. Is the u. K. Election a market event for you, and how are you positioning, if so . It is no longer a market event because it is fully priced in it was probably, strategically speaking, a good choice for Prime Minister may, who is likely to be reelected, ensuring continuity in these negotiations. A long and short of it is i see no insurmountable political obstacles from reaching some kind of a deal after those two years of negotiations, provided that the diplomats will be given the discretion to be able to negotiate this behind closed doors. But what makes this possible is that clearly both sides have a strong economic and political interest in continuing the collaboration. At the same time, their economies are listed by a strong economic tailwind that is lifting many. And it should make it possible to find a safehaven deal for both britain and the rest of the eu. Nejra sterling had its worst week this year last week. We are higher today by. 2 . Im sorry. I did not hear you. Nejra sterling, where does it end the year . Cable . Sterling has had a good run, one that we expected and took advantage of. But we also took profit, i should say, just last week as we feel it has run most of its course here, and it seems wellpositioned, well priced, especially against the euro and against the dollar, we see more value potentially in the dollar. That should rise again once the storm of the washington slides away. Nejra Burkhard Varnholt stays with us. Up next, where is the inflation . The question mario draghi is likely to face if he gets a grilling at the European Parliament. We look ahead to that next. This is bloomberg. So new touch screens. And biometrics. In 574 branches. All done by. Yesterday. Banks arent just undergoing a face lift. Theyre undergoing a transformation. A data fueled, security driven shift in applications and customer experience. Which is why comcast business delivers Consistent Network Performance and speed across all your locations. Hello, mr. Deets. Every Branch Running like headquarters. Thats how you outmaneuver. Tthats why at comcast,t to be connected 24 7. Were always working to make our services more reliable. With technology that can update itself. And advanced Fiber Network infrastructure. New, more Reliable Equipment for your home. And a new culture built around customer service. It all adds up to our most Reliable Network ever. One that keeps you connected to what matters most. Nejra you are watching bloomberg surveillance. Lets get the bloomberg first word news. Heres taylor riggs. Taylor north korea has conducted another missile test, drawing condemnation from south korea and japan. Military Officials Say the off the eastired coast and flew 450 kilometers towards japans exclusive economic zone. It comes days after World Leaders vowed to take tougher measures. British airways says many of its Computer Systems are running again as the carrier pushes to recover from a Technology Failure that disrupted hundreds of flights and stranded thousands of passengers worldwide. B. A. Says it will run a full schedule today at gatwick and intends to run a full longhaul schedule from heathrow. I know this has been a horrible time for customers. Some of you have missed holidays. Some of you have been separated from your bags. Many of you have been stuck while you waited for information. On behalf of everyone at British Airways, i want to apologize. Secretarye u. K. Home says there are potentially more suspects at large in the investigation into the terrorist attack in manchester. Amber told the bbc he operation is still at full tilt. The suicide bomber killed 22 people last monday in britains worst terrorist attack in more than a decade. Federal reserve bank of San Francisco president John Williams s