First thing is first, we have plenty of news to get through. Lets check the markets. European shares seem to be a little changed. This is after quite a volatile week. Investors awaiting eagerly the u. S. Employment report. Equities rebounding a little bit yesterday, but there has been so much concern over the strength of the italian Banking System, and people are still trying to decide,nd and basically, what the repercussions of the u. K. Vote to leave the European Union will mean for not only markets but insurers and some of the Property Funds as well. You can see eurodollar. Pound check below 1. 30 still. Lets get to first word news. An update on the situation in dallas. Policefive dallas officers have been killed and six other works wounded by snipers during a demonstration protesting shootings by officers in minnesota and louisiana. Suspectslieve four court noted the attack with rifles and positioned themselves and triangulated locations there the end of the route the protesters planned to take. Three people are in custody and in the early hours of this morning, police were negotiating with the fourth in a garage in downtown dallas. The u. K. Is set to have its second woman premised it with the race down to two runners. They will choose home secretary theresa may or Energy Minister andrea bussan. Michael gove came last in the second round of voting by tory mps and was eliminated from the race. Hasdirector james comey defended his recommendation against criminal charges for Hillary Clinton. His comments came through five hours of tough questionings as republicans vowed to investigate whether she lied to congress. A househallenged by panel about details uncovered by the fbi that appear to contradict clintons earlier statements about her use of private email as secretary of state. Global news 20 for hours a day powered by more than 2600 journalists and analysts in 120 countries. This is bloomberg. Francine lets introduce our next guest. Hes with us for the hour. Thet to have you on program. We are trying to understand the followup between the markets, the pound and the turmoil here. We talked about this last year. Last week. Does it make a difference if it is Andrea Leadsom or theresa may . You have a real gulf of experience. What is come to light over the last 48 hours is some questions over Andrea Leadsoms career in the city. That, in itself, what kind of role she has is not material but clearly, she misrepresented herself. It is the kind of story you do not want to have. When people are looking for the kind of candidate that will require great leadership to knit ether in an easy load coalition, someone who has got the experience, battled hardened. On the other side of the leadership contest is theresa may who can be described as battle hardened, having been in the toughest apartment estate in the u. K. , the home office, a department that went to almost everystate year under the last administration. She has been there for six years and successfully. I think you do have a gulf. Markets were respond accordingly. They will be much more nervous with Andrea Leadsom. Francine does theresa may have the better chance of securing a better deal with the e. U. . Simon i think so because she represented a reluctant remainer during the campaign. So, she ate knowledges this is a difficult decision. It wasnt black and white she acknowledges this was a difficult decision. That is negotiating in the middle ground will be easier for e. U. Leaders to deal with. The problem will be unifying the party and the country behind her who have a much more polarized set of use. Francine we have more of a sense of when each candidate will trigger article 50, especially for the city of london, with brussels . Simon the most material announcement we have had since the vote was from angela merkel. The announcement that there was not going to be any prenegotiation ahead of article 50. Shes trying to encourage the u. K. To stop the clock. That can beail added on the british side, the easier it is to sell that deal. Think if you have Andrea Leadsom she will go for a quicker timetable. Theresa may will want to understand the negotiating position and take longer. Francine lets move it onto the u. S. Jobs. It is jobs day in the u. S. After lackluster numbers that show the weakest implement growth, 38,000, investors are wondering if weather is that is whether it is a trend. 180,000. Ate is for how important is this number to the data dependent fed . Have we gone back to the 1970s where it is impossible to predict jobs. Simon those headline numbers, they start floating around from monthtomonth. It was a problem with last months data. With thergue this least important jobs number i can remember for the last couple years. Why . Because the next fed meeting, the july meeting, is not likely. You would need in a norm a surprise to bring july back onto the table. Francine because of all the these uncertainties. Uncertainties, only brexit really. Is that fair . Simon look at the italian Banking System and the devaluation of the yuan and you go, that is good for deflationary pressure across the world. Given that, why would the u. S. Federal reserve act . I dont think the jobs data today will necessarily take a data dependent fed anywhere different to what we saw on the june minutes. Francine i want to come back to u. S. Jobs, but very quickly, we saw four funds properly go under. Is this a canary in the coal mine, or is it just related to real estate in the u. K. . Simon they shattered the doors for 30 days. Hat you describe is particular Market Sentiment amongst commercial real estate. But i would say that was there already. 2 3re looking at cfos, thought the commercial real estate in the u. K. Was overvalued. Uncertainty over financials and passports in a postbrexit world. Is it a clearing in the mind for overall gdp . I dont think so. Francine something worse. We are going to take a short break and then it will ask it. Ask you. Stay with the pulse. Plenty coming up, including with the markets pricing a less than 12 chance of a fed rate rise, we will get an update on the u. S. Economy and go to our economics editor in the united states. What the number of candidates for the u. K. s next Prime Minister down from five to two means. We will profile theresa may and Andrea Leadsom. We will talk about the nato summit and global situations. This is bloomberg. News. Ne sad five Dallas Police officers have been killed by snipers during protest. Police believe for suspect positioned themselves in a trained to related location near the end of the route the protesters planned to take. Barack obama is in warsaw to attend a twoday nato summit. Our White House Correspondent is traveling with him and joins us on the phone. We heard a little bit. It has been three or four days of very sad news coming from all sides in the u. S. We know the president has talked briefly about it. Is he expected to say more today . Justin we are expecting to hear from the president in 45 minutes. He has got a meeting coming up with the heads of the European Commission and the european council. We are expecting him to give remarks on the latest developments in dallas. He has been brief by National Security officials. Francine what exactly, again, this is something that we hear too often, shootings and i dont know if its retaliation but certainly there is a big movement called black lives matter . How does the present respond to this . Has the divisiveness gotten worse since he become president . Justin yeah, the president just last night when he arrived in warsaw spoke about some of these issues. He implored americans to do better and address issues of racial bias. Said these protest should not be seen as a taxon law enforcement. As attacks on law enforcement. Really prompt some tough reflection. I think we are going to hear the president talk about that today and talk about some of the difficulties that the nation is facing. With a topic that has really exploded and turned deadly. Francine how much will this be one of the issues talked about in the u. S. President ial race . Justin certainly this is an issue that the democratic president ial candidate has talked about extensively on the trail. Hearld fully expect to Hillary Clinton and donald trump weigh in on this. I think theres going to be a lot of attention turned to how donald trump handles it. Obviously been very critical of the president in the way he handled these types of situations before. So, weather and how he chooses is situation isth going to have an impact on the president ial race. Francine we will get live sink, whitem justin house correspondent, throughout the day. Barack obama is set to speak in warsaw. He is expected to comment on the situation in dallas. We will bring you those comments live. Up next, with european stocks set for their worst week, investors worried about the italian baking sector. We will get more with our guest. This is bloomberg. Francine welcome back to the pulse. Lets did to the Bloomberg Business flash and an update on the situation in dallas. Nejra five Dallas Police officer seven killed and six wounded by snipers during a demonstration protesting shootings by officers in minnesota and louisiana. Police believe four suspects coordinate of the attack with rifles and positioned themselves and triangulated locations near the end of the route the protesters planned to take. Three people are in custody heard in the early hours of this morning, police were negotiating with the fourth in a garage in downtown dallas. Britains decision to leave the e. U. Had an Immediate Impact on the high street. Bdo says like for like sales amid market retailers fell 3. 6 last months, the worst june results for more than a decade. Steel has halted the sale of its u. K. Assets after many of the shortlisted figures pulled out. To sell tata is keen the business and will hold a Board Meeting to discuss what to do next. Air france klm has announced resigned. Fo has he will remain until november 4, while his successor is found. The company said a pilot strike will have an estimated impact on his june operating result of around 40 million euros. Shares traded lower the smarty. Is seeking to deal with its bad loans in two weeks. Bank aimsling italian signal to theong market and exploit the states guarantee for inevitable recapitalization. And that is the Bloomberg Business flash. Francine now, go to back to to go back to the italian banks. It seems that every day in almost every hour there is more speculation. We now understand that monte paschi is seeking a deal with 10 billion euros in bad loans. I have a great chart for the day. The pricetobook ratio. The white line is monte paschi. The blue line is deutsche bank. Simon french is with us. When you look at these italian banks, brexit was a concern but it is not a concern if anything goes under in italy. Do they need a resolution and how quickly . Simon given the size of the nonperforming loan portfolio, isut 17 of the loan book nonperforming, yes, they do need a solution. I think we need to Start Talking about, there are two sets a solution second happened. State haven and how to the rules of the eurozone have to be adjusted to facilitate that . And this is complex part of the discussions. There were always penciled independent to brexit to second half of this year. Think, you, i acknowledge that it is very difficult to do that without some sort of mutuals asian of fiscal policy and political control, then you need to realistically have a conversation about whether the italian Banking System remains within the eurozone. I was struck by a speech i went to for the next governor of the bank of england mervyn king where that was the key issue, is the startvent, since of the eurozone, have the integration and the completion of Monetary Union. The elephant in the room for the European Commission, the ecb keep talking about completing monetary and union to the guys a political issue. Where is the public support for this . Francine yesterday we spoke to a former general manager of unicredit, then an advisor. One of the things they kept on saying is fundamentally nothings happened. If you look at nonperforming billion. s 200 you can inject capital and they can survive a little bit, as long as the e. U. Were more flexible. Is it really huge problem, the italian banks, or is it that that the markets have fears that came to the surface because of brexit . Simon it depends on whether you think that the current rate of growth and not over a twelvemonth horizon, but since the inception of the eurozone, and italy has been acceptable. I certainly dont think it is been acceptable. There are many structural reasons but the health of the financial system, as they further a further dampening factor on an economy that has gone nowhere. The problem is if you diminish through which you can find Productive Enterprises and that is destroying the Balance Sheets of italian banks, then you diminish the Growth Potential going forward. You can sit type. Ultimately, you get the political spike we have seen all over europe, most notably in brexit, if policymakers think they considered on their hands. I agree with your first statement. We must have a resolution here. The question is when, what is the political interface with economics and the necessary economics and Monetary Union to come together . Francine with the commission this is something that the italians argue the amount into theto pump italian banks is fairly small compared to the risk. There are similar concerns in german banks. Maybe not any of the big ones but the smaller ones. It would be in everyones interest to be more flexible. Simon sure. You look at the brilliant charts you have got behind you. The absolute level is 0. 25. That is enormous capital destruction in the eurozones preeminent economy and the preeminent bank within that. Eo, the solution is not, th problem is not solely in italy. It is also in germany, but it lends itself to a collective decision regarding completion of Monetary Union. If it doesnt, than an acknowledgment that there are some economies within the system for whom the single currency does not work as a unifying force. Start talking credibly in terms of a roadmap for potential separation or fiscal and political mutualization. Francine do the italian banks have the potential of putting the eurozone into recession . How systemic is it . We dont understand. You have someone from sogen, the chairman, he says this is systemic. You have others who says it will contain. It will not spread. It will not be that damaging. Simon i will explain why that question is so difficult to answer, because i am fond what ofthey gave us a lot phrases. Francine hotel california. Simon my favorite one was that the eurozone is basically made up as you go along. Answering a question as to whether it is systemic, depends upon the tolerance. And we dont know the tolerance of policymakers to add further liquidity and further schemes perhaps ae will political leaders, particular in northern parts of the European Union. We just dont know where that tolerance comes to an end and political expediency takes over from the right Financial Sector response. Francine what happens to the euro from no one . Crucialthe euro will be to see how german exporters and southern european exporters will fare. Simon there we have to look further to the east, particularly in china because the interface between a thatning yuan and a euro is trying to weaken, certainly, while it has not been explicit to the ecb, but it has been implied to the start of the year, i think mario draghi has given up on that and starts to look at the Corporate Credit markets. The euro, the active strategy of trying to weaken euro, in a world where everybody is trying the same game, also in japan and china, you look around the world and there is very little in terms of geographical jurisdictions, currencies, that really are bucking that trend. The ones that are, the suisse, the yen, they are not keen on that. Ads actually ishe further strengthening and the current environment where geopolitical risk makes it. Optically look like a bit of a safe haven. Paradoxically look like a safe haven. Francine we will talk more about u. S. Jobs and the fed next. Why the fed should hike. Not bejobs number may enough but the u. S. Central bank should raise rates anyway according to mark gilbert. Thisgotten traction with controversial line of thinking. That conversation is up next. This is bloomberg, where markets really awaiting the u. S. Jobs data. For the moment they are pretty much flat. Eurodollar is one we will watch out for. You guys be good. Ill see you later [ bark ] [ bark ] bye. See ya pal. Ever wonder what your pets do when you leave home . [ laughing ] aw you cutie pie. Aw. Aw. Aw. Aw. [ barking ] [ washing machine running ] partys on know what your pets are up to with xfinity home. Xfinity. The future of awesome. See the secret life of pets, in theaters july 8th. Francine welcome to the pulse live in london. Im francine lacqua. Lets get straight to the first word news. For more on the situation in dallas. Policefive dallas officers have been killed and six wounded by snipers during a demonstration protesting shootings by officers in minnesota and louisiana. Suspectslieve four chordata the attack with rifles and positioned themselves in triangulated locations near the end of the route the protesters planned to take. Three people are in custody and in the early hours of this Morning Police were negotiating with the fourth who is in a garage in downtown dallas. The u. K. Is set to have its second woman Prime Minister with a race down to two runners conservative Party Membe