guy: welcome to bloomberg, this is the european open. we will bring you that first trait of the day. i am guy johnson here in london. matt miller is in berlin. what are we watching? paris pushing integration. the british finance minister tells bloomberg the euro area unification should be accelerated regardless of who becomes the ecb president. 36 billion pound divorce suggests the u.k. is ready to pay up to break the deadlock in exit negotiations -- brexit

negotiations with the eu. the payroll rally dissipates. the market is still underpricing until impulse. half hour away from the european open, take a look at the futures picture here across the board with the stoxx 50 showing a slight gain and the others across the board as well. yields are down right now. guy: let's talk about what is happening around the world. strong rally around europe and we had a decent session in asia. 1.42%. as you can see, euro stocks did well, german market did well. not a lot of action in the foreign exchange market. said we are he

talking out on the euro trade. china commodities and story is fascinating. at opec meeting, pay attention to that. take a look at what is happening with steel. a lot of speculation pointing you in the direction of the fact people are beginning to reassociate themselves with the idea the chinese economy is going to get on a front foot. let's find out what's happening around the world with juliette saly. juliette: france is working with germany and other partners to plug loopholes that have allowed companies like google, apple, facebook, and amazon to minimize taxes and grab market sharing europe at the expense of their own companies. speaking to bloomberg, the french finance minister said his country will propose a rule for real taxation at a meeting of european union officials due in september. >> the first step of the european level would be a tax

compensation between france, and germany, and i am quite convinced that will be no later than 2018, we should be favorite with germany to have a common corporate tax which should be of theis of hamas asian 19 member states. white house chief of staff john kelly has moved quickly to remove chaotic, unruly team. on his fifth day on the job, the retired four-star general told to staffers whatever their former allegiance is, he expects all of them to put country first. the president second, and their own needs and priorities last. president trump has spoken to south korean counterpart about north korea's was the missile test last month.

it comes after the united nations security council imposed additional sanctions on north korea that would ban exports of coal, iron, lead, and seafood. he just completed a call with south korea. britain is offering to pay a brexit divorce bill of 36 alien pounds to push for future trade deal according to the sunday threeaph that cited government officials it did not identify. news to me.as he says the body would not strictly on rumors. venezuela's president has sent a group of 20 mercenaries have attacked a base. maduro said two of the attackers were killed, when injured, seven detained during the assault. i have asked for a maxims

sentence for those involved in the plot of this terrorist attack. the maximum penalty and there will be no leniency under the circumstances. civilians and deserters. juliette: global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. can market opens on a five minutes away, the dollar stalling after friday's rally. the greenback fell against most of the g10 peers. little changed after a short rally following friday's payroll report. an estimate beating to a nine jobs added in july. let's speak to the mliv microstrategy is. what is it going to take to get the dollar moving? surprisingly witty not see a followthrough in asia. that reflects two things. need amarkets, so you

dominant market. the dominant narrative is the fed will not get away with balancing the sheets. the expectation is prioritizing reducing balance sheets. the chance for a hike in december is priced around 40% but has not changed too much since the labor report friday. if the thing important is at the labor market has been strong for a long time and the phillips curve seems to be not working as the fed previous week assumed. folks more in the inflation component. another strong labor report doesn't mean anything unless it leads to inflation. guy: the euro is -- matt: the euro is proving very resilient what message does this send? guest: a lot of people look not only the dollar to event, it also the euro to pull back. the dollar has been structurally weak.

it's not just euro-dollar. it is rallied against the index. 10% since april. funny might be the catalyst for a euro turnaround. we saw euro yen, euro dollar, euro swiss, nearly all the major crosses pull back sharply. quite a sharp reversal. the fact it is resilient this morning shows there is real money macro structural layers. they are looking for pullback to get into it. might see a positive straight in the next few days, but it looks like longer-term real money players are still looking to buy the euro index. that is a constructive signal to send to the euro. is in a similar story, very high expectations in terms of the employment story. you look at germany and the data, it is incredible how stretched it is in terms of

consumer sentiment, business sentiment, levels of unemployment which are sensationally low. can we put these two things together? which one's first, german wage growth or u.s. wage growth? i think it's not about which pops first, which economic framework might be slightly broken. i believe there are structural changes in the whole inflation dynamic that we are not fully incorporating into our models, the technology impact. we are getting commodities cheaper, less the impact on labor markets automation. the demographic impact, a very different pyramids in terms of demographic. older population spends money differently. the whole framework needs to be analyzed and germany and the u.s. will be roughly similar. a strong labor market will lead to inflation, but not as quickly as before and the reaction function is different than what we haven't used to for 40 or 50 years. guy: what does that make for the

fact that steel is rocketing in asia? what is the underlying message? it is going absolutely crazy there. 45% in five weeks, 40% in iron ore from the lows, it is clearly driven by speculation. that can be massive overreaction. there are stories, china cutting supplies in the winter months, real stories there. it is an overreaction to the speculative driven market. opening theignal noise, and exaggerated signal, but it shows a positive sign for the chinese economy. they seem to be doing very strongly, excelling slightly against -- positive for the whole asia region. all assets have to knows this. equities, metals, they will do well out of this and that increases all assets. it is a positive risk signal. guy: thank you for joining us.

bloomberg mliv macro strategist, you can follow like insights on the bloomberg at mliv and we encourage you to do that. also check out tv if you are a bloomberg user as well as a video stream. our chartso follow and functions and message us directly using the id function at the bottom. guy: great functions on the bloomberg. parisch new wave for aiming to win the race post-brexit. more from our exclusive interview throughout the program, this is bloomberg. ♪

guy: 7:43 in london. let's find out what is happening around the world. here is a bloomberg business flash with juliette saly. juliette: thank you. the audi unit has been made a part to the diesel admission pro. it's a step that might allow the seizure for selling vehicles with weak engines. germany does not allow for prosecution of companies under criminal laws, and administered prot is a tool postures can use to sanction firms. qatar national bank is considering options to raise financing as an ongoing stand up with its gulf neighbors,

threatening to weaken liquidity in the gas region. the middle east largest lender held early discussions with international banks about the possibility of private placement bond sale or loan in the first quarter. achilles is percent said there is no definite decision on the issue. dbs, the southeast asian bank that has spent 3.7 billion dollars on technology in the past five years is starting to see the investment states costs. singapore's biggest bank is seeing significant improvement on the expense side of the business. he admits online rivals such as alibaba are formidable competition in digital finance. >> we are a little bit more nimble of a culture. i have to say there is a still great for medical competitors. have, the advantages they any of the platform companies, the cost of customer acquisition

is very low. they are sitting on a massive pool of hundreds of millions of customers. juliette: googles new diversity cheap forcefully pushes back against arguments against up politically correct michael cordial that ignores differences between the sexes. the engineer provides a detailed list of nonbiased causes to be underrepresented women in the industry, saying the company's less leading work culture prevents discussion on the issues. tomorrow, facebook coo sheryl sandberg joins emily chang for an exclusive interview to discuss company culture as well as leadership, the global impact and headquarters in menlo park. tomorrow at 10:30 p.m. u.k. time. that is your bloomberg business flash.

france is changing, that is the message from emmanuel macron's economy minister. he gave us his first international television interview since the election. we asked him about the role with italy over the shipyard. exception because there is a direct link between the shipyards and the defense interest. have a look at the decisions taken by the united states for instance. they are doing exactly the same when defense interest are at stake. when your defense interests are at stake. i think this is normal and everybody could understand that we defend our economic and strategic interests. how can you reassert for investors who think france is going to block every foreign takeover as soon as it is

involved strategic interest? latesthave a look at our decisions with president macron. we have not decided to reduce taxes. this is good news for foreign investors. simplify thed to takenmarket and we have very deep decisions to simple fight the labor markets. --se are [no audio]

we are taking the right decisions and we are sending -- standing firm. the roles during the last month, will invest in firm. we will stand firm. we will take the difficult decisions. we will lower the french taxes. we will make our country more attractive. we will take our structural reforms and structural decisions .hat are needed for instance, we will simple fight the labor market. banks,hink that many many investors, should be aware that france is changing. and that this is not something fake. this is something true. things are changing deeply in france and that is why we will

win the battle of attractiveness. guy: great interview. the french finance minister speaking to bloomberg. we will have more on that interview throughout the morning. raising a number of questions about the future of europe. let's switch gears. the security council approved sanctions on north korea with china expressing confidence it will bring them to the bargaining table. haslinda amin is there. makebeijing's involvement the wall white house doubt back on trade action? -- dialback on trade action? haslinda: it may be three what a difference a week makes. just last week they were on a collision course after north korea launches its second missile in a month.

trump went on twitter to lash out on china, saying china did absolutely nothing to rein in north korea. turn it seems to be back in the good graces of the u.s.. will it dialback those trade plans? perhaps, but only for now. no trade war, no acquisitions, china stealing jobs from the u.s., no intellectual property. remember this is a very volatile relationship. on-again, off-again. one based on trade-offs between trade issues and north korea. trump's goodn books for now, but give it a couple of weeks and he might change his mind. having said that, we have to bear in mind the contributions from china to the sanctions imposed by the un security council cannot be underestimated. china is the biggest ally, the closest ally to pyongyang. it is also the biggest trading

partner of north korea by far. without china's agreements, these sanctions would have been so difficult to pass through. remember also that china is a member of the un security council. it holds veto power. china could have stopped this from happening. credit to china, they have gone on to north korea, urging north korea to react calmly to these sanctions. also urging north korea to stop testing those missiles. it is also playing a middleman role for the u.s., saying it must cooperate. everybody must play their part. matt: bloomberg news anchor coming to us live from manila. we take a look at the movers in today's trade including fresenius medical which announces a $20 million deal. this is bloomberg. the opening just eight minutes away. ♪

matt: we are minutes away from the open. let's get your stocks to watch. and a quick correction. $20 million deal for fresenius medical, but it is actually a $2 million deal. they are going to buy $30 a share. buy nxstageing to

medical in synergies for the next three years. look at this stock. $30 per share. in cash. keep an eye on what is happening on the stocks. keep an eye on iron ore in asia, that could be effective. keep an eye on some of these names. betweendifferential real and bhp this year. for ore back in the black 2017. we have a picture where we could see more of a bond coming through for the big mining stocks this morning. are not givinges us a sense of direction this morning. summer months, not much of a sense of direction, but we continue to watch what happens with the data. very important to work that story through. we are waiting for the glencore update in the next few days.

up next, it is the market open and we will bring you the detailed of exactly how some of these stocks are delivering this monday morning. this is bloomberg. ♪

guy: cash is about to open this monday morning in europe. the mining stocks could be interesting in what we are seeing. take a look at the cpi captivation on the bloomberg. it is putting us to around 2/10 of 1% gain. asia has had a reasonably strong session, adding a decent session. commodities have been fascinating out there. iron ore rocketing once again. matt: i have a look at the number that a lot of people have been searching through today. this is the industrial production. of 1.1 percent. we were actually looking for a gain in our survey of economists. why the miss?

bloomberg clients looking to the machine this morning trying to figure out what is going on. there was a decline in industrial production, consumer goods, capital goods, but again in energy. a drop in construction for the second month in a row people might want to look at it guy: fascinated by the german wages story. let's take a look at how your is opening as expected. london getting a little bit more than 2/10 of a percent. london gaining less at this point in time. we will see how the mining kick in in the next few minutes. not exactly a fascinating open seeing delivered by the european markets. the stock names as the market makers get the name up and running. manus cranny is standing by and ready to deliver for us. manus: you got my message at the bottom. there is nothing very risque there.

consumer spending in the u.k. is down for the third month in a row, the worst months since 2013. iron ore is surging which will put a lift in the minors this morning in terms of bhp and industrial production in germany however has stuttered ever so slightly. when we ran the numbers they talked about momentum. the momentum is actually a little bit kind of france, italy, and spain, and we have not seen that in almost 12 years. there is a shutter in the industrial production numbers. they are quite volatile. in summer confidence, consumer's -- consumer confidence, consumer spending. and are up 1/10 of 1% that's briskly move on from that page before met since anything or controversial. this is the relationship during the tenure government bond in germany and the euro. wayeuro is on it's one

trajectory, but there is a divergence. hsbc was here and he called the bunds up to .8%, maybe a little bit higher. what does it take to reignite or move the euro trade higher? he said there is little on the road map doing now and the end of the year that could really restart the euro trajectory. the length -- the momentum between one of five and 117 will be difficult to push through the 1.20 deficit. there is a relationship there. the tenure u.s. spread is there in white and this is the euro. , let meit barometer take his back to a time span that caught my eye. it is really beginning to pick up. that could be a false start, or any number of issues in the u.k.. is brexit bill we understand potentially on the table from the u.k.. 36 billion, but there is a

little bit of a shift in the brexit barometer. the average prime minister -- the irish i'm minister, the man who holds the political conflict with theresa may, perhaps they need to create a stronger relationship with the irish and they currently have at the moment. guy: thank you. i've tried to piece together what is happening with the stock stories to get a trend. it is a struggle. we are not seeing a pass through the asian markets into what is happening here in europe. i keep an i on what is happening with the single currency trade. that continues to be one of the unrelenting's you need to watch out for. names,s of individual stocks down by three or 4%. ceo, down 2.2%.

a little bit there on the downside, that some banks training on the upside. , barrett trading on the upside. difficult to discern a sense of where we are going in terms of these summer months at this point. i think it is more of a macro thing we need to focus on. we haven't talking about a single currency when a trade is going. should probably listen to what the french finance minister has to say. matt: let's get more from this exclusive interview. the french finance minister said euro members should agree on a framework for bringing tax regimes into closer alignment and sketch out a so-called european monetary fund. speaking to bloomberg's caroline connan, the government should avoid horsetrading when it comes to mario draghi job at the bce. guest: be a bit patient. we are in 2017 and the decision

has been taken to 2019. it means we still have some time before deciding who will be the next player of the ecb. before takingwait decisions as far as integration of the eurozone is concerned. i really think we should be able at the end of 2017, to make a first step toward low integration within the eurozone. guy: more integration with the eurozone. wants to start harmonizing corporation tax from germany. his berlin up for that? the global market strategist joins us now on set. what kind of an audience do think that idea it would get in berlin? guest: a reasonable one because it shows intent from the french to drive it forward. of things here. firstly, we talked about harmonizing the tech space in europe for years. there have been different

efforts to do it and it is very tough. there's only so far it goes because the next step is to harmonize tax rates and small countries are not going to have that at all on the corporate tax side. there is a limit to how far that can go, but starting smaller, just the two countries. guy: that is what he is implying. guest: exactly. it is a nice, nation for ambition without going too far. guy: what do the french numbers need to look like? guest: whenever you want to talk to germany about, you need to do so having gotten your budget deficit under the 3% threshold that is approved. is the numbere one priority for macron. he has to get the budget deficit down, show some key domestic legislative victories. we all know what is coming, the labor reforms they will try to pursue in early september. there are protests scheduled for the 12.

it is scheduled to go through on the 20th is my understanding. plan, officially in the fourth quarter, you could absolutely have berlin be very impressed by what they see. what are the risks that macron has to work with a different government out of berlin after september? is that on your radar at all or is this election come to be a confirmation for angela merkel? guest: it's definitely on our radar. at the moment you have to see the most likely thing is you get a resumption of merkel as chancellor in germany. the other side has made significant strides in the last couple of years and they are more coherent than they once were in terms of an opposition. when he talked about european integration issues, what is the difference in platform here? not a huge amount. both are prot european cd

continuity with merkel. it seems like a pro europe, pro integration outcome whoever wins the election. thatrms of market pricing is price off that outcome, i do not see a huge change which could disrupt markets a matter what the result of that election. asking isreason i'm because it seems like merkel is so invested in the european story but they would like to see the other guy running the ecb. do they get to make that deal? we get him running the ecb in exchange for some deeper ties to europe. which really means, obviously, shared debt. a busy a deal like that would be a big step forward for the ecb and integration. there are wider concerns that

germany has before the go that far in terms of agreeing to any kind of utilization of debt. what about the italian budget situation? markets and pro-european forces would love to see some for the steps in that direction. i think it is too early from our perspective to battle any kind moves, butce in such it would be an upside surprise to the market and pro-euro upon its announcement. guy: you see it softening up. we saw it last week and the pmi numbers. what would it take to get the euro dollar north of 1.20? guest: it would take a lot. series of positive political results in the beginning of the year. we had all these landmines for the market and those things, the elections, turnout to be pro-market. dimhe same time, you see

good data across the eurozone in unemployment. you see the ecb tiptoeing to the taper there and coming up. you see an awful lot. the other thing is, the psychology of these things, markets tend to focus on run numbers. zero trading to 1.20. euro trading to 1.20. the dollar is recognize to move further than fundamentals suggest, so it will take an awful lot this year. weakness in america would be the main thing you need because you see the market price out a lot of the fed action. that is going as far as you expected to go. quite significantly in the future of the u.s. cycle to develop over the next six months. i don't think you will get that. to discusse going

that coming up. thank you for your time this point. global market strategist at j.p. morgan asset management. up next, two titans of the bond market are cleaning to the idea that -- clinging to the idea that you was inflation will make a comeback. we'll discuss that in regards to the dollar and the doubt dead trump trade. that story is next. this is bloomberg. ♪

matt: welcome back to the european market open i'm matt miller. quick look at the markets here, we see gains across the board. very little of a gain on the stoxx 600. you can see a gain of seven 100s of a point at 3.8 to come we do have most of the industry groups actually rising. the only groups are consumer staples and utilities, particularly defensive sectors. if investors are selling those off, it might be a bullish sign. let's talk about where we stand with the data coming out of the united states. the bond market still clinging to that yet inflation will make a comeback. you think inflation will make a comeback has up in the run trait of late? the vanguard and blackrock, not exactly men knows, only a month before inflation is back to 2%

regardless what happens in washington. we get cpi data later this week. the bond market very much disagrees and you can see that in a breakeven see it everywhere. in terms of the market story. here is the u.s. ten-year break even. turning lower of late. the 30 year rate. basically the market is pointing you in a direction of the fact that inflation is going to struggle to come up. you have tight labor markets. you are at a neutral right. there are all kinds of things we should be working on at this point. you would be harnessing wrong if you believe inflation will make a comeback and the bond market has punish you. this idea, good luck with 3% by the end of the year, has been a run trait. is it the run trait now -- wrong trade now? guest: i personally think you

will not see it until first quarter next year. that is my view. certainly elements of this week inflation environment which are structural, i do see the push into services, which is two thirds of consumer expenditures, of the kind of automation, the kind of deflationary innovation that we have seen throughout the goods and sector in the last 20 years or so. i think there are key parts with cpi and pc bundles which are very portable to being deflated. so, at -- and if so, i don't think inflation will make a roaring comeback or are we right now on the cusp of significant wage growth. we will wait until further that, whichto get leads to an atmosphere we have artie seen. a very gradual celebration in wages. most which measures for the next

couple of quarters. prepared tos still look at the economy growing above potential. they think it is 1.5 and i think they are right. to gradually take away some of that with a balance sheet announcement in september, further rate hike announcement in december. they will artie ring the economy in a bit. there are playing a blender. just fyi, we are getting cpi data from switzerland right now. you can find that with your ego go function, just type switzerland in there. we have a gain year-over-year of 3/10 of 1%, in line with the estimate of month over month loss. and that ist there not what drives this was currency anyway. kind of the other way around. -- where the swissie

do you see the swissie? guest: will happen with other safe havens is fascinating topic, debating this with our investors for the past couple weeks. i'm not sure we are playing this aggressively, the we are seeing more and more about the growth in the acceptance among market participants of the steadiness of global growth, the fact that the economy is on its own steam right now does not require a super aggressive policy or greater stimulus it did a few summers ago. we have seen that in the breakdown of coalition of equities, coalition of stockton stock, and below precrisis averages. we think investors are distinction between securities because they are less focused on micro whisk and part of it, maybe the next step is a weakening in the pricing of safety havens. remember the swiss franc was

literally stuck to the stealing for many years -- the ceiling for many years because of swiss investors themselves who did not want to move their money out of switzerland. now you give them .5% on the german ten-year and they are stuck on what the swiss can go. guy: that's a big number to watch out for, a very quick move and i just wonder whether there are other factors in it. people talk about hedges going on and other factors. that should be happening slowly. can accept late that one move. it did not reverse. now you are consolidating that little move. everything's you will have that there. down as- fragile drift investors relocate outside of switzerland. essentially that could happen. the largest equity market

explosion is switzerland, 84% of earnings. hedge the currency and potentially get a good trade going forward. we have not seen portfolios but we are talking about it in the office. going to keep you here with one more block. j.p.l market strategist at morgan. up next, military attack in venezuela. we take a look at the armed assault that rocked the country with the highest oil reserves in the world. but as with a key for that market and right now, it is looking a little bit shaky. we will discuss this. this is bloomberg. ♪

matt: i'm matt miller in berlin. venezuelan president nicolas maduro has said terrorist attack by quote, mercenaries, at the military base has been defeated. one attacker was injured and two were killed in the alleged armed assault. this comes a day after the assembly removed chief prosecutor ortega diaz, a critic of maduro's regime. we have the managing editor for emerging markets joining us now. justin, the event at an

incredibly important country for the oil market. they have the biggest reserves in the world. an attack on a military base, this comes after the ousting of the chief prosecutor and previously there were helicopter incidents that were discovered as an attempted coup. what is going on in this country? are they on the verge of the civil war? that thought did cross my mind as i was reading the latest report. this incident to the level of desperation now among the ordinary venezuelan populace. probably and quite clearly i suppose it is filtering through into the security forces. of theas the ousting chief prosecutor is concerned, i am surprised help maduro put up with her for so long. she was clearly a voice of dissent within the government, a voice of moderation from the viewpoint of the protesters and

had expressed quite considerable sum of the toward the level of protest. it is a sign maduro is not going to put up with any opposition or dissents. he's going to continue defying his own people it would appear and the international community, as well. in: markets must have priced a lot at this point. is that why they are taking it well when it comes to the debt story? >> i was a yes. venezuela has some $4.6 billion of debt coming to you in the next two or three months. that is potentially quite manageable for venezuela. it has $10 billion of reserves. -- it has a [no audio]

the moment and of course, the prospect or possibility of u.s. sanctions on oil imports -- sorry, oil exports from venezuela, which of course then would throw the cat among the pigeons as far as debt commitment and debt servicing is concerned. guy: thank you. story to keep an eye on. we have a big meeting taking place on opec on compliance which starts today in abu dhabi, certainly a feature the market is paying attention to. what have we got for you next? hello bit more from our exclusive interview with the french finance minister.

it's interesting what he has to say about what he believes paris will win the fight to take the assets out of london rather frankfurt. this is bloomberg. ♪

matt: paris pushes integration. the french finance minister tells bloomberg that euro area unification should be accelerated regardless of who becomes the ecb president. the 36 billion pound divorce bill. reports suggest the u.k. is ready to pay up to break the deadlock in brexit negotiations the eu. is the number high enough? the payrolls rally dissipates. what is needed to boost the dollar? blackrock and vanguard said the market is underpricing the coming inflation impulse. look to the markets european open. i'm matt miller in berlin alongside guy johnson at

european headquarters in london. hard to get excited about whether markets are going. we have upped the ante a little bit. we are positive we are not up by much, a bite 3/10 of 1%. the market perform -- the cap performed well on monday. france is working with germany and others on the polls to allow come they giants to minimize taxes. that is the message from emmanuel macron's comedy minister. he gave the first international television interview since the election. >> it's always the same strategy based on a level playing field. based on civil's for everybody. when you are doing business in france or europe, he have to pay taxes. you cannot take the benefits of doing business in france or in europe without paying the taxes

that other companies, french or european companies, are paying in europe or in france. the same rules for all the companies and for all the states. >> does that mean you want to lower it the corporate tax to 25% everywhere in the eurozone? guest: we will lower the 36 to 25.tax from then this is the second step. we want to have tax harmonization among the members of the eurozone. you have 19 members of the eurozone. you have one cure and see, euro -- currency, the euro. you have 19 levels of taxes, 19 different economic policies. we cannot go this way anymore. that's why we are advocating for tax harmonization. the first step of tax harmonization will be a tax harmonization between france and

germany. i am quite convinced no later than 2018, we should be able to with germany, have common corporate tax. that should be the basis for harmonization of all corporate taxes, text level of 19 levels of the eurozone. >> what concession you expect from the germans to further these european integrations? in exchange, would you accept a german as the head of the ecb, for example? .uest: be a little bit patient we are in 2017 and the decision has been taken to 2019. we still have some time before deciding who will be the next chair of the ecb. beforeshould not wait making decisions as far as integration of the eurozone is concerned. i really think that we should be to bet the end of 2017

able to make a first step towards more integration within the eurozone. joining us now is caroline connan who had that exclusive interview. we heard his plan to harmonize taxes between france and germany. how did he defended his decision to nationalize the shipyard to block an italian takeover? that sparked outrage in italy and does not seem like uber ties with the european countries. the decision to nationalize the shipyard was not understood by italians and was not understood by the investor community. this is one of the reasons he wanted to give his first international tv interview to bloomberg. he insisted that this is not mean france is going down the

road of protectionism. he believes this nationalization is a trump rally until they can find a solution with italians by the end of september. he said france was not protectionist and this was clearly not an exception because it involved a strategy asset and military interest to france. he thinks he can take the financial companies that are actually the u.k. rather than them going to frankfurt. the evidence of this point is not that they are going to go to paris. more and more they are going to frankfurt. what does he believe will turn the tide on that? >> he is trying to win this race against time. emmanuel macron was only elected three months ago and many banks have are a chosen frankfurt and

other european capitals and set of paris in his battle to grab financial jobs out of london and brexit. he believes because france is going to reform really quickly because labor reform should pass, at least he hopes so, by september, and then there is the scrapping of the wealth tax and many other reforms, for example lowering the corporate tax to 25%. he believes if the government in france goes quickly enough to pass this reform, that will convince those banks who have not made their decision post-brexit quite yet, to choose paris over frankfurt. as you are mentioning, the evidence comes toward the other way at the moment. has artie chosen saidfurt and the hsbc has they will allocate 1000 jobs to believes he still

paris is still in the race and he says tomorrow, france will be the place to be, not only for the brazilian soccer players, who will be transferred, but for all investors. forget deutsche bank who has also china -- who has also joined frankfurt. the paris is also a good place. the figure has surfaced, what prime minister theresa may is willing to pay for the divorce from the eu. the sunday telegraph said three eu officials, does not identify them, saying britain would part , or 40 billion pounds billion euros in order to push the discussion toward the future trade deal. david stubbs, global market strategist at j.p. morgan asset management, still with us.

has the u.k. wasted too much every little about billion euros when it comes to this exit negotiation -- brexit negotiation? guest: i don't think it has wasted too much time. it has taken a cautious stance to the early pages of this negotiation. they know the crucial meeting for the european start is in october where europeans and europeans along with determine whether sufficient progress has been made in what they call the phase one exit. the brexit bill, the rights of that u.k. and eu citizens. if sufficient progress is made, they moved to the trade deal. this will be an important thing for the u.k. to achieve. want to start talking about trade. i think it is quite possible that these reports have surfaced even if they don't recognize

them whatsoever. as soon as the u.k. faces up to the reality is concessions such as payments are going to be required for a future agreement with the eu, the quicker we can move to that trade aspect of the negotiations. guy: i want to take us back to that interview with the finance minister. he is talking about tax harmonization with germany. you can see within that, the formation of a call within the eu that has the foreign finance minister and common taxation. you wonder where the peripheral nations fit into that and how to structure will be resolved. poland, spain, different countries. consentshave a further or around that. we beginning to understand the landscape that fits together you get consolidation in europe, but it is not for everybody. you spit out from that. guest: from 10 to 15 years, we

have talked about a twin track or to speak europe. a lot of the european federalists did not like that because they wanted everyone to come along with the journey. there are members not as committed and will not go along with it. those not in the eurozone for example. the hungarian government tort brussels. the lack of willingness to take on the currency in sweden. with brexit, it may be emphasizing the court needs to advance even if the non-euro members will come through. the euro was treated as a superstructure upon which the institutional framework of europe. things like debt utilization. now you see things as the subject being discussed. has not been anywhere in such as quitting the corporate tax base and harmonizing. maybe this time you'll get some progress. you are absolutely right. the eurozone will move ahead.

the other members will be left behind and all proceeds without the involvement. guy: thank you for sharing your thoughts with us. j.p. morgan asset management. matt? maga, is the, weaker dollar making everyone else ran again -- great again? our next guest thinks so. that coming up. this is bloomberg. ♪

guy: this is the european market open. let's find out what is happening around the world with a bloomberg first word update with juliette saly. in the u.s., new white house chief of staff john kelly has moved swiftly to bring water to a chaotic and unruly team according to accounts from 12th and decision aids and outside observers. on his fit they, the retired four-star general told staffers whatever their former allegiance is coming in our expects all of them to put country first, president second, and their own needs and priorities last. north korea is threatening to take what it calls action of justice in response to you and sanctions that were imposed over pyongyang's undercut mental missile tests. that is according to the korean central news agency.

trump spoke about the situation with south korea's president. south korea's foreign minister briefly spoke with his northern counterpart yesterday, urging him to respond to president moons offer to resume talks. britain is offering to pay a brexit divorce bill of 36 billion pounds to push talks with the eu for a future trade deal, according to a sunday telegraph. brexit secretary david davis told the sunday times the report was, news to me. an official at the european commission will said they would not spatially on rumors. as well as resident has -- venezuela's president has said the military base was attacked. nicholas maduro said two of the attackers were killed, one injured, seven detained during the attack. >> i have asked for a maximum sentence for those involved in

the plot of this terrorist attack. the maximum penalty and there will be no leniency under the circumstances. civilians and deserters. juliette: global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. guy, matt? matt: the dollar is still in the a a spreadingite the strong dollar. talks about how the dollar is making everyone else great again. joining us now is the fx strategist at ing. that, i assume you mean making other currencies stronger because that does not necessarily help their economy especially when they what to export takes. guest: exactly. we break down the dollar weakness into three parts. one is the short-term data weakness, obvious the fed is

going down this transitory weakness in the u.s. economy. the second part is the big picture, whether we are talking out on a relative basis. everyone else is catching up. the third is u.s. political uncertainty. as you mentioned, you saw friday's data sort of bouncing back from weakness. that is only one of the three elements causing this decline. that is why you are seeing partial recovery but not full on dollar sentiment returning to the market. guy: the euro-dollar expecting 1.18 as we speak. having that chart up to show you here. what is it going to take to get to 1.20? on our way.e there is no stopping us now. you have jackson hole, he ecb leaders coming out. it is hard to see it playing down or talking to the euro right now. to be fair, the ecb will be much

happier with 1.15. that is the level where the currency has less of an impact on inflation and growth production. have 1.20file, we going up in the midterm, reality check later this year and then returning back to 1.15, where we think we are comfortable at. what you think about the fed's next move? if they raise rates one more time this year, does that change your outlook? guest: we are basing it on the fed hiking once more in december. partly suggesting white we could get back to 1.15 later this year. aside, there is a pessimism for the dollar when it comes to political uncertainty will even get better or stay at these levels in our opinion. suggests -- guy: let's talk about sterling

at the moment. david bloom was on earlier. this is what he had to say about the pound. >> we had a structural move and a political move. we are getting to cyclical territory that is negative for the sterling. jobs have sterling going down. they will be at 1.20 by the end of the year. guy: parity. is a great chart. if you just extrapolate the move we are seeing in the eurosterling at the moment, it takes us in a clear line for the parity. you expect that to happen? guest: moving toward parity is one thing that has to happen and that is one layer in the u.k. economy and essentially a brexit risk flaring up as we head toward the cliff edge and of the spectrum. to viewt eurosterling this as a near-term overshoot. unlike in past times when we have been at not 19, it has been

crisis episodes. paris, youtake us to need another layer of bad news and that is not in our central case. matt: you are going to stay with us. strategist at ing will stick with us for more on the currency outlook. up next on the defensive, france's finance minister tells bloomberg he does not want a trade war with the u.s. but the european union needs to stand by its economic interests. can they protect his interests? more on that exquisite interviewed next. this is bloomberg. ♪

>> you just had to defend its economic interests. we don't want to enter into a trade war with united states, with china, with russia. ownust want to defend our economic interests. we believe once again in free-trade but based on a level playing field. and that is it. this is the way we go on. i think this is the right decision for free trade and this is also the right decision for the economic interest. interesting stuff coming out of that interview. a couple of things happening right now. one of them is the euro seems to be catching this morning.

eurosterling coming up for session highs, 19.53, resistance are a 1955. the euro swissie is primo that as well. chart on theession euro swissie right now. that kind of ads to move we see going on in the last few weeks. started kind of not less rate, but the week before. he saw this big move toward the upside. we are trading 1.1 489 right now. let's find out what our guests thinks coming in a more medium-term. where does this go? guest: we think there is risk also might, but it take the cyclical recovery in the eurozone. possibly proceed political risk which plays out in the swissie. there is strong whisk at --

strong risk at 1.20. that they declined would verify it. how important is the german election to you? does it look like just a confirmation for angela merkel and her fourth term or is there any risk she gets a fight from schulz? guest: i the euro is viewing it as a confirmation and general political risk in the eurozone has subsided since earlier this year. fundamentals,g on where growth infection, ecb, all of these factors are key to the eurozone right now. ecb? what about the you expect us to hear more about the taper at the end of this year? would we get a rate hike maybe next year? guest: we deftly expect some sort of tapering toward the end of this year.

what we are now questioning is the gap between sort of taper and the rate hike. when you get a strong euro and tightening of financial conditions, it seems to widen that gap of expectations. the ecb does not need to press ahead with the rate hikes. it is more of a late 2018 story if anything. the euro market is focused on the tapering story, expect that to come forward in september. guy: what do we get from jackson hole? that's a difficult one. the dollar is driven by political stuff going on in the u.s.. the idea for mario draghi to come out and try to talk down expectations and not state the facts of what is going on in the cyclical eurozone recovery, would be quite difficult. we are not really expecting a big speech, we are not expecting a big signal regime change, just what is going on with the euro. guy: thank you for taking the

time to join us. joining us from ing. coming up next is bloomberg surveillance. matt and i are off to bloomberg radio. this is bloomberg. ♪ is this a phone?

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expectations. the markets got it wrong and 2% levinsohn. we look ahead to friday's crucial figures. north korea threatens actions of crucial justice. trumpesident's move tells issues must be resolved peacefully. paris will be the big winner from brexit. >> we will win the race. >> we will win the race.