live from our european headquarters in the city of london. i am matt miller. guy johnson is off this week. the cash trade is less than 30 minutes away. ♪ matt: tech goes both ways. amazon reports record second-quarter profits after facebook takes a historic plunge, wiping out $120 billion in market cap.

ripping off the script is what the european union has done to's -- to theresa may's brexit options. jay carney says he will never accept her customs plan. 4% growth. we will get the u.s. gdp figures later on today. can president trump finally add this to his list of campaign promises fulfilled? we are one hour away from the open of european stock trading in the u.k.. futures are positive across the board. very little change if you look at the big stocks across europe. there could be a stronger day for the u.k. then it will be on the continent. let's take a look at the gmm screen on the bloomberg to take a look at what other asset classes are moving. indexes, wee equity

see a mixed trade in asia overnight. that holds true if you look at japan and china. we have the nikkei gaining, the ng in hongd the hangse kong down. let's take a look at where the other moves are in yields, as far as the commodities go -- gains are really across the complex. you have palm oil gaining along with iron ore. the two-year dropping in yield. it is green because the price comes up and the yield is coming down. the same thing is happening with australia's 30 years. the price is rising and the guilt goes down. let's go to singapore for the first word news. donald trump's former personal attorney is reportedly prepared to tell federal investigators the president knew

in advance about his june 2016 meeting where russians were prepared to offer damaging information about hillary clinton. testimony would contradict the public denials and testimony the president, his a son, and other campaign officials made about the president not knowing about the meeting until one year later. north korea has released the remains of some american war dead on the 65th anniversary of the armistice. flew to at plane north korean city today and returned to south korea with boxes containing what are believed to be the remains of 55 missing american personnel. it marks the first tangible outcome of president trump's summit with kim jong-un. narrowingions are after the european union

rejected a key part of theresa may's proposal for a trade deal with the block. bloc.h the she wanted to sell the steel to a divided parliament in london. but the chief negotiator said he will never accept the plan. official election results have confirmed that the former ,ricket star has one -- won marred by deadly violence and allegations of fraud. he now has a coalition to form a government, with 169 seats won. his major challenge is easing the country's foreign reserve crunch. global news on air, 24 hours a day and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. bloomberg.this is mixedasian markets were as we said, with gains in japanese equities. the boj offered to buy an unlimited amount of bonds for

the second time this week. yields and the yen parity gains. joining us now is our bloomberg mliv strategist. what do you make of this move? i know the market has been testing this for a while before we finally jumped in. >> it is a good time. we were waiting for the session before the finally came in. the guilds were pretty close to the level at which they showed themselves earlier in the week. there are interesting things. it was a very slightly different rate to what they did earlier in the week. america arebank of saying this is intended to show the bank of japan >> ability. it is a sign in which we should expect some tweaks and policy next week when the bank of japan

meet for their decisions. there could be a change in the market, which may be why bond yields did not do very much. the market currently -- highly budged -- hardly budged. matt: we have the bank of england decision coming up as well next week. it will be at 1:00 continental time. do you expect or advise the bank of england to hike? do you think they needed some hawkish guidance, not just a one and done dovish hike? it looks as though citizens in the u.k. are spending too much. probablyoverspending, the worst for about three decades. make seeof england

that we have been a bit too slow to rise interest rates. rather than one move in august, we may need to come further down the road at this point. it is a bit worrying. this data on spending in the , when people get overleveraged, the central bank often says no to these things. cranfield, think you for your time. you can follow the mliv team on bloomberg. a big day for two tech giants. delivered,ly absolutely crushing expectations for the second quarter, coming in at more than double consensus. computer and advertising growth were both highlights as the company slowed its spending.

earnings,zon confusing at first. the company missed estimates on revenue -- the revenue forecast. but massive earnings have been driven by cloud and advertising growth. the company talked up the prime program and said whole foods is driving a lot of new prime memberships. it talked about having the biggest prime day ever despite having that against -- that technical glitch. >> we are continuing to look at where we are investing headcount. areas a lot of growth being fueled by headcount, moving within the company. hiring iness external the first half of this year. we don't think there is a long-term trend. emily: he attributed amazon's to improvingrmance

operating efficiency across all amazon platforms. thecloud business and advertising business are now more profitable than the e-commerce business. take a listen. we had what i attributed to as the continued strength in some of our most probable areas. growth forcelerated its second-quarter. advertising also had strong growth. saw better than expected even efficiency's in operations. emily: microsoft reported strong. google reported strong. both impact revenue. the pie is expanding with amazon at the forefront. the pentagon is close to issuing its winner take all contract for its cloud business. that favors amazon.

facebook had a historically bad day in the stock market. , wipingal network fell out $120 billion of market cap. before its results, facebook had 44 buy ratinss, -- ratings, two sells and holds. we spoke to a top analyst on the street. >> there are real issues on gdpr and privacy regulations that could impact their business for the long term, but this is still a good business. >> they are working out their users in the most profitable markets. there has been a break of scandals over the past year. it is beginning to show up in your -- in user behavior. >> it is the largest social

network. >> the magnitude of the pullback is severe, but this is still a real company and business and there we will see material growth. >> the issue that people are coreling with, it is a facebook business. instagram is a great business and their is lots of engagement, but it is on the core facebook platform that face these same issues. and they are having to aggressively to turn that around. >> the markets may come around , butwhere it is now expectations are still too robust. >> this online platform is still in its infancy. the company spend more and more towards online. t: let's go to the bloomberg business flash.

juliette: ubs is laying off dozens of staff as it rebounds the leadership team. the head of the sustainable division at the wealth management solutions department was among those cut. there will be the continued leadership of sustainable investing effort. loriel's in mass-market brand is weighing on the cosmetic giant's sales, despite more chinese demand for high-end products. the french beauty conglomerate reported revenue fell shy of analyst estimates. although it was helped by sales brands,ght recovery mainstream brands fell short. we will bring you the interview with the company ceo at 11 a.m.

u.k. time. china has expressed regret over qualcomm's decision to scrap its $44 billion takeover of nxp's semiconductors, an apparent attempt to avoid blame after regulators failed to rule on what would have been the largest chipmaker acquisition in history. tensionsfell apart as between china and united states escalated. every other relevant jurisdiction in the world had green lit the bid. matt: we'll take a look at teh industry.h the sector is booming in china due to a recent surge of investment. there is a number of new and exciting drugs in the pipeline. can the good times continue to roll? joining us now is the ceo of the only chinese biotech firm listed in london has one of the earlier

firms in the industry. thank you for joining us. muchs this getting so attention right now echoed why is biotech the market darling of china right now? this has to do with the unmet medical needs that exist in china. patientse world cancer reside in china. history oflong provisional therapies that are not global therapies for these patients. china, if they get cancer, they think he must there be is the answer, whereas the rest of the world has moved on to immunotherapy and targeted therapy. china has this enormous unmet medical need, with global standards and policy technology. biotech companies are moving

rapidly to fill that gap. matt: has the investment community gotten too excited? when this happens, people overpriced shares. christian: the last couple of years, china med, we have been operating for 18 years. we have been grinding away for that time. candidates in over 30 political studies around the world. -- medical studies around the world. others in china have done that over a very long time. over the last couple of years, we have blossomed. several companies have been listed on nasdaq. we have all done very well. what that led to is a huge influx of financial investments

into the industry. there are some examples of success. flood of financial support coming into the industry, with china, it is a good thing. you have to invest to try to meet that -- that medical need, but it will take time. matt: bloomberg intelligence is our analytical arm. they are bullish about your future. can you give us some examples of therapies you have in the pipeline? we have a drug that is a foreign inhibitor. it is a drug we have taken the last seven or eight years to develop. we have been reporting a positive results last year. -- we reported a positive results last year. the efficacy of this particular

therapy is world-class, one of the first world-class therapies this discovery in china and was published in the medical association's journal. it would be the first major cancer indication to come from discovery to approval in china. that is great, but it is an indication the scientific talent in china is of a very high standard. the quality of the research being done and that will play out is going to make a difference, not just in china, but globally. matt: i am wondering about the research side. you are listed in the united kingdom and the united states, but based in china. does that offer advantages on the science side?

it -- it is adoes legacy. events historic set of that put us in the situation. when biotecher capital markets where in a down cycle. when we first needed to tap into this capital market, the u.k. was a great place to come. we will -- we were able to bring our story and propositions to investors. states is the home of specialist biotech investors who really understand the science. for companies like us, it is important to get our story. it is important for investors to understand it. matt: but can you tapping to the united states?

-- tap into the united states? christian: over the last 20 years, there has been a return of top-quality scientific talent. they have gone to america to get their phd's and worked for big pharma. many of them have returned or are considering returning back to china. the talent is there. talent quality of that is extremely high. matt: thank you for coming in and joining us, the ceo of hutchinson-china meditech. watch bp. agrees to pay $10.5 billion for bhp shale ass ets. this is bloomberg. ♪

matt: less than eight minutes away from the open. joining us from madrid is maria, covering cap-gemini. we have another bloomberg reporter in frankfurt, and annmarie hordern. cap-gemini put out first-half

numbers. they came in line with expectations. revenue for the first six months of the year was 4.4 7 million. has raised its growth outlook for the year. we spoke to the ceo earlier on the show. we think the outlook looks very nice. of 2017 wasalf significantly higher. >> that is the ceo of cap-gemini, talking about today's numbers. matt: patrick?

earnings were posted this morning for this company. the profit came slightly lower than estimates. the stock is not too bad on a first look, but the company relied heavily on its oil and gas business because of higher crude prices. highere fighting with cost ingredients for the most sophisticated products, like coatings. investors are concerned, sending shares lower by 2%. i want to applaud you wearing that bowtie on internationally broadcasted television. you will single-handedly wake up frankfurt tonight. annmarie, let's go to the u.s. shale sector.

bp's biggestis deal in nearly two decades. byher way, i like jon's -- the way, i like jon's bowtie as well. saying the profit has been completed faster, but at a higher price. 10.5 billion u.s. dollars for these shale assets. they are getting into the permian game. if the permian basin was not part of opec, it would be the fourth-largest member. it is producing 3.5 million barrels of crude a day, just behind saudi arabia and iraq. we will be talking to the ceo about this deal later. thanks veryie, much. jon-patrick, and mariea

-- and maria, thank you. subscribers can get the mobile app. coming up, the market open. this is bloomberg. ♪

matt: less than a minute away from the start of trading across the continent and in the u.k. let's take a look at some of these assets to see if we can gauge what kind of open it will be or how the news is affecting shut theresaarnier may down on her customs proposal. we saw the cable rate dropped for a moment earlier this morning. .06%. is only off no significant move there, although i should say it is going the other direction. we are seeing dollar weakness against everything else.

oil has come down a little, but also very little changed, only off .1% right now. at 74.46.e trading we see gains on the nikkei and they in -- increased into the close, stocks up more than .5%. it will be interesting to see how things shake out across europe and the u.s. open after the amazon positive surprise. amazon fell 3% yesterday and then surprised the market after the bell. it will be interesting to see if the stock trades up anything like the facebook shares traded down. let's go to the imap on the bloomberg 500 index and see how stocks are trading in europe at the open. we can see that financials are doing very well in europe. all green across the screen for financials.

also, the consumer staples are doing quite well in europe. spot, you see i.t. with weakness in it. you see consumer discretionary stocks and health care stocks down a little as well as the industrials. on my look at movers bloomberg terminal, i have the mov screen pulled up on the stoxx 600 index. billiton, after unloading a mass amount of shale non gainingbp, dan after earnings came out and a lot of financials. hsbc gaining. looking at the losers, you can see some earnings standout, lori l down more than 3%. bp off after the purchase and a big -- airbus was

gainer yesterday and now a bit of a loser. mixedan markets, a little in this session. is good to the upside, 300 up, 150 down. steve isaacs is the chairman of the investment to midi at outline financial company. let's talk about how the trade truce has affected stocks, if at all. has everyone been distracted by the tech story? >> that is a pretty good summary. the trade story has been going for four months now, and the hard action is pretty much now in place. actual tariffs came in about two weeks ago from the u.s., retaliation. $36 billion in goods in china and less than 30 billion overe ul -- eu, a total of 64 billion, that is not massive. stephen: i tend to agree.

the political story was bigger than the action and the tariffs are in place. if there is going to be further action on the trade front, it will be in the currency arena, where the next phase of this political battle -- that is what it is, with all sides wishing to engage, we will see further won and even in the euro, even though draghi doesn't have a policy on the euro, i don't think there is any attempt by the ecb or other european governments to arrest what is a convenient decline in the euro. matt: he certainly set policy more clearly than he has his entire career in the june you see theht? do 116, moving around lower from here? stories one of the big this year has been dollar

appreciation and that will continue. the u.s. is the only major economy that can stand 3% u.s. dollar rates. -- are where we had heading and a little higher. trump may have complained about the fed last week, if you remember, but appointed powell and howell's credentials as an industrialist and everything he has said suggests he will see aize or increase, but higher level of u.s. dollar interest rates, when the west -- int of the world, there is japan, maybe relaxing the bond prices or not, but we are talking about a few basis points. we know where we stand with the ecb, they set things pretty clear in june. there will be a tapering of bond purchases and a rate rise in 2019. contrast that to what is happening at the fed and we see the cap already very wide historically and continuing to

get wider. war, wheree trade perhaps the losers in the trade war, if i can use that expression, which are the chinese and europeans -- >> it is politically dangerous to say that right now. stephen: simply because they have more skin in the game. they may be happy to see that currency take the strain. boj: well, we do see the going in again today and buying bonds. you do have the ecb promising, even though they are enduring -- ending their qe program, promising not to raise rates till the end of next year, the chinese loosening monetary policy and allowing the yuan to drop. is this going to be a problem for the u.s. if the trade picture worsens, not to its favor? stephen: it will be in the sense that the administration wanted to shrink the trade deficit and if you have an appreciating

, that is going to make it a lot more difficult. the administration, which is to be judged on where the trade deficit is in 2019-2020, with a much higher dollar, then they are going to be disappointed, but to me, it was always more about politics. it was more about presenting an image internally to the american electorate, which has been achieved. matt: i wonder if -- what it will do to earnings, because the u.s. is the stock market that has gained this year. is that due to earnings? is that going to tail off? would you cash out at this point? aspects there are many to the u.s. stock market and the largest parties to mystic demand. we have the gdp figures coming out today and again, it is interesting but at this stage of the expansion, eight years into an expansion, the second longest since the second world war, that

the economy has picked up. tax credits and momentum driven trade. that has driven the largest part of the domestic, -- consumption and stock market earnings. further down the line, as interest rates rise and the currency rises, we are starting to see laggards, some losers in the trade war, the auto stocks have been homered -- hammered. it is the whole ecosystem that surrounds the stoxx. the have been cautious all year on market and see little value. if you want.cebook here is an interesting fact. the analyst that covered facebook yesterday morning, 44 were bullish. old, two said fell. that is an indication of how strong the market is on these handful of tech stocks that have driven the market forward. disproportionately. the market is very long. there was no blood on the

streets until facebook last night. stephen isaacs, chairman of the investment committee at alvine capital management. next, the stocks on the move joinsorning, plus -- cfo us for an exclusive interview. this is bloomberg. ♪

matt: welcome back to "bloomberg markets: the european open."

we are 10 minutes into the trading day. let's get to annmarie hordern with the big movers in the markets. annemarie: let's start with bhp billiton, up .2%. they are selling their shale $10.5 billion.r this was flagged last year. they came under pressure. base,al gives bp a huge producing 3.5 million barrels a day. we are looking forward to the interview after the megadeal. down more than 3%. second quarter adjusted earnings beat analysts -- analysts estimate. crudeaid the increased price is helping them. one analyst said they may see profit and weaker cash flow.

they should -- a miss on profit. down nearly 6% at the start of trading, but sales rose 32%. a had a stellar quarter. any people were saying this was such a star -- strong report like the likes of lvmh, insatiable demand from china, but this could be a sector having a good run. also, gucci, the sales numbers were light fair. -- there, but 40% sales versus 49% pace. these are numbers their rivals should be envying, but they can't keep up with how well they are doing. numbers there could be putting pressure on the stock. matt: henry horton with stocks on the move. some strong numbers from banks have been cared by mrs. in

energy and tech. stephen isaacs, chairman of the investment committee at alvine capital investments is with us. i have this function i fall back on in the earnings season. right now, i am looking at growth across the european companies reporting. sales growth up 5.8%, earnings growth down 2.5%. if you look at surprises, not just quarter on quarter, but compared to what the street was looking for, earnings surprises are weaker. is this the bad earnings season for your? stephen: europe has had a lot of deceleration in the overall picture. at the beginning of the year that the u.s. economy was very late cycle and europe was perhaps midcycle and certainly, we had the tailwind from the continued asset purchases and effective interest rates of well below zero.

the story was we would steam ahead in europe and perhaps have problems elsewhere. that hasn't played out. what is behind it, you could write a book on this. there are arguments to say unfortunately, the european economy is not that dynamic. really yes, monetary policy has given us a shot in the arm and hased all ills, but there been a complete absence of reform, there is still a lot of rigidity in markets like france where we see the gdp figures are being affected by strike action. has a reformist agenda, but is being pushed back by the reality of french politics. , -- prices because of the depreciation of the euro up -- euro. perhaps a one-off, one trick pony and the end of that. i think we need to see some real beef in europe. we need to see some reform.

we need to see more market friendly policies, and i don't see them. if anything, in italy, we have a populist government there, none of the political parties that did well in the election had a single jot of pro-business policies. there were tax cuts, but unfunded. there is a moral hazard that has theloped in europe due to ecb's policies, and it is not sure now that the ecb is trying to get out of them. i am cautious. matt: it is fascinating to look at it. we will keep you around because we want to talk more about your views on brexit. this has also been a fairly negative development. stephen isaacs, chairman of the investment committee at alvine capital investments is with us. of earnings, we heard from some of the largest european banks, including ubs and deutsche bank. both cited headwinds in asset

management amid cost-cutting. here is a recap of those names. profit is a solid number. most importantly, we have executed on all the targets we have set. >> if you look at asset management and our personal and corporate, they contributed to a very strong quarter and the fact that for the first six months of the year, we generated almost 3 billion of capital. that is a record. see strongnue to volume growth in the u.s. despite the elections of mexico and uncertainty and elections in brazil. we have seen particularly in europe a better quarter. probably the best quarter we have seen in a few years. years, everyone was doing well. everyone was a buyer. prices were quite high.

when the markets get more difficult, and that is my expectation for the next two years, i will see more opportunities because maybe some competitors will realize it is tough out there. one of the lenders that suffered the most from spain's real estate crash is throwing off its financial shackles from the financial crisis. after demand for credit sword. joining us on the phone is the cfo. thank you for joining us. let me ask you about what looks the final turnaround. are you confident going forward that you are looking at growth, profitability,, sustainable business for the bank? leopoldo: good morning. i think we were able to deliver yesterday a solid set of results, which were based

basically on the regained momentum on commercial activity. at the beginning of the year, we merged with a small bank. the first quarter was basically focused on both entities. in the second quarter, we have seen an increase in commercial activity, which you can see our results through all lending sectors. steepe also seen a very reduction of npa's. we were able to reduce 1.7 of npa's in the second half and had a target of 2.9 on the year. es minus business expansion was 9% up porter on quarter. sain --a very can contain cost of risk. our profit was 550 million euros for the half of the year and 24%

up on the quarter. on top of that, we were able to deliver a 46 point increase fully loaded in the first half of the year. we are already running with an excess of capital over 12% that we agreed with the market to give back capital on the basis of that 12%. matt: does this help you to give back capital from the bailout? can you accelerate payments and does this help you push faster toward privatization? leopoldo: well, as managers, we have to focus on generating as much value as possible for shareholders and the decision involving the privatization have to be done by shareholders. what we are doing is basically bestg to run the bank the as possible so as to make the bank as profitable as possible so that the markets will allow that privatization to go through. matt: thanks very much for joining us, leopoldo alvear cfo

of bankia. next week, we will bring you a slew of interviews with top executives, including the ceos of barclays, credit suisse and socgen. interviews you don't want to miss. theresa may's brexit options are narrowing. union has rejected 80 part of her proposal for a trade deal with the bloc. he wouldrnier said never allow a nonmember to collect tariffs and run its customs policy. the prime minister is 12 weeks until a divorce deal is meant to be signed. joining us now is bloomberg's rustles -- brussels bureau chief . why did the eu rejects so publicly theresa may's puzzle? because what theresa may proposed was outsourcing the collection of tariffs, of

customs -- european customs to her majesty's 11 customs. precedent of a country outsourcing the collection of tariffs. .t would not be practical the eu said it was not tactical and there is no precedent. on banks, theresa may has proposed a book between the eu and u.k.. retainsays it wants to its autonomy, as barnier said. it keeps its own rulebook for banks and won't code to side with another country -- decide with another country. is the eu's position. it has always been that and if anything, if the british government didn't see that coming, it would be surprising. matt: where does this leave the

british government? where does this leave theresa may? nikos: where we have always been, at square one. are two things the u.k. government can choose. it can choose a free-trade agreement modeled after the where you havet, no tariffs on goods traded between the two sides, but regulatory barriers, especially on services and goods. or, the u.k. can choose to participate in the eu's customs union and the single market, but in that case, it wouldn't maintain its regulatory economy. has its pros and cons, but the u.k. has to decide. matt: bloomberg brussels bureau chief, niko chrysoloras catching us up on a been. stephen isaacs is still with us. this leaves us at square one,

nikos says. will we ever make headwind on this until the end? stephen: i think i need a drink, matt. matt: i feel you on that. stephen: what has changed in the last few weeks was that the prime minister abandoned her red lines, and that is significant. if you go back to the lancaster house speech she gave a few weeks before the famous letter was triggered with great fanfare, there were a number of freeines and they were on movement of people, payment of and excepting the rulings in some shape or form. she has abandoned the ecj red line. she has accepted the common rulebook -- it is a misnomer because it is the eu's rulebook that will be enshrined and u.k. law, but rubberstamped. by going that far, the question is, is she a paired -- prepared

to cross other red lines? matt: is this really going to happen? stephen: we are speculating here. i think the prime minister having abandoned her red lines will carry on abandoning more redlines. she has shown herself up as a -- or facing the reality that the eu was never going to cooperate -- compromise and go along with what they are doing or have no deal. i think the parliamentary conservative party would not allow her to do that. there will be some sort of an agreement. some sort of fudged, late-night andement in october possibly later. it will be another summit, an emergency visit to brussels last minute or something like that. the? question is, can you get it to parliament? throughthe issue -- parliament? 80know there are 70 or

-- willtive mps who are vote against this kind of agreement. they weren't happy with it and furtherthere will be compromises, quite large or abandonments of redlines, so they will vote against it. the labour party has got a dilemma, certainly the majority of the parliamentary labor party. they are keen for us to stay as close as possible in the single market and if they were negotiating brexit, they would probably take the kind of offer the prime minister will get eventually, but you have this your politics. matt: you are saying we will either get the softest of the soft brexits or no deal? stephen: the question is, will parliament should it down? ot itnk it probably -- sho

down, and i think they will as a way of kicking conservative government to the next election. faction, the leader of the labour party, has always been against the eu. they see some of the rules of the single market on state ownership and intervention as tying their hands and therefore, i think they will be quite happy to say, let's be opportune , let's-- opportunistic let the tories voted down, but it is hard to predict. matt: that is why we talk about it every single day. stephen isaacs, chairman of the investment committee at alvine capital investments. with us shortly on bloomberg radio with myself and mark barton. lorielck of the hour, down 2.86%. 3.53% versus the average and the

way i know that is by looking at my gd screen. you see the graphic dashboard on any stock and you can see the one-day change versus the average in the red box next to the drop of the day.

matt: 30 minutes and tear trading day. let's get the top headlines. tech goes both ways. amazon reports record second-quarter profits, while take -- facebook takes a historic plunge, wiping out market cap. , that is whatript the eu has done to theresa may's brexit option. michel barnier said he would never accept her customs plan. what does she do now? doesn't achieve 4% growth. number laters. gdp today. 10 president trump add this to his list of campaign promises for filled, and how long can it

stick? welcome to "bloomberg markets: the european open." i am matt miller in our european headquarters in luncheon -- london. 30 minutes into the trading day. how are things shaping up as far as movers on the stoxx 600? there has been a common earnings out, but there have also been some deals. bhp billiton, of 4% after agreeing to sell a huge chunk of shale assets for $10.5 billion to bp. on to the losers and you see some of the earnings numbers represented. for example, lori l down -- l'oreal down 3%. 's -- juliette: donald trump's former personal attorney is reportedly prepared to tell federal investigators that the president

knew in advance about a june 2016 meeting where russians were expected to offer damaging information about hillary clinton. that is according to cnn. such testimony would contradict the testimony and public denials of the president, his son, and other campaign officials who claimed the president was not aware of the trump tower meeting until more than a year later. more korea has released dead on the 66th anniversary of the armistice. the white house sent a plane, flew to the north korean city today and returned to the air base in south korea with boxes containing what are believed to be the remains of 65 american personnel. it marks the first outcome of president trump's talks with kim. the prime minister's brexit options are narrowing after the

eu rejected etsy part of her proposal for a trade deal with the bloc. theresa may thought the proposal was her best hope for a deal. but in the public critique, michel barnier said he will never accept her plan. eu cannot and the eu will not dedicate the application of its customs policy and rules and excise duty collections to a nonmember. eu'suld not subject to the -- who would not subject to the eu's structures. juliette: a stock slumped after donald trump threatened to impose "large sanctions" if the nation doesn't release an american. withy is grappling financial strain that includes a

widening current account deficit and investor perceptions at this -- that the central bank isn't doing enough to shore up currency. global news 24 hours a day, on-air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. matt? matt: now, investors and policies -- policymakers across europe breathed a sigh of relief after the meeting between donald trump and jean-claude juncker. it appeared to ease trade tensions. our next guest believes neither the eu or china could afford a trade war with the u.s., anyway. escape fromuthor of " the central bank trap." thank you so much for joining us. let me ask, first, about your take on the juncker-trump meeting. it looks like they are moving closer to true free trade. do you believe any of these

governments, in china come in the eu, washington, really want no tariff, no subsidies, free trade? no. most governments want to keep subsidies, tariffs in order to keep control. they are more interested in control rather than growth and definitely trade. that is one of the problems of starting a trade war because if you believe you are going to lead someone to take action and be more open, but they want to exert control in the market, then it is more complicated. i believe that right now for the european union and the bank of china, there is no other option but to reduce barriers to trade. not just tariff barriers to trade, but also the invisible barriers to trade. matt: these are bigger? stephen: exactly -- exactly, like bureaucracy and the subsidies that exist for national champions and domestic segments. they need to do it because the

european union cannot reduce its overcapacity or grow as expected, 2.2%, without a massive trade surplus and its biggest customer is the u.s. and the same with china. china would have a tremendous difficulty in absolving its overcapacity and internal forlances if it were not its ability to trade with the united states. on one side the come up -- the customer demanding and on the other side, the suppliers. the macrot off, picture. when president trump was in canada, he said you don't like tariffs? its move to know tariffs. to see that kind of approach? at least juncker and trump are moving closer to that on autos. a nol: we will not see tariff deal. matt: will we move that

direction? daniel: it needs to, and it was a good move from president trump to say hey, let's go to know thatfs, because the idea has moved over consensus is that trump the protectionist versus the free trade eu and china, it is immediately brought down. i think it is important because the european union at the beginning preferred to retaliate with more tariffs, but the auto sector itself started to talk to the politicians and say look, we are very happy for you to reduce barriers in the united states because there is a much bigger benefit for everyone involved. benefit for the european union, for the united states obviously and for china, if we stop this race for more tariffs. we are moving in that direction of less tariffs and less

subsidies and that is a good thing. matt: let's talk about spain for a moment because you are from spain, yet you looked -- worked at citadel, pimco, here in the ony, but you advise the pp policy and spain has had a tough time bouncing back from the recession and financial crisis. is this going to be a benefit for spain because the imf came out earlier this week and said the euro is overvalued for spain and holding it back from trade gains? daniel: i disagree with the idea of the imf because it is based that isw of disparity clouded by central-bank policy. on a long-termen slide for a long period of time, and it doesn't benefit consumers, savers, workers. i am not worried about that because spain has been able to multiply its exports. at the beginning of 2011, nobody believed spain could export 33%

of gdp and it is doing so. there is no problem with the euro in achieving good growth there. spain is not a country that has any problems with its main trade partners in terms of barriers or tariffs at all. --is a country that is act has actually done the reforms. it has done the homework, it has approved -- improved balances and reduced the deficit by more than 70% and needs to continue to do so because the recovery's fragile. unemployment numbers are coming ofn rapidly, but the threat returning to the mistakes of the past are not small. matt: what needs to happen in spain? you have strong exports and gdp, but there are big issues like unemployment that plagued the nation. what needs to be done to set the economy right? daniel: spain, like so many

european countries, have a problem of perception of protection that doesn't protect anybody and therefore, the very large unemployment levels we see in the south european economies. one of the things that needs to be done is develop the already very successful labor reform, to facilitate hiring, which is one of the big problems, and the labor costs in spain are very high still. toneed also to reduce taxes job creators and families, because it is very difficult to improve consumption, improve growth and domestic demand with such a big tax wedge. the tax wedge for companies and families in spain is still high. there is a lot that needs to be done and that we should not forget the country came from a very big crisis. matt: thank you for joining us. daniel lacalle, tressis chief

economist and the author of "escape from the central bank trap." i will have him on our radio program in an hour's time. europe" todaybreak: hear more from daniel. let's get your mid-cap movers so far. let's kick it off with the french company that offers consulting in consumer product -- computer profit -- software. they have taken a big restructuring charge in europe -- earnings and they are down more than 12% this morning. sbm offshore, signed a deal with the

bitcoin maintain and lengthen its lead? >> bitcoin has become the foundation of many other cryptocurrencies. a lot of people took bitcoin's code and made something better out of it. i think you will see more things built on the bitcoin platform that will have more ability. that is a very good point. i spent a couple of weeks a year ago living on bitcoin. i used no dollars for two weeks. it worked fairly well, i had to do a lot of gift card buying to make it livable, but the transaction time back then in 2012 was a lot faster than it is now. i don't think i can do the same thing today. adapting,coin not itself, to daily use issues? because of the centralized

system, which is why people like it. it is not controlled by one party. paypal,zed systems like that is why people use them and engage with them. it point is not that and bitcoin will struggle to be that. it is more about the infrastructure it provides. will do you think we continue to see bitcoin outperforming the others, or do you think coins built on the bitcoin platform will be a better investment? guest: i think you should have a balanced portfolio. bitcoin will be relatively stable to others and it is like building commodities. you have to have higher risk and stable stuff in there. bitcoin can become more predictable. matt: you also invest in commodities on equities, bonds.

how big a share of your cryptocurrencies occupy. dsumantas: i have only crypto in my portfolio because it is what i understand. matt: you are not concerned it will all blow up at some point? it becomes the two lip sad -- tulip fad? dsumantas: we have seen multiple ways -- times when it could have and it has shown value. i think we will see more of but we should have a long-term perspective on this. i wouldn't advise people to put their life's work into a crypto only portfolio, but it has long-term potential. matt: thank you for joining us. the founder and ceo of transfer .o on cryptos let's get to one of our top stories this morning over the last 24 hours.

go, you can read see the top stories. fiat has no facts relating to the health of its former ceo in the period leading up to his shoulder surgery and subsequent death on wednesday. this, following the revelation he had been seriously ill for more than a year. we are joined on the phone for more by a senior writer in milan. what have we learned about his health? he was ill for a long time. what caused his death, or was it complications from the surgery? >> we just learned yesterday that he had been seriously ill for more than year and his death was on account of his illness -- what is shocking

is that fiat chrysler said the company was not aware and we got the statement from family later confirmedht that they they didn't reveal his condition if you chrysler until july 20, last friday, when they were aware he could not return to work. obviously, this is creating some questions by investors if it is possible the company didn't know if they had been properly informed. matt: i can't see any reason the board would know if he doesn't share it with them. we spoke with him in the last year and he seemed perfectly healthy. it leads me to a question as we grapple with facebook issues and all this privacy legislation and

regulation, doesn't sergio have the right to keep it to himself if he doesn't want people to know if he is sick? family that is what the essentially told us. for privacy reasons, it was not that he to the company was ill. i am getting questions from -- fiat justing said july 5 he underwent surgery and unfortunately, he passed away. ultimately, more will arise in the next few days. matt: bloomberg's senior writer, tommaso edhardt in milan. if you want to get more on sergio and fiat reporting, go to

bloomberg.com. unless you have a terminal in front of you. bloomberg users can interact with us using g tv . , 1952-2018.e this is bloomberg. ♪

>> i am extending to where that goes to show us. one, we have the blue line. the s&p 500 hitting a record high. then you have a white line, the relative performance of outperformance versus underperformers. you can see the lower highs for that over the last 20 years. it will be a higher bar for that to be impressed. i love both of these charts and point out the downturn in earnings. --t i must say >> do you guys hear her? your mike dropped. >> pitino.

hillary's mike dropped, and for a second we didn't know. thank in this game back. daddy, condolences. that's it for bloomberg. -- dani, condolences. this is bloomberg. ♪ retail.

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reports second quarter profits helping restore confidence. theresa may'se to operation. what are the prime minister's options now? and coming in hot. ,.s. gdp is likely to hit 4% but with growing risks from trade wars, will this big number of the repeated -- be repeated?