Transcripts For BLOOMBERG Bloomberg Surveillance 20240714

U. S. And china are trying to temper some of the repercussions trade war is having. You can see euro stocks gaining 0. 6 . The yen is also a good litmus 7. 81and you can see one of 107. 81. Tomorrow, we also have the ecb to look out for. Coming up, we speak to the former u. S. Ambassador to the European Union. Dont miss that interview at 10 30 a. M. London time. We talk u. S. Foreignpolicy and brexit. Lets get straight to the first word news. U. S. Goods to be exempted from tariffs last year were announced by china at the top of the list are pharmaceuticals and lubricant oils. Beijing is seeking to ease the impact from the trade dispute without lifting charges on agricultural item like soybeans and pork. The ministry of finance says further rounds of exemption will be released. Morgan stanleys ceo warned against the fed cutting too easily but says he supports of the reductions made so far. He made the comments at the Columbia Business School in new york. I have supported the latest fed rate cut and i suspect they will do one or two more. But then its time for a pause. The problem with cutting is that it is one of the few tools weve got. If you give it away, what if we have a real problem . Californias Senate Passed a bill that could force gig economy giants to reclassify workers as employers. They could only be considered contractors if the work is outside the usual course of business. It suggests the change could cost uber as much as 500 million a year. Pickedramco reportedly up banks including Goldman Sachs the jpmorgan for top roles of its planned ipo. Bloomberg has learned aramco is considering selling a 1 stake on the Saudi Stock Exchange before pursuing an overseas listing. Aramcos ceo says the big ipo decisions will ultimately be made by the company shareholders. The leader of Northern Irelands Democratic Unionist Party says Prime Minister Boris Johnson has confirmed his rejection of a Northern Island only backstop. A group of mps suggesting the change as one way to move talks forward. Meanwhile, mark carney says that sterling volatility is at emergingmarket levels. South korea says it will file a wto complaint against japan. Are unhappy at export curbs on key materials used in chips and manufacturing. It claims tokyo was politically motivated and taking the theft from south Koreas Supreme Court ruling. The lack of south korean export controls for sensitive materials. Global news, 24 hours a day on air, on tictoc, and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Francine President Trump says he has fired his National Security advisor john bolton. He left just minutes before a scheduled Media Briefing on terrorism. But bolton contradicted the president , saying he offered to resign on monday night. And the present have been disagreeing on many, many issues. Strategist of Wealth Management and more from the politics side, we are joined by our Senior Writer. There is so much we need to get through. Abrupt. Rture seemed the timing was a surprise, but it has been well reported and known for months that trump and bolton had discrete and foreignpolicy. Most recently, afghanistan. However, he had been due to appear at the press Conference Announcing tougher sections. ,he secretary of mike pompeo they did not show up to that. That was a bit of a surprise. They had been sparring in social media over if he quit or was they are submitting he fired him. Is chumsll be what fourth National Security advisor. It shows the chaos and disruption. Run his owning to foreignpolicy in his own freewheeling style. Francine how does it actually change foreignpolicy . If you listen to the likes of rand paul, he says the chances of the u. S. Being involved in war has receded dramatically. That,d trump saying unlike others in the administration, he was restraining bolton. It makes it more likely that we might see a sitdown between trump and the iranian president rouhani. That trump will try to renegotiate some sort of iran deal which bolton was dead set against. Francine we have a great story saying the last man standing is mike pompeo. His relationship with the president seems close. If you saw that press conference, they seemed almost gleeful that bolton was out. , theo saying, look president has the right to have his own National Security advisor that he trusts. It follows what we want to do. Pompeo, unlike bolton, has been able to subsume his own foreignpolicy goals for the ones that trump wants to pursue. Francine when the news came out, i was thinking to myself about how the markets would take this. Foreign policy has been largely ignored, but what impact does it have . As a seen recently, the markets are loving it when we see signs of any kind of easing. It is probably a good sign for markets that the tail risk might be reduced. Focused on thel u. S. China trade were. He was, by the way, one of the people in charge of writing president ial orders on tech companies, in particular. She was fixated on china and we know that. It is going to help Market Sentiment when it comes to the negotiations. Francine do you feel like your role has somehow changed that you have to look at political events much more than maybe 10 years ago . I have to admit, i would not up with aned to come index of president ial tweets and its affects on markets. But we have to. But we also have to acknowledge we dont know what can happen. So we have to be careful we have to adjust. Francine thank you. Well have a conversation with the former ambassador on how diplomacy through tweet is changing everything. Our guests stay with us. Coming up, tariff exemptions. China unveils a list of goods exempt from duties, but where does this leave trade talks . We discuss that next. This is bloomberg. Oomberg. Francine this is bloomberg surveillance. But it straight to the Bloomberg Business flash new york city. , a newly created Group Debuted in amsterdam, including a 31 stake in tencent. Massacres naspers gave a bloomberg his first interview of the morning. The main purpose is to facilitate our next wave of growth. We have become a substantial part of our original exchange. Apple announced a raft of new products and services, featuring enhanced cameras and battery life ahead of a substantial overhaul. One of the biggest surprises was a new aggressive pricing strategy. Hundred 50 price drop for the oneyearold iphone xr, the u. S. Prices down to 599. Consideringo be major changes to governance in a bid to save its planned ipo. Bloomberg has learned its lead advisors have concerns about offerings that could value the company as low as 15 billion. Space operator is losing 690 million in the first half of the year, bringing total losses to almost 3 billion in the past three years. And Societe Generale is studying wa to save 600 Million Euros in costs tied to the operations. To winart of an effort back Investor Confidence and improve returns. The ceo is under pressure to go beyond existing cost cuts. They are planning to eliminate 1600 jobs in its investing banking unit. China has announced a range of u. S. Goods to be exempted from the extra tariffs if put in place. Beijing is seeking to ease the impacts without lifting charges on agricultural items like soybeans of pork heard the ministry of finance is further rounds of exemptions will be announced in due course. Joining us is the european andomist at behringwerke another economist. We are talking about the trade war and the fact the market is latching on to any kind of easing. But when we know the easing will and then tough talk afterwards. We dont know before the sign is implemented but there could be differences between the talks and the agreements and the interpretations on both sides. Us terms ofrry Inflation Inflation is that we have seen the mechanical and direct effect of the trade tensions. In some cases, perhaps less than expected, but we havent seen the indirect effect in the spillovers are what we are looking at in terms of effects from the Manufacturing Sector into the labor market in particular. The longer this lasts, even if we get there, the larger the risks to the growth outlook. Francine this could also be some of the concerns we have around employment in china. How much can china manage the economy . We saw the reserve ratio. Can they withstand anything that happens . , ther the time being Chinese Government in combination with the central bank have managed to navigate the chinese economy through this with a look water at how chinese employment is doing and how much they were , once we get tariffs on consumer goods, its having an effect on the domestic side of the economy. You n shield companies by using a number of exemptions, but how can you actually shield consumers . This is where we might see at affects. I dont see a big reaction there. Talking about unintended consequences and things that are hard to measure, could that actually bring the World Economy to a recession . And what it started in the u. S. Or china . It is difficult to quantify and time a recession in china. I think that the main risk is to slowly drag ourselves into some self fulfilling prophecy. It actually happens because consumers at some point have a lower benefit to income in the labor market and perhaps lower confidence in the future. It happens from time to time in unexpected ways. Francine we will talk a little bit more about treasuries. Coming up, we speak to the u. K. Business secretary. That interview is next. This is bloomberg. Francine this is bloomberg surveillance. Onning us for more treasuries and the impact of the trade war on your markets is a european economist at behringwerke as well as an economist from picked a Wealth Management. Were talking about the impact of the trade war could have on the probability of a recession. What does that mean for fed policy . Is the main concern how a cuts you are expecting this year . We expect to more this year. Now that they are in pains to think about the number of rate , it does not make much of a big difference, but however you want to see it, the fed does need to respond to that slowdown that we see. We are china to get the insurance cuts and hope that there will be a soft landing. But on the trade tensions escalating, theres a big risk this is not going to end. I think they look at trade tensions extremely carefully. Are the insurance cuts better than not having them or the could they create the next problem . For them to work, you need to be credible. Hints at the fact that its a midcycle slowdown in that the economy is indeed better, we do expect three rate cuts. There is a template for that in the 90s and chairman powell follow. Its a great example of success. Except, at this time, its different. Bond markets in particular, there are many things the fed cannot control. I guess it is a race to the bottom when it comes to negative rates and just the dovishness of Central Banks. What do you expect the ecb to do . Togives them a couple months understand how to persuade politicians do fiscal stimulus. I dont really buy the arguments of political pressure. When they took the hand of the central bank, he cut rates immediately went nobody was expecting that. He is not waiting for anything in terms of politics. He knows Christine Lagarde very well, they have huge economies already. There is a strong case to move this week. They dont need to go all in, but they need to go bank. Francine at the time, they were almost certain. Now, theyre trying to figure out whether anything the ecb does will have the desired impact. Yeah, i struggle to see the impact. If we look at the private side of the economy, lowering Interest Rates is not going to make a big difference. But having another round of asset purchases maybe makes it easier for some Italian Companies to get the money and invest it. But what we really need to see is that we provide fiscal space for those governments who actually need it or those governments who have the fiscal space. But so far, they have not used it in a way. It looks like there is progress going on in germany and berlin that we are heading towards. A slightly more forceful reaction to the slowdown. Itncine i keep on hearing is such a political hot potato that could take years for it to come through. Been far, the response has relatively miniscule. Employment and income have been developing and relatively healthy ways. There is no pressure from the german population for a big response. And then to some extent, there on. Iscal stimulus going in the first half of on. In the first half of this year, Public Investment was increasing by 10 . So the government has been trying to nudge up these , and ofnts numbers course, there are some supply constraints. They are trying to describe that circle. And if you hear a press conference by the german government, there would have to be to. Two. One in english describing the changing fiscal stance, and for the german audience, were still fiscally prudent and we kind of respond to a slowdown in the economy. Francine thanks very much. We will come back and talk about the assets most at risk in the meeting. Coming up, we also speak to the u. K. Business secretary and will be asking her about brexit and a new initiative to do with genetics. This should be the next product to deal with diseases. This is bloomberg. Devices are like doorways that could allow hackers into your home. And like all doors, theyre safer when locked. Thats why you need xfinity xfi. With the xfi gateway, devices connected to your homes wifi are protected. Which helps keep people outside from accessing your passwords, credit cards and cameras. And people inside from accidentally visiting sites that arent secure. And if someone trys well let you know. Xfi advanced security. If its connected, its protected. Call, click, or visit a store today. Francine pressure is on, beijing is ramping up the heat on americas heartland. Its announced john woleton is fired. What does that mean for u. S. Policy . Good morning, everyone. Good afternoon if youre watching from asia. Francine lacqua from london. Were waiting for the interview with andrew from the u. K. Cabinet and we have lots to talk about when it comes to trade. Lets get more on apple. A big day on the tech giant launching the new software. Among the items involved, a new tch and ipad and new announcements to apple plus and apple arcade. All eyes were folked focused on the versions of the iphone. These are the most advanced iphones weve built in a stunning new design. Francine joining us for more on apple is the analyst at Bloomberg Intelligence who covers everything from space to apple and theres a link. What was the big star of the show yesterday . Matt from the leadin it was the pricing on the Apple Tv Service which surprised people. If you buy a new apple product you get it free for a year. Thats really helped them to grow interest in the product. But it takes pressure off netflix so people take the service so they dont have to pay for it and its defering any kind of head to head rivalry good the services for another 12 months or so. Francine apple can afford it because theyre sitting on so much cash. Matt billions in content and they gave us a bit of it coming up. Theres a long term play on making money on the service. Francine we were discussing, are they a little too late to the game. If i have netflix and Something Else, do i still go for apple or do i have to choose, am i loyal to netflix because i havent had it for a long time . Matt certainly for a year because of this freebie offer. Probably two or three years from now i think there will be a better crunch between the services and think the space long term for disney and netflix and apple and all these services. There could be a consolidation but theyre big enough they probably will be a major player long term. Francine matt is my guru on when to upgrade my phone. Was it a little underwhelming from what we heard about the new iphone . Matt no big surprises on the hardware. I think were a bit of surprised on the pricing so the entry level 11 is actually cheaper than last years 10r by 50 and theyre pushing the upgrade program so theyre taking onboard volumes of iphones that have come under pressure the last 12 months and need to generate fresh momentum so pricing has to be sharper before them and thats what they delivered. Francine how much pressure are they under with the trade war. Tim cook said he has samsung has an unfair advantage because theyre not too much implicated. Matt its tough. Theres a massive supply relying on an asian supply chain for building these products. I think it will start to hit them a bit. The fact they can absorb some of this lower pricing perhaps for now theyre not overly concerned about that. Francine thanks for the update. Lets get straight to the Bloomberg News in new york city. Viff anna viviana extra tariffs put in place announced by china and exclusion on imports, pharmaceuticals and lubricant oil. Beijing seeking to ease the impact but without lifting charges on combrurl items like soy beans and pork. There are a further round of exemptions that will be released. President donald trump said he fired john bolton and the notoriously bolton leaving minutes before the briefing on terrorism but minutes after trumps announcement. Bolton contradicted the president and said he offered to resign monday night. The white house said bolton and the president had been disagreeing on, quote, many, many issues. And California Senate passing a bill that could force uber and other economy giants to reclassify their workers as employees. Under the new law workers can only be considered contractors if their work is outside the usual course of the companys business. One Research Notes the change could cost uber as much as 500 million a year in the state of alifornia. Wilbur ross said turkey and new york havent started agreement on trade. He wants liberal goal with turkey. Speaking to our affiliate. Trade agreements normally take years to negotiate. T. P. P. Took eight or 10 years. Nafta took many years as well. So we cant expect anything to happen very soon. And we have not even begun actual negotiations for those kinds of agreements. Viviana news 24 hours a day powered by 2700 analysts in more than several countries. Francine lets focus on the u. K. The government is launching a 200 pound whole genome sequencing project which it says will help fight lifethreatening illnesses and will sequence the code of 500 volunteers in what claims to be the Worlds Largest genome project. Lets speak to andrea on this Great Initiative. Thanks for joining bloomberg. First of all, how difficult was it to get this project off the ground given the uncertainty surrounding the brexit date . Andrea in fact, the d. N. A. Data had been gathered between 20062010 as you rightly point out from half a million volunteers from the United Kingdom from the ages of 4069. That d. N. A. Data is already there and what were announcing today is the funding to be able to do the analysis of that genetic data that will enable us to understand better why some people get certain diseases like parkinsons or dementia or cancers and why other people dont and will help us to determine prevention measures and also cures. Its a really exciting announcement today. Im delighted to be making. It has nothing to do with brexit. Francine and business secretary, when you look at with a businesses ask you and it is a Great Initiative and congratulations for that, how much do they ask you about or how should they tell you the plan for future investments because of whats happening or not happening on october 31 . Andrea well, the United Kingdom is leading the world in so many technological areas ranging from Life Sciences to artificial intelgence to automated vehicles. Theres a lot of areas where the u. K. Is already incredibly strong, supported by our commitment tom spending much more on r d in the u. K. So businesses of course do want to see how well be outside of the European Union but weve Just Announced today a new migration route for International Students coming to the United Kingdom who will be able to stay in the u. K. When they graduate for an extra two years that will enable them to find some of these high quality skilled jobs and enable them to contribute to the u. K. s economy. Francine you said that the government is looking for creative ways to ensure theres no backstop. What are those . Andrea theres a number of different potential solutions to the challenge at the Northern Ireland border ranging from Technological Solutions to preclearance for customer checks to some regulatory alignment odds. And all of those are on the mix but the u. K. Government is determined to get a deal that works for the u. K. And e. U. Weve seen the current deal has been turned down by Parliament Three times. What we need to see is changes so we get a deal that works for all of us and that we can leash the European Union on october 31 and deliver on that renchs up. Francine will the d. O. P. Allow aggregates on food as long as there is no border . Andrea the key is to maintain the integrity of the United Kingdom. We wont do anything that undermines our United Kingdom either from the point of view of politically or from the point of view of harming the u. K. Internal market. So all of the proposals were putting forward seek to ensure that it would keep the u. K. Together and at the same time we leave the European Union on october 31. Francine were just getting breaking news from hong kong. Hong Kong Exchanges and clearing proposing to combine with the l. S. E. P. Would you be happy with the Stock Exchange being owned by a Chinese Company . Andrea thats breaking news and not something im cited on at the moment and obviously were always seeing to key Foreign Investment and collaboration with Different International interests but wed have to look very carefullyly at anything that has potentially has the security implications for the United Kingdom and is exactly standard. Wed always do that. Francine the viewers breaking news in the last couple seconds. You see the share price is gaining some 8 . One final question, would you personally give another chance or would you like to see the 21 m. P. s expelled from the party given an opportunity to return to the party . Andrea thats a matter of for the chief whip and Prime Minister. Its absolutely clear that everybody in the conservative party needs to be supporting the delivery of the referenm. The decision was taken to leave the European Union and we want too see all our conservative colleagues come together to deliver on that. Francine thank you so much for joining us that was Andrea Leadsom the business secretary. It was great to react to the london Stock Exchange news that happened moments ago. Lets hear what the share price of the london Stock Exchange is doing. Moments ago we understand the Hong Kong Exchanges and clearing has proposed to combine with the l. E. C. Were trying to see if theres a breakdown of what theyd pray for or what their proposal is. This is breaking news we had a couple minutes ago. We understand the board of hkex, the Hong Kong Exchange and clearing believe as proposed strategic opportunity to create a Global Market leader. Thats on the chinese side. We havent heard a response from the london Stock Exchange and well have plenty more on that throughout the day. Francine this is bloomberg surveillance. The last couple minutes we had a Hong Kong Exchange and clearance combine with the london Stock Exchange. We spoke to Andrea Leadsom, the u. K. Business secretary and said the u. K. Would look carefullyly at any investment in the loppedon Stock Exchange. If you look at what the board is saying, they say the combination would be a Good Opportunity to create a Global Infrastructure agreement and is offering 249 in cash and the new shares. The Stock Exchange gaining 6 and well have plenty more throughout the day and see exactly what happens with that. Now lets get straight to the Bloomberg Business flash in new ork city, hi, viviana. Viviana the newly created Group Includes the 31 stake in cent and is firm is netherlands Third Largest Company Giving the first interview of the morning. The main purpose of listing is to facilitate our growth and we have become over time a substantial part of our original exchange to the johannesburg Stock Exchange. Viviana apple announcing an iphone 11 and its features has a long battery life as well as a overhaul the next year. A new aggressive price cuts on existing products. A 150 price drop for the x. R. Where the u. S. Price is down to 599. We were considering major changes to governance in a bid to sign the i. P. O. Next month. Jp morgan an Goldman Sacks could value the company as low as 15 billion. The office space operator lost 690 million, bringing total losses the past three years to perform 3 billion. Francine . Francine the leader of Northern Irelands Democratic Unionist Party said Prime Minister Boris Johnson confirmed his rejection of a Northern Ireland backstop. A group of m. P. s said the exchange is to move talks forward. Sterlings volatility is at high levels. First of all, can you put everything in context . We had pretty good g. D. P. Figures for the month of judgment for the u. K. But whats the trend, are we going to an investment or is it less than it would have been had we nod had this uncertainty. Its staggering how the u. K. Government does in the uncertainty of brexit. But the trend is sort of going down as long as we continue to have that uncertainty and in order to see that would be exacerbated if the u. K. Would have for the hot plexity or no deal plexity route. Francine what does it mean for how you set policy, this used to be a emerging market policy and if you dont have a brexit exit, you dont have probability on that but maybe have to lower rates with high deductions. Its been settled sometime the inflation spike you get from a weak currency could be temporary and the bank of england would always fall in with the way it cuts with liquidity facilities. The difference is just the policy. That may perhaps explaining why the economy or expectations are holding up better because regardless of the brexit outcome there will be fiscal easing next year and probably to a larger extent. Francine can you afford it . Fredrik i think so because we always rely on the combination of the usual drivers and Interest Rates and obviously Interest Rates is not the problem but on cuts we remain low but not to persuade anyone but were low enough for the government to fund such policies and is the big difference for german yield in your area. Francine what happens to pound, its extremely wide range . Sprely. We could see the pound moving from the europe parity to 120 from the current levels. Its very dict to know wheads going to happen and is the him enge of the b. O. E. G. D. P. Expectations and is high in the u. K. At 3 . So the extent to how much the b. O. E. Could buffer the brexit risk is more limited than in the euro zone or u. S. And that sort of risk going forward. Francine you look at the European Central bank, tomorrow what will they do with egg negative rates . Florian the cut at least in basis points and more importantly they leave the door open couraging bank we posits, and the decision is whether they would do more and we would be looking at the reversal rates, this idea that policy rates cannot go as low as those in switzerland or lower because theres a limit where the Banking System is more important the real economy than anywhere else. Francine thanks for joining us. Well have plenty more on this main story today just happening about 1520 minutes ago. The Hong Kong Exchange making this price, 36. 6 billion dollar bid for the new york Stock Exchange. Well have plenty more on that next. This is bloomberg. Francine economic, finance and politics this is bloomberg surveillance. Im Francine Lacqua in london. Hong Kong Exchange and clearing is combining with the new york Stock Exchange and was a surprise bid at 36. 6 billion. Joining us, vincent, with the market expecting a consolidation . People expecting consolidation but this came out of the blue. I think theres a general sense exchanges have to do big deals to survive whether its going more into the data area like they were trying to do with a cross border consolidation. Francine will it get Regulatory Approval or will there be grumbles because its a hong kong Chinese Company . They are from hong kong and not from Mainland China so hopefully not as scary so cross border consolidation in the Exchange Phase is always tricky with a lot of nationalistic feeling involved especially at this time in the u. K. With a former bio coming in. And not clear whether theyd block it but it is a sensitive type of deal. Francine we havent had this happen so fluid like 25 minutes ago. When are we expecting the l. S. E. To come out with a statement or react to it . Ben not sure. It should be soon but will need a number of approvals. The Hong Kong Exchange would have to approve and l. S. E. Investors would have to decide to vote on a deal and l. S. E. Buying this Big Data Company or whether they want to opt for this deal and they kind of have these two alternatives in front of them now. Francine are you expecting more consolidations between the exchanges . Ben theyre looking at options now and cross border combination is why they looked to a deal and why no regulatoryor decided to block it and is not another exchange. Every exchange is looking at their options and trying to figure out how to bulk up. Francine does this make sense . What does it give them an advantage over if they combine . Ben they can share sources and would have a leading position in two of the worlds biggest Financial Markets, hkex positioned itself as the leading market in asia and the goto spot to raise capital overseas and theyve been building links with london the last few years and bought the London Metal Exchange in a pricey deal a couple years ago and looks like theyre willing to spend more now kind of to double down but this would help them to kind of diversify their business and not be so dependent on china really. Francine thanks for joining us, from our deals team, coming up on bloomberg surveillance we speak to Toni Gardiner and well have plenty more on this Hong Kong Exchange making this surprise bid for the l. S. E. This is bloomberg. Francine pressure is on. Beijing keeps additional tariffs on u. S. Farm products, ramping up the heat on americas heartland. President trump fires his hawkish National Security advisor john bolton. What does his departure mean for u. S. Foreign policy . W lineup, Apple Unveils an aggressively priced i pad and iphone but the tv service steals the show. This is bloomberg surveillance. Tom keene in new york. Tom, we had a pretty big piece of news in the last 30 minutes or so. This is the Hong Kong Exchange making a surprise 36. 6 billion bid for the london Stock Exchange as the news broke, i was speaking to the business secretary in the u. K. , Andrea Leadsom that they need to look at all offers but they need to be mindful of what happens to the london Stock Exchange. Tom the search for data as well, lets be clear, this is hong kong going after l. S. E. , not the London School of economics or london Stock Exchange. Whats interesting is you overlay upon it, francine, l. S. E. With that transaction is our itve which competitor reuters which is more than buying or selling stocks. Francine i agree but its an elegant way for the Hong Kong Exchange to diversify away from its main markets. Tom id say. Francine more on that but first to the bloomberg first ord news in new york city with Viviana Hurtado with more breaking news. This from amazon, u. S. Antitrust regulators are investigating whether the Worlds Largest online retailer is using the market pow tore hurt competition. A team of investigators are beginning interviewing Small Businesses that sell products on amazon. Bloomberg has learned the interviews suggest the agency is skeptical about amazons claim shoppers and suppliers have real alternatives. China announced a range of u. S. Goods it will exempt from 25 tariffs put in place last year but is keeping the pressure on American Farmers and wont be lifting the tariffs on major Agricultural Products such as soybeans and pork and those duties were proposed to retaliate for american tariffs placed on chinese goods. Over to north korea where kim jongun oversaw the test on a multiple missile launcher. Two missiles were fired hours after north korea said it was willing to restart nuclear talk with the u. S. South korea said the missiles flew about 200 miles. In north carolina, a republican candidate that President Donald Trump campaigned for narrowly won a special election, this for a congressional seat. Dan bishop beat the democratic challenger by 2 age points. 2016 the president won that district by 12 points. Global news 24 hours a day on air and particular tobacco on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. Im Viviana Hurtado. Tom amazon sales from an 1820 level to 1804 right now. Down about 1 . Good equities bonds, securities and commodities off breaking news on amazon and regulation and size. You knew it was going to come. You saw that with google as well. Futures flat. Curb inversion theres a really interesting new g market as well and lots going on in the equities market. Gina adams joining us the next hour. Lets go to the next screen with a big showing, the better than good dow 27,000 launch 15. 42 on the bid to close on the nearly 27,000 level and the 30year bond showing the rix to 2. 22. Francine . Francine im looking at data that is trying to figure out what this Hong Kong Exchange making a surprise bid means for them but overall its very clear that the signs that china is moving to lessen the trade wars repercussion is taking a positive note the way bonds are following and treasuries edging closer and european stocks gaining 0. 7 . Tom this is an interesting chart. And that will do it for us right now. I need to explain this. There is an analysis called Factor Analysis which looks at the quality of an Equity Investment across ideas of momentum. Ideas of value. Theres five or six factors out there. And the pros have noticed a huge divide as we come back from the summer which is the Standard Poors 500 holding up well to the right of the screen and down we go are the momentum stocks, the oh, so sexy momentum stocks have been clobbered the last three or four days. The jargon youll see is momo, he momos are getting crushed. Francine after cocoa were talking momos, were looking at the spread with the u. K. 10year yield on the back of e. C. B. Tomorrow but also the fact that italy has now a new government and well see exactly what theyll do in terms of fiscal policy and budget deficits. Were joined by Stephanie Baker, Bloomberg News Senior Writer to talk about whats happening also in the world of politics in the u. S. With the firing or resignation of john bolton, one of the most hawkish National Security advisors weve seen. When you look at the repercussions that this means for Foreign Policy, does President Trump now have any pushback from anyone in his near team . Stephanie well, iran is a tricky one for him to manage not just within his own administration and white house but within the Republican Party. He campaigned with a hard line substance on iran. Bolton was a hawk on iran and against any kind of diplomatic overtures. Trump is saying hes open to a meeting. Pompeo repeated that yesterday hed be open to a meeting without preconditions. This hard line policy on iran has not worked out for trump. But him trying to come to some sort of deal with iran in the runup to 2020 could be very tricky. Tom stephanie, you know an uproar from this, coming from the right and left and baffled as well and thought bernstein was exceptionally strong with threads on twitter. He writes for Bloomberg Opinion. Its not that its scathing but very informed about whats out there. The whole point of the job is to be ambassador boltons job is to help President Trump gain control over the sprawling Government Agencies responsible for National Security. Ambassador bolton was at least qualified for his job even if he wasnt right for it. Mr. Bernsteins opinion. Fewer and fewer qualified professionals will want to work in the Trump White House or anywhere in the administration and goes on to simply say pure chaos. Where does it fit on the baker chaos meter . Stephanie it only ups the chaos weve already seen. Obviously hes going to announce or says hes going to announce a replacement for john bolton next week but the short list of candidates, theres no one really prominent on that list. I think the likelihood is it will be someone that will be less bold than john bolton that will work more in step with secretary of state mike pompeo and that trump will really be running the show again. I think one of the lasting legacies of bolton is how many people have said how he dismantled the National Security infrastructure and continued to pursue meetings with trump with boltonened a few key advisors in the room, cutting out other key agencies feeding into that process. Tom Stephanie Baker is a great watcher of all things in washington. Is secretary pompeo part of the old guard or is he a new guy and perceived within the Foreign Policy establishment as inexperienced, which is he . Stephanie i think he is experienced. His time at the c. I. A. , hes proven to be more in lock step with trump than bolton, while at the same time, you know, having a tough stance on Foreign Policy. He had pursued these talks with the taliban to create Afghan Peace Deal and was something john bolton didnt feel comfortable with and biden got president ghany to the United States. But it does look like pompeo will be his main advisor and his importance has only increased. Francine thank so you much. Stephanie baker there, our Bloomberg News Senior Writer. We have breaking news on the brexit and the suspension of parliament and scottish judges are saying the pro rogation is unlawful and scheduled to go to the Supreme Court next week. What had broken last week while i was out of town there were judges who handed the victory to Boris Johnson. I imagine it is only the Supreme Court to decide overwhether prorogation is unlawful and in the eyes of the Supreme Court gets reopened but its quiet for Boris Johnson after six defeats. Joining us is the global head of f. X. Strategy. Elsa, im not sure what you do with the headline that says scottish judges say the prorogation is a muscle and does it have an impact on pound because it could change the outcome or is there so much noise as a currency strategist you look through it . At the moment we have more certainty because johnson tried twice to get an early election through parliament and failed twice p. The opposition have basically agreed among themselves until hes forced to ask for an extension theyre not agree togget early election he so desperately wants and from the pound perspective were focusing on how the political momentum will shape up ahead of another election which is likely to come before the end of the year. Francine what does it do with pound, parity with euro or 120 . In the odd situation where typically markets would favor the conservative majority but at the moment it is the high likelihood of a high deal breast pit. We speak to some clinalts that think johnson may pull a deal out of the hat and thats still a possibility. It looks less likely than it did previously but i do think the positive scenario, if youd like, is a corbin minority government with a lip dance and a possibility of brexit or no brexit at all. Tom i want to go back to your physics at cambridge and talk about drift and how the currency market is a general statement are drifting. Are we drifting within stability or are we drifting in not a chaotic manner but a manner that leads to jump conditions . Its interesting because if you look at what happened in dollar yen and u. S. Yields over the last month or so we had a grind lower for three weeks and in the space of five trading sessions weve reversed that and i think that tells you how people are positioned and what the weak side is. As you know, weve always had a longstanding view on dollar yen and dont think that will change unless we see the fed cut rates significantly more than weve seen so far. Tom i want to jump forward and talk to ms. Lignos in the halfhour we have with her but lets get to it, if we have drift, how does draghi adjust or adapt the drift in the important e. C. B. Meeting . Is in a elsa he tricky situation because the guard on the way in says theres a need for further stimulus. And we heard a story theres a lot of opposition within the governing council and the euro is not sure how to take it, does it act to the positive news of no further stimulus or focus on the reason behind it theres no unanimity in the Government Council. Draghi will learn more on the side of reacting trying to get the Government Council onboard and the euro because of that drifts lower. Tom much to talk about here in front of the e. C. B. Morning. Its a morning of breaking news. Francine has United Kingdom breaking news and i have seattle breaking news and that is amazon. Im not saying this has been anticipated but its in the air in america. The f. T. C. Will interview merchants to determine the amazon market power. They should just come to the lobby of my house, francine, here in new york and look at the effect of amazon on market power. They own it and dont need to do an investigation. Amazon down 1. 2 right now. Francine, tell us your flavor of breaking news. Francine we have a lot of breaking news, tom. We have a lot of breaking news on the brexit side. Ill get to that in a second. But the exchange side with the Hong Kong Exchange and making this price offer for the london Stock Exchange valuing it around 29. 6 billion pounds. The share price was gaining 9 and went up 15 and now is up around 9 . Of course, tom, if we put in context youre saying the bid comes after l. S. E. Agreed to shake up affirmative in the blockbuster deal weeks ago so theres some consolidation appetite in the space. Well have plenty more on the two big deals and more on amazon. This is bloomberg. Francine were looking at soybeans and pork. For more on the trade concerns and the impact it has on foreign exchange, were back with elsa. If you look at the headon, im not sure if currency shoes move with the markets every time theres a bit of easing or whether you take a longer term view and say this is probably dollar weakening . Elsa were looking through some of the noise. The chinese news was interesting because theyre obviously facing a lot of pressure on the food price front and we saw that on the c. P. I. Data, food prices up 10 year over year and yet chosen to maintain the pressure on the u. S. Side on the agricultural base and therefore its clear at the moment they dont want to suffer too much. Francine what does it mean for the fed actually . Elsa for the fed, not much now. Its positive news theyre going to resume talks in october but at this stage expectations for any resolution are relatively low. Our economists for what its worth in the u. S. , the closer they get to 2020 the more trump will be incentivized to strike a deal but if 2340g happens this side of another election wont an price. Tom talk to us about r. M. B. And the dollar proposed by intervention by the United States assuming its not coordinated in a unilateral intervention, what kind of yuan value would spark trump intervention . Elsa i dont know its yuan or eurodollar. I was tracking the twitter his entire twitter feed is obviously too much but doing a search on the bloomberg antitrump defeat for euro, europe, any mentions of the currency complaints about the level of the euro has picked up a bit in recent weeks and obviously focused on later this year when hes supposed to take a decision on 232. It is possible we could get action on eurodollar and dollar yen and give the more assets to buy which is more of r. M. B. Enge for the tom we have a set of breaking news with amazon regulation with amazon itself but the news for global wall street and not just a menscher of exchangess. The Hong Kong Exchange going after l. S. E. We heard andrea with francine in the last hour on this credit ically hong kong going after l. S. E. After their 27 billion pound proposed merger with parts of the reuters empire. Much more on this. This is bloomberg. Viviana this is bloomberg surveillance. To the business flash, bloomberg has learned the company is considering many changes to the governance structure to address investors concerns. They are worried about going ahead with the share sales that could value the company as low as 15 billion. Last month wework racked up billions in losses. The protest in hong kong appear to be having a impact on cafe pacific, based there. The airline reporting a 11 drop in passenger traffic. They say the outlook this month is more positive. Thats the Bloomberg Business flash. Tom within this particular news and the Hong Kong Exchange going after l. S. E. , let us consider a small gathering in frankfurt. There will be a certain level to the applause as mario draghi speaks to the r. B. C. What have we learned about quantitative easing . There are different flavors and shades. Is mario draghi humbled by what hes learned about q. E. And the need for a further and new and different q. E. . Elsa i think Central Banks still broadly believe in the power of q. E. And dont doubt the effectiveness as a tool even in the case theyre running out of assets to buy. Where the problem comes is not all the governing counsel is onboard with the need for further stimulus and will be the challenge behind the closed door talks. I believe draghi to give a fairly good message and what type of q. E. We get should be important to how we treat it for the euro. Tom have we delayed clearing markets . All of the q. E. , whether japan or e. C. B. Or the forums in the United States, is it about nothing more than our inability to clear markets as in olden days . Elsa an interesting question because the difference between a liquidity problem and solve enzi problem may not be as clear cut as you might think. If you think back to the euro, had this been not purchased assets we night have found the solvency issue become more real with bankruptcies and the like and giving time for these issues to be revolved have had a beneficial effect for the likes of spain and even now greece. The question is what policymakers do with the time that allows . Francine elsa, how do these european economies deal with negative rates, does it distort economies making it more difficult for people to feel the real benefits . Elsa i had this conversation with a policymaker and he said nobody said the riskfree rate should be higher and positive and if banks are doing what theyre supposed to do and take risks and lend further out long term or further out the credit cards theyd be making some money. The e. C. B. I think is sensitive to the impact on banks and talking about tiered depot rates. But in forms of the real economy its a good thing. Francine thank you so much. Stay with bloomberg for our live coverage of the e. C. B. Policy decision and News Conference tomorrow at 7 45 a. M. In new york, 12 45 p. M. In london. Coming up, more on brexit and more on the londin Stock Exchange. This is bloomberg. Francine tom good morning everyone. It is 18 years on. New york will see mom remembrances. It is a Beautiful Day in new york. Vice president pence will be in pennsylvania. Good morning, it is bloomberg surveillance. Uneventful newsday as well. Now, here ist Viviana Hurtado with our first word news. Viviana the hong kong Stock Exchange made a surprising offer. They say bringing the companies together will redefine Capital Markets for decades to come. The offer cong wee after the lsc agreed to by a data provider for 27 billion. Of an the target antitrust investigation by u. S. Regulators. Bloomberg has learned the u. S. Federal trade commission started interviewing Small Businesses that sell products on the online retailer. They are curious if amazon is using its Marketing Power to hurt competition. China keeping the pressure on American Farmers. Beijing announcing a range of u. S. Products that will be exempt from tariffs put in place last year but major agricultural items such as soybeans and pork are not included. The California Senate passing a bill that could transform the gig economy. It would force company such as uber to reclassify their workers as employees. That would make them eligible for him and overtime pay. Right now those workers are considered independent contractors. The California State Assembly still needs to pass this measure. Global news, 24 hours a day, on air and at tick toc on twitter, powered by over 2700 journalists and analysts in more than 120 countries. This is bloomberg. Francine back to our breaking news. The Hong Kong Exchange close to buying from the london Stock Exchange. Broke, i askeds the ux the u. K. Business secretary. Seee are always keen to direct investments, collaboration with Different International interests but we have to look very carefully at anything that potentially had security implications which is standard. Francine joining us for more on this story is our guest. Do we have any insight into how much the Hong Kong Exchange actually wants this deal and how long they have been preparing for it . It is a farreaching and ambitious deal that they are going for. It is a very surprising deal to a lot of us in the markets. We will have to see but analysts kongscould hong Stock Exchange could be seen as part of china, so they may have some regulatory hurdles. I would assume it has been thought through, how to get through the hurdles but it will take time for both exchanges. Tom this story is extremely fluid right now. But we are seeing more than is charles lee in the Hong Kong Exchange just a proxy for beijing and the peoples republic of china . Oft is that ageold linkage this iconic colonial trading mechanism, the Hong Kong Financial shanghai or political beijing . The exchange is no stranger to acquisitions. In 2014 they bought a mercantile exchange. Shanghai are in competition in many ways, including ipos and stock market volume. Some might see hong kong as a proxy to beijing but there is also competition. I would argue it might not always be the case. Tom thank you for your coverage. Speak toays good to passion capital. What is important here is not so much this story or that story but an understanding of this new network we are all living in. Dont care if you are going to order the apple 11 max pro whatever they are calling it, i would recommend you get it in a cool new green color. What i want to know is about the race for digital. Hong kong and lsc is nothing more than trying to capture the 19 cents 19thcentury phrase of modern technology. Explain this desire and need to capture this data. Is like people have said, data is the new oil. There have been a lot of conversations about what an advantage china already has to those . Its because of the amount of data they are able to get on patterns, use switch and so things like artificial intelligence, developing new algorithms, machine learning, it feels like they are already at an advantage in asia. This move may be another opportunity for them to try and on the publicata market side of companies and value. Tom and yet day after day, this burgeoning regulatory question from society, from all of us as parents and critically this morning from the ftc going after the amazon marketplace. Effort, doe a clumsy you presume the regulators and their nongrace will be clumsy and approaching amazon, approaching google and for that matter approaching the hong kong Stock Exchange . I think they will, but i dont think because it will be clumsy doesnt mean that it is not a good thing to actually undertake and i think we will see more of it. You saw 50 state attorneys general come together with an antitrust investigation against google. The Justice Department is looking at google. Consider,e thing to we talk about this being a race between asia, there it is china and western markets. Whether or not . You latoya concerns and our concerns as parents might put us at a disadvantage because that is not a concern of chinese regulators. Eileen burbage with us or burbidge right with us right now. It was anaph saying audacious effort to see hong kong and charles lee go after david schumer. All of this is the reuters terminal, the good competitor bloomberg which was taken out by lsc which seemed like two cups of coffee ago. The singleemember bloomberg headline coming across that the department of justice drops all of its regulatory and legal efforts against microsoft come along ago and far away. Do you presume we may go through that exercise in years down the road, a single line, the department drops its efforts against jeff bezos . Great question. It is definitely a nonzero chance but we might also see an i think there will be some action that is taken. I do think American Consumers and western markets are consumed are concerned about data privacy and protection of rights. The question is whether or not that is going to pe a problem for us when you think about geopolitics and what is going to happen with the future of data and innovation against other markets. Francine what did we learn from , forgoing money just to get market share . What is interesting about apples theyre willing to lower their prices. Which is quite remarkable and so they have lowered these prices and theyew iphone 11, also came in with the streaming products and that surprise the whole market and affected netflix and roku stock. They are finally flexing on the pricing and recognizing that the premium pricing, especially in markets like china was not working for them and they need to try and grab back more share. Francine thank you so much eileen, passion capital partner. We are getting breaking news and what we heard just moments ago from the scottish judges saying that the prorogation of parliament was unlawful and that they will appeal against the Supreme Court another u. K. Government sayinthey were disappointed by the decision and they will appeal to the Supreme Court. That will be next week. This is bloomberg. The key to this is to maintain the integrity of the United Kingdom. We wont to anything that undermines our United Kingdom. M of the point of view of all of the proposals we are putting forward, we will ensure that we keep the u. K. Together and at the same time that we leave the european u on th 31st of october. Francine that was the u. K. Business secretary, Andrea Leadsom. Thank you both for joining us. We are just getting some breaking news that we did not have about 25 minutes ago. Johnsonsster boris suspension of parliament is unlawful according to a scottish appeals court. We are just getting some headlines from the u. K. Government saying the suspension of parliament was legal and necessary and they are going to appeal to the Supreme Court. To me it just seems like more confusion about what we are looking at. We have this deadlocked british system and it just adds another layer of uncertainty. If we step back a second, we see the extraordinary times we are in and the constitutional confusion, the magnitude of these decisions being taken and just how hard both sides are fighting. On the one hand you have Boris Johnson, determined to get britain out of the eu and on the other hand you have a bunch of people who were in his party and politicians and other parties desperate he trying to stop him doing that with no deal. The fight is a huge one and it is going to carry on. Francine for me it is still confusing. If you are a chief executive a market participant, what you want to know is the probability of a no deal or if we have fresh elections. Because bothlp outcomes are still very live. A law was passed saying Boris Johnson cannot take the u. K. Out with no deal but it is unclear if that will be respected. Tom tim ross, thrilled to have you on. I know john roberts of the american Supreme Court. The United Kingdom Supreme Court historic extension of the judicial process of lords. Do they have any real power or can they be circumvented by the commons and can they be circumvented by the house of lords . Tim they do have real power. Historically it used to be the role of the house of lords to oversee this kind of thing but that got moved to the Supreme Court. The government will have to respect whatever the Supreme Court says. We will wait to see what that ruling says next week but it is quite possible that you could upsetother set another for johnson. Tom terrific news flows today. It is great to have ambassador gardner with a portfolio that extends over any of these things. Begin with john bolton but forget about that. You are in london. How is Jeremy Corbyn . This is a different calculus. Can labor be advantaged by all of this turmoil . I saw a snap poll done yesterday by the telegraph showing that the numbers have even down. He was trailing by about 10 points. Boris johnson must be the luckiest person on the face of the planet because he is facing someone on the others of the aisle who many people are considering to be impossible. Nobody wants to see Jeremy Corbyn running the country. If there was someone in the labour party with broader appeal this would end much more quickly. Francine if you were to speak to brussels ins but brussels insiders right now, the Prime Minister has been defeated six times in parliament. Unclear if he will abide by the law of the United Kingdom in regard to a no deal. Can they give inmate can they give him anything with a new deal . Anthony interestingly enough, the rumor mill has it that Boris Johnson is considering something tot has been on the table, just have Northern Ireland as part of the backstop guarantee in case there were no other solutions to the hard border, Northern Ireland would remain part of the Customs Union and part of the single market. That would be an incredible pure wet for Boris Johnson to do as he rejected that but it looks like the Northern Ireland party, having 10 seats, he has lost his majority, he may consider going back to that solution that the dup said was off the table. Is Boris Johnsons biggest enemy . Is it nigel for runge . Will he even be able to stay in power . Tim in the election to come, there is a real risk depending on the timing if that election happens before brexit. Brexiteers could hurt the conservative party. What will the members of teamament opposing on his and in the opposition be able to do . Tom tim ross, thank you so much. We appreciate your efforts on all things having to do with parliament and brexit. Any number of breaking news today. The telegraph reporting that the Hong Kong Exchange says the deal of lse must be called off. South today of ftc action. This is bloomberg. Viviana you are watching bloomberg surveillance. South africa shares jumping as much is 32 above its Reference Point before declining. They hold assets that include a lucrative stake in chinas tencent. The ceo wanted to expand from the companies base. Companys base. The main purpose of the listing is to facilitate our next wave of growth. We have become a substantial part of our original exchange. Viviana among other things, they have the Worlds Largest classified ads business. That is your Bloomberg Business flash. Tom it is an extraordinary morning of breaking news. As francine mentioned, one of thenewspapers talks about gas within the courtroom in scotland. The Scottish Courts push against Prime Minister johnson. We are hugely advantaged this morning to have with us anthony gardner. Service to the United States of america within the obama administration, a former u. S. Ambassador to the European Union. More than that, a cardcarrying member of this interesting transatlantic relationship. For you, it goes back to a young lad 30 years ago. Is the Prime Minister we see today anything like the young boris you knew a few years ago . Anthony yes. I got to know him in 1986. We debated the union together. He was in brussels working for the telegraph and i was working for the european commission. Our views on that topic have diverted ever since and even as a student he displayed an interesting relationship with facts. That is what i would say. Tom see how he does that . Francine that is how you become ambassador. Case, theat is the fact is Prime Minister johnson is resonated with a huge part of the United Kingdom. How do the elites, the remainders drag over at the margin, those people that viscerally agree with Boris Johnson . Anthony it will be difficult to do, especially when you box yourself in as this government has and Prime Minister may had. May said we are out of single market, out of the Customs Union and we avoid a hard border. Johnson has said i will die in a of takingthe process things off the table that were on the table. For example, a promise that u. K. Regulations would remain aligned with those of the eu. Now he says he wants the right to the verge. That sends alarm signals in the eu, if your intention mr. Johnson is to have the u. K. Become a singapore, that will have a cost in terms of your access to the single market. It is difficult to see a way out of it. The last thing i would say is this. I lived in this country for 22 years. I believe in this country but it is sad to see how it is tearing itself apart on constitutional grounds. Francine yesterday, Jeremy Corbyn was saying a no deal brexit was a trump brexit deal. Anthony i believe in free trade and i think the u. S. And u. K. Would be great lets not kid ourselves, this will be a long and complicated deal for many reasons. A lot of issues more troublesome in our u. S. And eu deal will will come back and be very difficult on agriculture. Watchedple on the show that phil hogan has been named the new eu trade commissioner. I dealt with him, i think he is good but he is very tough and he represents agricultural interests. He will not given easily. These are difficult deals to get done. Francine thank you so much ambassador gardner, former u. S. Ambassador to the eu. Plenty more on this hong kong lse deal. L. At comcast, we didnt build the nations largest gigspeed network just to make businesses run faster. We built it to help them go beyond. Because beyond risk. Welcome to the neighborhood, guys. There is reward. Beyond work and life. Who else could he be . There is the moment. Beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. Take your business beyond. , the foreignning policy establishment of the Republican Party are adrift and outside the trump administration. Meanwhile in china, china adjusts tariffs, markets grind higher. September, as the socalled factors of the market adjust. Possibility, all of global wall street adjus to the hong kong Stock Exchange, their desire to acquire the london Stock Exchange. They would discard the lses purchase of the reuters data company. Good morning. From new york i am tom keene. With me of course, Francine Lacqua. It is september 11 and the rumor and says in new york with and the remembrances in new york with mike with Vice President mike pence. Dealing with breaking news with the minister. Francine i was speaking to the u. K. Business secretary as the news broke about the Hong Kong Exchange. She was basically saying that they would welcome all kinds of investment. She said she would have to look at it a little deeper but she did not say there were concerns or that there were not concerns. We have to keep an open eye for the government response. The london Stock Exchange response has been pretty interesting because they say they are remaining to be committed and continue to make Good Progress on their proposed acquisition. Augustat was the acquisition proposal. It is a competitor to the bloomberg terminal. Hereour first word news, is Viviana Hurtado. Unexpectedxt offer to buy the london Stock Exchange and that could throw the lses own transformative deal into jeopardy. The hong kong bid could be seen as a potential takeover from china. The u. K. Business secretary telling bloomberg the government will look at anything that has security implications. Weeks ago, the London Exchange agreed to by data provider repetitive and a blockbuster 27 billion deal. Breaking news we continue to follow this morning, u. S. Antitrust regulators are investigating amazon, whether they are using its market power to hurt competition. A team of u. S. Federal trade Commission Investigators began to interview Small Businesses that sell products on amazon. China announcing a range of u. S. Goods it will exempt from 25 tariffs it placed last year but it is keeping the pressure on American Farmers. It wont be lifting the tariffs on major Agricultural Products. Those duties were imposed to retaliate for american tariffs laced on chinese goods. A republicanlina, trumpent that President Campaign for nearly won a congressional seat. Dan bishop beating his democratic challenger by two percentage points. Won the President Trump state by 12 points. Global news, 24 hours a day, on air and at tick toc on twitter, powered by over 2700 journalists and analysts in more than 120 countries. This is bloomberg. Equities, bonds, currencies, commodities. We will talk about the oddities of the equity market in a few moments. Right now you have the euro turning on. Not much going on. I would note the 30 year bond was up to 2. 22 at one point. Bonds,e if you look at they are moving a little bit in europe. This is one of the things we are watching out for. We have not had as much time as we want to because of all the breaking news, to discuss how mario draghi will position the ecb. Overall i am looking at european stocks and they are gaining. This is the chart that we have been trying to figure out, what this means for this possible combination and this is after the Hong Kong Exchange actually had the surprise bid for the london Stock Exchange and this is implied value of the lse and what we have seen for the last couple of years. When the news broke i was speaking to the u. K. Business secretary. This is what she had to say about the proposed merger. Seee are always keen to foreign direct investments, collaboration with Different International interests but we would have to look very carefully at anything that potentially had security implications for the United Kingdom which is standard. I misspoke, it is not a merger, it is definitely an acquisition. Spokesperson for the Hong Kong Security commission saying they will look closely at the counterparts and try and figure this out. Lets go straight to hong kong where the Hong Kong Bureau chief is there. And in london is our deals reporter. Thank you so much for joining us. How much does this make sense for china or for hong kong . Is this something they would be moving on to increase in value . The ceo said this is an ambitious and farreaching deal that they have been considering for many months. This is a very interesting deal also at a time where hong kong is in the middle of antigovernment protests. You can look at it from many perspectives but the bottom line is a lot of us here are surprised by the deal. It will take time to digest what the news could mean. Surprising is the timeline . Lse, and their own transformative deal. Could this put everything up in the air . The offer that has come in from the Hong Kong Exchange has said that it is contingent on the deals not going through. That could throw a lot of dealmaking into chaos. Tom i am stunned at the words being floated around, audacious, shocked, et cetera. Which institutions in london will drive this conversation . You cant tell me it is just the lse. Which other institutions will weigh in as hong kong tries to acquire london . The main ones at the moment will be refitted to and blackstone, the global asset manager and private equity firm that was driving a deal to merge the lse. The question is whether the lse wants to continue on and exchange path on an exchange path or if it will go on another path and be more datadriven instead. Tom we are watching on the. Erminal, we have a series they are beginning a briefing in hong kong right now. What will be the response of the tog kong Business Community this audacious proposal, to use a word from the telegraph . The Conference Call going on right now, i think there will be questions from analysts. I think the business sector here , is in a wait and see mode. Hong kong is a top destination for ipos for many companies. Companies, Chinese Companies and even some overseas companies. Tom one final question. Then kelly at lewis capital talked about sterling. Is this happening because of the devaluation of pound sterling, given all of brexit . Is this one indicator of the price of brexit . It is a factor that is driving that. The drop in sterling is certainly driving and that it makes the u. K. A much cheaper destination for Foreign Investors that it previously had. Imf salute leasure that some of the driving factors from the hong kong Stock Exchange has been this drop in sterling. Tom you have been wonderful to take time with us. Thank you so much in hong kong and london. Topics, youn 14 know martin has been looking at her bloomberg terminal function on her iphone. She probably has to by the new iphone. I just before we get into the news of the day, explained our global audience when you were outside bloomberg, the competition between reuters and bloomberg. It is a duopoly. It is a duopoly of the icon terminal and bloomberg terminal. Ethic it is one of the major data providers and certainly one of the competitors for bloomberg. I dont know the it is necessarily a duopoly. I think there are other competitors depending on the market you follow. Certainly for certain markets, one of the primary competitors. Follow,ch market you right now in your world, there is a geek uproar which goes up to professor ross a few years ago on Factor Analysis, the momentum geyser getting gushed. Explain in greek or Boris Johnsons latin, what is a factor . We still struggle to define factors but many people take Something Like the best performing stocks in the index over the last year tends to be classified and momentum stocks. The lowest momentum the lowest multiples tend to be classified as growth stocks. Intriguingly, most people sort of characterize in their mind, momentum is technology. Technology has been the primary leader in the equity market so therefore it must be momentum. Months, last several defensive stocks like utilities, real estate, Consumer Staples became the momentum stocks in the market following what we had in the bond market. You had this massive rally in bonds over the summer months. Bonds ended august at the most overbought levels we have seen in years. The result was this flight into yield oriented stocks. Those became the momentum stocks over the last several months and even over the course of the last year. Is as the bond Market Selling off, you are seeing a rotation out of some of the stocks. That has resulted in a depletion of the momentum trade. Tom Gina Martin Adams here with a lecture on factors. She is with Bloomberg Intelligence. It is september 11. There will be remembrances in Lower Manhattan today. Vice president pence is scheduled to be in pennsylvania in a field and the president is scheduled at the pentagon. This is bloomberg. Francine this is bloomberg surveillance. Tom and francine from london and new york. The Hong Kong Exchange currently briefing on their surprise bid for the london Stock Exchange. The chief executive going back a little bit in history. His company has owned the London Metal Exchange since 2012 and is saying it is no stranger in operating in the u. K. They were just asked if the fact that the u. K. Is going through brexit and the pound is cheaper was a factor in the purchase in choosee said they dont the timing, you choose what is and they say the u. K. Will remain a Global Financial center no matter what happens. Tom very good. We will come back to the london Stock Exchange as the briefing is going on. In 10 minutes we will have more on a global transaction. Our chief content officer will want to comment on this. We have a morning must read right now on the use on the news yesterday of bolton out the door. We can pontificate about what it was. Atlantic did a great feature five months ago on ambassador bolton. This is how you fire the pool boy. Guy youhow you fire the overheard cracking wise in the break room about your haircut. We havent a lobbyist, mark esper at defense and the secretary of state. The secretary spent 86 to 91 of the army but 10 years ago was selling Oil Equipment in the secure company in wichita, kansas. Gina martin adams, is ambassador bolton to leave stage right . The unceremonious way he was fired, it is unique that this president could make people who have been criticized look sympathetic. Tom exactly. Bolton ismbassador going to be in the punditry sphere talking about this any moment. How is he replaced in this unique administration or is he unreplaceable . Marty there is a lot of speculation on the people who might replace him. None of them are household names. I personally think he could wind up that donald trump does not replace him at all. Tom exactly. Marty this is a National Security strategy that resides with the president and that is where he got into trouble with john bolton. There has been reporting that donald trump himself has question why does he even need a National Security advisor. Francine but how does this change Foreign Policy . Does he need a National Security advisor . With the exit stage left of bolton, is the president going to meet with the irani and president at the United Nations General Assembly . Marty we have us again we have a story that suggests this makes the possibility of a u. N. Meeting next week more of a possibility. Donald trump is going to decide whether that happens or not. It is not going to be mike pompeo or his advisors. It is going to be donald trump and we know he has a propensity to want a big advantage to define his foreignpolicy. I suggest that that is a real possibility. Tom we will continue. Marty schenker, chief of content and decades of experience of following the markets as well and Gina Martin Adams with us as well. Tomorrow night, all eyes on houston, the third democratic debate. Kevin cirilli will hold court with fewer democratic debaters. I believe mr. Biden may be on the stage as well with the senator from massachusetts. That alone will be entertaining. Look for our coverage. This is bloomberg. Francine this is bloomberg surveillance. Tom and francine in new york and london. The hong kong Stock Exchange offer for the lse, we also seen nd, we have just k about banks tom brought that to my attention so lets get back to Marty Schenker and Gina Martin Adams. Story, whatn this are the chances that this actually gets approved . Think it faces considerable hurdles, not the least of which is the london Stock Exchange has embarked on this redefining itself as a data provider as you discussed earlier, a potential competitor in some markets to bloomberg. It also seems to me the regulatory issues, the hong kong entity inserting itself in the Global Markets. That is in such a major way and would face considerable resistance. Tom greenberg used to have to buy tickets over here and he and Marty Schenker would break at lunch. The cell point on this is you are 100 right. The cell point is we are going to have an 18 hour day. Do we want an 18 hour day . Marty we essentially have an 18 hour day already. Tom we have been living it for years. Marty that is the debt that is the question. There are certainly synergies between hong kong and london but the real question is with the regulators allow such a transaction to take place . Bencine it would also fundamentally different. If you have a tie up of the llc with hong kong, it is very different from an lsc refinitiv tie up which is why they are asking them to leave it to one side. Marty it is a different entity you wind up with. One is a Global Exchange behemoth. The other is sort of getting into a different kind of business. It will be contentious. It could go hostile. Then you have this overlay of regulatory issues with a Hong Kongbased entity. Tom Gina Martin Adams, the institution lead for this. Platform or global is this about hedge funds trying to garner that algorithmic tight trading that little bits of money adds up toangible cash . The ongoing decline in the amount of money you can make on trading. Lsc was already moving in a different direction of creating something of a different business for a reason. Hong Kong Exchange is struggling for survival in a global world and trying to get eager. Economies of scale is the primary goal. We need to take a step back and think about what drives exchanges, a combination of volume and price, the spread being critical. A much different environment to drive profits and this is the reason behind the transaction. Tom thank you so much on behalf of all of team surveillance, we dont want an 18 hour day. I am looking at five and a half hours. Francine i think 17 and a half hours will be fine. Tom the news flow is extraordinary. We will begin a remembrance of september 11. This happens traditionally in new york city but traditionally with the sunrise at the pentagon. Worldwide, this is bloomberg. Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. At comcast, we didnt build the nations largest gigspeed network just to make businesses run faster. We built it to help them go beyond. Because beyond risk. Welcome to the neighborhood, guys. There is reward. Beyond work and life. Who else could he be . There is the moment. Beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. Take your business beyond. Francine this is bloomberg surveillance. A couple of things happening. Boris johnson the Scottish Court ruling two hours ago on the suspension of parliament. Process has even more confusion than it did two hours ago. It seems to be a deadlocked political system ahead of this october 31 brexit date. Little movement on the pound for the moment. Lets get straight to the first peer, first word news. The hong kong Stock Exchange made an offer for the london Stock Exchange group. Bringing the two companies would redefine Capital Markets for decades to come. The offer coming weeks after the lsc agreed to by data provider agreed to buy data provider refinitiv. Ofna announced a range products that will be exempt from extra tariffs put into place last year but major agricultural items will not were not included. China imposed those tariffs to retaliate for higher u. S. Import duties. The protestant hong kong seems to be having an impact. An airline reporting 11 drop in passenger traffic, saying the outlook is slightly more positive. California, the state Senate Passing a bill that could transform the gig economy. It would force company such as uber to reclassify their workers as employees. That would make them eligible for a minimum wage and overtime pay. Right now those workers are considered independent contractors. The California State Assembly still needs to pass the measure. Global news, 24 hours a day, on air and at tick toc on twitter, powered by over 2700 journalists and analysts in more than 120 countries. I am Viviana Hurtado. This is bloomberg. Tom thank you so much. It was a mess, the mess was Morgan Stanley and then it was james gorman to the rescue with a remarkable focus on Wealth Management. Jason kelly, carol masters spoke with james gorman. I expect they will do one or two more but then it is time for a pause because the problem with cutting is it is one of the few tools youve got to be given away too easily. What if we have a real problem . I would be very surprised. Year at this 10 point, i expected it would be around 3 . James gorman on the ballet of the ecb and the fed. Right now it is a reunion, Gina Martin Adams from Bloomberg Intelligence. From wells fargo, sarah house joins us. It is amazing how i have been deficient on fed to chat the last couple of days. We have become distracted. On the 18th of this month, what is going to happen . We will see another rate cut but keeping the door open to further rate cuts in the coming months. We dont think this is the end of the easing cycle we are expecting to see. Tom there is a parlor game right now in the market. The market your world. Beyond the market doing september 18 . Gina it depends on which market you follow. The bond market expects we are in for a massive fed cycle coming from the balance sheet. The equity market maybe not quite as convinced but definitely expecting at least two more rate cuts, probably at least one in the early part of 2019 or 2020, excuse me but we have gone back and forth on that. It was an extreme repricing of expectations led by the bond market rally. The equity markets are to capitulate to the motion to the notion that the economy was likely slowing down and now in september we are may be repricing a little bit. Thesene sarah house, are insurance cuts from the fed or are they worried about something ugly happening to the World Economy and if it were something ugly, is it spearheaded or started by the u. S. China trade war . It certainly is the u. S. China trade war. We are seeing from effects from that such as lower capital spending. This is an area where we will see some outright decline. Insurance than just cuts and we actually are seeing growth already slow, but we think given that overall, a lot of strength coming out of the consumer side, that with some isitional fed easing, it predicated on the fact that we dont see further escalation in the trade war. What is the piece of data that the fed look slow looks at outside of the u. S. . Is it china employment or Something Else . Sarah i think it is closer to the venue factoring cycle. Some of the weakness you are seeing from overseas, manufacturing is much more exposed in that capacity. I think they are watching overall industrials and globally we have seen that slow. A lot of the pmis e struggling outside of the u. S. In addition t more recent struggle in market investment. Tom the heritage of wells fargo carefules, paying attention to the consumer in america. What is the dynamic in america for the consumer . Sarah overall it remains pretty good. If you look at where Balance Sheets and savings rate are, especially in a historical sense, it remains good but we are seeing some slowing spending coming out of the consumer based on tom are you seeing that in revenue . Consumer stocks are like 4 revenues. Splitted and it is ugly. Gina we are not seeing revenue yet. We are seeing domestic Growth Holding up s p 500 revenue and earnings growth. The risk to me is if that decline translates into contraction in job growth which then translates into contraction in Income Growth and the consumer capitulates. Right now the market is set up to expect steadily asked steadily increasing growth from them on from the nondomestic growth, a drag from the Manufacturing Industry and from tech stocks and anything related stock for to china anything related to china. Francine if you put stimulus, if the fed cuts rates or it sounds more dovish, how long does it take to reach the real economy . Gina it could be sometime. This was in the argument of the last 10 years. Every time the fed has added more stimulus, the natural response of the Financial Market commentators around the world is , this is not going to impact growth. The reality is it does impact prices but everyone sort of questions how much it will impact growth over time. The traditional elation ship between fed policy and the economy is generally a 12 to 18 month lag so we will not see the effects until late 2020. Intriguingly that is when we are expected to get our recovery and earnings growth, the second half of 2020, Analysts Expect much stronger earnings growth. Componentecast of a of this is what happens with trade policy, fiscal policy. Not necessarily Monetary Policy because Monetary Policy can only go so far. Tom what happens when they cut rates on the 18th . A number of guests suggesting the oneyear lag to see an effect on the economy. We are past that. What would you expect on september or november 19 . Sarah much more of it is about what is the signal going forward. Tom the press conference. Sarah given that the cut on the 18th is already priced in. I think you could see some easing of financial conditions and to the extent that that lowers rates. Francine winner we going to have a little bit more i dont know if we would call it normal markets. Gina it depends on your definition of normal. We are clearly still late cycle markets. They are characterized by lower average price gains with higher average volatility. I think a lot of this will depend upon the moving parts of policy. If you get extraordinary fed policy intervention as well as ecb intervention and then you have some reversal in trade policy, you could see a dramatic shift in the condition of markets. For the last two years we have been in late cycle conditions. Tom Gina Martin Adams said she would not come on unless there was some good news in technology. Traintrain wreck, lyft, wreck. A transaction may work. Coming across the bloomberg, the idea that cloud fair will actually raise the price range. Is a much better range than was expected. Here is cloud flare. Matthew prince, what a breath of fresh air given what is going on. The news flow is extraordinary, particularly on the idea of the hong kong Stock Exchange mating with the london Stock Exchange. On ecb policy, Matthew Miller will be tomorrow and there will be a modest press conference at 7 45 a. M. This is bloomberg. Francine this is bloomberg surveillance. Tom and francine from london and new york. More news on what we have been covering for the last 19 minutes. We understand the hong kong inhange saying that the deal trying to acquire the london Stock Exchange is not a hostile transaction. They also say it is critical to lsd lse deal would provide a way for them to hedge a little bit away from the hong kong economy. Quote from charles lee. This is vintage mr. Lee. He likens the transaction to romeo and juliet, maybe not. Chris hughes, always writing for Bloomberg Opinion graces out an important essay for wall street. , the londonaph Stock Exchange agreement to buy refinitiv which competes with bloomberg lp, the parent of Bloomberg News is forcing the hand of anyone who wants to buy the london board. If lses Shareholders Approve the refinitiv deal, the British Company will become too big a target with a vote on that transaction due at the end of this year, any auction among lse bidders would have to happen this year. That frames the immediacy around this transaction. Francine i think we have a tweet from the president , President Trump tweeting on the fed. The federal reserve, he says it should get Interest Rates down to zero or less. He is suggesting that rates should then start to refinance our debt. Interest costs could be brought down while substantially lengthening the term. We have great currency power. That is from the president. Lets get a dollar chart to see whether it actually moves anything. We were joking about whether he would tweet during the mario draghi presser tomorrow but he is a day early. Tom he is no doubt listening. Sarah house of wells fargo. This is a basic overview, dovetail in ecb and the United States in blue, the ecb fiveyear measure of inflati, europe flat on stacked, even the United States touching down to 2. 16 in white. Rates in britain are quite low. There is an ecb fed distinction, isnt there . Sarah there is certainly a policy scope that in terms of overall growth, the dynamics there are. Terms of stronger potential growth, more space to cut, more of the ecb, or constrained but you are seeing some similarities in terms of an eagerness and desire to move sooner rather than later. Tom we are seeing all of these banks. How do you respond to a president ial tweet and he trump trigonometry and says the 10 year yield is going to zero . How do you respond to that . The fed rate going to zero, excuse me. Sarah while we are seeing some slowing in the economy, it is not anywhere to a point where we are near a recession. In terms of expectations for the fed call, not only will we get easing in september but we will get 50 basis points of easing after that. A total of 108 100 basis points of easing. Francine how do you view the ecb tomorrow . Is mario draghi going to try and counter what the fed is doing or does he need to make sure he does enough tomorrow so that tomorrow and in october, so that when the new ecb president takes over, we are expecting a big package for the ecb tomorrow, to not only cut in the deposit rates but also lowering the major Financing Rate as well as restarting qe. Tohink this is just trying draghi is trying to jumpstart the euro zone economy to the extent that they can and give it a little policy space to do more, sooner so things dont get too bad where they are really constrained and what they can do and efficacy is even worse at that point. Francine do they really have the firepower to do anything at all or do they just need to try and push germany to do fiscal stimulus . All ofi think it is an the above approach. If you look at the main reFinancing Rate, bringing that down, the program is perhaps a bit more attractive. That has been pretty beneficial. It has worked fairly well. To the extent that they can look at some of the parameters around qe as well, that could be beneficial to it at least in terms of helping inflation dynamics. Tom sarah house with wells fargo, thank you so much. There will be a set of remembrances as there have been for 17 previous years. The 18th anniversary, but is not a painting although it looks like one. That is the flag at the pentagon. You can see by the stone as it is decidedly a rebuilt pentagon. Stay with us. This is bloomberg. Viviana you are watching bloomberg surveillance. Is under an antitrust investigation and are being asked to turn over a lot of information from their advertising business. Investigators are targeting the heart of googles Business Model. Learned a company is considering major changes to its governance structure. This is to address investor concerns. Theyre worried about going ahead with a share sale that could value the company as low as 15 billion. The target of an antitrust investigation by u. S. Regulators. Bloomberg has learned the u. S. Federal trade commission started interviewing smallusinesses that sell products on the Worlds Largest online retailer. Investigators want to find out if amazon is using its market power to hurt competition. The questions being asked suggest the agency is skeptical of amazons claim that shoppers and suppliers have real alternatives. Tom thank francine thank you so much. Opinionb, our bloomberg column is who focuses on tech. The amazon probe by antitrust officials over the marketplace. How big could this be and could it go to the crux of the Business Model . Alex what we are seeing is that amazon has two ways of business works. It has its own warehouses where it sells things directly and it has its marketplace where business x may want to sell a thing through amazon and amazon may not even touch the goods in the meantime. Amazon is accused of looking at these products and saying i see this pencil sharpener is doing particularly well, we should sell pencil sharpeners. Is azon Business Model if regular leaders feel that people having to use the marketplace, that points to the power that amazon has. If you are going to operate in the space, you have to sell things on amazon, irrespective of the damage it could cause you and that is the broad question it opens up. Francine we have been looking at the marketplace in europe. Regulators catching up . Alex we have already seen this in the european commission. They have already been asking these questions. Points to something we have known for a while now that what starts in europe often carries on in the u. S. It has gotten to the point where these regions are on the same point. Europe is not leading so much as the u. S. Is catching up and that poses a huge risk for these companies that have amazons Business Model. Francine apple is going for cheaper phones and they have this new service and they are giving it away for free for a year. Alex it points to that commitment to the service. Cheaper phones and getting people on board into the tv products at a low price. Or if you buy a phone you get tv for free for a year. That is where they want the recurring revenue to come from. The app the issue apple has is it makes a lot of money off it has to addbut consumers to stump up it has to ask ask consumers to stump up 1000 a year. Tv would be a far more productive a revenue stream that gives them more certainty heading into the next decade. Francine how much revenue will come from the streaming service and for the moment, because if you buy an ipad and get the streaming service for free, doesnt that make you choose between it but in a year you wont have to . Alex the fact is there a big question marks over what level of profitability profitability these businesses can achieve. Companies,ese other disney has said it will take a hit to its profitability as it invests in it. There is a mounting price for over a dozen or so services that are launching over the next 18 months in the u. S. And gradually that will trickle out elsewhere. Apple may choose a long bet on the hope that it delivers in the years to come but frankly the most Profitable Service that apple has is icloud and the app store. Newe are things which the products it is launching, the tv will be the most prominent and we dont know what the road to profitability will be. Francine thank you so much, alex webb, covering tech stocks for Bloomberg Opinion. As we go to break, lets remember september 11. This is what is happening, tributes across the dented states to mark the anniversary across the United States to mark the anniversary of the attack. Ttack. I suspect they will do one or two more, but then it is time for a pause and really absorb this. The problem with cutting is it is one of the few tools youve got. Alix keep some powder dry. Morgan stanleys ceos advice to the fed. And a 36 billion surprise bid. Announces achange deal for the london Stock Exchange, buying 36. 6 billion. And market whipsaw. Jp morgan sees value rotation could last as investors reposition. David welcome to bloomberg daybreak on this wednesday, september 11. Today is the anniversary of the day 18 years ago when terrorist attacks took the lives of some 3000 people. A series of events commemorating the lives lost against at sunrise, with the unrolling of the American Flag at depend on. There will