Transcripts For BLOOMBERG Bloomberg Surveillance 20240713

I am Francine Lacqua in london. You can see the stoxx pretty much unchanged, and if you look at the chinese were nimby the renminbi, china does not want a comprehensive deal with the u. S. , and we are looking at the pound, because we are seeing a little bit of a move on brexit, things on both sides, the eu saying they are looking at a proposal but are expecting more from the u. K. , the u. K. Saying they want to speak to Emmanuel Macron, the president of france, directly, and the euro is now at 1. 0973. And hsbc is cutting jobs, but bloombergs get to first word news. Reporter ready to emerge with impeachmentrump inquiry, a Law Firm Says it is acting on behalf of multiple whistleblowers. Abc news earlier reported the second whistleblower has not yet spoken to the committees investigating the president. The white house says this does not change the fact that trump did nothing wrong, and ealspects for a brexit d fading, after doubt be a cast on whether a deal can be reached before the october 30 one deadline, but Prime Minister Boris Johnson striking a defiant tone, saying the u. K. Would leave with or without a deal doubt being cast on whether a deal can be reached before the october 31 deadline. The u. S. Signals it will not stand in the way of turkish operations in the region after flagged anrdogan operation against militants. Turkey is prepared to use military force to prevent that. And there is no need to ease policy unless the slowdown gets worse according to the Kansas City Fed president who dissented against the last two rate cuts because the u. S. Is doing well, but she says she is prepared to act if she sees a change. She is one of the most hawkish officials at the u. S. Federal reserve, and over to hong kong, where it has been one of the most violent weekend since protests began after the government launched emergency rules to ban facemasks. Today remain limited for the second time in a week a teenage demonstrators shot and wounded in clashes with the police. Global news, 24 hours a day, on air and tictoc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. Francine . Francine thank you. Hsbc cutting more jobs, as many as 10,000 could go as part of a costsaving plan on top of the redundancies already flagged. Europe could be on the brunt of the initiative. Joining us is a bloomberg banking reporter. Nia, we have not yet heard from hsbc, but where do we think the job cuts are going to be focused . Is a goodyes, that question. You can look at the banks and see the less profitable and make a guess and see where the job cuts are going to be. Most likely, it will be across the group. And you cant assume that some of the job cuts are going to be you can assume some of the job cuts are going to be in europe. Basically, they will miss the target, the return target rate, so it is a business, and they are keeping an eye on it to look at improving profitability. Is this astefania, crisis . There has been a change, but these jobs are on top. yes, it shows an aggressive side of the ceo, and the reduction, the Cost Reduction programs. This is definitely more aggressive and shows that the ceo has a sharper focus on profitability and a more aggressive style of leadership. Francine what are we hearing from the bank . Are these confirmed, or are these just media reports . So we have to wait until hsbc comes out and says . Nia yes, they have to say. Francine three days ahead of crucial negotiations, china says it does not want to agree to a broad trade deal with the u. S. Prospects . E and a second whistleblower against donald trump is about to emerge. Francine economics, finance, politics. This is bloomberg surveillance. I am Francine Lacqua. Reporter raising a 30 billion pound bid for the London Stock Exchange, move after there was conditional support from some key shareholders. A paper reports the deal would have to be raised between 90 to 100 Pounds Per Share to be taken seriously. Hkex wasal offer of rejected. The industry faces growing criticism of the Environmental Impact of packaging. They say they will reduce plastic by 100,000 tons annually and will also step up to achieve these goals at unilever. And hopes for a solution for the three week strike at General Motors are fading as they asked for more investment in american factories and commitment. Labor bosses say talks will have taken a turn for the worse. Gm says they will negotiate in good faith and are committed to finding a solution to the strike. And that is your Bloomberg Business flash. Francine . Francine lets talk more about trade. Negotiators from the u. S. And china are prepared to restart talks, but we have heard that china is going into the talks with reluctance about a broader trade deal. Isry kudlow said the u. S. Openminded going into the trade talks. Of the issues, the commodities, the tariffs, the ownership, the forced transfer t. Theft,logy, the i. The cyber hacking, all of that will be on the table, and china has been buying some commodities as a goodwill gesture, so lets keep an open mind. I do not want to forecast. I will just say this is a good thing for going into the negotiations. Is a chiefoining us strategist at Morgan Stanley. We are hearing from beijing. What is a chance we get a deal from here until, i guess, lets call it the president ial election in 2020 . I guess it means what you mean by a deal. The risk to the market is that we get something that is just a standstill, just agricultural purchases by china, small things, things the u. S. Does not put any additional tariffs on, and that is seen by some sort of mini agreement, but it does not do anything about the tariffs still on the table, and it does not really move the needle in terms of giving businesses the certainty they need to really ramp up investment, and that is our base case at Morgan Stanley, that we see that pause that leaves the existing tariffs in place and does not really move the needle in getting things done. Again, i think it is that type of standstill, and i think the challenge is we are still facing a u. S. Backed drop where the s p is a couple of Percentage Points often alltime high and the Unemployment Rate is low, and i think what we have seen over the last year is it often takes a aore markets trash and lot more market stress and pressure to move the administrations stance. Francine in this limbo, if it does not get worse, and if it does not hurt the consumer, could we be looking at this for the next three to four years . Andrew if it stays in this middling range, then i think it is still a drag on business confidence, still a drag on Business Investment. We are seeing volumes around the world incredibly weak, so i think the status quo is not necessarily a good thing, so we are still forecasting decelerating growth globally, and i think that is a challenge. Francine what about future investment, or if there is a crash or a crunch in the next couple of years . Andrew i think we underestimate the effect it has on growth right now in the next 12 months. This becomes an issue where, if we go by the last 12 months, almost cannot get resolved without a greater level of market stress, so the market is a little bit stuck, because if there is not greater market stress, there is a strike on growth, and more stress is unpleasant to live with. Francine how much of an impact, or how much of a drag, is this on u. S. Growth . It is mixed data. Andrew i think you are already seeing it in manufacturing pmi, which drop to below 50, a major surprise to the downside, and the christmas season, there is already a lot of stockpiling of goods, where there is a lot of consumption, and this next round of tariffs has broadened out to affect more consumer goods, so i think it is already weighing on consumer confidence. We are starting to see figures, which are high, coming down, so i think it is a concern. Francine how much of a concern is it for Chinese Companies . Andrew this argument, and you hear it quite a bit, well, it is in chinas interest and in the u. S. s interest to support the economies, and i think you could have made that statement six months or a year ago. They are focused on the longerterm. Francine if we get some type of agreement, disagreement, what impact would that have on markets . Andrew i think a limited agreement that leaves the existing tariffs in place, i think the market would see that as disappointing. What they need to go higher is for tariffs to be rolled back. That would be positive and would move higher, and our base case, if that does not happen, i think youre still in a Challenging Market environment. Francine in this Challenging Market environment, what are you doing . Andrew we are cautious. Regionally, we see better value in japan, better value in europe, two markets that are behaving, more reasonably valued, where we think ownership is lower, but overall, we are defensive. We are overweight cash and do not see a lot of value in global markets. Or done do you buy gold, clients ask you to buy gold . Andrew clients are looking at it. You are seeing futures rise quite a bit with gold, but you already had a big move in the dollar. You have already had a big move in rates lower, and, look. I think the fed might come out and disappoint with their minutes this week, right . I think the fed is sounding less dovish than the market expects them to be. We are commodity neutral. Rinsing andrew sheets, Morgan Stanley, and a second whistleblower could be about to emerge. We have that story, next. This is bloomberg. Francine this is. Bloomberg surveillance. Lacqua. Ncine a second whistleblower in the impeachment inquiry concerning donald trump might be about to emerge. One lawyer says his firm is now representing multiple whistleblowers. Has suggested that the people have been spying and has threatened them. Is still with us. Kathleen, second whistleblower . Ofhleen in all likelihood, course, we may not know. There is federal law that tries to keep them hidden, and that has been particularly contentious, given trumps comments of trying to ferret out these people. I think this is significant because his line all along has been maybe a row or a political motivation against him, so now that we have at least two voices, potentially more, coming forward and making arguments or an argument against prompt, raising a red flag, i think that kind of a roads or counter avails his argument that this is think kind of i erodes or counter avails contra avails his argument that this is an isolated event. Where into a situation trump retaliated on twitter. I think the key here will be to watch the polls, and if we start seeing Republican Voters or independent voters, we might start seeing Senate Republicans beginning to pilaf in terms of their support for trauma. A lot of them Senate Republicans beginning to peel off in terms of their support for trump. A lot of them have been keeping their powder dry. We see people going to capitol hill and testify, giving close your testimony to those looking into the matter. The Trump Administration has indicated that some of those folks will not be allowed to go and testify, so the sparring we have seen all along between the Trump Administration and others over who is allowed to give information, and i think it is going to be another week of kind of putting more meat on the bones in terms of democrats. This meanwhat does for markets . , wonder if markets will react and if Elizabeth Warren gaines, you could argue she is a big winner, if Elizabeth Warren gains, you could argue she is a big winner. This is only the fourth time, so looking back at what this means historically, n 3, so it is hard to say, but the bigger issue is this will provide one more reason for businesses to push back on and pull back on investment and wait for more clarity, right . You are already entering a 2020 election season that is inherently uncertain. This will be one more thing that potentially makes the political backdrop more volatile, and i think it is one more thing that holds back Business Investment and keeps businesses on the sidelines until they have more clarity on what the longer run will be like. Francine you are right. We are not used to these kinds of events, so could you be mispricing things . Andrew there are always things that people are waiting when they should be doing things. 2016 was pretty interesting. There, you had an enormous amount of stimulus from china. It was clear early in the year that the Economic Data was improving, and yet, businesses and consumers still held off spending because there was this uncertain election environment coming up, so i do think that is another risk. I think they think that the election is a positive catalyst, because the Current Administration will want the economy to be good in an Election Year, and a 2016, it was actually a catalyst for people to hold back, for activity to be deferred, and then once you have an outcome, it is positive. Francine what we are waiting for in the next couple of weeks, nancy pelosi was reluctant for the impeachment process, fearing backlash, but is their backlash, or when it will come . Kathleen there is some movement, albeit mild, in terms of public support for impeachment, so that is certainly positive for democrats. Whether that continues is an open question. More significant is whether there is Movement Among republican and independent voters, so the timing will matter, it will be interesting in terms of strategy potentially getting this done before the end of the year as opposed to waiting to next year. Obviously, the closer you get to the election, the bigger the x factor it becomes. Francine there are a couple of panels this week. The Trump Administration gets to determine who gets to testify . Kathleen the administration the to have some sapient question is, like anything else, does the Trump Administration force a battle on this the ministry should gets to have some say. The administration gets to have some say. One interpretation, it could send a message. Francine if you look at this is huge for President Trump. It takes quite a bit of headspace. Doesnt have an impact on trade talks with china does it have an impact on trade talks with china, where is that farfetched . Andrew it is not farfetched. Any administration has unlimited bandwidth. The more focus on this impeachment inquiry, potentially the less attention, the less time that can be spent on broader trade strategy, on other types of policy initiatives, and i think you are already facing a pretty narrow legislative window, or summer optimistic we might see some infrastructure or some are optimistic we might see some infrastructure. We had Morgan Stanley are skeptical, not because we do not see the votes there but what is going on with this impeachment inquiry makes it less likely. Francine thank you both for joining us. Kathleen hunter from Bloomberg News and Andrew Sheetz from Morgan Stanley. Coming up, one of the most in hong kong. Ds we are live with the very latest. This is bloomberg. Trade talks tightened three days ahead of crucial negotiations area china signals it does not want to agree a broad trade deal with the u. S. Another 10,000 jobs according to the europe will bear the brunt. And hong kong claims up after another weekend of unrest cleans up after another weekend of unrest. We are live in the city. Good morning. This is bloomberg surveillance. Im Francine Lacqua in london. Lets check on whats moving in the markets. Annemarie you can see down more than 16. 5 . They were out with a profit warning also going to be selling two of their units. We have seen a read across like travis perkins, all of us in the u. K. Construction world getting hit with this warning. The biggest loser on the stoxx ams. Its falling alongside latest bid to not meet the minimum criteria of support that tender came in about 10 lower. Butsays they will continue the likes of bain and pe firms are looking into the books. A swedish biofarma company up more than 4. 5 , biggest gainer on the stoxx 600 area this comes down to a financial newspaper within sweden, talking about the fact that the stock has been brutally hit and now the valuation is low. Francine thank you so much. Hong kong is reeling from one of the most violent weekends of the longrunning democracy protest. Demonstrators paralyzed large swaths dealing a large blow to the economy. Emergency rules for the first time in more than half a century to ban facemasks. Sophie, first of all run us exactly what happened in the last 72 hours. How violent were protest . Sophie escalation of protests with petrol bombs being used by the hardliners as the cops used tear gas and other measures to try to contain those clashes. This, in the wake of a law taking effect friday which has received great backlash. Against what the administration deterping for to protesters to into the street area im in a commercial district which has been a rallying point for these demonstrations. We will likely see folks gathered here as they hope to participate in rallies that are. Upposed to take place acros this after thousands rallied for the past three days in defiance li. The ban on masks being used as you can see, vandalism has been this is one of the stations that has remained closed after the Subway Networks which shut down temporarily over the weekend. Seen businesses in hong kong affected, foreign and otherwise right here. This is a domestic retailer which has taken a hit especially with mainland tourism coming to hong kong being curtailed as well. We are anticipating more demonstrations as carrie lam just three days after returning from hong kong to beijing. There is a lot of criticism. For aers looking temporary injunction. A Court Hearing is to be held by the end of this month on that matter. Francine thank you so much. Lets get to the bluebird first word news. Viviana bloomberg has learned in recent weeks the range of trade topics beijing is willing to discuss with washington has narrowed. Hina appears reluctant President Donald Trump wants chinas offer one include or government subsidies. These are core issues for the u. S. Did u. S. Nuclear talks with north korea breakdown . The u. S. Disputing north koreas assessment after pyongyangs top negotiator said the u. S. Arrived emptyhanded. South korean media reporting the north is not keen to hold more talks until washington withdraws what it calls hostile policy toward pyongyang. Where agal, that is socialist Prime Minister one this weekend elections. Gaining more seats in parliament. He will fall short of an absolute majority. A rare victory for europe left. It has been batted on both sides by the rise of the greens and the farright. Turkey says u. S. Troops are withdrawing from Northern Syria after the u. S. Signaled it will not stand in the way of turkish operations in the region. This comes after president erdogan flagged an operation against kurdish militants, ankara suspect in the u. S. Is backing kurdish aspirations for selfrule. Turkey willing to use military force prevent that. Global news 24 hours a day on air and on tic toc at twitter powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Driven factory orders aggravating and industrial slump that has pushed europes largest economy to the brink of contraction. Lumbar economics says the economy is probably already in recession. Still with us, andrew sheets from Morgan Stanley. What do you worry about the most . The European Data is the weakest but i think that is where the markets already the most cautious. We look at what european rates have done, what is priced in for ecb action, its very dovish. What worries me the most is probably the u. S. Data, where i think theyre still the most optimism that the u. S. Consumer will see that ship through stormy waters. I think you see a lot of worrying signs from pmis to consumer confidence, that the u. S. Economy is slowing. The pace is suggestive of a poor forwardlooking return environment. Francine when you look at negative rates in europe, how much risk are people putting out there on the markets . Andrew i think that is whats fascinating about the debate of negative rates in europe. The debate seems to have shifted in the past couple of months in a way that it has not shifted in years. Ecbhave seen prominent members speaking out against ecb policy. Divided counsel in the last meeting about action, and i think there is a good debate, and honest debate about whether we have reached the point where further Interest Rate cuts actually tighten financial conditions and dont ease them. I think that is a reason the ecb and will be rates more vocal in asking and demanding governments that they carry the burden the ecb has carried too much of that in the cycle. Francine thank you so much. Andrew sheets, from Morgan Stanley stays with us. Coming up, London Property staying hot. Realf londons biggest estate managers. And e scooters drive ahead. European starter looking to challenge u. S. Scooter unicorns. This is bloomberg. Francine this is bloomberg surveillance. As the u. K. Approaches brexit, with or without a deal on october 31, bi money has fled the sector one of europes biggest Real Estate Managers saying london is a top city for tenet demand and growth. With more, dani burger. Getsni osea of the u. K. When we look at u. K. Property upflows they start to ease 2019 but you see over the past few months, they begin again in full force. For the past 11 consecutive months weve seen investors pull their money and it has rivaled that of the referendum vote in 2016 where we saw major withdrawals force the biggest fund to suspend redemptions. 67 billion lasalle investment management, they see opportunity in london real estate. I caught up with one of the investment strategist at simon marks and he noted that Foreign Investments in u. K. Property have investment since the end of 2013 has fallen away and a lot of that is due to brexit, despite there being a weak currency. We also know given the attractive incomes that real estate offers and the transparency that someone like london has, global status, there are cues of investors waiting to go in at the right time. Dani qs of investors. Investors are ready to pile into london. Every year lasalle puts out its top cities for future occupancy demand and you can see london has hit it number one spot. The third consecutive year. He said despite economic challenges, london has always been able to bounce back. Think of the. Com bust, making it an especially attractive investment in the current late cycle environment. Francine francine thank you so much. The latest on some of the real estate. Lets stay with brexit and signs of a prospect of a deal between the u. K. And European Union are starting to fade. President Emmanuel Macron and ireland they want progress by friday. Boris johnson struck a defiant tone over the weekend saying the u. K. Will brexit on october 31, deal or no deal. Andrew sheets, with us. What is priced into the market . Andrew i think the market has is assuming a delay in the brexit discussion. They do not think the market is price for an exit on october 31. I think that is where the current commentary is notable because you have a Prime Minister who is both saying he will obey law by parliament designed to push back the brexit deadline yet also say hes committed to leaving on an earlier october 31 date. For the market, i think that is an ongoing nearterm uncertainty. I do not think the currency market or the broader u. K. Asset market is priced for a hard exit on the 31st of october. Francine Boris Johnson has never said anything else. He said 31st round. Why does the market not price it in at the margins . Andrew i think the challenge is because you have had this act passed by congress that seems to force an extension through law. This is an issue where deadlines have repeatedly been put down and moved back. You had theresa may repeatedly saying the 31st of march will be the date. Obviously, here we are. For that reason the markets have to believed or led that these deadlines can always be flexible. I think we are in a period over the next several weeks where it is important, as a potential to drive volatility. Theres quite a bit of uncertainty. Francine what is your main concern about the way this could take . If we have an election and i called for december are we going to see Something Else . Markets always like certainty. A lot of these issues potentially dont provide certainty. Even if the u. K. Leaves october 31, all of these issues, the border, the money, these are all issues that are still with us. Even that does not necessarily result the issue. If you move toward an election, you could get a parliament that at the end of the day still could not agree on what a brexit deal would look like. I think with the markets want is a resolution. I stressed that a resolution is not necessarily the same as having brexit happen or not. Its a great deal of certainty what you need to make longterm investment. Francine is there an asset that you like at the moment because it looks cheap and the u. K. Or do you just not touch it . Andrew i do think the equity market is a most recently valued thing. The ftse 100 is one of the cheapest Global Equity markets of 20 or 25 that we covered on a variety of stats back through ine, however, you are still this period of significant uncertainty. We currently dont have recommendation on it. Of the assets in the u. K. Its probably the most recently thats reasonably valued. Francine chief asset strategist at Morgan Stanley. Lets get to the Bloomberg Business flash. Drivea a costcutting according to the Financial Times. It reports europe may bear the brunt of the plan. The bank is questioning why it has so many stops in the region when it has doubledigit returns in parts of asia. These cuts are on top of the nearly 5000 already announced in august. Hsbc, declined to comment on the report. A 4 billion euro offer from ams failed to attract support from shareholders. To pursue is bowing an opposition pursuant acquisition. That is as they mull a further german lighting firm. That is your Bloomberg Business flash. Francine up next to the east scooter markets drive ahead. European scooter startup challenging u. S. Unicorns. Nymex francine finance politics. Im Francine Lacqua here in london. The future of transportation or a Public Safety hazard. Whichever you think he scooters are a focus of major Worldwide Investment the biggest u. S. Players, bird and lime valued at 2 billion each. Tier mobility is one of europes biggest e scooter sharing companies a primary competitor to those u. S. Unicorns. Its as it has raised 60 million in new financing in a new round led partly by the Sovereign Wealth Fund vehicles behind softbanks vision fund. Joining us as the cofounder of tier mobility. Something i know that has a hearts racing. So keen to colead this investment. What does that mean for your funding and where does it mean that you go next . Lawrence we are super happy side. E have them on our we have a big mission. We want to change mobility for good. We need to get strong investments with strong conviction and that is what they have. Francine e scooters and germany have only been legal since june of this year or the summer of this year. How has that changed the market . Lawrence germany turned out to be the most exciting market in times of acceptance, just by the customers. Are,ery city where we connection to the public transport. Germany is the biggest market for transportation, this is a key market. The most important in the world. Francine what is your biggest concern . Finding a solution with some of the cities and where you leave the scooters . . S it making the scooters making sure they are safe . Lawrence the traffic situation. If youre in mumbai or new york or berlin it is a mess and we have to change something. Now is the right time in history to really tackle the current status and give customers better access to mobility. I think if you ask about my personal concerns, i think we are going to a situation where we have to rethink cities. Cities are not made for cars therefore we have to find a way for regular tourists to have scooters in the city for the perfect safety situation. Francine what does it mean for regulators . How are they adapting to a huge number of the scooters around . In the u. K. For example, right on the pavement but then it could be david dangerous riding with the cars. Lawrence the city is currently designed for cars. Rethink we have to how we are going to transport ourselves in the cities. We need bikes, wider biking lanes. Scooters, better chance and better structure to go to the cities. We have to partner with the cities to make sure that we have enough space for those vehicles and it is a lot safer than before. Francine people worry that the buses cannot get through and theres too much traffic. If you look at competitors in the u. S. That are so much bigger and expanding into europe, do you have intention to expand in north america . Germany is the biggest market for transportation in europe. Europe has turned out to be the most successful market. We believe completely in europe. This is our focus now. Were going to win germany, europe. I think for us it is important to be labor focused. Francine do you think the industry will have to consolidate because there are so many active e Scooter Companies . Lawrence always the question making the cost structure more effective. I think we are in the very early point of time. Our company is around 12 months old. We are at the beginning of disruption. There will be a point of time when it makes sense and lets see. Francine what comes after e scooters . I dont know if its a smaller electric vehicle or Something Else. Is there something that you think has been untapped in the space . Lawrence we have a clear path to creating new vehicles and i think we are not far away from that. It will be a vehicle that is suited for the cities that you can drive in the rain for the winter season which is very important. This is something youre currently working on. We will increase our fleet of new vehicles and this is part of our company. A Service Provider and we want to give you as the customer different vehicles you can transport yourself to the city. Francine how important is it to be biggest on as possible to get market share or otherwise the u. S. Will eat your lunch . Lawrence in a sense of you need a lot you need enough access to capital. If you compare us to the american players, we raised around 30 million our first round and reached 10 million rides before anyone else in the world. It is not about just collecting money, it is very much about how you invest your capital and how efficient you are. I think this is something really sees us as the most capital Efficient Company decides being the fastest in the industry. Francine what is the lifecycle of your scooter . Lawrence currently, 18 months. I think we will get to two years. We develop our own scooter which is very durable now and we have in every city this is my background i have been importantng and it is that we expand the lifetime of these scooters because we want that is something economic friendly. Francine lawrence is the oftier. R and ceo tom keene joins the out of new york. This is bloomberg. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. You can share 1, 3, or 10 gigs of data between lines, mix in lines of unlimited, and switch it up at any time. All with millions of secure wifi hotspots and the best lte everywhere else. Its a different kind of wireless network, designed to save you money. Switch and save up to 400 a year on your wireless bill. Plus, get 250 back when you buy an eligible phone. Thats simple. Easy. Awesome. Call, click, or visit a store today. Just three days ahead of crucial negotiations china signals it does not want to agree on trade deals with the u. S. Hsbc could eliminate another 10,000 jobs. Europe will bear the brunt. Hong kong cleans up after another weekend of unrest. Will the emergency ban on facemasks come with protests . We are live in the city. Good morning and good afternoon if youre watching in asia. This is bloomberg surveillance. Tom, we will spend a little time talking about brexit. A little bit of time talking about trade. If you look at the markets, kind of moving sideways. Drifting with no clear indication of whats next. Tom tom the jobs report at 3. 5 unemployed america, an extraordinary number. 11 00 p. M. Last night, washington time, the New York Times broke a story on turkey, isis, the kurds, and the president. An extraordinary story that will develop in america this morning. Francine we will have more on that. We will also look at the impeachment process. Lets get to the bloomberg first word news with viviana hurtado. Viviana china wants to narrow the scope or trade deal with u. S. Beijing singer signaling it is reluctant to work toward trade agreement pursued by President Trump. Negotiations resume this week. The chinese will not offer to reform subsidies. The u. S. Has complained about the sticking points. The white house giving turkey the green light to invade Northern Syria in the coming days. Turkey will go up against kurdish forces. Reversals a possible for President Trump. He warned turkey of economic devastation if it attacked kurdish troops in syria. British Prime Minister Boris Johnson is not backing away from his threats on brexit. Johnson repeated his pledge to take the u. K. Out of the European Union on october 31 if necessary without a deal. Hes trying to persuade the eu to negotiate a new deal along the lines of the one he proposed last week. Mayportedly made cut cut as many as 10,000 jobs. According to the Financial Times, a work the workforce in europe would bear the brunt of the cut. Global news 24 hours a day on air and on tic tok at twitter powered by more than 2700 journalists and analysts in more than 120 countries. Commodities, as francine mentions, equities are the weight to that. Off that bloomberg story, 6 00 p. M. Last night, looking at difficult trade talks. We will get to that in a bit. Showing the equity 18. 41 off the good friday close. But with all that said, it is critical to note the 30 year bond at 2. 02 really underscores the growth field for this fourth quarter. Into 2020. Francine i put pound up there because of rupert. We are expecting a court to rule on possible sanctions of the Prime Minister should he defy the law. We will keep an eye on that. Im looking at european stocks fluctuating a little bit. Earlier we said they were down, now they are a little up. Treasuries nudging higher. Thisre focus on report that china may be increasingly reluctant to a broad trade deal with the Trump Administration. Lets get more on trade negotiations from the u. S. And china preparing to restart talks on thursday in washington. I was just saying china is going into meetings with a new reluctance about a broader agreement. Joining us is Tom Mackenzie. Why do we think china is reluctant . it dovetails what we have heard in terms of reporting. Comments and private from chinese officials, policymakers, really since may when the trade talks broke down, that of course, they want to have a more narrowly focused set of conversations with the u. S. U. S. Dignitaries have been discussing with the likes of they have come back and told us that what the chinese are not going to be putting on the table is that industrial policy. The push to automate, the push for autonomous vehicles, that kind of thing, that is not going to be discussed according to the chinese side. They want to keep that off the table as well as the subsidy regime for the state sector and the private sector as well. Surprise. R it adds clarity in terms of chinas positioning ahead of these talks thursday, friday. Trump said he wants a 100 deal at a conference of deal. Tom lets look at the domestic pressure that the president and vice premier have as well. Everybody showing this chart. What i want to show is not only the spike up evanescent of years ago but on a jolt basis, a jolt to the households of china we are well offside to standard deviations of a trend. A real acceleration to this. What is the daytoday, moment to moment pressure on the communist leadership over surging port prices . Pork prices question mark Tom Mackenzie prices are up 70 yt 10 million tons of port they have unleashed some of their frozen stockpiles, put in place initiatives to ensure there is more pork on the market but its going to take a long time. I dont think they will be able to address those shortages into 2020. From a policy response, it tightens bands and restricts options for the pboc. Monetary policy will be more restrictive because pork prices it makes that Monetary Policy response that much more difficult. That ties into the trade story. The economy continues to slow, but will the pboc be able to step up as aggressively as it has in the past . Possibly not with pork prices this high. Francine thank you so much. Tom mackenzie in beijing. When yourupert look at trade, it looks like we are in kind of a limbo, status quo. How much does it impact how much investment is on the market . Could that still be the catalyst that puts the World Economy in a worse footing . Rupert we have seen that impact coming through. Combined with the impact of tightening financial conditions in china and the u. S. Over the last couple of years. The trade impact in addition to that. I think the judgment you referred to is still that this is unlikely to be enough to push the Global Economy into a more generalized slump. We see domestic demand relatively resilient even though slowing a little. This is something that will be with us for some time. Whileue it is been for a whenever you get optimism about the big deal between china and the u. S. That is something you want to say the conditions are not in place, chinese in particular are not willing to put on the table their core strategic interest. Francine what does that mean for the Trump Administration . We had mixed data in the u. S. Jobs was ok and before that it wasnt. When does the manufacturing concern hurt the consumer . Rupert the major concern that came about over the last week in particular, employment indices the nonmay affect ring ism which is the first hit of something potentially more serious, u. S. Corporates under pressure, facing a significant amount of ce uncertainty. That is the key thing to watch in the months ahead. We are not seeing any early but that is the key risk. I think where we have High Conviction is cost forward six to nine months the u. S. Will be in a gradual recovery phase because we have seen the recovery of financial conditions and we have not seen a significant shock enough to drive the u. S. Economy into recession. The uncertainty is how do we get over the next two to three months before we see that recovery kicking in. Tom have you changed your investment approach because of all of these geopolitical events . Think theres prolonged uncertainty over trade. We set for some time justifies a discount in growth. Its a reason to be a little more defensive. I would say that is the big picture background. The time particularly in europe to be leaning into cyclicality. The markets have priced a lot of economic gloom. All of these geopolitical uncertainties are pretty fully priced. If we are near the bottom of that manufacturing cycle, which i thing we are in europe, and maybe close to the bottom in u. S. , defensive equities are richly priced. Weve also got low bond yields around the world. Gloom inhat prevailing the short term. Tom just in the last four weeks the terminal rate has become more embedded in our minds. Is that the tone and blackrock, the idea of a low rate regime is actually become that . Rupert i think the global pressures that are forcing this low rate regime are here to stay. When i say we are feeding low bond yield we are not targeting the 10 year up around three anytime soon even though we saw that relatively recently. I think this is about getting yields backup to two or little higher. The terminal rate as you referred to is now very locked in. It would take a lot to change them. Francine Rupert Harrison stays with us from blackrock. Multiasset strategist there. A check on hsbc. Stock a little lower after reports from the Financial Times that the bank may cut up to 10,000 jobs to slash costs. We will have more, next. Viviana viviana youre watching bloomberg surveillance. The union for striking in general workers General Motors workers says talks to end the walkout to the turn for the worst. Inuest for more investment u. S. Factories. The union saying gms response to its latest proposal did not address some issues they identify as sticking points, including job security. Gm says it is bargaining in good faith. Hong kong exchanges reportedly will raise it already 6. 5 billion offer for the London Stock Exchange according to the times of london the Hong Kong Exchange received conditional support from some key shareholders. The London Exchange rejected the initial takeover proposal last month and set it wants to complete its own deal. At 27 billion takeover of the data provider preventative. For financialetes data. Yearit is that time of where you right size in the case of all of our reporting on surveillance, any and all will be rightsizing. Hsbc gets out in front. Harry wilson joins us. 4000 to go. 4000 to go and now 10,000 to go, are they done . Harry this is now basically largely done. There might be a bit more to come. We are moving to a new phase under their interim chief executive officer noel quinn and what he wants to do is try to get a handle on the cost base of this bank. Tom the cost base of the bank, is that a retail bank in Continental Europe . Is it the romance of Investment Bankers dashing around the pacific rim . Which part is the debris of the american experiment 10 years ago . Which part of the hong kong and shanghai banking will be hit hardest . Harry harry i think you are looking at europe and particularly Continental Europe to place from citibank. We are really looking at Continental Europe. In most part, we are looking at the french retail bank. Francine how much of this is a banking crisis . Like quite a big number or is it a new chief executive with a more aggressive stance to get out front . Harry the last chief executive was in part ousted. So the new guy basically or the temporary new guy, has really got a mandate to get going on the cost and do what his predecessor had done, which is get the number of staff down. Francine doesnt make sense for them to hold onto the French Business . Or should they sell it off harry if youre talking about the french wholesale bank is probably safer now. If youre talking about the resale business, theres already signals coming out thats going to be sold. That seems to be at the early stage. That could be a large part of these cuts we are starting to hear about now. Tom tom thank you for the brief. Appreciated from Queen Victoria street. Somehow i do not think it will be the first announcement or the last announcement of this quarter i should say. On americanuch more banks. Ichael mayo, new ceo i dont think hes going to talk about wells fargo. Mike mayo will talk about american banking. This is bloomberg. Francine this is bloomberg surveillance. Lets talk about brexit. Prospects of a deal between the u. K. And European Union are starting to fade. French president Emmanuel Macron and irelands leah wreck Prime Minister Boris Johnson saying the u. K. Will brexit on october 31, deal or no deal. Rupert harrison from blackrock is still with us. Of knowledgelot the tory party it does give us perspective into what we are seeing now. When you look at what the market is pricing in, is there any glimmer of pricing of a no deal brexit and should they price that in . Rupert a little of that still priced. I think the market understands this has been pushed forward until after democratic events of some kind. We will have a general election for a small probability of a second referendum. The uncertainty mainly embedded in the outcome of that election. Happens anhat extension giving the Court Rulings rupert i think the common nation of a solid majority in parliament that not only has legislation but can respond to anything the government does to pin any holes in the dam that the government manages to create plus a legal system showing its willingness to enforce the law means we should see with these as a political stance. They want to maintain the purity of message theyve had. In the end they will abide by the law. Extensionme theres and general election do we have to price in Jeremy Corbyn Prime Minister under some kind of alliance or is it a conservative win and therefore keeping the specter of a new deal alive . Rupert rupert a labor majority government is very unlikely where the polling is. You could get a minority Labour Government led by Jeremy Corbyn that would most likely lead to a second referendum. It is possible Boris Johnson can win a majority. If you look at the polling, it has stayed very resilient over the past few weeks. The labour party are about 10 behind the conservative party in the polls. That wins you a lot of seats, that kind of gap a main predictor. We are back in a similar situation. I think that is when the European Union will have to engage with these u. K. Proposals a little more seriously. At the moment they can sit back and wait and see how the cards fall in general election. Tom i tried to do all my reading on brexit and in the middle of the calendar there is october 14. Frame the significance of the queens speech. Does Buckingham Palace want her give the speech . The people of the United Kingdom want to hear from her . What is the body language of the queens speech here in less than 10 days . Rupert it will be a tricky one. Im sure the palace would like to stay out of this brexit scenario. She most likely is going to have to come to parliament and read out the government legislative agenda is what the queens speech is for. I think the difficulty is everyone will know that agenda is really an election platform because no one expects there to be a full session of parliament able to pass all these bills or be announced. The government gets it will be theater. It is all about the lead into a general election. Tom i get that. Does Prime Minister johnson resign . What do i need to look for in the next to get to get october 31 . Rupert we will get a European Council summit. That will most likely not lead to a deal. We have to remember there is a small possibility that the u. K. Makes further concessions to get the deal. I do believe that is Boris Johnsons first best outcome. He genuinely would like to get a deal. He is very constrained. Most likely we dont get a deal. I think the government will push this to the limit. If they have any loopholes in the law they will try and exploit those. I thing they are happy to be taken to the Supreme Court and be forced by the Supreme Court to request extension in some way. I think its all about getting to that point, whereby Boris Johnson can get into a general election while maintaining the purity and clarity of message he has built up over the last few weeks. Francine Rupert Harrison from black rock. He of course stays with us. Bloombergs guy johnson will speak to a former advisor to Prime Minister Boris Johnson, one of the possible contenders for becoming the governor of the bank of england. We have Great Stories on the bloomberg terminal, talking about what the boe could do under Governor Carney in case of a no deal brexit. As a great story out saying when this to trillion dollar market turns start worrying about brexit. We will have a look at what they are talking about. U. K. Assets, next. This is bloomberg. Speaker of the house nancy pelosi announced an official impeachment inquiry against President Trump on september 24. She said she is directing six committees investigating trump to proceed with their probes under the umbrella of a formal impeachment process. One committee would bring forward articles of impeachment to a floor vote. House members can present their own impeachment articles without a prevent. They have to be adopted by a simple majority at which point the president would become impeached. It would be up to the senate to remove the president from office. Mitch mcconnell said it is mandatory to hold a senate trial if the president is impeached by the house. Senators would become the jury as house members acting as jurors. A two thirds majority in the senate would be needed to convict the president. If that happens, the president would be removed from office but could run for office again. Tom a wonderful civics lesson. I will play that a number of times through october and probably through the end of the year. That was outstanding on the complexities of the rules of impeachment. Derek while bank is with us. He is a bloomberg Senior Editor with a lot of experience based out of singapore. Good morning. On the impeachment this morning, lets go to news and notoriety. All of the sudden Vice President pence might be drawn into this. How will that play out this week . Derek that is right. Isis not just pence but it rick perry and a host of other people in the Trump Administration. When you are talking about and impeachment inquiry, you are talking about something that goes all the way down in the Trump Administration. It is not Something Like with the clinton impeachment that everyone is familiar with, where just it is about the guy at the top. This one stretches down to a lot of people. I think that will complicate matters because democrats will have to figure out how far they will go and where they will stop. Tom we are going to cut it short, we will get him back on for more extensive conversation. Rupert harrison is with us from blackrock. One of the strategies is to avoid impeachment. The geopolitical distractions are absolutely extraordinary. Is this a gridlock that is beneficial or is in a gridlock that has a unique character for investors . This is athink secondary issue for investors. We have seen in the past reaction to these type of events. Nobody is seriously expecting this to get all the way toward removing the president from office. Ass is seen by investors political noise, albeit dramatic. I think far more important is the global macro momentum that develops over the next few months and the ups and downs of trade negotiations. What is the gdp macro . I understand the u. S. Is doing better but do we need to recalibrate that in october . Rupert we were saying earlier, the big news is the employment components. The only way this manufacturing slow down can trigger something more serious is if u. S. Morenies start to hire than it is what expected. That is something to look for in the next few months. We could see from weakness in domestic demand over the next few months. On the others we have financial conditions that are very supportive in europe and the u. S. I would expect to see that come through in the bottoming of the manufacturing cycle. Europe has worked through this weakness little more than the u. S. Has. Think wed into 2020, i will a recovery. We are positioning for improvement, but i think the question is in the u. S. In the next few months, we could get prints for markets to remain nervous. Francine if Elizabeth Warren gets the democratic nomination, what happens to markets . Rupert at what point do markets start pricing that risk . There is a perception that point is gradually moving forward. In the past, we have been well into the Election Year we saw that in 2016 round health care policy. It is clear that people are racing to catch up with the realities of what these policies could mean for markets. I think it might take an edge off with some of these micro issues, were Elizabeth Warren has some radical policies. In other jurisdictions, we talk about the risk of a Jeremy Corbyn government and the u. K. , Elizabeth Warren will be tempered by what she can get through congress. Francine does it actually change the dynamic for dollar . Rupert i dont think so, not at this stage. That is not a trade policy dynamic. The dollar continues to be bid because of upward pressure because of fiscal uncertainty and uncertainty about global growth. I would expect that to improve as we headed to next year. The dollar is unlikely to see another leg up. Francine markets are clearly expecting more from the fed that they seem to be intimating they will do. How disappointed will markets be . Rupert i dont think markets will be disappointed this month. There has been enough weakness for the fed to feel enough to feel emboldened. We might get another cut, most likely in october. We still see this in the context of the midcycle adjustment. We are not going to get significantly more than 100 basis points cut in total. Where we see more than that over the entirety of the cutting cycle, that is where we might see the disappointment. Tom rupert is with us and will continue with us. Here is a viviana hurtado. Viviana north korea and u. S. Disagree how talks went over the weekend. Pyongyang said he does not want to hold more discussions. Administration called the talks good. Toth korea has been pushing ease sanctions. It has been staging missile tests. Want tokong, activists follow up that chaotic weekend with more demonstrations. Demonstrators fighting with police and vandalizing stores. The latest protests surrounding after hong kongs chief executive used emergency rules to ban facemasks. That rule was largely ignored. His party increasing in parliament but it does not have an absolute majority. The victory is rare for europe. Global news 24 hours a day, on the air at tictoc, on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am viviana hurtado, you are watching bloomberg surveillance. This is bloomberg. Francine you are watching bloomberg surveillance. Viviana lets get the Bloomberg Business flash. Reportedly its workforce. It could eliminate as many as 10,000 jobs. That is about 4 of its workforce. Hsbc wonders why it has someone people in the region when most of its profits come from asia. Facebook skeptics have a place derivatives are offered based on the idea it will be operative by 2020. The National Basketball association try to defuse a political firestorm in china. The league apologizing after the general manager of the Houston Rockets tweeted his support for protesters in hong kong. That tweet led Chinese Companies to suspend elation ships with the team. The Houston Rockets are one of the most popular teams in china. Kong is reeling from one of the most violent weekends of the longrunning democracy protest. Ofonstrators paralyzed parts the financial hub, dealing another blow to the economy during a threeday weekend that would usually be packed with forests. Tourists. How violent were the protests . Are we expecting more or will they die down is the week progresses . Antimask law was enacted id midnight on friday, when it came to the intensity, the hardliners were using bombs and the police used tear gas. When it comes to how intense the protests might be, because of the Public Holiday you can expect demonstrators take the streets again. This is usually bustling with shoppers but it 5 00 p. M. , we have started to see shops roll down their shutters and demonstration of the protest. This is usually busy with tourists but not so this year. Station, we did see some services resume but very limited. This particular causeway was shut down on monday and the entire network will be closed once again. Seen is a big build up of people trying to get on buses to get out of the district, which along with other neighborhoods, could see rallies tonight. Francine thank you so much. Lets get back to Rupert Harrison from blackrock. We were going to ask you about china and whether this impacts the economy, but overall, how should the market price in these geopolitical events . It is difficult to know what comes next. Alwayshave to hedge certain parts of the portfolio . Reason fors is a being more defensively positioned than you would otherwise be. Attention. The hong kong situation is relevant so far as it could lead into making more difficult for either side in the u. S. China trade negotiation to make concessions if there was an escalation. These factors deserve a discount. That has been true for some time, though. We still need to think about where the markets are pricing too much caution. Tom the great debate of last week was international versus u. S. Largecap investment. Oft is the blackrock view the international largecap gets it up and gets going will that be forever . Rupert i think that is a key question and it could be one of the key questions heading into next year. There are pockets of global equities, bits of europe that look like they are of real value and we saw the potential a few weeks ago for this value rotation to be pretty vicious given the extent of positioning for growth, quality, etc. I think what it needs is more reassuring and convincing evidence of a bottoming in global growth. People will be looking for reassurance it is not bleeding into Service Sectors in domestic economies. If we get that condition and the geopolitics remains in this emergingou could see and europe as part of a value rally. The conditions are not in place right now. Look it does come down to earnings season. We are there, it is october. What is the framework you have dynamicsngs, revenue and earnings dynamics . Rupert they are relatively depressed. Earnings news will not be the factor that triggers that rotation. That will have to come subsequently. Growth conditions are relatively sluggish. It is hard to have much positive conviction about growth in the em. We have not yet got the kind of global momentum that em needs. That is something that could emerge. Francine if we have a trade deal, then momentum will pick up . Rupert i dont think it is quite as simple as that. We dont expect a deal but if we get a mini deal that might help in the short term. That could help the reemergence of conviction in the Global Economy but i think this is more about working through existing weakness you have. You are still absorbing weakness and demand from china. The fact that china will not reemerge as a consumers last resort when it comes to investment goods, but we need that weakness to be worked through. We need natural flock coming into a natural floor coming into global manufacturing. I think we should wait a little longer to see if these conditions start to feed through into activity. Tom Rupert Harrison is with us and will continue. Us, i wantn was with to bring you your attention that mr. Wilson makes it clear it will be a partition of businesses, including french Retail Banking. Markets, on Bloomberg David westin and balance of power, a president ial candidate. This is bloomberg. Francine this is bloomberg surveillance. That is an event where we will hear from the italian finance minister. Presentation at a of a report on the italian economy. Aim is totheir relaunch toward growth and employment. He is confident the italian budget will be well received by the e. U. We are back with Rupert Harrison from blackrock. Can they shock the market into believing that in the first few months they mean business . Rupert i would not be too optimistic. They could do enough to reassure the market there will be some stability and in a sense that is what you need. There was incredible improvement in financial conditions so some of the shock from the last year should wear off. You have a political situation where the government is in a electionshe fear of could bind this government together for some time. If we could find some calm, that could be relatively positive. Francine these are economies that are hurt by negative rates and that could get worse. What today need to implement to be able to grow . Rupert there is a long list of structural reforms. We saw a brief window open up under Prime Minister renzi and we saw some achievements during that time. It is difficult to see that time difficult to see that window opening up any soon. We saw some progress in the labor market, there is a lot more that is needed to shock the long run fundamental growth rate. I dont think anyone is expecting that. Tom i want to turn to negative rates. When will this end . Not for some time. We talked about the low rate environment globally, i think that will stay for a long time. Particular, it is hard to see conditions in place where they can and a negative rate environment. We dont see any life emerging in core inflation in the euro zone. It looks like it was a clear policy error to end qe with a did. They were forced to. Really end, we will need global drivers and low rates to change. We will need significant changes in fiscal policy. That is not going to happen until we are staring into the teeth of the next downturn. Powerful downward force on Interest Rates. Not anytime soon, i would not hold your breath. Tom we have the banking crisis. I understand harry wilson saying the hsbc layoffs a management issue. Must adjustanking to this. Are we at a critical point or do they just do for example, just move things down the road . Rupert that has to be the central case, kicking the can down the road. The Banking System faces serious headwinds, particularly in the rate environment. I dont think that will change anytime soon. If you look at credit numbers and lending in the euro zone, it has not been too bad. Clearly the Banking System is still able to sustain moderate growth rates in europe, even in this negative rate environment. As an investor in banks in europe, there is an opportunity if we think it is underpriced in europe shortterm but that is a strategic longterm investment. Francine how much does europe suffer in this trade war between the u. S. And china . Rupert europe has suffered from the chinese slowdown. Would still give most of the responsibility of the chinese slowdown to chinese policy. The trade war has contributed to that. I think europe has seen a particular slow down and demand for capital goods, including in sectors like energy generation. Obviously we have seen specific issues around autos but most of that is domestic. Europe tends to benefit from a strong global environment, so it is certainly suffering from a low level trade war but most of the woes europe is facing come from elsewhere. Countries from germany to france to spend more fiscally. Rupert i dont think so. A fiscaltually has stance at the moment, they will face some trouble maintaining that into 2020. All of this noise around fiscal and germany and netherlands policy, theeen moves are glacial. I would not expect anything significant. Tom thank you so much. Showould do and all brexit with Rupert Harrison. That would be a joy. Good comments, particularly on international versus u. S. And domestic investments. We look at the news on the u. S. And turkey. This is bloomberg. Tom this morning, there will be a trade war well, there will be trade war talks. Adopting to ae likely haoching peace and of the president . Of the jobut front reduction. Overnight, north america will leave Northern Syria. All of the president s men disagree with the president. Good morning, this is bloomberg surveillance. The news is absolutely extraordinary. Let us begin with this immediacy of brexit, we are 24 days away from brexit, or are we . Francine we dont know. Rhetoric coming from Boris Johnson is punchy. He said even if there is no deal we will be leaving. If you look at the Supreme Court, there is a belief in the market that he wont be able to do that. There is a belief he will have to ask for extension unless there is a deal with that you before october 31. Tom there is a lot going on. With our first word news, it is viviana hurtado. Viviana the white house giving turkey the green light to invade Northern Syria. Turkey will go up against kurdish forces, have been alley with the u. S. And the fight against islamic state. If it trump warned turkey attacked kurdish troops in syria. China wants to narrow the scope for any trade deal with the u. S. Beijing saying it is reluctant to work toward a broader trade agreement. Negotiations will resume. Bloomberg has learned the chinese will not reform policies. The u. S. Has complained about these sticking points. In hong kong, activists want to followup chaotic weekend with more protests. Demonstrators 4wood police and vandalized stores. Hong kongs chief executive imposed an emergency rule to ban facemasks. Hsbc reportedly might cut as many as 10,000 jobs. The british banks would bear the front of the cost. Hsbc is questioning why it has somebody people in europe when it makes most of its profits in asia. Global news 24 hours a day, on the air at tictoc, on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Hurtado, this is bloomberg. Tom lets get right to the data. It is usually a quiet monday on data but will go through the numbers. Clearly off the bloomberg story around 5 00 p. M. Last night on challenging trade talks with china. The euro a little bit of strength versus dollar weakness. 18. 48. Own to the thirtyyear buying gets my 2 on the it means 30 year bond. Francine i am looking at european equities and they are drifting. They were down a touch, they were up a touch and now they are relatively unchanged. There are a lot of questions about the broad trade deal with the Trump Administration. China would be reluctant to accept a broader trade deal. You can see a lot of equities range bound over the last three days. Tom get out the map, we did that around 11 00 p. M. With a bombshell announcement out of the white house. He arrived for a two day meeting in belgrade. Always a symbolic meeting. Everything he does now as symbolism including a phone call yesterday with President Trump and then a release of a white house statement. We will show you that statement in a moment. If we can go to the map as we refresh ourselves on the complexities of the distance from damascus to the Northern Syria of iraq, that is a wonderful map. Thanks to our map team of putting that together. Troops will exit and 60,000 kurdish troops will have to find Something Else to do. Is our chief content officer. Josh wingrove and others are catching up on the announcement late last night. It is extraordinary announcement. The kremlin says syrian territorial integrity must be priority. Lets begin with square one, the body language that the president did this ad hoc almost unilaterally . Like theost seems Foreign Policy of donald trump, he decides what the policy is going to be. He would notry, even meet with mr. Bolton. Dont forget turkey took these air Defense Systems from russia. It was considered to be a real strategic problem for the u. S. Now you have the russians with a pretty mild statement when you get down to it. Are on the verge of invading syria. Tom we have had a large presence in and sample. The heart of the matter, we dont need to turn this into an ir exercise, but turkey has been a nato member since the early 1950s and there is a set of baggage. What is the modern take of this . Is it wrapped around the white house statement . If we can bring up the statement on the white house, this is the exact quote from the white house that we had that we have defeated the caliphate, i am paraphrasing. Have we . Marty according to donald trump we have. Clearly the state no longer exists in that region. Many people in the National Security apparatus have said it can easily reassert itself with the absence of the u. S. Presence there. Tom right. Marty turkey has been our ally but the kurds have been a bigger ally. Tom the quotes are white house quotes. The u. S. Armed forces will not support or be involved in the operation and u. S. Forces, having defeated the isis territorial caliphate was no longer be in the immediate area. Francine the impeachment, we know there is a second whistleblower that will come forward, do we think the Trump Administration will let several witnesses speak to the house this week . Marty the white house basically dared nancy pelosi in the democrats to take a formal Impeachment Vote among the entire house before paving the way for people to testify. They will not allow people to testify to the House Intelligence Committee in the absence of that vote. It is complete posturing, to a certain extent, on both sides. Francine what comes next . But we see more conversations being dive all and is the Republican Party still sticking with this president . Marty except for a handful of republican senators like mitt romney, the republicans are saying nothing to see here, there is no impeachable defense. No impeachable offense. The democrats have to stay disciplined and keep the process transparent and clean. Adam schiff has stumbled a few times, misspeaking on a few occasions. Anything like that, donald trump donald trump jumps on it and he is a master at that. The secondith whistleblower, will there be less of a backlash from the public if more people come forward . Marty the reports are this second whistleblower had firsthand knowledge of the allegations in the initial whistleblower report. The white house has complained this is all hearsay. I dont think it will be hugely significant except that it corroborates the initial whistleblower complaint. Tom what a busy monday. Good luck with Bloomberg News today. We have much more coming up, the important article last night on trade. This is the basic idea that the chinese have a limited scope for trade. Futures reacting off that story and a number of other stories. Futures at 15. This is bloomberg. ,om bloomberg surveillance good morning everyone. Futures are at 15. Moving the markets, no question about it, the white house has a wider scope in the chinese have a more narrow scope as we go to important talks this week. Us. Stopher marangi is with i will go to the theme last week and right into this week that is the idea that at some point emergingmarket investments have not moved like u. S. Domestic. When did they start moving or is it forever dead money . Christopher there is a big valuation gap between the u. S. And most international markets, including europe. We saw the beginnings of irritation in september, moved to value. You can see the same thing with regard to international markets. Tom is it literally just getting some of these gigantic news items out of the way . Christopher im not hopeful that will happen anytime soon but a china trade deal would help everybody. Would but it looks unlikely will get one. If we stay status quo, what does it mean for markets . Chris the markets are realistic with a trade deal not happening in the odds going down, especially as the impeachment noise continues and heats up. Small deal, big deal, dont think there is a chance for a big deal. Francine what does it mean for the consumer . I would say we have diverging job reports, what kind of u. S. Economy are we looking at . Chris the data has been mixed. The consumer has hung in there. Consumer confidence is at an alltime high. Is this going to be a repeat of what we saw in 2015, 2016 where the industrial economy rolled over led by oil, the consumer helped the economy get through it . Or will this be Something Different . I think it is too early to tell. I think we avoid a recession before the next election. Francine because you think the consumer is Strong Enough to withstand anything . Chris i do. The fed has some ammunition left. Not the bazooka that the europeans use, but some ammo left. Tom what came up over the weekend, i want to address this in the next halfhour, is the 30, 31, 34 multiples of consumer stock. Absolutely extraordinary. Have we hit the nifty 50. Chris we have been talking about this dynamic for several years. Tom now it is extraordinary. Chris going back to the rotation we saw in september, there are a lot of big, safe Global Companies that investors have been hiding in the top the brunt of the selloff. These are great companies. Of theard, visa, some best managed companies in of world. But there is a price. They should be trading forward and the price got a little high and we saw that come back. Francine thank you so much. Chris will stay with us. We are looking at hsbc. We have some news initially from reports, they are looking at significant job cuts. We had our own reporting talking about hsbc looking at shrinking by thousands but they are looking at possibly selling their friendship retail business. We will have more on hsbc shortly. This is bloomberg. This is bloomberg surveillance. Hong kong will raise its 3. 5 billion offer for the London Stock Exchange. It will receive conditional support from key shareholders. The London Exchange rejecting the additional takeover proposal. Instead it wants to complete its own deal. Bloomberg competes with rafina data. Providing financial facebook skeptics have a place to bet the facebook currency will miss at launch date. Likelihoodt on the libra will be operational by the end of 2020. The initial price equals a 30 chance of the cryptocurrency meeting that timeline. Jp morgan predicts the current Market Correction is half over. The bank saying it will prove to be less painful than last september. They say a recession is avoidable, recurring market slumps are not. Francine thank you so much. To reduce its headcount by thousands. Europes largest bank is looking to sell its french retail 4000ess, which would take people off the payroll. Thank you both for sticking around or joining us. We had an early report which was 10,000 job cuts ahead of the 4700 already announced. What are we looking at now . Talk they could do a switch for the u. K. Business. It looks like they will have to move on. There is a new sheriff in town and he wants to stay the sheriff because he hopes to get a permanent job. He needs to cut costs, which is the only game in town for banking. If you look at the size of hsbcs payroll, 238,000. Retail banking is dying. Banking might get there even occur. They have to sort out the u. S. At some point. Even prophets are struggling with what is going on in hong kong. Francine back in august, he was ousted as chief executive because he had not done enough but the market is not taking kindly to reports of tens of thousands of job cuts. Are they worried there are too many cuts . Is is where isnt growth coming from . You have to have an area or you can make the money. When you look at hsbc, one of the behemoth of global banking, if it is difficult for them, it must be difficult for everyone else. They have to cut costs, but where is Profit Growth going to come from . It is hard to deliver. Is a Hong Kongshanghai bank. Why cant they do that in europe . I dont understand the need to be in europe if you are minting money the way they are seeming to be minting money off the street in hong kong. An s in thee is name and that is for shanghai. There has been huge profitability over decades in hong kong. What are they doing in europe . Iny have never had traction the United States, either. Investment banking has been a perennial failure for them. Where did they turn . Safe, theynd and should cut costs, but where are they going to grow . They are putting their hopes on asia and it is proving a struggle. Europe is a disaster. Look at deutsche bank. Marangi is with us. Are there opportunities . I know you are u. S. Based, but you look at some of the booking values at some of these train wrecks . Chris i am happy in the u. S. The u. S. Banking sector has not been a happy place over the last five years. When we look at the u. S. Compared internationally, Balance Sheets are in good shape. Not as much pressure as there is internationally. U. S. Happy in the tom are we going to have the as we seel downsizing with hsbc . Chris there has to be consolidation in this country, especially with regional banks. Among the megabanks, i dont think that is politically feasible at this time. Consolidation is one way to go. Francine consolidation for some means they are asset shedding for others. How much will hsbc selloff . Marcus i dont know. Is an awful lot more they can do. They are competing heavily in the u. K. Mortgage market. That butsome value in they are making it impossible for everyone else. Really, they have a lot to look at for what they should be doing, a much broader picture across all of europe and potentially all of the United States. Francine will we see more stories like this . Tens of thousands of job cuts from other firms . Growth,unless we see unfortunately i think it will be an ongoing theme because Retail Banking as a whole is a dying industry. Francine thank you both. Coming up, we have plenty more on the trade war. We will have plenty more on banks and possible consolidations. There is a lot going on. We do a data check every 15 minutes. This is what we are looking at. We had a news report that china may be increasingly reluctant to accept a broad trade deal with the Trump Administration. European is weaker and leaders are casting doubt on a Brexit Agreement and time for the october 31 deadline. Francine this is bloomberg surveillance. Andand francine from london new york. Hong kong is reeling from one of the most violent weekends from the democracy protest. Demonstrators paralyzed large parts of the financial hub. Imposed emergency rules for the first time in more than half a century to ban facemasks. Latest to sophie for the on hong kong. What are we expecting the rest of the week . At 8 00 a. M. Monday there are calls for demonstrations, including here at the commercial district. You can see Department Stores are closed in anticipation. As of 6 00 p. M. This evening, the entire Subway Network has been closed for the second time in amtraks fouryear history. This time for repair work. When it comes to how big demonstrations may be tonight it remains to be seen. After the three days over the weekend which saw clashes between protesters and police. They are debating whether or not they should continue with their refurbishment for some of the vandalism we have seen across the city, francine. Tom we have images from hong kong. Maybe this is what happens on a monday after a protest. A memorial here for the people thehave died during prodemocracy protests. Governmentt is the response this week . Is there a calendar or a complete mystery to how the Hong Kong Government moves forward . It is difficult to ascertain what direction the government wants to take after the emergency ordinance was used on friday by carrie lam and the executive council to enact the law that would ban the use of masks during masked assemblies. Acrosss seen backlash the community. We have prodemocracy lawmakers attempting to have an injunction put against this. This builds up there is a lot of frustration. Carrie lam not compromising. The five demands the protesters seek have yet to be met. A lot of speculation with the government may do given the ordinance allowing for a curfew or limiting internet access. We had the government issue a statement clarifying and that at the stock market which reopens after the bank holiday. Francine thank you so much. In hong kong for us. Giving us the very latest on these protests. Lets get to the bloomberg first word news. The u. S. Is disagreeing with how toxins we then went over the weekend. Pyongyang says it doesnt want more discussions until the u. S. Withdraws its hostile policies. The Trump Administration called the talks good. North korea has been pushing the u. S. To ease sanctions and staging missile tests. They are seen as provocative. A second whistleblower may emerge with a complaint against President Trump. A lawyer representing the first intelligence official to come forward says that the firm is representing several whistleblowers. According to abc news the second individual says they have firsthand knowledge of the july call. That person offered details of the president s effort to get ukraine to dig up damaging information about joe biden and his son. British Prime Minister Boris Johnson isnt backing away from his threat on brexit. Johnson repeated his pledge to take the u. K. Out of the European Union on october 30 first if necessary without a deal. He is trying to persuade the European Union to negotiate a new deal along the lines of what he proposed last week. Clinching a second term. His party increase the number of seats in parliament, though it doesnt have an absolute majority. His win is a rare victory for europe left. Global news, 24 hours a day onair and on tic toc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. This is bloomberg. Francine, tom . We bookedet lucky, George Freeman out of austin, texas of Geopolitical Futures to speak with us on any number of topics. The news of flow and 11 50 last night has revved our script and ripped up our script. George freeman on turkey and President Trump. The resident acted unilaterally. How will the pentagon respond . How will the state department respond to what appears to be a single action by the president . It is the president s job and responsibility. They will do what he says. The basic point is this. Turkey is the fundamental power in the region. It is a longstanding ally of the United States. There has been huge tension between the two countries. Clearly trump wants to go beyond those tensions and is willing to sacrifice the kurds, at least partly, in that pursuit. It is not an irrational geopolitical move and how they handle it internally is ultimately a decision for the president. Look for syria territorial cohesiveness, i use that word myself. Do you assume that mr. Trump and mr. Erdogan are pushing the kurds towards an agreement with damascus and assad . Tim they may have an agreement george they may have an agreement. They are trying to push agreement along their border through long syrian civil war. There border has sometimes been poor sent under attack from isis, sometimes from syrian forces. The turks want to secure their border, they arent going to be very nice about it. Tell us what does this about the Foreign Policy of the u. S. . This is a reversal of what weve had in the past. George the u. S. Policy under trump is very inconsistent. He doesnt want to overly commit u. S. Forces in the middle east. Time and time again in iran when he had chances for military operations he declined it. His view is iraq and afghanistan has been a disaster for the u. S. , he doesnt want to repeat it, so he will move very lightly. As for the reversal of policy, basic policy has always been the same. Turkey and the United States must be aligned. When turkey went into what appeared to be in alignment with the russians, the United States was extremely uncomfortable of that. Trump appears to be wanting to pull turkey back into it. On the one hand he wants to be the friends with turkey. If he wants to be friends with turkey he cant be friends with the kurds. This is where you decide what is your most important friend. Francine does the shift cast further doubts on the reliability of the u. S. As an ally in the region . Of who . Ally turkey has been an ally of the United States since 1945. He is trying to pull back into that alliance. It is critical to the United States. Turkey is the major power in the region. He has to make choices. That is what president s do, they make choices among who to go with. Of thebe an ally simply kurds and alienate the turks. From the American Point of view, that is a dangerous move. Tom we lost an airbase in turkey. Its not as useful. Reports are we have other quatar and romania. Back to cyprus, back to the 1950s, what is our relationship with turkey . George the air force base youre talking about is still operational. It is the most strategic airbase we have. A strike north into ukraine if there is a russian offensive. It has the ability to strike all over the middle east. We dont want to lose it. The other bases dont substitute for it in many ways. With the United States is saying is look, we have a fundamental interest in our relationship to turkey. Past 5,iorated over the 6, seven years. We want to build it back. That means they will be unhappy people in the middle east. There are always some unhappy people in the middle east. Us thank you for joining with Geopolitical Futures. We have headlines out of general electric. I say that with a heritage back to when you worked for ge and you had what was called definedbenefit pension plan. He has seen the details of a press release. This is the future, maybe not for illinois and troubled state governments, but for troubled companies clearing it. The bottom line involving billions of dollars and 20,000 employees. He gave you a definedbenefit program. That aint working out with a new actuarial assumption. You are going with a 401 k . That is between the lines. Are we going to see more of this . Especially with rates going down. That makes the liability larger for rates going down and companies. Tom this is really key. As i have said for the last six weeks, and this comes off of a british article on an actuarial assumption of four point one percent, basically Corporate America is flat out not ready for the lower actuarial rate, which forces a greater cash contribution. Thats right. Not to mention part of the actuarial assumptions are part of the returns on the portfolios, which give where the market is today is not as high as many would assume. There is a lot of pressure, obviously come on these legacy costs and how Companies Work through them, more importantly how governments work through them, is something we watch closely. Tom have a wonderful chart to get us going on a monday. It is a restorative a corrected chart, if you will. Coming up, on balance of power democratic president ial candidate with david westin and the 12 00 hour. This is bloomberg. Francine this is bloomberg surveillance. Tom and francine from london and new york. We are getting breaking news, headlines from the spokesperson of Prime Minister Boris Johnson. He has said, Boris Johnson, will call the swedish, polish, and danish counterparts to talk about this possible deal. He says that they are ready to matchand that the eu must the u. K. Compromises. It seems like they are inviting spirits. At the same time, we did have a couple of headlines from Boris Johnson himself that he will not ask for an extension but will go out of the eu without a deal if necessary. Something, or the moment, the market doesnt believe. Coming up guy johnson will speak to the former advisor to the Prime Minister oris johnson, one of the names touted as Boris Johnson, one of the names touted as possible boe governor. Tom lets get to that chart. Floating around the jp morgan view that the correction is half over. We fell out of their chairs and picked ourselves up to look at the debris since december 2018. Yellow, correction. Read, bear market. , beare near that red market. Nowhere near that. We got near a correction in the summer, may and june, but not really. Are we going to take a loss . The Third Quarter did nothing. If you had gone away for the summer and come back you would have been in almost the same exact tom sell in june and come back in october. We have forgotten how to take a good old loss. The markets should be opportunities. Volatility gives you the opportunity to sell when stocks are dear and to buy when stocks are cheap. It is harder to pull the trigger when youre in the middle of a big selloff, but thats what we do. , somewhere inet maybecinity of 22,000, 22,500. A huge generational shift in the great bull market never felt normal pain. Chris the market has changed dramatically with the algos and marketdriven trading. Maybe that has kept us in the trading ranges. I would expect volatility to pick up and continue through the next 390 days until the next election. Muchine is there too worry that people looking for for risky returns . Is there too much money going into private equity or things that could go wrong that could start some kind of downturn . Chris i think that the notion of Investment Capital going to private equity as a whole another discussion. One of the reasons that allocators do that is because the market returns to market, of course. There are some questions about how accurate those marks are, and with the real returns are on private equity. That being said, too much money chasing, too few returns has always been a problem in the bond markets. We think equities is still a pretty good place to be. Francine does it mean we could be creating bubbles . If so, where . Bull there is a bubble, a market somewhere at all times. There are bubbles somewhere at all times. We saw bubbles and some of the big momentum stocks we talked about earlier, and some of the big growth companies. Those bubbles, i think, were shown to be not impermeable in september as you see some of the cash burning companies, the great netflixs of the world, and the great ipos come off their highs, pretty dramatically, actually. Tom we have George Freeman on ge. Key, and the news on they will move to a 401 k wrapped up in the employment Retirement Security act of 1974. Thenvolves for ge of all of costs of moving people over. Something like 100,000 people involved. Why are they doing this . The 10year yield from 15 down, down, down. Untilan they forward out 2029 . This is bloomberg. You are watching bloomberg surveillance. We begin with breaking news on the terminal. General electric plans to reduce deficit. Ion the refreeze pensions for 20,000 employees in the u. S. They are offering a lump sum option to 100,000 former employees who have not started receiving monthly pension claimants yet. Lee slashing g to slash its workforce. The bulk of the cuts may come in europe. So many people in the region where most of its profits come from asia. The National Basketball association trying to defuse a political firestorm in china. The leagues apologizing after the general manager of the Houston Rockets tweeted support for protesters in hong kong. The tweet led Chinese Companies to suspend ties with the team. The mostts are one of popular teams in china because of their former star, yao ming. General motors says talks to end a threeweek walkout took a turn for the worst. Stalled. E the union says that gms response to his latest proposal did not address issues that they identify sticking points, including job security. Gm is saying that it is bargaining in good faith. Much. Hank you, so there is a global, indeed national, impact to the gm strike. With us is david welsh, our bloomberg detroit euro chief. He can touch upon the third real that you were speak third rail you were speaking about. I was thunderstruck how frank joyce, a name that many will know in automobiles, and cowriter spoke of a uaw that is incredibly troubled. I understand this union is not my fathers or grandfathers union. Is it perceived in the greater gm world that this is a corrupt union . David they have got a lot of problems and corruption is perceived to go very deep. The Justice Department was nine for nine convicting people at Fiat Chrysler and the union on the Fiat Chrysler department for taking in terms of giving Fiat Chrysler an easier contract. You have other uaw leaders being investigated for taking money from the union for bribery schemes. You have different groups of Union Leaders being investigated or having been indicted or convicted for different things. It looks like there is widespread corruption. All these people need to be Proven Guilty before we can say that they are totally corrupt, but i have read the complaint that accuses gary jones, the current president , the past president , and a leader in the union who worked with gary jones it is very detailed. The government did a lot of work on this and there was a lot of money these guys were allegedly taking. Bus . Who is driving the gm are they lockstep in week four or not . This is an interesting dynamic. The corruption investigation going on right now is in the background. The indictments and convictions against the Fiat Chrysler executives and Union Negotiators is in the background. The current leadership, gary jones, is still driving the bus. He is the president even though he is being investigated. They have to negotiate a good deal to prove to their members they arent on the take, this isnt a corrupted set of negotiations. The Union Members are angry about unallocated plans like georgetown, ohio that dont have a product now or product to build after january, whether or not they will have job security there. Gm made record profits over the last four years and the union wants what they believe is their rightful share. Going into talks the Union Members were not going to ratify a deal that did not seem good to them. Now you have the Corruption Trust issue in the background. Going into the weekend we had good momentum and we hit a speed bump yesterday. Francine thank you, so much. The Bloomberg Detroit Bureau chief. We are keeping an eye on what is happening in hong kong. We are getting live pictures of a memorial. We have been updated by sophie, who has been on the ground for us all day. We did hear about violence over the weekend. Something is also expected to happen in the coming days as more protesters will meet. We will keep a very close eye on that. On bloomberg surveillance radio come up next. Otherwise, look at brexit negotiations intensifying as we hear from the spokesperson a Boris Johnson. This is bloomberg. Alix that could be bad news add news could be bad news bad news could be bad news. Morgan says equities are in the middle of their correction, and it would take a big zucca big bazooka for a rotation that everyone is waiting for. Jobs, a blowd cut to a region where Investor Sentiment is at a six year low. Welcome to bloomberg daybreak on this monday, october 7. We have a very busy week lined up for you. Im alix steel. Bad news could be bad news when it comes to the u. S. S p futures off the lows of the session, still down by about 0. 1 . Eurodollar pretty much flat. The yen and the swissie pretty much the out performers. 10 year yields