Transcripts For BLOOMBERG Bloomberg Surveillance 20240713

Francine lacqua is at the london event. We will join her later in the show. Lets get you through some of the Wild Movement in Global Markets. It was risk on. Believe that the chinese delegation was looking at a broad area of subjects, but now the latest lines coming through around basketball broadcasts. Now a warning from the chinese side. China sang stay tuned for a retaliation when it comes to the blacklisting of Chinese Companies by the u. S. Government. The market in the last five to 10 minutes is clearly turning. U. S. Equity futures 0. 1 lower. Gold, same story, flipping around, now higher. Trepidation percolating throughout the classes. The aussie dollar coming off the highs of the session. Other surveillance points to look out for. Francine. K. Time will be speaking to the chief executive of Fidelity International. Dodds half past 9 00 london time. Chinese state tv halting broadcasts of the National Basketball association games, saying the backlash intensifies over a tweet expressing support for hong kong protesters. The general manager of the Houston Rockets tweeting. The nba commissioner supporting his freedom of speech. Donald trump winning a reprieve over his tax returns, he has been granted an emergency appeal. Has to persuade the higher court to reject the ruling against him. The judge called his claim repugnant. President trump has not endorsed a turkish incursion. Confusion over u. S. Policy in the region, following an uproar of republicans that the president planned to abandon kurdish allies. Trump said, he would quote up litter rate obliterate the turkish economy. The Global Economic outlook deteriorating over brexit and a downturn in europe. Forecasts are 2019 growth are looking weaker than in june. The imf is on the same page. Back to joind come the eu in 10 to 15 years, ccording t we caught up with him at the bloomberg conference in london. People are saying lets just do it whether the prices. That may be a hard brexit. Without fully understanding the consequences, that is a bit scary. Global news, 24 hours a day on air and at tictoc on twitter, powered by 2700 journalists and analysts in more than 120 countries. This is bloomberg. Yousef thank you. Here is what is coming up. Being blacklisted, the Trump Administration targets eight chinese tech firms for human rights violations. We will break down. This is bloomberg. Yousef economics, finance, politics, this is bloomberg surveillance. I am yousef gamal eldin in dubai. Lets get the Bloomberg Business flash. Hkes is dropping its bid for the london stock exchange. It is no longer in the best interest of shareholders to pursue a deal. For tradingack between the east and west. They will look to build their role in asia. Samsung results getting estimates on Strong Demand for smartphones. 6. 5 billion for the quarter, that is 50 of last year as they grapple the slowdown in its business. Gainsfunds are on a roll, up 5 on average in the first three quarters, the best sense 2013. Since 2013. That is your Bloomberg Business flash. Yousef thank you. Lets get back to one of our top stories. The Trump Administration has placed eight Chinese Companies on a blacklist. Washington accuses them of human rights violations. Have reopened in hong kong and china after a holiday. For more perspective, we are joined by selina wang and garfield reynolds. Companysre about the that have been blacklisted from a chinese point of view . Companies are redhot high profile companies, some viewed as national champions. Vision which controls a third of the Global Market for surveillance cameras. Sense time is the most valuable Artificial Intelligence company, at 7. 5 billion. From facial recognition to robots to chips and semiconductors, it is a similar business. Thatdition to concerns these companies are allegedly involved in human rights violations, there are concerns about the relationships that they may have as well as the role they play overall in helping china to come world leader in Artificial Intelligence. Yousef moments ago we understood the Chinese Government has decided to halt nba broadcasts. How does that get factored into these trade negotiations, which are already tense. Selina the mood going into negotiations is as bleak as it can be. On the nba front, so much is at stake. A Multinational Corporation caught in the fray of the hong kong protests. 800 million it had viewers of its programming in china, nearly 2. 5 times the u. S. Population. This in combination with comments u. S. Lawmakers around the hong kong protests added to this blacklist and the fact that china is looking to narrow the scope of the trade discussions further narrows the window of possibility that even a minid could be reached. We heard from the ministry of Foreign Affairs to stay tuned for any retaliation from the chinese side. We could see some action around the chinese unreliable entities list. Yousef garfield, let me get you to weigh yen on this. Weigh in on this. Turnarket taking a clear in the last 15 to 20 minutes. Have investors been too complacent about realities that these trade discussions face . Especiallynvestors stock investors tend toward the hopeful side. They are hoping for reasons that some sort of deal which many argue would make rational sense for both sides to stop the bleeding from the trade war. You can see where they are coming from. I also think up until the last 15 to 20 minutes, asia had a bright day and there was a feeling to some extent the chinese had done everyone a favor by focusing on this minideal idea. By lowering the temperature and expectations, you were going into the talks thinking it is not do or die, not we have to have a big deal that trump tends to talk about. We can have a partial deal that gets some way toward trade piece, much like the japanese deal that trump just signed. It is a limited deal, there were things left off the table like auto tariffs. One thing that has put a kibosh in the last 15 to 20 minutes, china taking a concrete step with the nba tweet, and saying it will retaliate on the blacklisting. That is what has put the shark back in the water. Yousef that is the question of the day that the mliv team is putting out there. What would a narrow trade deal mean for markets . What Asset Classes standout . You can reach out to us on your bloomberg. Run me through the ideas for Asset Allocation in the coming hours. Garfield one thing already obvious from the market in asia, asian equities, we have been tracking this for months, asian equities are crying out for trade piece. Trade peace. Something that would stop the drumbeat of rumors, trump tweets, tariffs, retaliation from china. Something that would give some breathing room, and some sort of or reduction of uncertainty that can allow businesses back to making real decisions. You could get some sustained muchnd for asian assets and in particular the capacity for them to outperform at the moment when asian stocks bounce. They usually bounce less impressively than the u. S. And europe. On the downside, we are seeing bonds might have a lot to fear, they are already richly priced. Drumbeat a continued of bad Economic News and not so great trade news to justify the levels that are going on in the bond market. We will have to leave it there, thank you very much. Coming up, francine will be speaking with the chief executive of Fidelity International. Plenty more. This is bloomberg. Yousef you are watching bloomberg surveillance. I am yousef gamal eldin in dubai. Francine lacqua is speaking with the chief executive of Fidelity International, lets listen in. Francine we are focusing on the window, andrton that is the range of ideas considered acceptable in a the huge as disruptions, brexit, china trade wars and Climate Change. What do you see as the biggest shift . Is it sustainability or technology . Dr. Richards that is a tough one. Traumatic start the day, i got the wrong coffee. We sort of that with a lovely espresso. And only this morning, one of my iphones was functioning after the upgrade. Points without0 access to the internet. Technology in the terms of how it is shifting the decisionmaking frameworks is very radical in terms of how we can adapt to things out there. Demand and external what society expects from us as investors, there is a growing understanding that the shareholder supremacy is the model we have had ubiquitously since the 1970s is now not it is not what society expects of us, when you think of our collective power that we have by accumulating small pots of money to create a big pot of money. There are different strands to that. From a demand side, that is the contract with society. Francine does that mean more sustainable investments, and how much appetite is there . Dr. Richards it is very varied. When we lump these factors into a group, every country you go to, every client will have a different take on what they regard as important. It is not every client that is convinced there are other returns that matter other than financial returns. Where we come from, many of the had are notd financial yet, and that is what you see with the u. S. Business roundtable. The understanding that there are many things which go into the return on equity, and we need to get a broader view on how you think about the impact of all those things, and creating that financial return. Think it is a complex map we have, but if you sit in london today with the Climate Change protests, you can see there is a demand from society for us to change what we do. Francine what would be a game changer . Transparency . Dr. Richards i think what we try to do at fidelity is changed from backward looking measures to forwardlooking measures. Of the thousands and thousands of companies we do business with, we are considering what the impact is of any individual company. Regardless, but i think it is more than what one company can do, and what we try to encourage is a collaborative effort to go from backward looking measures to forwardlooking measures. What we are trying to do is encourage companies to think things which are not financial yet, but will become financial. And how we create an economy that is more sustainable. With an aging population, the demand for aggregate gdp growth becomes less. That broad shape is very important, because as a world, we will run out of stuff if we do not get that are about reuse and sustainability. Francine what does it mean for Fidelity International . Is richards every company rated on a forwardlooking impact measure, thinking about what the impact is. We rate them on a fivepoint scale. When we look at any portfolio and do our Quarterly Fund reviews, we look at what the impact of any portfolio is likely to be on those broader measures. We are not trying to restrict companies, or say how this is how we rate you. We can get transparency to any customer, and they can make an informed choice. The index we can also rate the same way. Francine do clients ask about it, or do they look for yield . Dr. Richards clients ask about it, but yield is a very big ring. A very big thing. The other big cohort we get asked about a lot is our prospectivee and employees. It comes up in an interview, a question we are asked, how do you think about this, in a way five years ago did not happen. The shift is coming from both sides. Francine talk to me about yields. Our clients asking for riskier stuff because they just want that return which is difficult to find . Dr. Richards i really struggle with how do you find a riskfree measuren the benchmark is guaranteed to lose your money. I find that hard to get my head around. Willing toable and take more volatility because of that search for yield. That was francine with dr. Anne richards, ceo, fidelity intl. Fascinating conversation, we will check back in later. Of rise of germany output in august, but is it enough to stave off the risk of recession . We will discuss that next. Euro stoxx 600 extending early losses. A remarkable turnaround in sentiment over the last hour regarding the trade issue. This is bloomberg. Yousef the u. S. Blacklists eight chinese tech giants, accusing them human rights violations. China blocks nba broadcasts. Preventbe enough to europes biggest economy from slipping into recession . , the bid forlug the lfc. Whatsit next for stock market consolidation. This is bloomberg surveillance. You are watching bloomberg surveillance. Lets get to some of the other Market Action in terms of the stock movers. Stanley berger has the latest action. Im looking at the biggest mover. Keegan is a medical testing company. They have cut their sales Growth Outlook for the rest of the year. They are getting a new ceo. Change does not paint a good picture for the nearterm set up. This is the most in 17 years. Fallingbig the kleiner, nearly 10 . This gives them a majority stake. The labor union has tried to fight off. This could threaten the credit rating. London stock exchange, btx is scrapping its takeover bid for the exchange. This wouldve started some m a action. Now this 36 billion deal is not Going Forward. They were frustrated at issues engaging. Shares dropping 6 . Yousef thank you very much for that. Lets get you the first word news. Lets get out to the the. Said to stayna tuned for retaliation. This is over alleged human rights violations. Companies on the u. S. Blacklists cant do business with American Companies without a government license. President donald trump won a reprieve over demands for his tax returns. Hes been granted an emergency appeal after a Court Ordered his Accounting Firm to hand the findings over to the courts. The judge called his claims of immunity repugnant to the u. S. Constitution. Endorsed trump has turkish. It does confuse policy in the region. There was an uproar about the plan to abandon kurdish allies. He tweeted he would obliterate the turkish economy of the committed unspecified actions. Hong kong not can handle the growing unrest after some of the worst violence since protests again. Emergencyment invoked laws to ban facemasks. At this point in time, i feel strongly that we should find the solution that is also the position of the government, that hong kong should tackle the its own. N if the situation becomes so bad that no option could be ruled out. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries, this is bloomberg. Thank you. Now to germany where a jump in manufacturing fueled improvement in industrial production. The largest economy remains troubled with production down 4 on the year. There is no real turning point insight. We are joined now from frankfurt. Looking at these numbers, you could be led to believe this could be enough to alleviate this worrying, constant worrying about intensifying trade wars. If you look on the face of it , there is a slight improvement in output. If you look at the numbers on the whole here, you see that production is down 4 since the beginning of the year, which the factory orders yesterday showed orders are down for 15 consecutive months. Business confidence in germany is down to a decade low. Given the surprising news about the ongoing trade war. Every economist now, almost everyone thinks germany has entered a technical recession in the third quarter. About theat indications that the recession could be inbound for many months . Are we seeing an impact on the labor market . Surface, the labor market looks fine. We have record low unemployment at 4. 9 . If you dig deeper, there are signs of weakness. Sector,anufacturing which is at the heart of the german economy, we see 5 of Manufacturing Companies having parts of the workforce on shortterm work. Another 12 are expecting to do so in the next three months. We have seen a number of large banknies like deutsche restructure job cuts already. This is not boding well for the employment market Going Forward. Yousef we are going to have to leave it there. Great work. He is our Germany Bureau chief. Its scrapexchanges for the stock exchange. For the ceo. Etback he said the board is going to focus on its role in asia instead. This is our deals reporter in hong kong. Clearly played a role here. What would you point to specifically the derailed the deliberations . It was really tough and challenging to pull off. To be frank, very few people expected the deal to be done. Everybody was caught by surprise made theservice change answer. The deal made a lot of sense in theory on paper. Everything was great. , withng a juggernaut platforms from asia into the middle east and europe. The reality is these deals are so difficult to achieve. Youve got to convince shareholders, youve got to convince government officials as well as regulators. It was going to be a really long shot. Out of the blue with this bid. Way thatrprising in a they did the proposal so quickly. Exchange expected the to find it out a little bit longer. They realized they needed support. They have done their homework. It was going to be possible. You look at the stock the moment, its trading 6 lower on the london stock exchange. You think about some of the other potential scenarios, maybe the Hong Kong Exchange can make another offer in the future and come back with something bolder . What do you think . Who knows . Not for the time being. Not for the next six months at least. Who knows if in the future they keep pushing. With the proposal to whetherdata provider, it will be too big by april. Windowy people, this before the deal closes was the only chance to make an attempt and become a bigger global powerhouse. The question is what they want to be and what the future is going to look like for the company and the exchange itself. They have to figure out if they want to grow or both. If they want to be relevant in the future. Yousef its been great catching up. Thank you for that. With reuters to provide Financial News and information. Lets get you a snapshot of whatsit around the corner. The countdown to brexit deadline. Can the latest offer to the eu get off the ground . Them. L talk to we will break it all down next. This is bloomberg. Yousef you are watching bloomberg surveillance. Lets check back in with the Bloomberg Business flash. Chinese state tv is halting broadcasts of the nba games because the backlash over a tweet expressing support for hong kong protesters. The general managers of the Houston Rockets tweeted it. He came out in support for freedom of speech. Earnings are at the top end of the forecast range. There were strikes at rival carriers. Decreased slightly for the second half. Hedge funds are on a roll this year. They gained 5 on average. It was the best return since 2013. Thats according to hedge fund research. We have learned the soda giant wants to offer 1 billion, it will yield 92 basis points above treasuries. Stablee looking for development. They are looking for trade cleaner transportation. Operating income came in at nearly 6. 5 alien dollars. That is a profit decline from last year. They grappled with the slowdown in its memory chip business. That is your Bloomberg Business flash. Yousef thank you very much. Lets check back in with the markets. We had a shift in what was initially a risk off rally. The chinese delegation could discuss things. The ministry of Foreign Affairs, we had the announcement that some of the basketball broadcasts would be stopped for the nba in china. Some of the german ecodata is not taking off at all. About 1 5 of 1 . Brent crude, this is partially due to comments we been getting in the last few minutes. The Russian Energy mr. Says he around 50 aprice barrel. Sanctions are illegal. Get to the story around Boris Johnson. The government is preparing for exit talks to collapse and plans to blame ireland. According to a text minister reported by spectator magazine, johnson presented a new offer to the eu last week that would see Northern Ireland remain in alignment with the eu as long as they agree every four years. They have indicated its not enough for a deal. In dublinan open is for our coverage. Good morning. Much. Nks very in terms of whether the deal ors johnson has presented, whether it has any legs or will be amended at all, the deputy leader said he joins me from london. Its good to have you on the program. One of the concerns around the latest basel seems to be around theconsent process by which Northern Irish administration would agree or not to continue its alignment. Thatard from julian smith there is room to reform that consent process. How would you respond . Exactly whatheard julian smith said. He is not involved in the direct negotiations. The matter is the proposal has been put to brussels by the Prime Minister Boris Johnson. Respecting the consent and spoke good people support the friday agreement. Thats based on the consent of unionists and nationalists in Northern Ireland. What we are pointing out is if youre going to have rules, laws in Northern Ireland, there has to be democratic accountability. There has to be consent. Boris johnson recognize that. It goes back to theresa may and the eu. It doesnt sound as if you think there is any room to change that consent process. Theyn objects to the way are given the ability to veto. Dublin is turning the good , all of thement agreements that were made in the last 20 years as part of the political process on its head. On theembly operates basis of parallel consent. If nationalists dont like something, they can say they dont want it. Itlin wants to say that when comes to making laws on the economy, we cant have that process. Are they suggesting we go back to majority ruling in Northern Ireland . Say thereey want to is some kind of consent, but you notice will have to do with they are told. Is not acceptable to unionists because it doesnt have their consent. It is antidemocratic. They would have no say. In a customsthem Arrangement Union until such time as the eu are happy to let the u. K. Out of it. Thats not acceptable for any country. Object to the backstop. Dublin objects to the latest proposal. Point, if they change the way that functions, would you support the government . I dont think there will be any attempt to change that. I think this is all speculation on the part of the dublin government. Sayeems desperate to try to its not their fault if there is they have never had the support of parliament. Its been rejected three times. Dublin has got to realize that it takes two to make the deal. Boris johnson has come forward the proposals that have integrity of Northern Ireland. It offers a sensible weight forward. Rather than engaging in some of the rhetoric weve heard within minutes of the proposal being them denouncing it in very striking terms. A deal. To get we think there is a possibility of getting the deal. Its got to be based on democratic control of our laws. The consent principle has been made. There cant be a never ending trap the usa u. K. Cant get out of. Could you see a situation partnerse of your might veto rule alignment with the eu . What would happen to the relationship . To have good relations with the irish republic. We are concerned at the way the rhetoric has moved up against Northern Ireland. Behind in theft European Union. The only way to get a solution ireland orunited some other fanciful nonsense. We stay within the Customs Union in the single market. We are with the United Kingdom. More than the rest of the world, the European Union in the irish republic put together, thats not a constitutional problem. Its economically damaging in the long run. In terms of what happens in the future, we will take every step along the way. We are talking about the second stage of negotiations. Brussels really intent on getting an agreement that provides an alternative . Thats why we need that power to serious, wee not are not going to make arrangements. That is a piece for me spectator. They said Doris Johnson has given up hope that a deal will be achieved. Do you think a deal will be achieved by friday, thats the informal deadline. At theooks difficult moment. Im very sad about that. The fact that almost immediately around a rejections, particularly coming from dublin. There seems to be a more nuanced approach. Thats quite revealing. Proposalsal backstop were something that certain politicians really felt was the end destination. They were never going to consider anything else seriously. They have dismissed any arrangements, that indicates their own purposes. Parliament,cted by the one to which dublin and brussels, that would give an arm us power Going Forward to brussels. They could decide when we would be really from those arrangements. Thank you very much for speaking with us. Thosel be sure to get once we are here in the republic of ireland. Yousef thank you very much for that. That was anna edwards. In the meantime, i want to circle back to tensions between the u. S. And china. That continues to develop. The u. S. Is blacklisting a chinese tech giants, accusing them of human rights violation. China has threatened retaliation. Chinese tv is halting nba broadcasts. We are joined now from hong kong. And draw out some scenarios here for potential retaliation. Is there any recent precedent about where this could go . The one option china would this isld be to something they have done in the past. That could be a way forward. When you take these developments together, even if they are not trade war related, they have their own backstory. Critical trade talks. Whether or not they can make the break seems. Thanks for joining us there. Francine is in london and tom keene picks it up from washington dc. Thats happening later today. We have more coverage, the markets are a little bit lower. 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. Francine the u. S. Blacklists eight chinese tech giants, kimi accusing them of human rights violations. China halts nba broadcasts. Obliterate the turkish economy if they do anything in ceric he doesnt like. Bed for the their lse. Good morning. This is bloomberg surveillance. From london and washington today. You have an exciting conversation with the new head of the imf. Ive got 30 minutes with her after an important speech. Weve got to go to the debate and monetary affairs. What extraordinary is how the last 48 hours geopolitical events have overwhelmed markets. Im glad you lead with the tech blacklisting. At was a stunning new story. Francine we are keeping a close if on the trade war to see its escalating and what havens the market will identify. Lets go straight to the first word news. The latest white house remarks are deepening the confusion over policy on turkey and kurdish allies. The president has not endorsed the turkish invasion of syrian territory occupied by the kurds. That comes after republicans blasted the president for giving turkey a green light to invade. Turkey sees the kurds as a security threat. Boris johnson is being urged not to seek tax cuts. A no deal brexit could lead to 123 billion budget deficit. That would be twice what is expected next year. Stay tuned for retaliation over the u. S. Blacklists. The Trump Administration blacklisted eight giant Chinese Tech Companies over human rights. The u. S. Says the theanys have violated human rights of muslim communities in china. State run broadcaster says it wont show preseason games of the nba. Starts with a tweet from the Houston Rockets general manager expressing support for the hong kong protest. Nese celebrities are global news global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries, this is bloomberg. Tom thank you so much. Lets get data right now. We have quiet markets out there. Just one screen today. You can see the churn to the market. We dont want to make too much of it. Oil with a lift. There was an important interview coming up. Francine what does that mean for the markets . I can barely contain myself. I am looking at european stocks. They are turning lower. There is a breakthrough between america and china that were starting, they are worried about the latest in technology stocks. Vix is a little bit more elevated than yesterday. The china state broadcaster said it would halt broadcasts of the nba games after the commissioner said he supports Houston Rockets general managers freedom of speech. He tweeted an image that expressed support for hong kong democracy protesters. Chinago straight to our responded. This was kind of a tweet that was lead. It was out there, it was taken offense to end the lead. How much does this escalate the dispute . Just another example of a brand getting caught in the fray of a hong kong protests, whether at starbucks or the nba. They have been scorched as supporting one side or the other. The most at stake. They had 800 Million Viewers in china, that is 2. 5 times the population of the United States. They have been notching doubledigit growth in china. They started to deal with the state right castor to have games broadcast with a revenue sharing agreement. Whether its the nba or these other brands caught in the situation, they are at risk of losing fans. They could be seen as kowtowing to the Chinese Government while at the expense of American Values like freedom of speech. ,his on top of the blacklist china when to narrow the trade talks, even a mini deal could be reached in the near future. Tom give us your reporting on the linkage of this blacklists of these airst time ive seen that. Is their right now. Give us the background on that. Waiting for the Trump Administration to make this announcement for quite some time. We reported several months ago this link between these companies and the alleged operations in the detention of muslims in the western area of china. Some of these companies have responded with their own reports disputing their involvement in that region. This takes the trade discussions in a different direction. It ratchets up the tension. Its the first and the Trump Administration is citing human rights as a reason for action. That was on the grounds of national security. Making things more difficult and challenging is these companies are viewed as national champions, hightech redhot companies. Its the worlds most viable Artificial Intelligence company. 7. 5 billion. At they control about one third of the Global Market for surveillance cameras. Dampens added together the mood ahead of trade talks. Francine thank you so much. She is our china correspondent. Joining us is the Senior Investment manager. Joining us. Th for let me kick it off with you. When you look at the stocks or futures, they are worried about whats going on with these Tech Companies over in china. Overall, do we think the trade war will get worse before it gets better . James they are not very worried. Dramatic been pretty deterioration in the economic outlook. It looks to me like equities are looking at a different future. Escalation, it looks like an thing in nature. If is a convenient excuse to apply pressure on the other. It doesnt look to me to be a situation where neither side is going to back down. That is still the case. The key issues need to be resolved, we are nowhere close to doing that. Francine you look at the markets, they are expecting Central Banks to be there. The outlook for trade gets worse. Peter thats one of the points from the past. The bond market in the equity market are looking at. The equity market, the Central Banks come to the rescue once again. Doesntty market necessarily have to trade down as much. When you look at some of the , weral banks, particularly wait is getting thinner. The market is putting more emphasis on what they can deliver. Look at the permanence of low Interest Rates. I understand the global slowdown when everything is said and done, its a new regime of low Interest Rates. Will that support equities . James no. Not forever. I find it very strange that we get this argument. Rates of fallen and equities are discounted. Rate meansiscount higher present value without adjusting Revenue Streams in the future. Those are certain amounts of support that could happen. Actually, when you look at the , when you lookes at some of the pushback we are , iting from Central Banks does seem the market is coming around to the idea that they dont keep things afloat forever. There is a high vulnerability that Central Banks are making things worse. Behind the dam. At some Point Equities will wake up and the future is not as bright as they are saying. Will they change equity allocations . Peter we havent at this stage. Our outlook economically speaking for the u. S. Is relatively healthy. Weve been pointing out for quite a while that the inufacturing taking place europe in general and germany in particular, the outlook is not great. As long as the u. S. Economy holds up reasonably well and the fed has more leeway, we dont necessarily have to change things in this stage. Francine we will be back with james and peter. In the meantime, we had a response from the nba following what has happened in china. The nba says the freedom of expression as long defined the nba. They are on the defense side after that tweet on the protests that was deleted. Tom we will see how that story unfolds. We are looking for the chinese response to the tech blacklisting as well. Is important conversation with the International Monetary fund. This is a fascinating selection to run the imf for the next five years. Stay with us. This is bloomberg. Tom good morning. Bloomberg surveillance from washington and london. A wonderful day here in london. An insight panel. I am in washington for a conversation with the new managing director of the imf. For those worried about the economy, we will get to that in a moment. Rage in thethe fiscal space. Peter is with us from rbc Capital Markets. Is physical space to the rescue. You listen to guys like mario draghi, the case is very convincing. Headroom,ook at the they are not very keen on it. We see that. Two countries in europe in particular and the netherlands and germany are doing that. Is this going to be the allencompassing get out of jail free card . Deeper into this we do something more meaningful. Tom its a quiet day in the markets. We are looking at all of these geopolitical stories. How do you full whats going on into a coherent Investment Strategy . James what a wonderful question. To be honest, i dont think its quite as bad as it may seem. For all of this year continues to be a question of crosswinds and the net result is in the same direction. Boldave to make a really prediction or expectation around the trade negotiations to really find where the positive news is, forcially given the price the future, that does not seem to be playing out. I completely agree with peter. Proactive fromof germany and the netherlands, we still see the headwinds being the most important. To be defensively position, you want the opportunity to buy risk assets if that is your bag when they are more appropriately priced and there are attractive opportunities. Francine we did have some news out of germany. When you look at the jump in manufacturing, there is an improvement in industrial production. Does that alleviate some of the concerns weve had . Peter we dont know yet. We came out of a deep slump. When you look at the actual levels, it is still pretty grim. Despite the upside, we will have to see. Picture is not necessarily only about manufacturing. This starts the spillover into the labor market into the broader economy. This one data point is not enough. Francine thank you both. They both stay with us. We are keeping an eye on bloomberg london. Watch on the terminal. A conversation with pimco. We hear from the chief executive. This is bloomberg. Tom good morning, everyone. Francine is in london. Right now, after a to mulch was six weeks, we are in london. Good morning. Oil and money conference, the yearly conference that brings titans from the corporate side and the policy side into one room. We are joined by a man who travels both of those worlds. Thank you so much for joining me. The last time we spoke, you are the last opec meeting. You have left the group. We have seen an escalation in tensions in the gulf, the devastating attack on the saudi aramco. Has this impacted your business . You do have oil. We donttack like that condone. We dont want to see any facilities being harmed in the world. Y are strategic accept assets. Course, it was shocking to see an attack on an oil and gas facility. Prices havent stayed elevated. Is there too much oil in the market . We look at the oil market and production, you look at venezuela, libya, its surprising that 5 Million Barrels off the market from the biggest producer outside the is a huge shock to head of taken prices higher. The market is used to geopolitical risk. Fearshave recessionary from europe and asia, we have the trade war. Is a winner qatar or loser given that the chinese may be less likely to buy lng from the u. S. . You could take that kind of approach. Longterm, you need to see a liberalized world where economies can flow around the world. They can prosper around the world. Free trade is the best staying for commodities, such an important commodity. Oil and gas should flow freely. What happening between china and the u. S. , that will affect the market. Everyone in the energy world wants to know whats going on with your northfield expansion plans. What are the updates . Where are you on that . We are on track. We have awarded most of the contracts. These will be given out by the end of this year. , we will haveter secured all of the contracts. We will start reduction in 2024. We have a select few we have invited to enter into about 50 . The big players are there. Shell, others have been invited. Invited them. They will compete to give us the best proposal, to show us an added value. Have the project fully running. We have a few moments left. I want you to explain what you announced today. You are attempting to move to cleaner energy. Highlighted the u. N. On Climate Change. Climate in general is very important. We feel this is something we should target to be more environmentally friendly. What we have done in the industry is his ambition. We have announced today we have tons. D 2. 5 million we are up against a commercial break. I will be back here tomorrow with the shell ceo. This is bloomberg. From the couldnt be prouders to the wait did we just winners. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. Now you can share it between lines. Mix with unlimited, and switch it up at anytime so you only pay for what you need. Its a different kind of Wireless Network designed to save you money. Save up to 400 a year on your wireless bill. Plus get 250 back when you buy an eligible phone. Call, click, or visit a store today. Tom this is Bloomberg Francine this is bloomberg surveillance. Minutes,st couple of we understand that Angela Merkel, the chancellor of germany has told Boris Johnson the Prime Minister of the u. K. That a deal is extremely unlikely. This is exactly her words. We are getting the news in the last couple of seconds. We are seeing some pound reaction. Extending the losses. Merkel telling Maurice Johnson that a deal is essentially impossible at the moment. Out theould point queens speech and what is so important here is this idea of how mr. Johnson fits into the polls. He has a new confidence over election outcomes. You wonder how he takes this versus how he would have taken it 30 days ago. Francine it depends on whether he will continue with his rhetoric of pushing through a no deal or whether he will back down. There was an interesting court ruling that changes what he can and cannot do. Senioret straight to our executive editor on the back of that headline. With the fact that Angela Merkel telling Boris Johnson that it is almost impossible, what are we looking at . This is all public according to the script. This deal that was presented by mr. Johnson last week, it was obvious to observers that it had lots of conditions the eu were never going to sign up to. This question about how to deal with the irish border. Johnson saying we can have my cake and eat it, we can take Northern Ireland with the rest of the United Kingdom outside the Customs Union without any infrastructure. That was not going to fly. We also heard the government are the been to obeying act. Shows the headline narrative from the Prime Minister is going to be look, it is not my fault, it is the fault of the eu. It is setting up this Election Campaign whether it is in a month or two months, it is coming. The Prime Minister is going to say i am the one trying to get hings done in the face of the in the face of the mps in the courts and Angela Merkel now. Francine where are we at . Can he go for no deal or are there so many moving parts . David it is hard to keep up. The reason the court said that is we already have commitments from him or his lawyers that they are going to obey the law. We have to take his word for it that he will obey the law of the land as stipulated in that legislation. For now that is where things stand. Parliament is going to be suspended again. We are going to have a queen speech. For, octoberok out 21 with when Parliament Comes back within 10 days or so. At that point, johnson should have asked for his extension. If not then, we will have to see some movement either by parliament deposing him more orting up somebody else something for the courts, getting the Supreme Court to force johnsons hand. Marketectations of the are we are going to have this extension and johnson is going to say it is not his fault. Say,what does the polling what are the nuances in the polling of the United Kingdom . David this argument that johnson seems to be making, that it is me against the system seems to be getting through. Tori numbers seems to be going up. That is the current set up to win an overall majority at the next election. The liberal democrats are slipping back. They are one saying we should revoke article 50. The conservatives can go into this campaign pretty confident that this narrative is actually and that the public are tired of this argument we have been making for three years and they may just back him to take brexit over the line. Francine how do you trade it . I absolutely love the brexit discussion and debate. How do you trade it . With great difficulty. What i would like to do is come up with a reasonably high predicted probability of the outcomes from a political and Economic Perspective and it certainly does not work in a short time between now and the end of the month. Me most attractive thing for is how extreme the pricing of u. K. Assets and sterling are. Even if i cant attach very high convictions to the outcome, what i can say is the gilt will be very low. There is potentially an opportunity there. Sterling is well, at a 30 year low. A hard brexit idle thick the euro zone is in a position to shrug that off. Of the bad news gets posted into the sterling. Sterling is the longterm attractive play. Should i buy u. K. Multinationals before or after the queen speech . Lets keep it more general. What is the value of largecap cap multinational british equities right now . It is long. It is clear that it is long. Not only the lords multinationals, it is acrosstheboard as our fixed fixed assets as are income assets. I would make the argument that sterling is not cheap enough. In general i think the pricing treatreme and extremely extremely cheap. Francine breaking news, Deutsche Bank plans to cut about planning 18,000 job cuts in germany. Job cuts that000 Deutsche Bank will start, about half of them will be in germany. This is on the back of the news could lose as much as 10,000 jobs. There is an outstanding opinion piece saying bankers in general need to be ready for more job cuts across the board because we are not seeing growth and negative rates seem to be here. O stay tom if i have time i will put up the piece on the urgency to right side banking. Mike mayo does not mens any words does not mince any words. Massive going to be resizing worldwide and it is going to start in europe. Francine what kind of banking andl will these banks want what are they going after . Deutsche bank has been under so much pressure because of the share price. You wonder what theyre going to try and achieve down the line. David for you so much brexit wisdom. Right now in new york city with our first word news, here is viviana hurtado. Viviana confusion today over u. S. Policy in turkey and the kurds. A senior official says President Donald Trump is not endorsed a turkish invasion of northern sierra of Northern Syria. Earlier in the day trump said he would not stand in the way. Republican allies accused him of abandoning kurdish allies. Hong kongs government promising it can handle the protests without help from china for now. The citys chief executive will not rule out asking beijing for help. The government could invoke more emergency measures. Protests over the weekend were among the most violent of are the last four months. The union for Southwest Airlines , pilots suing boeing over the 737 max 8. They claim the company rushed the output of the plane and withheld Key Information that late that led to two fatal crashes. Boeing calling the suit meritless. Global news, 24 hours a day, on air and at tick toc on twitter, powered by over 2700 journalists and analysts in more than 120 countries. I am viviana hurtado. This is bloomberg. Francine thank you so much. Quite a lot of news going on. We brought you the latest stories over Deutsche Bank cutting a lot of jobs and head of 18,000 job cuts, a lot of them will be lost in germany but also a lot will be lost in london. Where adamo japan inside, peaking speaking in saitama. We will bring you both sides of the argument and we just need to know the anger is mounting with canceled events but also boycotting nba games. This is bloomberg. Tom good morning everyone. Extraordinary news flow this morning. We will have good conversation on much to do with the Trump Administration, exit news, Angela Merkel as well and we are watching some of the distractions of the National Basketball association. Adam silver in japan right now really pushes back and makes clear they will be freedom of speech in the nba. Later today there will be a speech in washington. Name to you, running the world bank chosen to replace Christine Lagarde. Individual. Y i look forward to our conversation here in a bit. Look for that at the 10 00 hour, washington time. The clear belief is that monetary authorities have run out of the tools in the toolbox. Is the central bank toolbox . We have to be mindful of which geography we are talking about. If you look at the ecb, it is much more empty than other places. A couple more basis points to cut and maybe you can rule roll another qe program. Think it is not as clear cut and when you look at other Central Banks such as the rba in australia who are on a mission to cut and have not done any qe and are talking about it, there is clearly something that can be done. The real challenging point is those Central Banks who have done a lot already. I think that is where the challenge is. Tom if we assume we have a as clues fromn the headlines of the imf and others indicate, that is the forecast and you mix in the dynamics of central banking, what does it mean for investment . Permanent low Interest Rates and then what for the equity market . It is always dangerous to say things like permanent because it tends to be the case that just when we think something can never be repeated or can never go away, it is precisely the time we enter new paradigms. N agree with peter from a investment perspective. To go back to the underlying me, the fed having 150 basis points, the australians having the ability to buy bonds, the ecb buying equities, we are into the realms of madness now, none of this is helping because we are not dealing with any of the underlying problems causing this low growth environment. I think we are well past the stage when we are contributing to this low growth environment. Perspective,tment the fed has the ability to cut. It has to deal with some of these liquidity issues and is probably going to do that with more Balance Sheet expansion. All that should be supported for a good period of time but you certainly dont want to be owning risk markets because they are still priced very ridiculously positive outlook and if you look at some of the bea data and compare that to the pro forma profitability you see in s p 500 companies, the two things are telling a different story and i think you will see equities coming off significantly. Banksne are central saving us from a recession and at this point how efficient or effective is Central Bank Policy . Againhink you have to look at different geographies. If you look at europe, i would think it has prevented worse things from happening now but whether it has the tools to stimulate the economy from here onwards is a different story. I would argue that in the places where there is room for traditional Monetary Policy to kick in, you would have a stimulative effect for the time being. Said i think is a very important kernel of truth in a broader sense that if you have something that is fundamentally different to how we used to operate such as trade policies, you cant fix that with monetary policies. Francine do you worry about liquidity . Absolutely. But we have seen in the front end of the u. S. Yield curve what we have seen in the frontend of the u. S. Yield curve, now people think that has been swept back under the carpet but that is illustrative of something more nefarious going on under the hood. A lot of reserves but the way they are distributed and the willingness and ability of banks to lend reserves when they have a lot of them is being impeded by the regulatory response which is creating bottlenecks and weakness. James and peter, you are staying with us. Lets recap what has been going on with brexit. Boris johnson has held a very difficult conversation with the chancellor of germany, Angela Merkel. According to a british official, Angela Merkel basically told they promised her that Northern Ireland must stay part of the Customs Union and Boris Johnson telling Angela Merkel this demand makes a deal essentially impossible. A little bit of pound weakness. This is bloomberg. I am more raid there is more of a liquidity strain in Capital Markets globally i am worried there is more of a liquidity strain in Capital Markets globally. We need to continue to work politically to push for that continued free flow of capital around the system. Richards that was ann talking about liquidity. We also heard from the chief Investment Officer of saying a lot of this passive investing could force bond liquidity. She was worried it could make it harder to sell. Tom the challenges of asset managing as well from richard fidelity and the rest of trading. Frankfurt right now, Deutsche Bank looking at adjusting their retail and the mystic banking within germany. The thing we saw with hsbc yesterday and as michael mayo of wells fargo said on the u. S. Banks, it is the end of traditional Retail Banking. Is that feasible in germany . Is Digital Banking so successful that Deutsche Bank can bring down the retail platform . Think you are raising the right question. We have seen how difficult it is to cut jobs in germany and Deutsche Bank wants to cut about half of 18,000 jobs at wants to get rid of in germany. How is that going to be possible . That is going to be extremely difficult to pull off for the ceo but i guess that is his plan. Tom why do you say that . That is critical steve. Why will this be pretty hard . If you look at the past, not just Deutsche Banks track record in cutting jobs in germany but all banks in germany. They have an extremely hard time doing it. You need an agreement by the works council. They are likely to sabotage it. They are doing everything they can to sabotage the deal even the profitability of the banks is a joke. Thosel be hard to get stakeholders on board. Lossese how many job will we see in london . Have a lot of the jobs already moved because of brexit . Jobs i dont think have moved yet but we will see significant cuts. If you look at the general job 18,000, london being disproportionally hit means there is going to be a reduction in excess of 20 relating to brexit and we just heard how hardy brexit scenario we are facing right now. I think Deutsche Bank in london will be a very different place 15 years from now. Tom much more not only on European Finance but the immediacy for Central Banks given a global slowdown. I will do that today with the new managing director of the International Monetary fund from the world bank, from bulgaria. Join us in the 10 00 hour. 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. Tom this morning it is a changed world. The Trump Administration blacklist chinese tech firms that directly links the action to the treatment of muslim minorities in western china. China will quote, safeguard its interest. Trump must adapt to a firestorm of gop criticism after handing Northern Syria to the turks. The searchdown in for a fiscal space. There is a new managing director at the imf. This is bloomberg surveillance. An extraordinary news flow this morning and i want to put this up top for american audiences. Prime minister johnson speaks to the chancellor of germany and it did not go well. Understand the leaders spoke about three hours ago and it was a tough and tense conversation but the bottom line is that basically after the call between the two leaders, Boris Johnson has told reporters that a deal is essentially impossible because the eu was demanding Northern Ireland stay in the Customs Union, something that Boris Johnson said he cannot accept. Out ofsome breaking news frankfurt, saying Deutsche Banks 18,000 job cuts, half of them will probably happen in germany. On anything an eye banks related indo in germany. Tom coming up later today and the 10 00 hour, a speech by the managing director of the imf. I will be in a good conversation with her, really centered around the new global slowdown. Right now in new york city, your first word news. Viviana the latest white house remarks are only deepening confusion over President Trumps policy on turkey and the u. S. s kurdish allies. Officials say the president has not endorsed a turkish invasion of syrian territory occupied by the kurds. That statement coming after republicans blasted the president for apparently giving turkey the green light to invade. Turkey views the kurdish views the kurds as a security threat. The trauma administration blacklisted eight giant Chinese Tech Companies. Two Video Surveillance companies that have cornered about a third of the world market. The basis for this blacklist, the u. S. Says the companys allegedly violated human rights of muslim minorities in china. Moments ago, the National Basketball association chief adam silver saying the league upholds the value of freedom of expression after state run broadcasters says they wont show preseason games of the nba. This feud starting with a tweet from the rockets general manager expressing support for the hong kong protesters. Chinese celebrities say they are skipping exhibition games in the country. Global news, 24 hours a day, on air and at tick toc on twitter, powered by over 2700 journalists and analysts in more than 120 countries. This is bloomberg. Tom thanks so much. We are lucky we have a quiet market. Futures deteriorate over the last hour. The euro is actually stronger. Francine when you look at european equities, turning lower , you can see european stocks down with treasuries edging higher. Speak to Kevin Cirilli by himself. Today the news flow is so extraordinary that i am going to break that rule with our chief washington correspondent. Joining me is william lee of the walkon institute. Of theilled that wilkin institute. Kevin i have to go to you. Blistering on the gop response to the kurds. Do you see in the do you see the white house in any way managing the message back . Kevin i dont. I spoke with the director of Rapid Response in the trump reElection Campaign. Outside the beltway they feel this is going to be perceived amongst President Trumps base as a promise that was a filled. That said, when you look at independent voters, democrats, this is just going to inject this into the narrative of uncertainty and unpredictability that he has been criticized for. Tom as an isolationist president , his clear message is we are bringing our troops home. Why is there such outrage about this if it goes to a core emotion of so Many Americans . Kevin it is the way he did it. That is what he has been criticized for. Policy by tweet once again. There was not a formal overall formal oval office address. You would normally have an official address. I was struck by an article in the Jerusalem Post and the israeli implications by columnist who essentially said what does this mean for u. S. Israeli relations and quite frankly, the israelis have been somewhat quiet on this which is quite surprising given the pushback the president has received from the likes of Senate Majority leader mitch mcconnell. Francine what is the talk looking like when it comes to trade . Do they want a deal or not . Kevin President Trump says he wants a deal but in terms of what is going on in the shortterm, i think the expectation now but the market is that they would be some type of shortterm agreement reached. Youve got this situation developing in the past 24 hours in regards to Tech Companies that were blacklisted but beyond that, december is still the working timeline for some sort of shortterm deal as it relates to things like intellectual property. Tom this goes to your wonderful work at the imf, the buttressing of politics and emotion with a global slowdown. Link the turmoil we see including in hong kong to a global slowdown. William one of the things i did was estimate the impact of uncertainty on investment spending. The uncertainty index has a greater impact. Tom where is that index . Nearly it shows it is at historical peaks. It is continuing to rise because of all this machinations by trump in terms of policy uncertainty but also hong kong itself is causing china uncertainty and that is a structural issue because now china has become a very big player in the Global Economy and chinas economic wellbeing is something that is going to hurt the United States directly and indirectly. Francine what is the one thing we misunderstand about this u. S. China trade war . Who actually wants an agreement and on what . Weve got some technical difficulties. Let me jump in as well. Weve got some technical difficulties. Lets continue forward. At 10 00 this morning i will be speaking with the new managing director of the International Monetary fund. We are monitoring breaking news stories out of germany and Deutsche Bank and Retail Banking and also we are looking at news on brexit and a global slowdown. Stay with us. This is bloomberg. Tom bloomberg surveillance from our studios in washington and london. We continue our conversation with william lee of the Milken Institute and Kevin Cirilli, our chief washington correspondent. I want to go to the crushing fact of economic slowdown. Kevin has followed President Trump from day one and the singlestory story was geo was gdp slow down for a huge part of america and now it is global. I wonder why people talk about stall speed. A slowdown is a mixture of flat business fixed investment and strong consumption and that is also a drag. Tom stall speed is when you were coming in on gulfstream and you have to make that sharp right into reagan. Kevin and here we are. Tom we are landing in the wind. Is the next step for the president given the democrats supporting the president on unilateral approach and republicans support the president . Kevin from the president s perspective, he rapped out wrapped up a trade deal with japan and now is meeting with china but when you look across the finish line, the number one priority is the usmca. Tom mexico and canada. Kevin exactly. You have Vice President mike pence traveling to mexico and here is where impeachment matters. House Speaker Nancy Pelosi saying i can impeach the president and have an inquiry while also delivering a major trade deal and President Trump and say i can deal with democrats impeaching me and also deliver a trade deal. The impeachment inquiry has actually added more incentive to get usmca done by the end of the year. William i cant agree more. Talk about china is important but what is important to the United States is mexico and canada. If we dont get that trade deal we are going to see a collapse. Tom francine is typing right now. Was feeling a little bit left out in london. Kevin when you look at impeachment, what are the polls telling us . Are republicans still supporting the president or where are we at . Kevin i was struck by this because there was a morning pulled came out the other week that said to intend republicans support the impeachment inquiry, significant more than the 10 about a month before but the president has not lost any true republican support in the house nor in the senate. The sense is that republicans uneased about his actions but are not breaking from him. What do i say to the new managing director of the imf about the steadfast and it seems unanimous american view that we dont want to do multilateral trade . Terms of thek in longterm that policy is here to stay, whether it is a democratic president ial nominee like Elizabeth Warren or biden. The tariff talk from the United States is here to stay. 1944take us back to imf and all of that process. Is multilateral done . William multilateralism has collapsed under its own weight because it has taken so long to deal done. D of what we have now is a sequential bilateral is him bilateralism. Role but it have a is going to be an arbiter. Tom i look at this and it goes right into pulling. Domestic issues surmount all. Is turkey and syria a domestic issue for the politics of the nation . Kevin it could be perceived as such. It strikes that libertarian streak of politics that exists in both parties. I think gun control is huge were democrats, education as well. Tom breaking news and we are glad that Kevin Cirilli is here. This has to do with the dynamics with our Washington News bureau. The chinese delegation may leave one day early. Surprise. Is not a kevin given the developments with regard to the Tech Companies, this is not the type of development that you want if you are trying to get a deal by middecember. , that wedo we respond are linking sanctions and blacklisting directly to human rights in western china . Kevin you have to take a step back and look at the situation in hong kong and developing with the Houston Rockets. The chinese avenue eventually have essentially said game on, if you think hong kong is a problem, watch what we are going to do with the Houston Rockets. We see the blacklisting from the u. S. Perspective with regards to human rights and president xi is saying we are going to keep going. Tom there is a chinese experiment here that you are more than conversed in. William you have a lot of chips on the table and you are moving a lot of pieces. Tom but the western chinese experiment is one communist in 2014 andent in change the rules. What are the rules for president xi . William is going it is going to take the principles to bring us back together. In november when they have the meeting, that is when the meat that is when the two persons can meet and they can say lets reset the board. Tom kevin, thank you for getting me ready for 10 00. Mr. Surreal he is our chief washington correspondent. Billy will continue with us from the Milken Institute. Rancine, more information francine our own reporting in frankfurt says Deutsche Bank intends to make about half of its 18,000 planned job cuts in germany. This has political implications for the country and this is as tsche bank is relying on to lower retail costs. Istsche Bank Share Price and not touched. Now we have a better sense of where they will happen. This is bloomberg. It looks difficult at the moment. I am very sad about that. I think the fact that almost immediately these proposals were published that we had a round of rejections, particularly from dublin, the way they have dismissed any alternative indic alternatives indicates to us is that the real plan is to keep more in ireland and the u. K. And arrangements for their own purposes. Was the deputy leader of the dup speaking earlier this morning. In the meantime we heard about a telephone call between Boris Johnson the u. K. Prime minister germany,hancellor of Angela Merkel and according to this, Boris Johnson told the chancellor that a brexit deal is essentially impossible at the eu demands Northern Ireland should stay in the Customs Union. Guest joins us from brussels. It is clear the eu seems to be sticking to their redline. What is the chance of an agreement . I would say i would be very careful to read too much into this transcript. It essentially comes from the british officials. This is the u. K. Interpretation of a phone call that happened between the Prime Minister and Angela Merkel but by no means is it clear that it reflects your official decision or that of the European Union. There are a few eyebrows that were raised. If you look at that readout, it doesnt sound like Angela Merkel. If you look at everything she said before today, it is that we all need to work to get that deal. The tone of that readout is very different to the line that Angela Merkel usually goes for. I would be careful to perhaps read too much into it. Tom buried in all of the articles and analysis of brexit, our selected european countries, particularly Eastern Countries to the british rescue. ,s that in any way feasible that hungary or poland or other nations would come to the rescue of Boris Johnson . We have heard this many times. Every time it looked like it was crunch time, this idea that the eastern europeans would break rank with the rest of europe came up and the truth is, if you look at this on a factual basis, it never actually happened. If you look at the longterm interests of european countries, they look at this as they know they are better off staying with brussels and that rupture has never happened and that threat is actually new. It has never materialized. Tom thank you so much. With us with the Milken Institute, their chief economist with years at citigroup and the International Monetary fund, william lee. It is an extraordinary story and i think we are making generational shifts in europe as well. Tell me the generational shift if madame lagarde parachutes into the ecb. Sheiam the one thing brings is the notion of structural reform and change. It is something every mission to europe has to require and everyone is not into it but no one has incremented it. Labor markets are rigid, there is no ability for Market Forces to do their job. Christine lagarde goes there from the position of the ecb, it is a macro shock but i think shes going to push hard on getting politicians to do the reforms they know they have to do. Francine it is not the ecbs job to push structural reform. Inflation figure out and that goes to the transmission mechanisms. She is not going to start telling her maybe she can get away with fiscal policy. Now wondering if the ecb is at the limits of Monetary Policy and the transmission mechanisms are being blocked and Christine Lagarde has one major which is she has the ability to convince politicians, she had a career of doing that as the minister of finance. Lets hope she brings that same power to the ecb. Tom thank you so much. Amid quieton here markets. Coming up at 10 00, a that ontion look for the changes of asset management. This is bloomberg. Tom good morning everyone. Francine sorry tom. Tom please go ahead. I will let you start up today. Francine look at that, we are matched. Tom keene in d. C. And i am Francine Lacqua in london. Fascinatingave a conversation coming up tom with the new managing director of the imf. Tom this is before their annual meeting. She comes from the world bank, looking forward to her important speech this morning. A little bit of news flow to say the least. With a news flow that is out there, my interview with her for a good 30 minutes, i hope will set the tone as we move forward to those meetings i know you will be attending as well. Deutsche bank will make have to will make about half of its 18,000 planned job cuts in germany. The bank wants to rely on savings. Good to bank has about 92,000 employees worldwide. That was the latest from our amp from our reporting on Deutsche Bank, that story breaking in the last hour or so. Marcus fromow is bloomberg opinions. It seems we were talking about hsbc yesterday. Hearing 18,000 but half of that would be in germany. How much pushback will they get . Marcus a lot. It is interesting that it is not going to fall too hard on the u. S. That is because they see some growth there, they already did some cuts. In london we already had 1000 or so. Brexit, you need to go back to the heart of the european jobs, back to germany and then they cannot avoid the basic fact that retail in germany is a very difficult business and it is dead and it is dying. Are going to have to make some cuts. The unions will obviously kick back harder on this. Ais is going to be welltraveled road and they will have to do more of this but at least they are giving us the details of what they will announce in july. Francine how many more job cuts can the finance industry lose . It seems like everyday there are more job losses. Marcus we just dont know but the point is they are going for a lot more. As growth falls away in europe, banking is ever harder. It is only going to have to be more and it is a reality check. Tom marcus you nail it on the reality check which will be below six euros per share or a breakdown in Deutsche Bank share price lows. Does management care about the share price . Marcus of course they care but the point is, all the bad news is out and they have to deliver. I dont think it is moving the dial today. The fact they are emphasizing half their cuts in germany means they are aware of what they need to do. Great news for Investment Banking in london. That is a reality check. Keeping some stuff in the states is possibly good. It is not like a new business much, marcusu so of bloomberg opinion. We continue with william lee of the Milken Institute. Maybe what the nationals are doing against the dodgers. Terry haynes of pangea policy advisory. How about those nationals . That is the state of the city that, it is a fractured and broken washington. How fractured are the fractures . Terry i think less than most people think. There are pro trump and antitrust factions and each party. There is a lot of outrage as he pointed out this morning about things like the syria policy, which republicans dont have a problem pushing back on. Theyre essentially a Coalition Government with trump, not a fealty arrangement. There is a lot of virtue signaling that goes on anytime the president shows up, on both sides and that makes it worse. Tom you have for years written a Research Note that i say is shockingly balanced. Define liberal right now. If you and i were at a local , what is the liberal tone . Increase and control Government Solutions as opposed to anything that goes on in the private sector. Tom is not going to get a marginal return in those key counties within those states . Terry at the end of the day i think not. People are very skeptical of that. It is one of the reasons why those key states ended up going for trump in 2016. Francine how much will the key states be looking at the trade war between the u. S. And china . Are they behind the president or is it going to start hurting them and the consumer . Terry that is a good question because the answer is both. The answer is that they will continue to support the president even while they get hurt to some extent and as you know, i have never been somebody that thinks that a resolution of the trade war is likely and i try to always keep it simple and the simple answer to this is not the kind of whackamole stuff that people talk about. It is simple that the chinese have been clear about not wanting to do unenforceable deal. The minute they do, you will get a deal with the United States. Francine we are hearing now say staya they tuned over the u. S. Tech blacklist. Does it get much worse from here . Terry i think both sides have reached a conclusion, a silent one that it is better to keep hope alive and manage the markets that way than actually do anything precipitous. Tom where is the biden alternative . Have isconversation i centrist democrats looking for another alternative to Vice President biden. Is it out there . Terry not really. Tom why is that . Because thely energy of the party, particularly in the primaries which tend to reward the true believers on both sides, the energy in the party and a lot of the money, the big money resides with progressives. You can look at tom steyer as a perfect example of that. As long as that is the case, they clearly think that what has failed is a centrist Hillary Clinton approach. They go towards the progressive. Tom is a centrist approach going to work in our International Economics or will we see the same polarization . William it is the same balkanization where every scientist taking extreme positions and that is the thing that has held back investment in this world. Business investment is completely shot because of this. Tom this has been wonderful. Thank you so much, billy formally with the International Monetary fund. And terry, thank you so much for the update. The phrases fiscal space. We need the definition but we have the right person. It took them from portugal. He is front and center in the Global International debate on debt and deficit. This is bloomberg. Tom good morning everyone. Francine lacqua spearheading our event in london. I am tom keene in washington. Michael mckee, our National Economic and politics correspondent on the state of our economics. Michael the members of the National Association for business economics generally agree by a small majority that we are probably not going to see a recession or additional fed rate cuts this year. That is not what the markets are thinking and today the two come together as chairman powell speaks to this group this afternoon. It will be interesting to see what he says. And if try to push back so, how does he do that . The u. S. Ay he said economy is in a good place and they have the 3. 5 percent Unemployment Rate to standby. To stand by. Much of the data is backward looking. It is going to be difficult for him to make the case that the fed wants to stay on hold. One can see with the trade negotiations coming up why it would be an advantage to him. It is going to be a very interesting speech and it could be the event that moves markets on the day if powell tells investors something they dont want to hear. Tom thank you for the brief, Michael Mckee with the National Association for business economics. Conversation,our a single best chart. This is the view from 100,000 feet. Nominal gdp for the Global Economy and what you need to know is the slope matters. Up we go out of the 1960s and that a more gradual slope and in the last 10 challenging years,here is no question about it and even more gradual but rising slope. It is a changed world as we create a new managing director. She will lean on the International Monetary fund. What you need to know is he is the mustread must watch and oft listen on the challenges debt, deficit and our solutions out there. Thank you so much for joining us. , have been dying to ask you what is fiscal space . Fiscal space is the ability of countries to spend more or cut taxes while not endangering their ability to access bond markets for financing or longterm debt sustainability. Though,is cultural behavioral economics as well. Christine lagarde of the European Central bank, they have to deal with culture dont they . It is a lot about expectations, about behavior exactly as you say. Cycles ands do have one of the things that has been emphasized is that low interest a ground fornot be complacency because we have seen in the past, episodes of low Interest Rates being followed by over borrowing and panic. A lot of european models buried within their hundreds and hundreds of years of study. On negative Interest Rates, the barometer of our fiscal realities, has not been a successful experiment . Rates, verynterest low Interest Rates, zero or negative Interest Rates in advanced economies have led to a situation where increasing levels of debt, debt levels which are much above what they were at the beginning of the Global Financial crisis, has been at the same time accompanied by a declining Interest Rate build. Countries, and many advanced economies, there is additional fiscal space. In some economies there is a lot of fiscal space for countries that have fiscal space, it is time to use it. Francine how concerned are you about debt levels . Have they gotten worse . We have this situation in advanced economies where you have very high levels of debt ompanied by declining interest expenditures. In most economies around the world, that is not the situation. In most economies around the world, but we see is increasing levels of debt which are accompanied by increasing interest expenditures and in particular, an increase in the interest of payments and in those circumstances, the general approach is to be cautious to avoid complacency, to fight high levels of debt and put all of that in the mediumterm framework for low income developing countries, it is crucial to reconcile the constraints of Public Finance with the imperatives from the sustainable developing goals. Francine overall, what is the concern over borrowing to actually fund countercyclical spending at this time . It is crucial to have a robust Public Finance framework. In most countries it is important to have a mediumterm framework backed by a solid institution and that is important for fiscal policy to be able to fulfill its role both from a Business Cycle viewpoint but also from the viewpoint of growth and development. Tom do you care about how the debt and deficit is spent . In germany there is a theme of it has to have a green angle as well. Does the imf care about infrastructure or do you just want to see a debt build up where there it goes directly into consumption or social programs or into tangible things that hurt your foot . Is to my mind a wonderful example. Financing able to get at negative Interest Rates. In germany there are many opportunities for Public Investment in infrastructure, in green infrastructure, digital infrastructure. That allows an economy like germany at this point in time to have a double benefit, expansion of aggregate demand and support while atic activity the same time improving the competitiveness and Growth Potential from a longterm perspective. One final question with all the challenges of imf assistance to the political mess that is argentina. Give us an update on the physical structure of argentina as they face their political challenges. Time, at this point in argentina is at a juncture. It is very important for the imf to be constructively engaged way argentina and to pave a that will allow argentina to be stable. Tom we greatly appreciate it. Really front and center on fiscal debt. Francine we are just getting breaking out of the u. K. And out of brexit. This is basically the working papers that we were promised from Boris Johnson on what would happen or what the new deal brexit preparation could be. This is basically a report that they decided to go public and what they would do. Leaving in the event of a deal or no deal. Boris johnson saying that a no deal preparation effort is herculean. Just as the report is coming out. We will have more on this brexit report. That is just being published. This is bloomberg. Francine this is bloomberg surveillance. We just got some breaking news on nissan. This is after what happened. We now have the new chief executive. Nikkei. According to the and we have plenty more will see if there is any impact on the share price when it opens up tomorrow. Now to the latest from japan where adam silver spoke in a press conference. The nba commissioner reiterated the nbas commitment to the value of free speech saying they would not apologize for the rockets general manager. Joining us now from the super arena where the nba commissioner was just speaking, our guest, great to have you on the program. What exactly is at stake . The nba was trying to get into the markets and it took billions of dollars and a lot of years. Does it all unravel from here . China is a huge market for the nba. Adam silver, the nba commissioner reiterated that he had so many fans in china and that it was a that it was an important market for the league that he wants to defend the freedom of expression for all of his employees, including the Houston Rockets gm and his tweet from friday that has really boiled over, over the weekend and has led to two of the nba china games being dropped from broadcasters from cctv. They will no longer broadcast them. This tweet having an impact. Adam silver spoke shortly ago in this room at issued a statement ahead of a presser saying that the nba will not put itself in a position of regulating what players, employees and team owners say will not say on these issues and they could simply operate that way. Again reiterating and backing up this point that they will defend the freedom of expression. Although china is an important market for the nba, this is how they will handle the situation with the hong kong protests. Francine thank you so much. Coming up today, tom sits down with the m with the imf managing director ahead of the annual meetings in washington. I know you will have a question or two about economic stability and about what jay powell of the fed can do and how the trade war will impact her reasoning. In the meantime i am looking at treasuries. Investors in todays market trying to weigh the chances of a breakthrough of these highlevel trade talks. If you look at equities, they are kind of falling a little bit, especially with futures little bit lower. This is bloomberg. From the couldnt be prouders to the wait did we just winners. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. Now you can share it between lines. Mix with unlimited, and switch it up at anytime so you only pay for what you need. Its a different kind of Wireless Network designed to save you money. Save up to 400 a year on your wireless bill. Plus get 250 back when you buy an eligible phone. Call, click, or visit a store today. Pres. Trump we dont have an agreement. My inclination is to get a big deal. Weve come this far. Alix sparks fly before the trade meeting. The u. S. Blacklists eight Chinese Tech Companies for human rights violations. China says stay tuned for retaliation. China cuts the nba loose. The state broadcaster will stop showing games after a hong kong protest. In u. K. Prime minister Boris Johnson tells Angela Merkel a brexit deal is impossible to make more contingency plans. Welcome to bloomberg daybreak on this tuesday. The white house he said to focus on limiting china stocks in government funds. Its all part of the conversation of limiting any capital flows in support of Chinese Companies here in the u. S. The Trump Administration could be moving ahead with discussions around restricting capital flows into china, a real focus on investments made by