Transcripts For BLOOMBERG Bloomberg Surveillance 20240713

This is bloomberg surveillance. These are your markets. Quite a lot going on in terms of brexit. Hopefully there is a lot going on when it comes to trade. That is what the markets are putting their hopes on. Lets get that board up for you so we look at what european equities are doing and a little bit of weakness. Stocks in general higher. U. S. Futures higher. Bonds. S in we are expecting a lot of news out of companies such as amazon. Com. 1. 2 957, all eyes on westminster and a possible vote in the house of commons behind me. That is coming up. More from our interview with mark carney at the imf meeting in washington over the weekend. First, lets get straight to super saturday. That was last saturday. Indian lawmakers voted to withhold approval from oris Johnsons Brexit deal until all the legislation had passed. The Prime Minister was then forced to send a letter to brussels asking for another extension. Later today the government is expected to make a fresh bid to get the agreement passed by parliament. The foreign secretary says he is confident about the chances of success. People have written the Prime Minister off. We seem to have numbers in the house of commons. We dont know that. We dont know, but from what people have said, and i think people at their word, people say get this done and move on. Joining us now from brussels is maria tadeo. Joining us here is david merritt. What happens today . We may get a vote. Big afternoon, on this question, this meaningful vote, does parliament back boris is deal . This amendment says, look, we need to get the legislation passed. There is a wrinkle. Alreadyow is saying we did that. About but regardless of that, even if it happens or not, we are in the position where they need to get the legislation passed. We are going to see that throughout this week. You all the foreign secretary saying we appear to have the numbers. That is not the same as all the details of all the legislation passed. Simply certainly not by the middle of next week. What are the chances the u. K. Leaves october 31 . Considering that letter has been sent unsigned with another letter saying i dont mean it, from the eu side, they are treating that as a request for an extension. It seems a little unlikely. If we had not had legislation by the 31st, we will see no deal brexit. Aboutre talking latenight citizens. Another sitting of parliament to get it through. Look what the opposition is saying. They are saying we are going to push for softer brexit, a Customs Union, possibly even a second referendum, which means none of this might end up looking like what mr. Johnson has sent at all. It is Parliament Getting in the way of a smooth process here. We are waiting to possibly have that by next week. What is the view from brussels . Are we going to see a special summit . We are being told here it is just a wait and see. The European Union does not want to preempt moves that are yet to come from the u. K. Parliament. Past 24 hours, the Prime Minister has not been defeated. He has not lost the vote. The europeans do believe a lot could happen from now until october 31. In terms of the extension, what a are hearing today is that letter could suffice in which european leaders ultimately agree to grant more time. Emmanuel macron said time was not needed because we already have a deal, but at this point, the view from brussels is that request has been taken note of. If the u. K. Does not does need more time, they would prefer to give more time than risk no deal brexit. Will change the u. K. Forever, just by the Power Parliament is actually having, which it has not had in the past. What is the chance of Boris Johnson being able to get an election . That is the question. He tried. The labour party blocked him saying, we dont trust you to have a no deal. We are going to have to make sure there are extensions. It could be very interesting. If the u. K. Do say, fine, you can have that extension. We know they are way behind in the polls. This parliament is not able to pass any brexit, we need to change the numbers. Again, numbers to get that done before the end of this year are still pretty tight. If this bill cannot get through this week, maybe mr. Johnson accepts that extension, comes back and asks again, and could we be facing a general election. Thank you so much. Plenty more throughout the day. Lets get straight to new york city and the first word news. U. K. Is celebrating its no deal brexit plans. Activating operation Yellow Hammer in which departments take action to offset the worst outcomes. An official saying hundreds of Civil Servants would be moved to work on the plan. Protesters unleashing another wave of destruction on hong kong. Arsonists using petrol bombs to set fires in subways. This as chief executive carrie lam heads to japan today. She will intend the enthronement ceremony of the emperor. Lebanese officials struggling to avert a financial meltdown amid protests. The Prime Minister holding talks with some of his Coalition Partners on sunday, two days after he gave them 72 hours to back reforms to rebuild confidence. Tens of thousands of people taking to the streets for a fourth day of antigovernment demonstrations. Have environmental parties made history in the countrys election, the greens overtaking the christian democrats to become the fourth biggest party. The Green Liberal Party also increasing its share of the vote. This means the two control a quarter of the house at the expense of the antiimmigrant swiss peoples party. It saw its lead narrow. President Donald Trumps allies making a list of replacements for mick mulvaney. Sources say includes matthew andaker, Chris Christie, wayne berman. There are signs President Trump is in a hurry to replace mulvaney, but some white house aides were on come were unhappy with his performance at a press conference on thursday. Global news, 24 hours a day on air and tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Thanks so much. Employinguest millions of people in the u. K. What they want from westminster. Economic, finance, politics. Lets get straight to the Bloomberg Business flash. Ubs is cutting 40 jobs in the asiapacific. Bloomberg has learned protections are split reductions are split at Vice President level or below as part of the global push to trim costs. A Goldman Sachs banker has been arrested on Insider Trading allegations. U. S. Securities says the Vice President linked to non leaked to nonpublic information as part of a scheme that led to he is the third goldman employee in 18 months to be charged over Insider Trading. Chinas base rate for new corporate loans stayed steady in october. The one year loan prime rate was set at 4. 2 . Analysts expected a reduction as the chinese economy sees its weakest growth since the early 1990s. Berlin freezing rents. The citys Government Party striking a fiveyear deal to regulate housing costs. That paves the way for legislative approvals next week. Foreign policy comes into force next year. Its one of the most radical plans to ease the burden after a property boom caused rents to double over the past decade. That is your Bloomberg Business flash. Thank you so much. Escapeinitely cannot brexit at westminster. You can also not escape it washington. I sat down with mark carney on friday. We started by discussing what a brexit deal could mean for the economy and Monetary Policy. Is there is ans agreement between the u. K. And the European Union. As a consequence of that, if it is adopted, it would be there would be a transition to a new economic relationship and we have been saying what we have been saying from day one after the referendum, after the decision of the people of the United Kingdom to move to a new economic relationship, our relationship with the eu, it is important to have a transition to that relationship. That is what this deal would deliver if it is adopted. What does that actually it is hard to distillate to one thing. The nature of the timeframe in which it happens, there are a lot of potential paths, but transitions that are they are clearly better than the alternative, and the alternative is a no deal brexit at the end of this month. In general, what we have seen in the u. K. , and i would like to generalize the point, is that this entrenched uncertainty andt trade relationships, this is the tightest trade relationship in the world between the u. K. And the rest of the eu, this entrenched uncertainty about it is having a consequence for business investments. We think the investment level is about 25 below where it otherwise would have been post referendum. If this is adopted, it will remove that uncertainty. We would expect a rebound in that investment. It will not all come back. We dont know the nature of the future relationship. We do know the prospect of an orderly transition we do know the broad contours. In that environment, you would expect all things being equal, the economy to pick up at a subdued pace. Includinguld be Interest Rate hikes . Not necessarily. Im not going to precommit. We are sitting here, this is why i wanted to generalize. , theu know characterization of the fund is. Hat the momentum is precarious why has it built up . The principal reason is global trade tensions. Particularly tensions between the United States and china, the United States and europe. Whatre seeing globally now has been seen in the u. K. We have to take that into account. How much momentum is there in the Global Economy . Take these factors into account and make the right decision at the time. Speakingas mark carney to us at the imf meeting in washington on friday. Let us get back to brexit, back to pounds. Despite westminster failing to saturdayit progress on , goldman, credit agricole, and others have maintained bullish predictions for sterling. Lets get to an expert at fidelity. You look at the pound, there seems to be optimism. At 1. 284. Ncing what are the market seeing politicians are not . Last you think about the that setback for johnson, for the market the important thing now is that a no deal that was supposed to happen on the 31st of october accident,y, even by is no longer on the table. , a reason for some respite breather. Do you think markets are pricing an agreement . There is confusion on whether it is possible to get some kind of a deal this week. Markets look at probabilities. If you think about the probability of a no deal now, it is lower. A hard, lower. Markets are getting a little bit more optimistic, although clearly it is not going to be plain sailing. A lot of amendments will have to be debated. The government will have to keep, if they have a majority, throughout the process. There is also the fact that positioning is quite cautious. It has been for a while. Even just a Short Covering of those positions can provide a good tailwind. This is our mliv question. A great markets like blog you can find on our bloomberg terminal. What impact will negotiated brexit have . Lets say we get a deal. What asset do you like . Will be the first currency to react. In general, Sterling Credit would be the area where we do replacement. On rates in general, while it may lead to optimism around the economy, it is not clear whether how much damage has already been done, what a deal will do, plus the u. K. Remains at the mercy of external events. Yield would be positive for us. Guesting up, my next employs more than 7 Million People in the u. K. What they want from westminster. This is bloomberg. Surveillance from westminster. My next guest is an economist at the federation of british industry, which employs more than 7 Million People. She says the majority of her members would rather have an extension to the Brexit Process than face in no deal. When you look at whats going on, i dont know whether we are seeing entrenched concerns in what your members are saying. Is herenk uncertainty for a while. What is really important for businesses is first that we avoid a no deal brexit. Having a deal on the table makes that less likely for that to really important. This is something to work with, but the big challenges around are wherecal sector are we heading . A higher level of andtion from the government a clear statement that we are going to focus on what is right for the wider economy. Is there danger government is focusing on delivering brexit and not focusing on this future relationship . It is a danger we get focused on the daytoday at the moment. What is really important for business is absolutely about goods, it is making sure we have territory access. Ultimately, we need to look at the extent of our economy. 40 of our trade, the fastestgrowing bit of our trade. For that, we need harmonization of rules to make it easy for travelers on borders. We need to see a higher level of ambition from this government. We are going to go for an ambitious trade agreement that deals with our Services Sector as well. Have you had any insurances assurances from the government . If you look at the declaration, it talks about this, but there are gaps. If you sell a tv show in the u. K. , you can sell that across 27 different countries. It is not even mentioned in the political declaration. Both sides have been clear this has a lower level of ambition than previous deals. We want a higher level of ambition. We want harmonization of our rules with our biggest trading partner. That is where we need to have a debate. Is no deal off the table . You hear rumors that maybe it is back on. Left amendment is a safety valve. If we get this deal through, we have time to get legislation through. It gives us breathing space. We need to see what europe comes back with, whether they agree to that extension. You can always call that a technical extension. A bigger challenge is what happens. If we fail to get an agreement on that wider trade deal, we could be facing no deal in 14 months time. Need indo your members the u. K. . We need clear direction forward. We need to make sure we avoid a no deal. We need to have this trade deal on brexit. That is what businesses need to see to be able to invest. We need clarity. We need a higher level of ambition. Thank you for joining us, rain newtonsmith. More from westminster throughout the day. We will also focus on trade. Coming up, our conversation with all optionals at the imf meeting. This is bloomberg. Boris johnson tries for a new vote on this brexit deal. Could it be blocked . A sterling outcome. The pound hits 1. 30 as optimism builds over a brexit deal. And holding steady. Beijings top trade negotiator says progress has been made on a partial u. S. Trade deal, but mike pence is set to deliver a major speech on china policy this week. Good morning, everyone. Building in the markets over a brexit deal. At least taking no deal off the table. The pound touching 1. 30 on the dollar. We will have a look at treasuries. First, lets get straight to the bloomberg first word news in new york city. We begin first word with brexit. The u. K. Is celebrating its no deal brexit plan. The government activating operation Yellow Hammer. Agencies taking action to offset the worst case outcome. A u. K. Official said hundreds of Civil Servants would be moved to work on this plan. Protesters have unleashed another wave of destruction on hong kong. Arsonists used petrol bombs to set off fires in subways and offices of chinese businesses including huawei were trashed. Carrie lam heads to japan to attend the enthronement ceremony of the emperor. Lebanese officials are arambling to avert a mount meltdown amid nationwide protests. The Prime Minister holding talks with some of his Coalition Partners just two days after he gave them 72 hours to restore confidence. Tens of thousands continue to protest against the government. Thousands continue to protest against the government. Swiss environmental parties have made history in the countrys election. The greens over taking the christian democrats to become the fourth biggest party. The Green Liberal Party also increasing its share of the vote. The two control a quarter of the house at the expense of the antiimmigrant swiss peoples party. It saw its lead narrow. Donald trumps allies are making a list of potential replacements for mick mulvaney. Sources say it includes matthew andaker, Chris Christie, wayne berman. There are few signs President Trump is in a hurry to replace mulvaney, but white house aides were unhappy with his performance at a press conference on thursday. Global news, 24 hours a day on air and tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Thanks so much. Let us focus on europe. Holz and to olaf sc started by asking him about the health of the economy. Have a very competitive economy. It is not just Big Companies anyone knows. Many companies are successful. What we know is we have lower growth. Tensionsnow trade between the u. S. And china and other countries hopefully all of these are resolved like brexit seems to be. It would have a good impact on the world economy. What we are facing our problems from new tariffs. Also the problem of people who are uncertain about the future. We dont have a brexit deal. What happens if it doesnt get voted through . It would be difficult for the United Kingdom. Is a problem for the u. K. It is a problem for the European Union. It is always the same. You have to make a pragmatic political strategy. This should they should avoid tension. She takes over november 1. I think the European Central k she is a very intelligent person. She did a good job at imf. Could the german bank take more negative rates . Could they cope . [indiscernible] that was the german science minister speaking to us at the imf museum in washington. Lets keep it on europe and the European Central bank. Over, madame lagarde takes november 1. Does that change anything in terms of composition . Lessshe have a divided Government Counsel . We do not think there will be any meaningful change to continuity. Her political background and skills will be useful. Particularly now, when we are starting to be more pronounced within the governing council. Thes going to continue on path of easy policy. We will have lower rates Going Forward. While the latest qe program is hasthe bazooka, the ecb more, particularly as the trade war moves away. What does it mean in terms of negative rates . We have a number of banks complaining. . Ill they venture the tearing helps but it does not make everything better. We are seeing more and more commercial banks passing on. Egative rates t that is something we have never seen before. If anything, that will be a positive for some like european credit, as investors are moved , in search for income. On wheres o your take europe goes from here . The german finance minister says we have already done fiscal study. No more needed. It is turning positive at the margin. Room, if onlyted if the only meaningful think they can pull is the fiscal run, in order for aiming for fiscal needge to be approved, we to see a slower economy. How much do you worry about the european economy as a whole . Minister schulz was very clear that if the u. S. China trade war escalates or does not get better, europe will pay the price. Growtht of europes comes from the manufacturing sector. That have slowed down the most are the ones that have manufacturing and exports in goods. If the uncertainty continues or does not the escalate, europe will be in a rock and a hard place. Thanks so much. Have more on will trade. The trade negotiator says talks with the u. S. Are making progress. Both sides are working toward a partial deal. We will give you the latest on the trade war up next. This is bloomberg. This is bloomberg surveillance. You can see a couple of movements. They were above 130. Europe is down to 86. Boris johnson reviewing the brexit push as a bill could pass. First, lets get straight to the Bloomberg Business flash in new york city. Theps is cutting 40 jobs in asian pacific. At Vice President level or below. This comes as part of a global push to trim costs. Asking prices for london homes rebound they can october. There was a scarcity of new properties. Brexit has made sellers reluctant to take the real estate funds. A Goldman Sachs banker has been arrested on insider allegations. Vice president brian cohen leaked nonpublic information. This was part of a scheme that led to 2. 6 million in illicit claims. Chinas base rate for new coper loans staying corporate loans staying on effectively steady in october. Expected as the chinese economy sees its weakest growth since the early 1990s. Over to berlin, that is where the cities of any governing party struck a fiveyear deal to regulate housing costs. Fullpolicy comes into force next year. It is one of the most radical plans to ease the burden on tenets after a property boom prices to double. Thanks so much. Chinas top trade negotiator they have made progress and both sides are working toward a deal. Been made, laying an Important Foundation for phase one. Negotiators are trying to prepare a deal to sign at next months apex. When you look at u. S. Trade, the concern the markets may have is that we have constant noise, negative noise. You are not sure where you are on the trade deal. Who needs the trade deal most . How bad is the chinese economy . Both sides could do some improvements. They both care about growth. The u. S. Has the election on their radar. Chinese economy is slowing down. Part of it is due to structural issues. As far as china is concerned, they have the ammo to overcome some of the hiccups and the slowdowns that come from trade. From fiscal and monetary policies. On the fiscal side, they will be more careful as we heard on the over the weekend. They dont want it to build up. They have room to support the economy. We keep saying growth will be sub 6 . Even 3 . Ng if you look at sub 6 , what internal dynamics do they need to understand . Rotation outing a of the externally driven growth in china. Forhould keep an eye out the Public Markets and the wealth of the chinese. Two elements. Where do you want to be . It is not going to be an easy ride. There will be volatility. We will get compensated for higheryearold and higher carry. Higher yield and higher carry. What if things deteriorate at a faster pace . It will be the one thing that authorities. Something that will create further uncertainty. It does not help anybody. So far, it has been managed carefully. There is a question that is a question mark we have to keep on the radar. What about the dollar . It is the highest yielding development currency out there. You get meaningful slowdowns. That is something we have on our radar. Up on bloomberg surveillance, we will have more from brexit. We will hear from the ups chief executive. You can catch that interview after 6 30 a. M. , london time. More on the earnings season next. This is bloomberg. It is now my judgment that we have reached the best of all solutions. This government cannot be willed and these ventures not be duped. Agreement, which we believe caused damage to our part of the United Kingdom. I am moving to ensure that we can be secure that the u. K. Will request an extension. I have a distinct sense of deja vu. [laughter] the is to the right, 322. The nose to the left, 206. Must nowime minister comply with the law. He can no longer use the threat of a no deal crash out. Negotiate a delay with the e. U. Neither does the law compel me to do so. Some key moments from saturdays special session in parliament. Some better than expected gains in trading. This week, we will get a look at the first indications from ups. On wednesday, watch out for updates. Thursday, we will have earnings. We will get final thoughts. From our guest. I will ask you what you are expecting in terms of the earnings season. Thanks, do they have a Business Model . Have as, do they Business Model . Volatility onre the Investment Banking side than the market side. There is room to generate more revenues. That comes in the context of that is a bit more challenging. There is a more challenging backed up backdrop structurally. That most the fact ks us, even though there may be headwinds, there is still an opportunity to invest in credit markets, financially. Talk to me about banking. Does that change how much upside you have four credit financials . Is a long way away. We will see. We have to look at each individual bank. Creditll have their own dynamics and demand for credits and revenue sources. Each bank has their own Business Model. The one thing we need to be sure of is that we do not miss the next recession. Could it come with earnings, not necessarily financial but earnings in general . It is something we need to monitor closely. Earnings are the first warning sign. In terms of the current earnings at the we will look strength of the consumer in the u. S. This is all something that we can find out from earnings coming up. Changes,n the consumer he could spell worries for the Global Economy. Could the consumer be changing this season . Not yet. Sales number have been a little bit soft. Is direction of causality earnings strength starts going up and you start seeing consumers become more conservative in their spending. Unemployment is low. Wages are rising. That can change. Consumers feel good today. That can change. Where can you put your money . We are happy to hold investment rates at this juncture. Ultimately european corporates have not increased their leverage like the u. S. Has done. Policy the insurance that the can give you in this environment. Thanks so much. Surveillance continues in the next hour. I will be joined by tom keene in new york. We may or may not get a vote. The brexit continue conversation. Pound at 129. T this is bloomberg. Prime minister force Boris Johnson tries inuvo on his brexit deal. But, could it be a new vote on his brexit deal. But, could it be blocked . Holding steady, beijings top trade negotiator says progress is being made on a trade deal. Mike pence is set to deliver a major speech on china policy this week. This is bloomberg surveillance. Tom, lets talk about brexit. It is clear. We do not know what is going on. Stateust ran through the of play. I am baffled. I am confused. I am not sure how we get to wednesday. I am not sure how we get to monday afternoon. Thatat i am sure of is there is either the removal of a new deal or, there may be some kind of deal, the Boris Johnson deal. We will have a look at the markets and how they are reacting. Cruz forces are giving into demands from turkeys president. They have withdrawn from a northern town Kurdish Forces are giving into demands from turkeys president. They have withdrawn it from a northern town. Trump seesonald himself as being in the hospitality business. That is according to the white house chief of staff, mick mulvaney. He is saying the president made the right decision to reverse course and not hold the g7 summit at his florida resort. The president could have violated conflict of interest laws. Over to hong kong, that is where protesters unleashed another wave of violence. It is the 20th week of protests. And waterd tear gas cannons to break up the demonstration. Global news, 24 hours a day, on air, on tictoc and on twitter. I am viviana hurtado. Joins us in the next hour to focus on u. S. Equities. Futures of five, beneath the 27,000 level on the dow. Euro sterling with a lift. It is interesting to see why sterling is moving. We understand what Boris Johnson is the bill could pass, and that has given him a lift. Is pricing market because no deal is off the table. No matter. At 129, 78. Picture on show the the pound. This is the johnson pound. Is Prime Minister johnson does his magic. Stronger sterling as well. Onouple of big legs up based the news of our team in london. We go up to 130. We went through here briefly. Just below 130, francine. Will we get a deal . Will Boris Johnson be able to push the deal through Parliament Today . Now for a brexit iscussion from all angles david. Let me kick off with you. Probabilityk at the we get a deal this week, are they low . The mp said we want to take our time with this. It is a huge decision, of course. Time is a really short to do any sort of normal scrutiny that you would expect from legislation like this. The government may say they think they have the numbers to get this through. That is different to getting it through. Bill, they are going to try and change it along the way. They will say we want a Customs Union. They might say we want a second referendum. All of which is going to radically transform it the other way. The idea of getting it all through this place by the 31st seems farfetched. Francine a letter was sent requesting an extension. He did not sign it. Grant the u. K. An extension . Francine, at this point, that is a big question. The mood in brussel is wait and see. The europeans did not want to precipitate events. Send a not want to timetable. Boris johnson has not lost a vote. He can still get this through. A lot of things could happen from now until october 31. The europeans do not want to be the first ones to move. In terms of the extension, it comes down to the e. U. Entirety. The e. U. 27, what all 27 would have to agree to it. He does not see a need for more time because there is a deal in place. If you look at every summit that was covered, every time european leaders get together before a make or break moment, ultimately they always agree to give more time, just because they do not want to be blamed for a new deal brexit. They still believe the best way to leave the European Union is with a deal. Tom i have a list of things as i try to get to wednesday. I have the issue this afternoon. I have the complete disarray of the labour party. I have the scottish legal action, which i guess we learned about learn about today or tomorrow. Manchester united liverpool, which is important in all of this. What matters to david merritt. What you focused on as you try to get through. There is an off a lot of knowledge. Legal challenges. Ispping back from it, it definitely true that we are a lot closer to getting a deal past than ever before. We are talking about one or two votes. Theresa may never got close to that. It is within reaching distance. Bear in mind that that extension letter was sent on saturday. What we are looking at here is that there will be more time to get this negotiated. Labour partythe opposition may be in disarray, they did unite and vote to get this extension done. To idea that brexit is going get done by next week is pretty likely. Is estion to me the labour party will rattle excuses to block it. Will we get enough votes this side of christmas . Tom the day i have is november 28. Could you explain to me how adults in brussels receive a letter that is unsigned . How was that greeted . It is like a spoof or a comedy or a tragic comedy. How did greece how do you get an unsigned letter from a g7 leader . Is when youreality look at the letters, the european un look at the cabinet. If you remove the political spin and what the Prime Minister said, which is i would never ask for more time and i am not going back to brussels to request an extension, the truth is he has done it. The europeans were expecting this and they were prepared for it. And noiseof clarity comes out of the u. K. Parliament but they stick to the technicalities. Under those technicalities, the default continues to be a new deal brexit on october 31, unless there is clarity this week from the u. K. Parliament. The bar is low but the europeans are not surprised. There is a drama that has been going on for years. There is no surprise around that. They are used to this tactic. Francine thank you so much. Onto the markets and how they are doing. Joining us from our london studio is jeffrey. Atwill have a look everything we are looking at. Great to have you on. What are the markets looking at . Are they pricing a deal or are they pricing on the fact that a new deal no deal is possible. I think they are pricing that a no deal is possible per how do you trade the individual steps . How do you invest is going to depend on what the deal looks like. There may be enough support for Boris Johnsons yield to be amended. Outright keeping the u. K. In the Customs Union. An even softer brexit. How do you trade different degrees of a soft brexit or no brexit. I think that is on the table right now. Francine if this deal were to be passed, what happens to the pound . 135 or higher . The market will take another step to see where do we go from here. The transition goes towards 2020, how would a freetrade agreement look . Lets say, take it toward 140 or beyond. To say this is the only the end of the beginning, we are at the beginning of the end. The beginning is 135. The bar is quite low. Thank you for being with us today. Much to talk about. We will try to get through economics and Financial Investment in a bit. Roger, this is an exceptionally important interview. For shades ofport lee. This is bloomberg. We seem to have the numbers at the house of commons. We dont know that. Get this done and move on. That was the foreign secretary saying he was confident about the chances of success. The government will make a fresh bid. We are joined by the director of the institute for government. Thank you so much for doing this. When we look at what happens next, what are the chances that s deal will outdo there are different locations in there. Boris johnson might have the numbers to get this deal through. The question is what about the amendment . An awful lot could happen next week. Whether or not he gets it through or decides to pull it back depends on these amendments. We have a question of whether or he is actually if the speaker rules he can do tomorrow is the biggest battleground. All kinds of amendments may be attached to the legislation to get this bill through. Main ones are a Customs Union or a referendum. If that got through, it is might the Prime Minister withdraw, saying it is not the same at all. After many setbacks, the Prime Minister is almost on the front foot. Seems to have what theresa may never managed to half, which is more or less the numbers. The secret life from the past, which is used in media stocks. Think of paul sweeney in bloomberg. Let me ask you about the medias of fact on all of this political debate. I am thunderstruck about how all the politicians, literally 24 7, play the media. What is the effect of the media on this constitutional crisis . Well, it is keeping the media in business in a way. It is a minor brexit industry. A level of brexit fatigue coming in. That is why the governments new slogan, get it done is having such residence. People want some kind of resolution. The media has many different voices. The media are plural. They have had much to say. I would not say it is changing peoples minds one direction or another. You couldnt say that the people of britain were not educated on every aspect of brexit. Tom which voice will you listen for in the next 24 hours, of all the different players in this . What are you most focused on . Tomorrow and on whether this led by labor once to get through on the Customs Union, forcing this to be added to Boris Johnsons bill. If that goes through, that is trouble for the Prime Minister. How will the Prime Minister the force toher extend the Customs Union or a second referendum . Wouldnt he lose so many votes . That would be against what he promises. Exactly. That is why i am not sure he would go ahead with the legislation. He might say i pull it back. Lets go straight to a general election. If he gets a general election. He hasnt gotten it. We are in a situation where the opposition cannot stop making i. This is an unforeseen conflict. This is legislation that sounded great. Wereunded as if they Holding Elections when they wanted. No one could actually make decisions. The Prime Minister cant make decisions in parliament cant either. Lets see where we get to. The Prime Minister has a desire to get this through and hold elections by the end of the week. That would happen in about six weeks time. Different groups of every option. What you say what if, francine thank you so much. We will be back with jeffrey. Tom very good. Much more to come. Jeffrey. Much more this week. We will talk to jeffrey about foreign exchange. And some of the dynamics of dollars. Stay with us on a monday. This is bloomberg. Bloomberg surveillance, good morning everyone. The spirit of wentz minster westminster with how to get to her monday afternoon. We are thrilled to bring you jeffrey this morning. We are running the investment shops for Wealth Management. I believe away from the geopolitics and away from the international relations, the bank is at a vicinity of nine days. What will you watch for this week as we try to get to this important fed meeting . I think the mood is interesting. There are major, economically impactful geopolitical events. They are moving in the right direction. If you look at a chunk of the fed, which may have been skeptical about the need to screen easing. Subtlee going to be a change . Things are not that bad. It looks like it is still on the cars. You have to look out further. I have been focusing on december 11. Madame lagarde has been focusing on december 12 as well. Are we going to see within the dialogue this week, and end of the fed meeting dialogue about december . Are we so discrete that we ignore december and focus on october 30 . I think we need to focus on the sort shortterm at this point. Ehe chines negotiators want to hammer out the details on this trade deal. The next meeting will look different. Place. Phase i deal in we still get a hard brexit, which is not off the table yet, no matter how much of a tail risk it is, if we do get that by , the ecbf the year will look different. Event and one one deal at a time. Francine if you look at chinese growth, sub 6 , what does that mean for the rest of the world . Enough, the bulk of the feedback right now on that growth is so bad that shirley , china must surely emulate the economy. They cannot accept this. When chinese numbers are back, the stimulus is coming along. China may say if we are getting the jobs numbers that we need and we can head into in pc next next march, we can tolerate this. Is no mood to implement the floodwaters and go for a big bank stimulus. Beijing will try to hold the line. Francine thanks so much. In the meantime, we are looking at the sterling rising above 138 for the First Time Since may. Amid the speculation that no deal will be taken off the table or they will sign a deal. Coming up, mohammed. This is bloomberg. Hey. Hey. You must be stevens phone. Now you can take control of your home wifi and get a notification the instant someone new joins your network. Only with xfinity xfi. Download the xfi app today. Morning, everyone. Constitutional crisis. She will have a conversation in a moment. ,ight now in new york city viviana hurtado. Viviana incoming European Central Bank Resident saying Donald Trumps trade war with china has Global Growth. He could lift that burden. The biggest key that President Trump has is in relation to stability and uncertainty in terms of trade. It is the unknown. 1, she on november takes the reins at ecb. President trumps allies are putting a list together mick mulvaney. Bloomberg has learned the list includes Chris Christie and Matthew Whitaker. Tromp is reportedly unhappy with mulvaney over the white house slow response to the impeachment inquiry. In canada, in todays election, Justin Trudeau looks set to retain power. He will lose some of his majority in parliament. Hurties of scandals have trudeaus standing. Global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. I am viviana hurtado. This is bloomberg. Francine thanks so much. More on our top story, Prime Minister Boris Johnson making a fresh bid on promising to deliver brexit. He will put his deal fluctuating in the runup to the vote. More on brexit, we are trying to look at a crystal ball and what is happening to pound. We are joined by roger bootle. Roger, great to have you on the program. What is the likelihood that this deal that Boris Johnson has renegotiated will pass through Parliament Without amendments . Roger i am afraid we are beyond probabilities. It is a world of purely uncertain. Is there a reasonable chance still . Had it not in for the amendments that carried on saturday, i dont think we would be in this position. Here is a chance francine there is a met there is an amendment. I am not the speaker of the house. We are making new ground, frankly. We are in a constitutional crisis. Depends on what side of the bed jeanmarc will get out of in the morning. Tom you and i have talked about this many times. I am observing sterling stronger. I am observing what i think are better poll numbers for johnson, as well. Thethe elites in london, people of westminster, are they more out of tune . Is it a continuation . Have they ever been more out of tune . Roger tom, i think you put your finger on it it although it looks awful for Boris Johnson when you observe what has been going on in parliament. The bigger story, people are getting more fed up with parliament and politicians. Johnsons position is strengthening. If it comes to a general election, i think boris is looking at a victory. I are not, help me, jeffrey, the important level for pound sterling. What are the levels up that matter . Right now, if you believe that, no deal is well and truly off the table, as it is not even a tail risk, then we are going to be looking at 130. Basically, what is the deal going to look like . How close is the relationship going to be . Going beyond the transition period, going beyond a relationship, then people might start to think about where fair value is. Do we look at ppp . We were above that right before 2006. Before 2016, before the first vote. That is what the trade is going to look like. No deal isn mind, not off the table yet. Francine roger, we had a conversation last friday. He was talking about interest uncertainty. Whattrenched uncertainty does it mean for the u. K. Economy . Roger it is remarkable that the u. K. Economy has softened and suffered a bit over the last year or two. What happens really, mainly about businesses. What do they make decisions to invest . When you havent got it isnt about the trading relationship with the eu. What sort of government are we going to have . The simplest thing to do is do nothing. Just say i will not make my mind up now. Governmentill this make this a priority in the future . Roger i think the answer is yes. Uncertainty in this with ongoing brexit debate, we havent gotten down to the serious stuff of negotiating or thinking to negotiate what we are going to have as a relationship with eu. A key issue about trade deal with the u. S. And whatever that may make for us. Francine markets seem to be more optimistic around a deal and the fact that he no deal is off the table. For aill need to happen no deal to actually happen . Roger i think we are in legal territory here. Possible, but the most likely thing is that will not happen. We are looking at boriss deal being passed or being withdrawn because parliament forces him into a second referendum or Customs Union. Tom roger, we have to get through monday. It is a constitutional crisis. As we get beyond this one month out, when youre out, you are a student of politics, how does the United Kingdom amend its nonconstitution . Oh gosh, theyre all sorts of ideas about this. Some people suggesting we need a fully written constitution. We have done well without one. Weve got to think through and codify the powers of the speaker are, the powers of parliament are against the Prime Minister. Weve also got to rethink the whole business about referendum, because dont forget we got into this position because parliament said, we parliament had a choice in we gave it to you the people. Another major issue weve got to sort out. We will drive forward the business aspects of this constitutional crisis in the United Kingdom. New york times, 11 00 hour, mr. Marshall is in the it is chambers of commerce and the director general. This is bloomberg. Ood morning you are watching bloomberg surveillance. Lets get the Bloomberg Business flash could boeing says it is holding u. S. Regulators many times of changes to Flight Control software on the boeing 737 max 8. That software was linked to two fatal crashes. The u. S. Faa has criticized boeing for your comments about software for one of its own pilots of ubs is cutting 40 jobs in the asiapacific region. Cuts are split between the swiss bank markets and Investment Banking team. You best launching a sweeping overall ubs launching a sweeping overhaul. Month, asking prices for homes in london rebounded. 2. 4 . Erage arriving at for the year new listings plunged 30 . That shows how perspective sellers are reluctant to put their houses on the market because of the brexit crisis. That is the Bloomberg Business flash. Tom there is much to talk about on the crisis in the United Kingdom and other items of geopolitics, but we will speak to roger bootle and jeffrey you about some of the mundane things. You buried in the Financial Stability report, the math was three paragraphs the imf was three paragraphs on negative Interest Rates, low Interest Rates and what they will do to longterm institutional money. Are we anywhere near a Tipping Point of the effect or ramifications of negative Interest Rates . Jeffrey in terms of longterm, you would be surprised how much that is coming up in the conversations especially among private clients. They would not be thinking about that as much normally, but they would be saying look at how Pension Funds especially mandated on the regulatory basis. They must be suffering, especially in countries with very weak graphics. Demographics. You would have seeping in yield curves but not going to be one of the most bullish signals for equity markets. Backroger, let me take you a few years ago. None of this was in your textbooks at the time. If you were lecturing today, how do we unwind from negative Interest Rates . Can we do it with stability . Are we organized in our path to normalcy . Roger it would be nice if we got a natural recovery. I since that is not going to happen. The key here is fiscal policy. In many countries, there is room for fiscal expansion. It is true in britain, germany. Most countries have got to borrow a lot more. The markets are saying governments take money off us, please. Governments ought to say, ok. Francine i had a conversation with a finance minister of germany friday. He said we are doing enough. Will germany come around to do real fiscal stimulus . The kind that changed the course of the you . Roger it is difficult to get germany to change on this issue. Germany calling for this german think tank saying this is a peculiar position. It would do germany a lot of good because germany needs new infrastructure. When you travel germany travel to germany, it is quite striking. Germany needs it and the eu as a whole needs it. Francine how will the ecb change under Christine Lagarde . She takes over on november 1. Roger initially i dont think it is going to change very much. Changeand until we get a in the whole demand situation, particular change in fiscal policy which draghi has been pushing for behind the scenes. That is really key. I think it is the policy. We need more Government Spending and government borrowing. Tom jeffrey you, if we believe in persistent Interest Rates, what does it do to the reciprocal on the equity valuations . Is there a direct linkage between lower Interest Rates and higher pe . Jeffrey there is. Lower risking Interest Rates but the second is he start to see so many equities, especially those that start to trade like bonds. This convergence in terms of evaluations at how equities behave and also bond prices that youd be sort of thank one 2018 but as roger said, if it is a demand, the fiscal or natural recovery, then beyond the shortterm, it is much more manageable. The will said but is convergence constructive or it is a thickening of those tales where beget the convergence instability . I think the conversation has started to move away from stability right now, especially with the bond prices. I dont think we get too much off in terms of equity valuations. No one is saying they are exceedingly expensive. Going toivergence is happen, can it happen to bond prices in isolation in a way that doesnt track out equity are always going to see more prolonged repeat of what happened in the First Quarter of 2018. That is what many clients are worried about. Look at theen you ecb, they are key about a Government Counsel. Does it hurt Monetary Policy . Think it hurts the aspect of communication. If you know it is divided then it makes it hard for banks to have a prolonged effect because things are going to change relatively quickly. The ecb risks being left behind on the monetary side but the lack of unanimity but also on the fiscal side. China can meet whatever it wants to whenever it wants to. Tom roger bootle, one final question. Is john bercow a oneoff . Or is he forever changed the nature of the character of parliament . Roger a lot depends on who his successor is. My guess is, i refer to the constitutional crisis. Be k there has got to so we do not get a repeat of this. Tom roger bootle, thank you so much. Geoffrey yu is with ubs Wealth Management at weve got much more coming up. We barely touched on other global news. Also all going on in asia including very difficult protests in hong kong. A good time to speak with Meredith Sumpter of Eurasia Group. Please stay with us in westminster. This is bloomberg. Francine i am Francine Lacqua here at westminster. Tom keene in new york. We will look at brexit. Chinas top trade negotiator has launched a signal that talks with washington are making progress. Both sides are working toward a partial deal. Vice president mike pence will deliver a speech on thursday. Lets get back, geoffrey yu. Terms of aced in an trade deal between the u. S. And china . We are lose we are moving closer to a deal. Geoffrey markets believe that we could get hostilities on tariffs. I dont think there is much expectation that it will be rolled back. China seems to be pushing to aggressively it doesnt seem to be pushing to aggressively. Can any side pull out . I think there is going to be a lot of skepticism. Further that prevents escalation, the markets will take it. It is safe if we bring in the support to help the tech side of things. That is going to be a long, long, long way away. Francine geoffrey, where does this play out . Does it play in renminbi or dollar . Geoffrey all of the deal, cyclical issues. Globally, everything that has been impacted by the trade war, that can take a breather. That will be the primary source of transmission. Can this translate into better growth for emerging markets . Sell as well. Nbi tom if this clears, what the scenario is, we get through titfortat tariffs, we get on to some new world, may be a return to the old world, maybe something new. Is the mother of all trays to go all trades to go long em . Geoffrey that will be one of the best performing sectors if you see the investment flow going back in. If you look at how it limits the positioning, how it is underperforming developed markets, clearly the scope the question is does it come at the expense of u. S. Equities . Or can a rising psycho lift both . Tom why will it do that . That is a key binomial. What is the why behind your enthusiasm . Geoffrey if you get that em kicking in, that is where the marginal demand is going to come from. That is where equities will start to equity squares instead of staying flat. We can go higher in developed orchids. Developed markets. What does the fed do next . Geoffrey i think the fed will stay in terms of applying insurance. The data in the United States has not been firing on all cylinders. This meeting comes a little too early. The fed will try to be consistent with the messaging on the office signal up ahead. It is going to be datadependent and the international outlook. Not really commit themselves to anything beyond the next six or 12 months or so. Francine geoffrey, what happened dollar . Geoffrey the dollar will struggle to break higher. Against sterling but that is news already. Flat against some of the other riskon assets. I struggle to build a case from these bevels. People create the range right now. Tom geoffrey yu, thank you so much. I am sorry, francine, for stepping on you. Geoffrey yu, thank you so much, as well could weve got much more coming up. Charles kantor will join us. Francine lacqua in the great westminster. A critical vote at 2 30 this afternoon. Mr. Burke how will try that. This is bloomberg. Tom this morning, a most curious constitutional crisis in the United Kingdom. All eyes on the all honorable john bercow. What provoked ireland . Will there be order this monday. A most curious market. Quities forever higher in this hour, Charles Kantor and it is not curious and irregular. All of the president s chiefs of staff, at some point they exited. Bloomberg reporting on that over the weekend. This is bloomberg surveillance. Live from our World Headquarters in new york. Beautiful weather on the greens. Francine lacqua, partly 40 degrees fahrenheit, no snow, no hail. There is a chill and parliament. Francine, what is everybody looking for across the road from you . Look, tom, after what happened on saturday, people want to know i like the way you say order by the way. Will they allow a second vote . Or like in the past will they say no way . And willhe amendment it be forcing the deal to be tied to an arrangement . Frankly, weve got the expert on this. There are five ways this could go. Tom i am really taken back on how our brexit experts have been a real mystery. His viviana hurtado. Viviana Kurdish Forces are giving in to demands to turkeys president s erewhon turkeys president erdogan. If they didnt pull back tomorrow night, turkey nice claims it is violating the ceasefire. Over to hong kong where protesters unleashed another wave of violence. This is the scene in the 20th week of protests. Etting fires, wrecking stores police using tear gas and Water Cannons to break up the demonstrations. In china, thanks cut the bench rate for corporate data showing the economy is growing at its lowest rate since the 1990s. Global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. I am vivian hurtado. This is bloomberg. Tom all this destruction of geopolitics and quiet markets. Futures up seven. Oil turning. You can tell me about pound surfing. Francine looking at my data check. It is similar to yours. We are looking at time on the pound, 129. 84. It went weekly above 130. This seems to be optimism in the markets. We could still get a deal this week. Otherwise, we speak to other Market Participants and essay Pound Strength has to do with the mounting that a no deal has been taken off the table. Tom very good. Looking at the bloomberg, its got to be sterling. Different legs up, all day. What impresses me is the persistency of this sterling above 130 right now. Geoffrey yu says with the kind of politics that Prime Minister base. N 130 is the francine we have a brexit coverage from all angles. Roth. E here is tim he is basically our brexit star. First of all, what are the chances the deal gets passed . What are the chances they can work on it a second time . The issue really is how to go on saturday . They decided they didnt want to address the question. They wanted to vote on a deal once that legislation has gone through. I am sure we will get a vote but it may not be today. Francine talk to me about the amendment. They are trying to get parliament to try and tie the Prime Minister tim the real mood to win that legislation on the brexit deal has come through. That is a really detailed text. A sizable group of mps who would like to change it and make sure the u. K. Is tied to the use Customs Union. They want a closer alignment with the u. K. Union than Boris Johnson has at the moment. Tom what is the body language and brussels . How are they observing this chaos . We are about to find out because they are about to get on the phone to talk to each of the european capitals to test the waters, to test the appetite for an extension. This is something the europeans do not want to get dragged on for time infinitesimal. This is something they tell us it is time to move on and get a deal and focus on the new commission. The party is that. The priority is that. Those three letters that contradicted each other on saturday once again highlights what the europeans tell you, three years after the referendum, the u. K. Hasnt figured out what kind of relationship it wants with the European Union. It is hard to read what is going on in the u. K. Parliament. On that vote, one thing sources are telling us is the europeans are keeping a close eye on it but they are not going to move intel becomes clear that the. Ill will be voted this week tom it is not fair question but if there was an election today, who would win . Tim it is a really unfair question. T would be difficult johnson is ahead in the polls but he hasnt gotten brexit done. Nigel farage will be back saying the tories have failed, vote for me. Tim ross, thank you for your reporting. We are going to turn and move from the geopolitics to the markets. We will have a lengthy conversation with mr. Kantor. Charles kantor is with newberger berman. Amazonslipis the whole foods transaction. You have a single sentence in your note that nails the mood. I need to find my idiosyncratic opportunity. Where is the mother of all idiosyncratic opportunities right now . Charles for us it will probably be in equities. The idiosyncratic nature of the market today is much more stock specific versus Asset Classes specific. It is a great thing that has happened where stacks are moving stocks are moving on fundamentals. Good news has been treated well in news has been punished. Is no longer low Interest Rates pulling on the market. Tom what category has the most attraction company to company . Is it the value trap category . Growe growth enus thiness . Charles that question depends on your time. The cyclical risks that folks are worried about have been unwarranted as the cyclicals have reported that stocks have reacted well. , peopleth securities have over relied on the resiliency of those businesses. Right now it feels more valued versus growth. Over the longer term as you go through a recession at some point, nothing i am calling for the imminent future. At some point and our view is you want to grow own growth securities because when you come out of the recession two years later, this is that are securing and up with growth more revenues and more cash flows. We always want to bet on the quality of the business and quality of the Management Team and the sustainability of return on capital. Charles, what do you do with the companies that exposed to the u. K. And brexit . Charles we are not trying to make a macro call. Brexit, of course, has held the u. K. Back. Its a tax on confidence, its a tax on hiring, its a tax on the investment decisions. Because of that, we see u. K. Gdp growth well below trend. Brexit is an act of selfharm. It cannot be unwound. When it gets should it happen, it needs to happen in an orderly way which is what todays debate is all about. It is an act of selfharm, of course, that the train has left the station on that. Tom we will have a good check chat in our next halfhour. , looking at the true constitutional crisis in the United Kingdom. Meredith sumpter, Eurasia Group. This is bloomberg. Stay with us. Tom bloomberg surveillance. Good morning, everyone. Francine lacqua, frozen to frozen two, it is coming this winter. Charles kantor, we are thrilled to have with us to give us an asian summary. Bankoff imf, world meetings. Meredith, i am going to give you an open question. What are you writing about right now on this trade war we are in . Meredith right now what we are how focusedut is markets are on this interim trade deal. Likely to be sealed between President Trump and xi. The real story is what happens post phase one of that trade negotiation which we think is going to be incredibly difficult. And not just on the tariffs front but increasingly as we have gotten to a point where some sort of agreement is made on purchases and the tariff escalation. Tax. W gets to it is not just about tariffs. About whatlso really the imf chief referred to as a coupling of economies. It is about industrial tensions that are likely likely to continue to see a downward in trade and innovation between the Worlds Largest economies. Tom how do we get back to a trade piece and a Mutual Understanding of the advantages of multilateral . Meredith are we going to get there anytime soon . I am talking to our Eurasia Group analysts. When we look at these scenarios Going Forward for global trade, the lowest of the scenarios is for a return to multilateralism. The other two probabilities that our analysts are looking at are a return to very focused regional or bilateral trade activity which we are seeing elements of. But our base case is an overlapping patchwork of trade and investment agreements that span different regions but certainly not as efficient and certainly not as constructive to markets as he multilateral trade and investment regime that has spurred growth over the past several decades. Policymakers are preparing to look at the economy sub 6 growth. What does that mean for how they manage this economy . Looks at Eurasia Group how beijing is approaching its economy. We do believe that beijing will stimulusa modest measures that will keep growth around the 6 market. Beijing is not as concerned about the slowing growth as Market Investors are in fact president she is focused on president xi is more focused on parties. Tom Meredith Sumpter and Charles Kantor. We will get to amazon and discussion of the growth enus growthiness. Today, allianz and writing bloomberg opinions. This is bloomberg. Tom bloomberg surveillance, good morning. Francine lacqua at westminster hitting ready for an eventful afternoon. It is a constitutional crisis. For little more perspective, all of our platforms this morning. Right now in new york with us is Charles Kantor of new burger berman. In washington, Meredith Sumpter from Eurasia Group. He is with us this morning. Jennifer jacobs burning the midnight weekend oil over the gaming of another chief of staff out the door for the president. President after what we have seen . Charles no more so then he has been for the last years. Tom etc. , etc. He is making it up as he goes. Charles i dont think he is making it up as he goes. He is most comfortable with himself making decisions like the syria decision without getting much counsel from the people around him. Ignoring those things that he doesnt agree with. Tom people are exhausted by the news flow. Yesterday, the journalism of washington, the idea of Speaker Pelosi and jordan. Now she has wandered off. How will that be interpreted by the white house . Even they think donald trump tweeted some derisive comments about her trip. Donald trump is a Foreign Policy design by one person and that is him. Even though he has been severely criticized for his withdrawal on syria, he is sticking with it although there are reports that he is willing to leave 200 special forces in that area. Francine will that be enough to placate the people in this party criticizing him on syria . Marty we will wait and see if he is able to articulate what the policy is. I think most of the republicans in congress have been critical because there is no strategy. There is no plan. If he can give voice to what that plan is, i think he could bring back those dissident republicans but he hasnt done it yet. Where does the impeachment process go this week . Marty we are still waiting for nancy pelosi to spell out when there will be a house vote. To formally impeach this president. I dont think that is anytime soon. Meanwhile, the polling still shows a majority of americans support impeachment and even removal. We are going to see some new poles coming out. It will be interesting to see if it is impeachment or things have receded . Tom in washington, Meredith Sumpter. Give us an update on mr. Erdogan. Turkey. Im speak in ive got a huge understanding of the domestic split in turkey. What will your Eurasia Group look for . Meredith even though he is facing the toughest local crisis of his career, the crisis is just beyond his border in syria has been good for him in terms of being able to deflect from his dropping popularity at home. Key source of criticism that i think will make the u. S. Turkey relationship even more troubled Going Forward. Despite the commitment at top levels between erdogan and trump to maintain stable ties, clues that we have seen last week with dissension that we are hearing about even among Senate Republicans who can no longer defend the move by the u. S. President which has given accompli. Fait erdogan got what he wanted with the latest agreement he got with the u. S. President at the expense of the u. S. Expansion the u. S. Position in the region. We do not think should the ceasefire hold, we dont think that the u. S. Congress will move forward with much more controversial sanctions that have been placed on the table that could have impacted sovereign debt. But the u. S. Turkey relationship will be a problem Going Forward and that will put downward pressure on the lira and make it much more difficult for erdogan to get his economy. Tom we will continue. Yelling you hear in the background is our washington, d. C. Foodcourt where the coffee is not ready this early in the morning. That is someone yelling. Us. Les kantor with i am begging him to talk about amazon. That transactional whole foods taking on by our expert in avocados. Mr. Demers of the United States of america. Please stay with us, news from westminster and washington and here in new york, this is bloomberg. Good morning. Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. Tom bloomberg surveillance. Francine lacqua. Tom keene in new york. A lot of news. First were news on monday. Heres viviana hurtado. Viviana incoming European Central Bank Resident saying president Donald Trumps trade war with china she told 60 minutes he could lift that burden. It is key that president has is in relation to credit stability and uncertainty. It is the unknown which is hurting. 1, lagarde november takes rains at ecb. Trumps allies are putting together a list of possible replacements mick mulvaney. Former new jersey governor Chris Christie and Matthew Whitaker are on this list. President trump is said to be unhappy with mulvaney over the white house apostle response white houses slow response on the impeachment inquiry. Ouster are demanding the the government is considering a wealth tax while living wages intact. Intact. Ng wages global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. Im viviana hurtado. This is bloomberg. Tom there is a backstory and that is multiple reports as worldwide. There managing protest in lebanon they are managing protests in lebanon, chile. We are monitoring these more peaceful images this morning. Francine . Francine tom, last friday we sat down with mark carney and all of schultz. Here are comments on breakfast on brexit. There is an agreement with u. K. In the European Union and that is a consequence of that agreement. There would be a transition to a new economic relationship. It will remove much of the uncertainty. It wont all come back because we dont know the exact nature of the future relationship. The future relationship is still to be negotiated, but we do know the prospect of an early transition will come into play. Thisll be very difficult. Our brexit will be a problem. It is a problem for the u. K. And the rest of the world. Mostly there will be some effects. It is always the same. The best thing to do is to make a very pragmatic political strategy. This means they should brexit, theck to Prime Minister Boris Johnson is making a fresh bread fresh bid. Johnson will put his deal to a vote in the Parliament Today. Now is andrew, a conservative member of parliament. Brexit anda pro member of the erg. Thank you for joining us. What is the chance we will leave the eu by october 31 . Andrew the Prime Minister wants to deliver and it is what the country wants but they are all very resistant. Trying to ensure that we have an extension and indeed looking to try and create a situation where we end up moving to a second referendum which i think would be damaging to our country. Francine under what circumstance will the Prime Minister pull his deal . Andrew he is going to try and get a meaningful vote through today. I would be surprised if the speaker agrees to allow that to happen today. There will be inconsistent to the way he has acted over brexit over the last several years. That means there Withdrawal Agreement will come tomorrow. Because we havent got a treaty approved by parliament to attach to it, that means it is open season for amendments. There will be calls for a Customs Union to be included which means we would not have a free trade policy. Francine a free Customs Union if a Customs Union is included, what will the Prime Minister do . Calls for second referendum. The Prime Minister will have to pull the bill. It would be inconsistent with government policy and the deal he has already negotiated with the European Union. They will try again to get a general election so we can go back to the people and try and change the balance of power in our parliament to better reflect sentiment in the country which ones to leave the European Union. If the eu grass at the extension, is there anyway Boris Johnson pushes a no deal through on october 31 . Andrew that will be very difficult. I dont see the government has that in mind. All his critics said he could not reopen their Withdrawal Agreements, he wouldnt be able to get rid of the backstop. He has done all of this. The remain dominated party passing the ban act which is a surrender where we cannot leave or walk away from the negotiations without a deal. Francine he has a deal so theres no talk about walking away. Andrew they want to delay the brexit. They want to have a second referendum and stay in the European Union. Francine will Parliament Give them an election . I dont know in your eyes whether it is january 31 or parliament will they say yes to the Prime Minister getting a reelection . We should have gotten rid of that election that legislation 2015. We need two thirds of all mps to vote for general election. The problem is the labour party. They have refused now twice to hold one when the Prime Minister has offered them one. They are dropping in the polls and everything they are doing is make them go down lower so they are running away. They are less likely to go for general election. If theres a threemonth extension, what we could do is bring in a bill which supersedes the tax saying this parliament where we will have a general election and that would only require a simple majority of 50 plus one. The way the polls are looking, they will drop again in the polls. Francine andrew bridge in, thank you so much. Equities, we are try to figure out what is the next move for brexit . Tom very good. Meredith sumpter, we will get in a bit here. Right now, Charles Kantors Charles Kantor, the great mystery of the market it i want to pause after the unicorn the buckle which is centered around wellmeaning, young turks. Wanting to be amazon. Pixie dust in the air, we all want to be like amazon and no one has had more transactional skill than mr. Kantor. Can mr. Bezos keep their religion going of someday there will be processed profits . He has executed on this idea that you can move from defense to offense and use scale. Can be tremendous wealth creator. Some of the more Traditional Companies whether it is mcdonalds, walmart, have all moved from defense to offense by using scale to create tremendous wealth. What they have done so well is focus people on the longterm and a couple of Key Performance indicators and by extending decisionmaking time arises getting investors to focus on key thanks. Theyve got us to look through the shorter term and focus on the creations. It has taken them a while to tilt. This is the complete failure known as amazon. Heres the chart. Theres these pauses along the way. Along the way there is an ebb and flow. When amazon picks it up, what is the why where they revert to a constructive vector . Is it Product Innovation . What is the why . Charles i think it comes to the ability to think for the longterm. There longterm is much longer than most and to pursue very large aggressive market opportunities. They continue to reshape the food retailing environment through the acquisition of whole foods. You see that is the shadow that has been shot across the retailing bow. Amazon themselves are contemplating opening their own stairs where they will have wider resource meant and much lower price points for a much larger demographic. Theyve got tremendous scale. The question that have left to the more Traditional Companies is how do they use the scale to move from defense to offense to extend decisionmaking and create tremendous wealth. Will continue new continue with mr. Kantor. Meredith sumpter with us. With the New York Stock Exchange , the president and chief executive officers. This is bloomberg. Tom good morning. Bloomberg surveillance, Francine Lacqua in westminister where it is warming up. Important festivities at the house of commons. I am new york with Charles Kantor. Some time with Meredith Sumpter who has patiently waited for us. I want to go back to your wheelhouse which is understanding what the chinese are saying. What have you seen in the chinese speaking press in the last week . Meredith really more of a mode on the u. S. China trade front. The vice premier looks to calm tensions between the two tonomies as a narrow in signing some sort of interim agreement that will be that will have a handshake between xi and donald trump. Beijing has been a study as they approach this 6 growth mark. We touched on this earlier. We really see beijing taking more of a medium to longterm approach to managing their economy. They had expected that growth would need to slow. This is not concerning to them. But they are looking to do now is trying to tweaked the system in the fiscal space, also in the credit space, just so, so you can manage that slowdown in a way that doesnt concern investors too much, but certainly we are not going to be seeing beijing abandon its fiscal principles and trying to keep the debt problem and check and allowing xi to retain focus on his core political priorities , strengthening the party, anticorruption and keeping fiscal risks and making good on promises to the chinese people, including the overall quality of life. Five or sixa standard deviation, the single best chart right now. One on tariffs. This is the price of pork in china. This has really gotten ugly. One standard deviation. Ere is where we were we are now well out of five and six standard deviation. How does that change the calculus for president she president xi. Meredith it is incredibly important. They are looking to make purchases that are going to be meeting the demands of the chinese people. More so than looking to give whendent trump any kind of win here. Know, the key focus in terms of stability for president xi is not so much domestic, Mainland China what what is happening and hong kong over the medium to longterm. That is where we see a worrisome risk. Dealine how will china with hong kong . How should we view debt in china . Meredith hong kong is one of these we have been watching this for several months and the sentge that president xi on october 1 is something that we are paying very close attention to. The core message and is pretty short speech was unity. His mandate is to keep china unified. It was a message to hong kong. It was a message to shin john. It was also a message to taiwan. Probabilityd is 25 , a low probability there will be military intervention in hong kong because of the disastrous effects would have on markets and chinas reputation, but also on the taiwan vote in january 2020 eight what concerns me is president xi is not a leader who is challenged without pushing back. We have seen that in the anticorruption campaign. We have seen that in a number of domestic challenges. At some point, if we dont see a lessening in protests, which we dont see happening anytime soon, at some point has got to be a reaction affect because beijing is going to be concerned about losing hong kong. We have seen a protest movement go from criticizing the government to the extradition bill to moving toward a prodemocracy movement. This is getting into dangerous territory for president xi. Tom we will continue with mr. Kantor. Lots to talk about in the equity space. Later today as we continue to drive forward, important decisions in the new york midday. Adam marshall. This is bloomberg. You are watching bloomberg surveillance. Lets get you Bloomberg Business flash at boeing says it told u. S. Ventilators many time to change the flights control software on the boeing 737 max 8. The faa had criticized boeing for not revealing negative comments about the software for one of its own pilots. This month asking prices for homes in london rebounded. Ording to the average plunged 30 . That shows how effective sellers are reluctant to put their houses on the market because of the exit crisis. That is the bloomberg this is flash. Tom with us, Charles Kantor of new berger berman. Talk about the evergreen idea of a company doing it each and every year. I want to address this first. They are in the real estate business. Those guys downtown but explained the characters are attributes a company like brookfield has to bring in other stocks. Charles brookfield is run by a ceo named bruce flat. He is referred to as the Warren Buffett of canada. Enabled to tighten in the alternative through converting what was at one point a clearly cyclical commodity base into incomerations streams of. Mostly in infrastructure and property and now private equity riding a tidal wave of demand. They have just been astonishingly good. Tom this is fundamental. They paid 19. 1 for the last 10 years. Areuld say basically, what their best practices that sovereign wealth funds need to learn . They do their best investing when folks are petrified about a recession or in a recession. They maintain a really solid Balance Sheet and a put money to work when other people dont have the ability to put money to work and are selling assets. They are one of the few companies that came out of the stronger withuch some of the finest longduration assets and property and infrastructure around the world. Francine how do you spot a bubble . Charles how do i spot a bubble . I spotted bubble bubbles identify where euphoria is ubiquitous. That ultimately drives prices and evaluations to unsustainable levels. I can tell you that in the equity market, there is no euphoria. There is only petulant him. Worry about a to global slowdown, trump and because of this lack of euphoria , and fact pessimism everywhere. You have seen record inflows into money markets over the last six months, as much as you have seen since 2008. The equity backdrop is one where the fear and the concern and the uncertainty that we spoken about all morning is more than well reflected in equity prices today in my opinion. I think folks lose sight of the fact that in the u. S. , what drives this economy is the u. S. Consumer. The u. S. Consumer drives more than half of our gdp. When i last looked, they had tremendous job opportunities, wages continue to go up. They have more equity in their homes today than they did in 2008. I wouldnt bet against the u. S. Consumer and i would not bet against the inertia and resiliency of the economy over long periods of time. Tom Charles Kantor, thank you so much. He is with neuberger berman. We are going to have coverage off the green all day. You are coming up on 11 00 a. M. Right now. What happens in the next three hours . Francine tom, first of all, we find out if john bercow, the stick of the house will allow a meaningful vote. We will see what amendments they will attach to legislation tomorrow. This is bloomberg. Alix at first you dont succeed , try again and again and again. U. K. Prime minister Boris Johnson will try to get his brexit deal approved in parliament as the eu weighs extension. Thinghink the biggest donald trump has is the relation to critics and the terms of trade. Alix Kristi Lagarde says Global Growth is all about trade Christine Lagarde says Global Growth is all about trade. And industrials and the consumer. Of earningslf reports this week. Welcome to bloomberg daybreak on this monday, october 21. In the markets, its all about reading through on brexit and what it winds up meaning for the currency market and yields. Yields higher, cable rate really whippy. Now we are flat on the day. Those of the takeaways leading