Transcripts For BLOOMBERG Bloomberg Surveillance 20240713

We have been covering the economy, bringing you live coverage from beijing. In the meantime, this is what is happening in europe. Euro area november services pmi falling to 51. 5. Anything above 50 is expansionary but below forecasts. Again, this is for yourarea manufacturing for the month of november. Quite a lot going on in the markets. It is all about the ecb speech and Christine Lagarde. How she means new policies will be taking place. Stocks overall on the up. We had a similar rally when it came to asia. Pointing towards a marginally strong open in the u. S. As investors try to figure out headlines on the trade dispute. Say, a lot of the talk in beijing was on that. The dollar is mostly steady. Lets get first word news in newark city. New york city. I fear this was all going to blow up. Those were the exact words spoken by fiona hill in the impeachment hearings, that is what she told fellow diplomats but that she now understands why he was not involved in security or Foreign Policy, but instead a quote put look domestic political errand. Fraud,d on charges of the latest setback for benjamin netanyahu. He is the first sitting leader to be charged for the nation but is heading back, accusing Law Enforcement of staging a coup. An inconclusive election race of the prospect of a third vote in a year. In japan, inflation is gaining to 0. 4 despite last months sales tax hike. It illustrates the difficulty the bank of japan faces in boosting prices, excluding the effect of government measures, core inflation is slowing even further. And chinas economy will stabilize in 2020 as a trade tensions ease according to goldman sachs. It says cautious policy support will continue to aid soft landing. At the outlook for expansion is slightly below consensus, just 5. 8 next year. Global news, 24 hours a day on air, on tictoc, and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Francine, back to you in beijing. Francine thank you so much. Hasking news, south korea suspended the intel sharing pact with japan. It surely does not point to more cooperations. Moments ago, suspending the intel sharing pact with japan. Lets break it off with news on ecb Monetary Policy. Christine lagarde has made her first major speech today. She said europe needs a new policy mix and strategy review begin shortly. For more, maria tadeo joins us from frankfurt. . Hat exactly does she mean maria there was a lot of hype filled into the speech. Out the highlights that perhaps she said there will be Strategic Review shortly, something we know members of the governing council really wanted. Not have toe does be necessarily draghi 2. 0, it was time to go back and review these options. If she willr announce in december. There were also comments that reflected on mario draghi. Fact thated the fiscal policy needs to be applied to the european economy and made it clear you have to complete the European Union. That means the Single Market, the Banking Union, and the elements that are still pending. Much progressen made. Francine i have to correct myself, the headline was confusing to him at first. Confusing, at first. Oftary is suspending the end the pact, which probably means they are restarting the pact. We will look more at details of exactly what that means. On to more ecb news. Mix andmeans and policy exactly what a policy review means, joining us from london is the chief Investment Officer at rathbones. Good morning. When Christine Lagarde says europe needs a new policy mix, is it fiscal spending . Is that what her job will be . Good morning, francine. Be trying toill get germany to spend more. How successful she will be, we will have to wait and see. It is not just germany but the rest of the major european nations. They may be quicker to open their purses then the germans will. Than the germans will. She made the point it is not Monetary Policy alone that is going to drive growth in europe. Fiscal spending is one also investment by the private sector. Francine what does that mean for what euro does next . We were watching from afar, Christine Lagarde seemed come into her own. This is her own style. Is the ecb going to sway in a different direction . Julian we shall have to wait and see. She talked about be Strategic Review. I cynically wonder how long it will be for the review to kick in. It will be great if she could Say Something about a review of Monetary Policy in the third quarter. Even better news if she got support from European Form ofnts around some united infrastructure plan and fiscal spending. I think she is calling for a united front. Lets see whether she gets support. Francine meanwhile, she said Monetary Policy will continue to be driven to the economy. Given todays pmi figures, shouldve the ecb be on hold should the ecb be on hold . Pmi and manufacturing data was the negative. I would also pose the question that if we dont get a trade next,nd it drifts into thats not good news for the Northern European exporters it to asia. You could see manufacturing pmi numbers dip again. Francine julian, thank you so much. Julian from rathbones stays with us. Stay with bloomberg surveillance plenty coming up. Xi jinping speaks about a potential partial deal with the u. S. And later, the question on everyones list, who will be germanys next chancellor . Delegates gather for the party conference. This is bloomberg. Francine talking about trade, christian sewing, the chief executive of deutsche bank. Thats not him. I think thats from commerzbank. But christian sewing is speaking shortly in frankfurt. We will keep an eye on frankfurt. Xi jinping has stressed the need for equality during a phase one trade negotiation. Speaking for the first time about a partial deal, he says beijing did not initiate and does not want a trade war will fight back when necessary. Lets get back to our london guest, julian. In joining me in beijing is a partner at trivium china. ,hen you look at the trade list are we more likely to get a phase one deal than not because the chinese want it . Andrew we think we will get a phase one deal. There are issues to be ironed out, but we are optimistic it will happen. The issue is every day it does not happen, it becomes somewhat less likely. The chinese have always wanted a deal. They were clear from the beginning they did not want this trade war. , they time has worn on have change their position where they really need a deal on their terms. They would like to do a deal, but it has to be equal. Francine so the problem is they are not speaking the same language. President trump wants to keep the tariffs and china says unless you remove tariffs, we dont want to go to the table. Would that be a fair way to describe it . Andrew that is fair. But i think the white house is starting to understand the reality on the chinese side. They have to come away with some wins here. A couple of weeks ago, it was like what is the chinese side getting out of this deal . House isk the white starting to understand that some level of tariff pause is critical. Francine julian, how hurtful is this for Central Banks . Is the onlyhe fed, real unknown u. S. China trade . Julian i was interested to hear ist the view at a beijing that a deal is definitely likely. To think a deal this year may not be possible. Particularly if the democracy and human rights bill is signed into law by donald trump. The fed is obviously going to ity resolute and indicate will stay static as we go into the end of the year. It will stay static as we go into the endoftheyear. Francine what exactly is a phase one deal . Something that helps the economy or just making sure it does not get worse . Andrew just making sure it does not get worse. It does not really have a Material Impact on chinese growth, nor does it impact the American Economy. The meat of the deal is a pause on tariffs and agricultural purchases. Everything else is fuzzy. , does not seemak like it will actually help the economy. It is sort of an agreement to pause. Detente. A francine how long can the chinese economy sustain this . Andrew my view is that the trade war has had little impact on chinas macro economy. It has had impact on a micro basis, specific economies and industries, but looking at the macro data, we dont see an outsized impact. What we see as the key drivers of slowdown is to mr. Policy enacted in 2017, the tightening slowdown is the Monetary Policy enacted in 2017, the tightening of financial policy. Francine both stay with us. Philip hammond says the worst worst election outcome is a slaw conservative majority small conservative majority. This is bloomberg. Francine this is bloomberg surveillance. Earlier on, we caught up with the former u. K. Chancellor of the exchequer. Would be a outcome slim majority for the accordinge party, to the former chancellor who spoke to us at the World Economy forum in beijing. The bigger the majority, the Less Authority the prime and the more have he will be able to use flex ability to operate. He would use hope that authority to deliver brexit and do it quickly. That is on everyones agenda, but then to ensure that we invest the time, energy, and effort needed to get the best possible trade deal. So that we have a good solid relationship going. If we get brexit right and have solid economic growth, we get a bounce and a deal dividend, then it will be possible to accommodate some increase of public spending. Not on the scale of what Jeremy Corbyn is proposing, and his rafter policies would undermine confidence in the economy and certainly investment, i think the conservative package can provided there is commitment to a conference of tracheal. To a comprehensive trade deal. Francine europe is trapped in the middle. Philip exactly right. Europe today is larger than the u. S. , larger than china. Europe has no strategic power. Does not have any way of defending its economic interest. How should the u. K. Government deal with finance . Philip the u. K. Is a mediumsized, open economy. A has to be open to maintain positive trade relations with both the u. S. And china. It has to resist to argument from either side that countries like the u. K. Must choose between the two blocks. That cannot be the future for europe. The u. K. Does have a particular child. Under the sinobritish agreement of 1994, we do have a locus in this issue. The onecommitted to country, two Systems Approach to hong kong. The Chinese Government remains committed. The u. K. Must always speak up in defense of the commitments that we in the chinese jointly made under the sinobritish agreement. Francine that was Philip Hammond peeking to me earlier on. The u. K. Opposition has presented its manifesto, but will the voters by it . It . Uy Jeremy Corbyn says if elected, state infrastructure will be brought into leadership. We are back with our guest julian in london, and in beijing, is andrew polk from trivium. What do you make of the chancellors comments . He talked a lot fact we need to make sure the u. K. Cant afford any promises can afford promises. And if the conservative have a smaller majority but we could look at a harder brexit. Julian i would support his view , there willy undoubtedly be a brexit bounce or postelection bounce in the stock market. Hopefully we see some oversee investors returning as well. Getting the deal done by the end of 2020 with the eu is a high aspiration to achieve. I cannot see that deadline being hit. Therefore, there will be uncertainty as to where we go by the end of 2020 if we are still negotiating. Francine do you trust the polls . Dont. Not totally, i we all know the polls have not been that reliable in the last referendum or election. Thatld suggest to you there has been quite a lot of work done by people looking at individual constituencies and that will be quite valuable. It seemed the u. K. Has had a quite privileged relationship with china. Will they still hold that special relationship . Andrew they will have to make tough choices. We hear a lot of the language we just heard very much echoed by policymakers we are not going to get stuck in the middle. We dont want to have to choose between these two giants battling it out, we want our interests to be respected and put forth with both the u. S. And china. We will not be made to choose your how they threaded that needle is going to be quite difficult. Francine are the protests and the responses to them linked to the trade talks . No. Ew in our view, especially from the chinese side. The chinese side has been good at keeping these issues separate. Traded separate from tech from investment from hong kong. It is the Top Administration that has lumped these things together, for example bringing huawei into the trade meal dixie mix. We are not confident the talks will fall apart the chinese have been good keeping these issues separate. Francine andrew polk from trivium and julian from rathbones. Coming up next, blade runner. Hen musk flips the script as unveils an electricpowered pickup cyber truck in los angeles. 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. And now get 250 off google pixel 4 during Xfinity Mobile beyond black friday. Thats simple. Easy. Awesome. Click, call or visit a store today. Francine Andrew Lagarde is the new ecb president. The first policy speech. Wants to work toward Mutual Respect and equality. He said china should not want the trade war. It is looking more fragile than ever. Are live. Good morning, good afternoon, good evening, this is bloomberg surveillance, i am Francine Lacqua in beijing. Means it is a 50 contraction. You can see pounds moving on the back of that 128. We will have plenty more on how the pound could move. Lets get straight to the worlds biggest movers. Good morning. A truce may be brewing. That is why they are up by 2 . They are getting set to sell a 20 stake. Long feud anda this is a goodwill gesture. Much reprieve is needed after it was hit earlier this week. For yielding paid airways for 5g. The amount is not set yet. Earlier this week, these Companies Got hit because the fcc said they will go to a public auction. Edenred has been been hit with a malware attack. Everyone has been watching tesla this morning because of this video. The company unveiled this truck ev this morning. It took a sledgehammer to show how strong this deal was. And then they put this metal ball into the glass and it shattered twice. Teslas stock is getting hit. It is down 2 . Francine thank you so much. Lets get straight to the bloomberg first word news. Policy, that is what ecb president lagarde is calling for. She said ecb policy will continue support the economy but higher spending and investment is key. Lagarde set a policy review at the ecb will begin soon. Policyfirst is monetary and i am saying that because it is my area of responsibility. It will undergo a Strategic Review, due to begin in the near future. Indicted on charges of that is thefraud, latest for benjamin netanyahu. He is the nations first leader to be charged but he is hitting back, accusing Law Enforcement of trying to stage a coup. There is the prospect of a third vote in a year. The chinese economy will stabilize in 2020 as trade tensions ease, according to goldman sachs. Expansion isfor likely below consensus, just 5. 8 next year, according to economists. Global news 24 hours a day, on the air at tictoc, on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Francine thank you so much. Lets focus on the euro area economy. There should be progress by december. Fragmentedtill very within the single banking market. The goal of the European Union is to have a Single Market. We still need to move a lot to get that done for banking. Does that mean it is almost impossible . Or will we get there . We will make progress by december. A lot ofill debating the impulses we gave. It is a question of whether we will have something to agree on in the next three weeks. We aim to see results in december. Francine what is the concession that led to where we are . Our proposal has several pillars. We think there needs to be further Risk Reduction. There needs to be further improvements to the revolution regime for banks when they come into crisis. We need an enhancement of the harmonization of the regimes for the Smaller Banks. We need harmonization for a complete banking unit. For example, a minimum taxation. Last but not least, we think of all of these things move ahead, we can also move ahead. Francine when will that come around . It depends on how quickly we can reduce the risks of the Banking System, each everyone agrees still needs work. That is the component of the negotiation. We have to agree on when we will tear down the walls that prevent the common markets for a Banking System. Every member state has their own capital and liquidity rules. Countriesare other pushing back against reduction of risk . Everyone has their elements where they are pushing back. If we all gives up our redline. Francine a division of bloomberg lp with a Parent Company of Bloomberg News. The Christian Democratic Union has a packed agenda. Who will become germanys next chancellor . We take a backseat. Party leadership is trying to avoid any direct discussion about candidates for the top job. There was nearly an open revolt. Resolution that would allow Party Members to choose a Party Candidate is expected to be blocked. First of all, how close are we to a coalition collapsing . Are we on the cusp . Is there a little bit of time left . At this point it looks like the discussion over who will be the next candidate to succeed Angela Merkel does not want a deep rift that has risen in the past couple of weeks. They want to show unity today and that looks like what we will be getting. An era. Like the end of Angela Merkel came to power 14 years ago and since she stepped down the party has been addressed. There has been much discussion over policy. There is a lot of concern here today. Chances what are the of that person running for chancellor . This is precisely what she is trying to avoid. There were challenges to our authority. The question now is will these arise today . We have heard from party leadership, they will try to avoid at all costs any discussion over it. It looks like she will make it through this weekend. The question does not away. It is just delayed. Francine thank you so much. Still with us is julian chillingworth. Where do you see germany heading . This, what happens to europe . Julian i think that obviously we have seen a slowdown in German Growth the last six months. Not surprisingly, investors have been concerned by that. We have been speaking about the u. S. China trade deal. That is key for growth next year for germany, as well. The deal could be done and that is good news on the German Economy. If it is not done by the end of useyear, that is not good not good news for the German Economy. Some sort of political stability in germany is also important. Francine if you looked at the German Economy and how it is composed, how much longer can they be in the middle of this u. S. China trade war . It is an open economy with a lot of exports. We could also see the Trump Administration hitting a lot of the carmakers in germany with extra tariffs. Julian indeed. Overnight, the white house has suggested they will look at a Fresh Initiative next year of possibly not just focusing on autos coming out of europe, but other products as well. They want to keep the pressure on the eu to continue to work with them over tariffs, as well. I think there are a lot of external pressures over the air pin economy which are outside of their control, to a degree. Euorine what kind of levels doesro germany need . Julian i think there is a lot of external pressure from other leading eu nations for germany to step up to the plate about fiscal spending. A degree ofed political stability. Dollareu rate around this level would be fine. The dollar,ening in which could well occur if we continue to see this big between european bond rates and u. S. Bond rates. That could put pressure on the dollar and might see intervention from the u. S. Fed, as well, which is something we have not talked about for years. Francine thank you so much. We will get back to julian shortly. Stay with bloomberg surveillance. There is plenty coming up. A member of the Monetary Policy Committee Says china still has fiscal firepower. We will focus on the worlds secondlargest economy next. This is bloomberg. We are accused, we are designated. Debate is useful for the we need to have in society. I think the planet is looking for something we can bring to the market. We are at least one year away from making a decision on that. We believe we do more than any other airline. This is what customers Want Companies to do. We have to explain to everyone that this industry is doing everything it can it has been doing that for 10 years to reduce the carbon footprint. Francine those were some of the biggest names in aerospace speaking to bloombergtv. You are watching bloomberg surveillance, i am Francine Lacqua in beijing. Lets focus on the chinese economy. He made the comments on the sideline of the forum in beijing. Andrew polk is a partner at trivium china. When we look at what they have left to do, how much more to the control the economy . Andrew on the monetary side, a member of the pboc Monetary Committee is right, they have tools, the question is whether or not they will use them. Because of the legacy that loan. They realize at this stage unleashing a huge credit more problemses than fixing shortterm problems. They have been focused on keeping credit growth relatively restrained and focusing on the fiscal side. The premier yesterday said we will continue on the fiscal path. The outcome of that is fiscal and Monetary Policy are at odds with each other and that will take some time to feed into economic growth. Francine if it came to it, what would they do first . For is itt Interest Rates . Andrew basically, they are going to try to continue to lower that in the Banking System. They are using their own prime rates system to bring down costs for banks. They are doing tiny moves. Points, that basis does nothing. They will continue to try to bring down capital for the Banking System. They will keep cutting reserve requirements to try to open up some room on the banks balance sheets. Francine the economy in beijing is different than the economy and parts of china. Do the chinese authorities have a problem if they dont match up at some point . Andrew absolutely. One of the big aspects of this economic downturn over the past several years is you have seen increased growth divergence. The northeast doing badly in the south doing very well. Recognition, that are different pockets of growth, is what in my view is leading them to be more restrained on the monetary side and take a more targeted approach. The problem is the targeted approach has not been working. Francine thank you so much. Coming up right here on bloomberg surveillance, ukraines Prime Minister will speak to us exclusively. That conversation just after has to half past 4 00 london time. This is bloomberg. Francine economic, finance, politics, this is bloomberg surveillance. I am Francine Lacqua in beijing. Lets bring you another interview. One of the biggest risk factors to the Global Economy will be the sustainability of u. S. Growth. I think the most important thing right now, the greatest concern is the u. S. Seems to be alone. Around 6 , in china so you see that kind of support, but the question is how long does the u. S. Stay around 2 growth when the rest of the world have slowed down considerably. In 2020, can the u. S. Stay supportive. Francine can extend that way if it doesnt get worse . Manufacturing numbers in the United States are still of concern but Everything Else is firm. I think they will end up with some kind of a deal. Overnight, the news is phase one of the deal might not show up until early next year. I feel pretty confident there is enough for both sides to want to make something happen. I am not worried about a no trade deal scenario. Francine is the consumer safe in the u. S. . That is what we are counting on. If you look at the numbers in the last quarter, i think in many respects i was pretty surprised many more companies had firm numbers. I thought we would see much weaker numbers. Low and the pretty narrative is well known. How much debt will people get into . Francine are we underestimating the debt pressure the u. S. Has . Is this the biggest risk to the u. S. Economy . Absolutely. Corporate debt, household debt, are allloans, they peeking in the amount. They are all at 1 trillion minimum. That is a very big concern. If lucy rates rise considerably, there could be pressure in terms of what happens. About raising Interest Rates . Are we stuck lower . I have been wrong. Peoples expectations around inflation have been misplaced. Start to see inflation pressure, who knows . There could be some pickup in activity numbers in the United States. Capitalism is capitalism changing or are we just talking about it . Take a broader sweep of history, the model of liberal democracy has only been around for 1 of humans history. Only 30 of people enjoy the benefits of living in the liberal democracy. Democracies are actually indistinguishable from authoritarian states. Against that backdrop, i think people would argue that what we have seen in the last 50 years a more state led kind of capitalism or system is one we have seen predominantly in most developing countries over longer spans of time. Do have faith in capitalism . Absolutely. How it is going to change is still an open question. That innovation and personal rights continue to be protected. Francine she spoke to me earlier. As we start the second hour of bloomberg surveillance, tom keene will join me and we will talk a lot about the European Central bank. Stocks are up, investors are trying to figure out what will happen in trades between the u. S. And china. Pmi out for some of the signatures out of europe. This is bloomberg. Tom the new ecb president. Newstine lagarde says a strategy review will start soon. President xi said he wants to work toward Mutual Respect and equality. China does not want a trade. They gather for the party conference. Good morning, good afternoon, good evening. This is bloomberg surveillance, i am Francine Lacqua in beijing. Focus is onof the what Christine Lagarde was talking about. Say we wills see if she will put more pressure on germany. Francine lets get straight to bloomberg first word news. President stressing the need for a quality in the trade agreement. He said china did not start the trade war. Wardds a continuing trade is something the chinese do not want. The government is in business until december 20 because President Trump signed a temporary spending bill that averts a government shutdown. Roadblock, white house demands for 9 billion to build the border wall with mexico. It is raising eyebrows. Challenging an article about the central bank last month. Fed shouldubt the operate free of political influence. The white house has yet to formally nominate her. If the president does go ahead, her remarks may complicate her nomination. The new president of the European Central bank calling for a new policy to make sure europes economy will thrive. It was Christine Lagardes first major speech since taking over. The first is Monetary Policy. It is my area of responsibility. It will undergo a Strategic Review due to begin in the near future. She also said higher investment is crucial. Global news 24 hours a day, on the air at tictoc, on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Francine thank you so much. This is what we are looking at in your markets. A little bit of optimism. The latest in u. S. China trade. Lagarde urging a new policy. Some traders have written in and said this is more of the same. Higher. Es are turning i am in china and a have to go to dinner and spend money. Lisa i am looking at the positive tone. You are seeing a little bit of a lift. A dip. Aking this comes amidst a slew of data in the United States. The dollar. Ning on francine thank you so much. I think we are looking at a chart. Lisa one thing i am looking at his we are seeing betterthanexpected Economic Data coming out of the euro region. Does this set her up for a performance of european equities . The only problem is you are seeing european equities have got ahead of the increase. Up how much has been priced in france . Francine thank you so much. Now, an exclusive interview with the former u. K. Chancellor. He said the worse outcome in the upcoming u. K. Election would be a majority for the conservative party. He also weighed in on the protests and hong kong and trade tensions. That would undermine confidence in the economy and undermine investment. The unrest does present a particular difficult for the u. K. Government and particular challenge to generally good relations with china. Francine that was Philip Hammond speaking to me earlier. London is for more in Isabelle Mateos y lago and from newcastle, Freya Beamish. Thank you both for joining us. When you look at the u. K. Election, do you trust the polls . If we dont have a clear majority, what does that mean for brexit . G last i think the pollin time was so far out that there are people the dont trust the polls much. Think you have learned from that previous mistake and adjusted for the turnout. People didwer income it turn out devote less time and that is where the polls were wrong last time. Polls arenk that the telling us something reflective of reality this time around. Francine where do you see brexit going . If we have the agreement at some point, we need to talk about the transition period and that is what markets really want to know about. Isabelle i think that is right. There has been a lot of focus in the recent market commentary, looking at the domestic agenda of the two sides and thinking one is more market friendly than the other and therefore everything is fine. Unless a decision is made or a request is made by june of next year to request for an extension of the transition period, that it will end at the end of next year. That is a near certainty no postbrexit is ready yet. We would be back to something close to a no deal brexit. Shockld still be a major for the u. K. Economy. Has notthis realization quite yet crept into markets. The hope is, are we going to get clarity . Our going to get certainty . Unfortunately, people have not focused enough on the fact you could get certainty in the near term. But potentially more down the road. Francine this is something people have been focused on. In we haveading Jeremy Corbyns spending plan. I am wondering from your perspective, is the fiscal stimulus that he is proposing potentially positive for u. K. Markets . Ask what one needs to are the odds that the labour party would be able to implement everything in the manifesto that they rolled out yesterday . Even if you dont put much faith consensusi think the is it is more than likely the labour party would win an outright majority. There are elements of fiscal stimulus and the manifestoes of both major parties. It is consensus we will see more fiscal spending and the u. K. Economy. The u. K. Economy is pretty weak. Shortterm stimulus would be a positive and then it depends on what the fiscal money is spent on. Both sides are talking about financing the Energy Transition with different degrees of ambition. These are things theyre focused on the longterm. One needs to see how it is implemented. On both sides of the aisle, there is potential for additional fiscal spending. Aboutyou have the concern brexit, the potential for a no deal brexit on one hand, on the other you see fiscal stimulus proposed on both sides of the aisle and u. K. Parliament how do you come up with an outlook for the u. K. Economy heading into 2020 . Difficultis very because there is such a wide array of possible outcomes. If there were some kind of resolution to brexit that was more lasting, we could start to see a rebound in the economy with the uncertainty being removed. There is good evidence corporations have been holding back cash that would lead to a rebound. There would be some uncertainty lifted there. The reality of the situation is the transition goes smoothly, even after that there will be a huge degree of uncertainty prevailing for a very long time as the actual trading agreement is negotiated over the years to come. That is counterbalanced against fiscal Spending Plans on the labour side and the conservative side. Think on the tories side of , the promise of tax cuts and those have been rolled back slightly. Both sides are cheering the end of austerity and pointing toward the fiscal stimulus coming through. Francine thank you both. Also coming up, a member of the Monetary Policy Committee Says china still has fiscal firepower. We will focus on the worlds secondlargest economy, next. If we could successfully age it, i think we are confident both countries want to find a resolution, certainly a phase one resolution. But as we know, trade talks are a symbol and symptom of the need to resolve a broader business and diplomatic relationship. Lisa sounding optimistic about fixed Income Opportunities in china. Francine we are just getting breaking news out of hong kong. A Hong Kong Court has let the government reinstate its mask ban for seven days. A Hong Kong Court says it is legal for the government to reinstate a mask ban for seven days. I dont know whether that will mean the protests will be less violent than in the past or more violent. This feels significant given the violence. Lisa still with us is Isabelle Mateos y lago of blackrock and Freya Beamish of pantheon macroeconomics. What do you think is the highest conviction trade you can make right now around trade that is influenced by whether or not we get a phase one deal . Isabelle i would say the highest conviction trade is we will not get full resolution of that uncertainty around trade anytime soon. I would say focus on the fundamentals. Focus on what is happening to the economy as a whole. That picture is not a bad one. Growthre signs that the is stabilizing and there is a strong chance we will see a bit of an upturn going into next year and that is already happening in china, the u. S. And in europe, as well. Bigt expect to have a before and after moment before this phase i trade deal, it will just not happen. Build portfolios that have a fair amount of resilience. Keep that exposure to the growth upside because it is coming. Lisa you raise an interesting question. There is a feeling things are on an upswing and even though the decline or slow in chinas economy has been persistent, it is manageable. Where you stand on that . How sustained and how deep is china slow down at this point based on the data and unofficial figures we are getting . Estimates ofr own gdp growth in china and that showed a weak picture. Lower than the 20152016 period. It is very weak. Deteriorationthe into the Fourth Quarter of the year. Bottom in theen a aggregate data. Circuits seem to be in a turnaround in the trade cycle and real terms. There is some positivity coming through. If you look at the tyson manufacturing pmi for china, that has been on an uptrend. The problem is the backdrop against which those are unfolding is one of tight monetary conditions. The m1 as the of leading indicator and that has not showed any sustained recovery yet. It probably will recover on the basis of it feeding through, but not by very much. We are not looking for recovery on terms of quarter on quarter gdp growth until next year. War,e context of the trade when we hear people coming out it tells me the chinese are thinking more and more that we might just have to go with more domestic stimulus and rely less on the trade deal coming through. At this stage, the most likely outcome we see from talks at the moment is a postponement of the december tariffs. Deal beingse one pushed into the future. Risksof next year, the will probably be cutting rates. I say those risks are elevated. Lisa thank you so much. Runner. Blade elon musk flips the script once again i see unveils the electric pickup cyber truck. This is bloomberg. You are watching bloomberg surveillance. Schwab does by tv ameritrade, there could be an antitrust review that could create a 5 trillion giant. It would combine a few of the Biggest Companies that run platforms with individual financial advisors. Td ameritrade might have up to 20 of the market. Elon musk would probably like a do over. Pickupiled an electric truck last night but it did not go as planned. Two of the trucks windows were shattered. For a while, the truck was a trending topic on twitter. 40,000. At just under some more on the tesla story. Get into the shattering of the window, which is part of the reason it is down nearly 3 . Why is tesla getting into trucks . Good question. If you look at the u. S. Market, trucks count for almost 3 Million Units per year. It is a big market. Thatu include crossovers, is another 40 . I dont understand how that even happens. You are doing a demonstration and, what, have they not checked it before and the glass shatters . How unexpected was that . Maybe they tried it a few times a few too many times and it created weakness in the glass. Elon musk said who cares . This is great exposure for tesla. Most people who are going to buy this, they are two or three years away from producing this thing. They will figure it out by the time it is a commercial product. Blade runner, do people want to buy that . Different thany any of the pickup trucks you see out there, like the ford f150. It will certainly be different. Clearly not going to be a massmarket product but it will attract a certain niche. 50,000 units per year. I think there will be enough appeal. Going after the american manufacturers. This is a cyber truck, it is basically an electric pickup truck. Can it take on and beat ford, chrysler and chevy . Brand still accounts for over 90 of pickups in the as. And that is by despite big effort by the chinese manufacturers. It is a bit expensive, starting at 40,000. Traditional pickups start at 30,000 and go up to 70,000. I think it deftly has a chance to take enough share for tesla to get the volume they need. I kind of like it. Tom will probably say it is ugly. Up, president lagarde calls for a new policy. This is bloomberg. This is bloomberg surveillance. I am Francine Lacqua in beijing, Lisa Abramowicz in new york. Hong kongs High Court Said the government would be able to reinstate the controversial law of not wearing facemasks. Earlier on, they ruled it unconstitutional. Mask banm imposed the last month by invoking Emergency Powers and when it was said to be unconstitutional, people said this was a big one for the protesters, so the fact that they can reinstate the mask ban will have massive repercussions. Lets go straight to the bloomberg first word news. Jinping president xi says china did not start the trade war but is willing to fight back. The chinese president speaking publicly about prospects of a deal, saying china wants to work toward a phase i deal on a basis of Mutual Respect and quality. Negotiatoref trade said he was cautiously optimistic about a deal. Nancy pelosi and Robert Lighthizer failing to seal a deal on a new north american trade treaty which increases the chance an agreement will not go this year before congress for a vote. Pelosi is eager to get a deal done but would not agree to a superficial agreement. House democrats are leaving donald trump in suspense on where the impeachment goes up next. They wrapped up their last public hearing on ukraine and will have to decide to schedule more or not, or take the next move of impeaching the president. In hong kong, the high Court Allowed the government to reinstate its ban on Wearing Masks for seven days, according to Radio Television hong kong. Earlier this week, the court ruled the ban was unconstitutional. Banesters say the mask makes it easier for authorities to identify them. 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. I am viviana hurtado. This is bloomberg. Francine thank you so much. European central Christine Lagarde gave her first speech this morning. Policyfirst is monetary and im saying that because it is my area of responsibility, which will undergo a Strategic Review due to begin in the near future. We face a Global Environment that is mired by uncertainty, but i believe if we approach this challenge in the right way, it can also be a moment of fertility. Francine this was madame andrdes first speech Monetary Policy will continue to support the economy, but made it clear that Government Spending and investment is key. We are joined by maria tadeo. She almost gave us what we policyd, monetary similar to what we heard from mario draghi with an extra emphasis on pushing governments to spend more. Maria that is exactly right. Inre was a lot of hype built and the reality is investors do not know Christine Lagarde is the head of the European Central bank, do not know where she stands on the ranks rates. She did say she wants to move forward with a Strategic Review to policy. Members of the governing council wanted that and felt because mario draghi was so dovish, she does not have to be. She did sound very similar to draghi on some aspects. She said we need to get going on the fiscal spending and Monetary Policy cannot be the only game in town. Complete key elements of the European Union, the Single Market and the Banking Union. There is a proposal the germans have Going Forward but it is not flying with the italians, so it is unclear whether we get that as soon as they would want that. Francine i am glad you brought up lisa i am glad you brought up fiscal stimulus. I am wondering how much this pits her against the German Government given they have this balanced budget type policy. Issuesthat rings up two brings up two issues. Germany is very much in transition. We have Angela Merkel at e. U. Meetings today and the other part of the coalition deciding whether they want to stay. You would believe or hope that the government will obtain a position to shore up a fiscal package. We talked to german officials and they still believe there is nothing fundamentally wrong with the German Economy, this is just external factors and when the trade story clears, the German Economy will regain its momentum. Christine lagarde said something that should be considered now, Companies Like germany and the netherlands have a big surplus and should put it to work now before we get into a bigger downturn. Francine maria tadeo and frankfurt. For more on ecb policy, we are back with Isabelle Mateos y lago of blackrock. I dont know what the policy aims to achieve, but people are hoping it quells the divisions. We saw a governing council that was so split that you wonder whether, when you speak out and say the ecb is not doing the right thing, it hurts the transmission mechanism. Isabelle i think that was a really interesting speech and on the policy side, she clearly tried to speak for both sides of the board and said we will continue what we have been doing and we will monitor the side effects. That was interesting, this kind of balancing act, saying i have heard both sides of the board but established a clear order of priority in terms of actions that will continue. On the Strategic Review, one thing she said which hasnt got enough attention is, give us time to do the work. Means there may be another review of the bureaucratic strategy, lets create a Strategic Review of an idea that is a little too hot. This idea came earlier in the not enoughhere was explicit symmetry in the ecb. This was pushed by the more dovish side of the ecb and the commentators. Now it is passed by the hawks as a way of saying, maybe we dont need such a high inflation target, anywhere between zero and two is fine. Expectation is not very much will come out of it because there is this balance between different perspectives that the ecb and there is no strong momentum toward doing one thing or another. More importantly, it will be a process to try and bring both sides along without major announcement anytime soon. Francine thank you, Isabelle Mateos y lago stays with us. About an hour ago, hong kongs highest court saying the government would be allowed to reinstate its controversial law banning protesters from wearing facemasks. Is dan. Us is it likely to make the , orests more violent, worse does it placate them . Are inr the moment, we this legal territory, the court just ruled this ban unconstitutional and then said the government can still enforce the ban. The government has not been able to enforce the ban since it came into effect. It is a bit symbolic at the moment. Protesters will hit the streets regardless of the ban and since the government has not been able to enforce it, it does not make a big difference. We are not expecting a lot of people to come out tonight, although it is possible in hong kong. This will kind of wind through the court system and it will be a question of whether beijing wants to intervene legally into hong kongs system and change, potentially change basic laws to say that this is legal. They issued a stark warning earlier this week saying they can basically tell hong kong what their needs laws need to be. Lisa the potential ramifications from the western world, so far troops have taken a pretty measured approach, beijing troops in or near hong kong. Can you give us an update on that . Calculation for china is if they send in troops, it is basically over, this notion of one country, two systems. The idea of hong kong, you can thethe u. S. Revoking special trade status hong kong has which would be devastating for the economy, and beijing understands that. Nobody really expects troops to come in and to be used on protesters. That is a last resort situation that would signal basically the end of hong kong as we know it, too many people here. Francine is there a local election on sunday, and what can we expect . Daniel normally there is an election that nobody really pays attention to. There is the counselors in the district counselors do not have as much power. It is very limited. They couldnt even fill all the slots last time they had this election, but because it of this it first be hash because is the first real democratic process, it is getting some tension and they hope to Gain Momentum from that. Francine thank you very much. We will have plenty more on this throughout the day, especially as hong kong prepares to hold a local election on sunday. Stay with surveillance. Xi theing speaks about potential partial deal with the u. S. And efforts to avoid the trade war. Who will be the next transfer . Delegates gather for their party conference. This is bloomberg. This is bloomberg surveillance. We sat down with the german deputy finance minister to talk about the future of the european economy while speaking at the Bloomberg New Economy Forum. Him and hep with told us there should be progress on a Banking Union by december. We are still very fragmented in the single banking market and the goal of the European Union is to have the Single Market for all goods and services, so we need to move a lot to get that done. Francine does it mean it is almost impossible to have something by december . I think we will make progress by december. Our position has been published so we are still debating a lot of the impulses we gave. It is less of a question of whether we will have something agreed in the next two or three weeks. There will be progress soon. We aim to see the first results in december. Francine what is the succession that led to where we are . Pillars. Several there needs to be further Risk Reduction on npls, on sovereigns, on bank balance sheets. There needs to be further resolution for banks when they come into crisis and an enhancement of the harmonization of policy regimes for the Smaller Banks that do not fall under the resolution regime. We need a complete Banking Union for harmonization, for minimum tax is a taxation. We think if all of these things are moved ahead, we can move ahead on the positive trade. Francine when do we get the positive trends back . It all depends on how quickly we can reduce the risks in the Banking System, which everyone agrees still needs work, and that is the component of the negotiations. We need to agree on when we will tail down tear down the walls that prevent the Banking System because each have their own capital and liquidity rules. Francine are there countries that are pushing back against reduction of risk . Everyone has their elements where they are pushing back, but allgood news is that if we give up our we can make substantial progress. The policy regime, reduce risks, find enhanced incentive compatible ways of sharing risk, it will move everyone. Francine that was the deputy finance minister of germany speaking to us at the new Economy Forum in beijing being organized by bloomberg group. Lets get more on banking. We are back with Isabelle Mateos y lago. Unionsessary is banking to relieve some of the pain we are seeing in the euro zone . Freya it is very necessary isabelle it is very necessary and it was not going anywhere until recently, until germany agreed to move its redlines. It hasnt dropped them entirely, but it has moved them so there is hope this discussion can resume, and that is encouraging, particularly the way kukies framed it, not just creating deposit insurance or risksharing mechanisms, but also what he called tearing down the walls to facilitate an allocation of bank capital and liquidity at the European Union level, rather than on national borders. That is really crucial. If we can make progress on both of these fronts, the euro zone in particular will function a whole lot better. That is encouraging. At the same time, we shouldnt kid ourselves. The process will have to remain very slow, frustratingly so, but that is just the nature of the beast. At least now, there is new momentum. It is not just on the Banking Union that there is a sense of new momentum. There is new momentum on the Capital Markets union which had been stalled, and really will benefit the European Union as a whole. That is very encouraging. It will take years and years. Francine thank you so much, Isabelle Mateos y lago from blackrock. We have plenty more on the Business Climate from the new Economy Forum. We are accused, we are designated a kind of enemy. I think the flight change is not very fact base, but this is useful for the debate. Environmentally, for the market, the planet is looking for something we can plug into the market. We are at least a year away. We do better than any other Airline Business in the area. We have to explain to isryone that this industry doing everything it can, now has been doing that for 10 years, to reduce its carbon footprint. You are watching bloomberg surveillance. Tiffanys says customers do not care who owns your brand. He was that bloombergs year ahead luxury summit and said it is not the state to be a public company. Have fromink we doing the right thing, or other brands. Look at hermes. They report quarterly and i think they did the wrong thing. I think also tiffany, we have been listed for 25 years. At some moments you are more successful, at other moments less, but i dont think we have made strong decisions because we are listed. Viviana he said tiffanys big job now is to win over younger customers. Looking for a way to reduce the size of the offer for wework stock. The move would be designed to limit the amount paid to wework cofounder adam neumann. That is the Bloomberg Business flash. Being in china the last three days, people are talking about the u. S. China trade war and it was listening interesting listening to xi jinping saying they would be agreement in it trade as long as it is fair, but they want the u. S. To remove the tariffs before they agree on anything. It is clear that the Trump Administration finds the tariffs effective in negotiating. Lisa the key question is how it is affecting the economy and how the economy is doing otherwise. Services soft, manufacturing strength. We are getting some u. S. Pmi data coming up in a couple of hours. Wencine in the next hour, speak to Robert Hormats of Kissinger Associates who will have a thing or two to say about trade and the hong kong protests. This is bloomberg. When you move homes, you move more than just yourself. Thats why xfinity has made taking your internet and tv with you a breeze. Really . Yup. You can transfer your Service Online in about a minute. You can do that . Yeah. And with twohour Service Appointment windows, its all on your schedule. Awesome. So while moving may still come with its share of headaches. No kidding. Were doing all we can to make moving simple, easy, awesome. Go to xfinity. Com moving to get started. Francine enter lagarde, the new ecb president calls for a new policy makes. Mix. Strategy review will begin shortly. Xi jinping wants to work toward a phase one deal on the basis of respect and mutual equality, and china did not want the trade war. Germanys coalition looking more fragile than ever as they gather for their party conference. Good morning, everyone, this surveillance tell live this surveillance. With the latest coming from hong kong, the high court saying they can reimpose the ban on facemasks. This is highly controversial, and we look at the impact on the phase one trade deal. Lisa interesting that you are in beijing, the focus of yearend, potential gains in equitieseuropean versus the opposite if there is no trade truce. Francine if you are a trader, how do you trade . If you are a central banker, how do you mitigate that risk . Chinas we begin with president xi jinping stressing the need for equality in a trade deal with the u. S. , making his first public remarks on a deal he could sign with donald trump. He said china did not start the trade war and is something they do not want. The government is in business until december 20 because President Trump signed a temporary spending bill that averts a government shutdown. Congress is still negotiating the spending bills that make up the budget. Roadblock, the white house demands to build a wall with mexico. The European Central bank a new policy mix to make sure your economy europes economy will thrive. Policyfirst is monetary and im saying that because it is an area of responsibility which will undergo a Strategic Review due to begin in the near future. Viviana she also said higher Government Spending on investment is crucial. 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. I am viviana hurtado. This is bloomberg. Francine thank you so much. It is clear that traders and investors are trying to figure out how to trade the trade headlines. This is the picture for equities across the board, european equities on the outside. I hope we have it, treasuries rising along with the benchmark funds in europe. One thing i did not put was the pound, it is falling. Renminbi to remind myself when i am paying for my meals. Was part of the trade negotiations but since it has broke at the seven level, 7. 0 four is where renminbi is. Lisa it is a muted price action day, u. S. Futures barely up. You can see how much bigger it is in the u. K. With the ftse rising more than 1 . Crude taking a dip, interesting given there was a risk on feel elsewhere in the euro elsewhere. The euro losing a touch against the dollar. Francine we heard from a number of executives of hong kong as a financial hub. Heard the court temporally temporarily has allowed a mass ban. This is with the chief executive said before that news. I spent some time in hong kong and it is a complex, multilayered situation. The Business Environment is ok and the impact of our business has been ok. We saw clients and people thinking about contingency planning. People are taking a wait and see attitude and i think the expectation that this will get resolved. The if there were down in pressure on economic activity, we can see some effect here. We have not seen any outflows or major movement. I dont see change in the behavior of clients that are significant financial players in hong kong. Francine joining me now in beijing is selina wang. Is this a legal manner matter . Can reimpose this ban. Is this a legal or political decision . Like it is, it seems more symbolic than anything because it was not really effective anyways and the protesters will continue protesting regardless. From the perspective of beijing, we have not heard from them about this most recent news, but from the original court to call it unconstitutional, they denounced that. It seems that in the future, more direct intervention into the hong kong legal system and beijing has been intimating they may want to intervene a bit more. They are pledging to improve the legal system. Kong cut across the conversations, what it means for trade talks. Some who said has not had a big impact on their liens and they are not making contingency plans yet clients and are not making contingency plans that yet. Francine does it mean we could see more violent protests . Selina it is possible. We have seen small, symbolic moves lead to larger flareups so it is a possibility. In terms of the impact on the Financial Market and the conversations that nef, reiterating that at this point things like the alibaba ipo, things that are boosting the market which are a big divide beyond what is going on in the streets and the financial sector. Lisa thank you so much, selina wang. Joining us now are robert who and martyert hormats schenker. The key question is how is the unrest in hong kong affecting trade negotiations, given that both houses of congress have passed a measure saying they stand by hong kong in protest . Robert so far, there has been no linkage. Both sides are trying to keep it that way. The new bill that you have just indicated past both houses of congress has a substantial reaction in beijing and one would anticipate it would. But in terms of linking it to trade, there does not seem to have been any intent on either side to do this. The trade negotiations are developing have developed a certain independence as the hong kong issue is a different set of issues. Is it possible to keep them delinked . I dont know if it is possible, but they are trying. Lisa so far that seems to be the case. Robert i was in beijing for a week and there was no indication the americans and chinese i talked to, that they wanted to have the two linked. She ington, the dingo negotiators do not want to link them. The what would impede ongoing negotiations . Close to phase one or close to pushing off the december 15 tariffs . Marty like all of the negotiations, the fact that you are almost there means nothing. Until you have an actual deal, it reminds me of the European Bank prices when there were reports constantly that they were close, but it took months for a deal to get done. I do think both china and donald trump want to keep these issue separate, and so far they have been able to do that. Francine the Vice President mike pence, i am reading about it, just three days ago saying it would be tougher the u. S. To ifn a trade agreement demonstrations in hong kong continue. Marty he is the outlier because the Trump Administration, we ourselves have been trying to get the white house to provide their view on this hong kong bill for weeks, and could not get any traction at all from the white house. Donald trump himself has not come out and said anything of substance on the protest and you would think he would. The pictures are pretty vivid and he watches television. I think mike pence is sort of an outlier. It is really what donald trump thinks that matters most. Francine why do we still not have a phase one deal . It does not seem difficult that one side wants tariffs removed before starting negotiations and the Trump Administration thinks these are an effective way to get what they want. Robert that is one part of it. The other part is how much the administration can get china to buy of american agricultural exports. 40president has mentioned billion to 50 billion, but the level ofs best affiliate specificity and timing have not been worked out. Those are two significant issues at play. One thing that is troubling about these negotiations is the comments that come out of washington, they are going well, the tone is good, the tone is so good, then there are threats of new tariffs. This does not exactly help and it certainly riles the markets because they get whipsawed one way or another. I think a moratorium on these comments coming out of washington would help things. Lighthizer, much to his credit, is not talking about this publicly, nor is liu he. The american negotiators are not talking, but people on the sidelines are, and the markets are adversely affected. There is a very critical time problem. It is very important to get an agreement between now and december 15, because if there is no agreement and if President Trump fulfills his threat to impose new tariffs on december 15, then it could cause a reescalation of the problem. This is a very important timeframe we are dealing with. It could be an Inflection Point and if this gets out of control with tariffs and escalation, we could have a much more disrupted Financial Market, and more disruption for the American Economy since these tariffs are being paid by americans. Francine this is to his point, theants this deal more Trump Administration to alleviate farmers ahead of the election, but the chinese economy also needs this . Trump constantly makes the point china wants the deal more than he does, and to some extent that is true, but at some point, donald trump is running on a vital economy and will want to make sure there is no disruption. Thus, he will want a china deal badly too. Francine thank you, both staying with us, Robert Hormats and marty schenker. Up next, the end of the public hearings for the houses impeachment. What lies ahead for the Intelligence Committee, that is next. This is bloomberg. The cost of this clearlyon advanced russian interest. As republicans and democrats it isgreed for decades, important for our National Security and i have been part of the Ukrainian Government and the ukraine, not russia, attacked in 2016. Lisa that was fiona hill speaking at the House Intelligence Committee impeachment inquiry. The white house said a senate trial is the only chamber where they can expect fairness and achieve due process. Still with us are Robert Hormats and marty schenker. Can you give us an update, where are we in the impeachment hearings . Marty we are friday. Actually, there are no more witnesses. The Intelligence Committee essentially has done its work. Hoping we may get some visibility from adam schiff on what happens next. Decide onats will articles of impeachment, or do they want to try to get some of these other witnesses, firsthand witnesses that complete their case . President se defense remains the same, that he did not order this himself. Marty on Bloomberg News this morning, our borders reporters have an insightful analysis. The one key thing nobody was ile to testify to was that heard donald trump and he told me to withhold aid or withhold that meeting until we get these investigations. No one has a firsthand account. There are people in washington who may have that, but they have not testified before this committee, so as long as that is the case, donald trump can defend himself. Evidence or there not of a directive from President Trump . Robert that is out of my line, to use martys expression. I think marty is far more uptodate than i am. I do want to say one thing. What has troubled me and this is not about the direct substance of this but there have been attacks or people who impugn the integrity or loyalty of people who have testified who were born abroad or whose families were born abroad, particularly in the ukraine. Ighan mccain at this point, would like to say impugns the loyalty to the United States as one of the elements i have found distasteful and very troublesome. I would hope we would not hear that, and let them stand on the substance of what they say, not the background of their family or their own origins. Lisa we have not seen much of market reaction. Markets are not giving any cues at all. Experience with trade negotiations for the United States, how does this potentially affect the allies and people who the u. S. Are negotiating with who feel that President Trump has a weaker hand at home . Robert this is something they are trying to work out. When i was in china and japan, i go to europe and other places as well, they are watching the level of concern because if the United States gets so tied up in internal politics of an impeachment process, where it fact thatsimply the these kinds of hearings are taking place, it makes for them very confusing as to whether the United States can devote attention to some of the issues of Foreign Policy or National Security that from their point of view are very important. Come is nafta to nafta ii and cannot get through. People are wondering if the United States cannot pass a trade deal with its two closest paralyzed will it be from doing any other kind of deals . So far, i think their hope is that the United States can at least focus and not be sidetracked. Lisa Robert Hormats stays with us. Up next, blade runner elon musk flips the script as cn veils and hectric powered as unveils an electric powered pickup truck. We revealed the details of the shadow breaking. This is bloomberg shatter breaking. This is bloomberg. Viviana this is bloomberg surveillance. Kalanick has now sold almost 1. 5 billion dollars of his uber shares. Week over theis span of three days. He thought he could offload his stake in his shares make up more than half of his 3 billion fortune. Elon musk would certainly like a do over. Truckngawaited electric did not go as expected. Topic. Ber two trending the truck starts at just 40,000. That is your Bloomberg Business flash. Francine i dont know whether it is too ugly to buy or so ugly you want to buy it. Is this genius because everyone is talking about it . They will fix the mirror or shatter glass . Lisa they did get a lot of publicity. My favorite twitter quote was i swear i drew this in kindergarten. There are questions about management, of all this pomp and circumstance. Francine all the publicity, i dont know what to say. Reconvene in five years and see of the thing is made properly. Stocks for the moment up in europe. Trying toin europe figure out the latest trade headlines. Asia was mixed, u. S. Futures point to a higher start. Francine a beautiful shot. A beautiful shot of washington, d. C. , capitol hill. In beijing, it is definitely dark. There is about a 10 or 12 hour difference. Beijing,cine lacqua in Lisa Abramowicz in new york. Viviana we begin in hong kong where the high court has allowed the government to reinstate its ban on protesters wearing facemasks for seven days. Earlier this week, the court ruled the ban was unconstitutional and while it is being appealed, the ban was suspended. House leader nancy pelosi and Robert Lighthizer failed to reach a deal on the north american trade treaty. Pelosi saying she is eager to get a deal done but would not agree to a superficial agreement without stronger enforcement. One of president Donald Trumps recent picks for the Federal Reserve is raising eyebrows with her comments, challenging the central bank. She is casting doubt the fed should operate free of political influence. The white house has yet to normally to nominate shelton. Her remarks may commenting complicate her nomination. 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. I am viviana hurtado. This is bloomberg. Francine thank you so much. This comes as just yesterday the former u. S. Economic advisor gary cohn said protecting u. S. Independence was of utmost importance. I think the fed is too interventionist. It is a distortion that occurs as a result of trying to artificially move the Interest Rate that aliens up being more problematic ends up being more problematic. Francine that was obviously not gary cohn. That was judy shelton speaking to bloomberg on fed independence. Here is gary cohn. Gary cohn the Federal Reserve is an independent agency and protecting the independence is of utmost importance. Jerome powell and the other voting members have been making the right decisions. The data they have at their fingertips at the time they make the decision. Francine to talk more about fed independence and what the fed tilley, and, luke still with us is Robert Hormats. Why is the president constantly attacking the fed . Does he get what he wants at the end of the day . Can you argue he is starting the trade war because he wants the fed to lower the Interest Rates . Robert i think the trade war is fully independent of that, because he wants to reduce the trade debt and he thinks there are a number of issues he wants to be dealt with on the round, dust on their own, but it does have on their own, but it does have the impact of weakening the economy to a degree, and he hopes that the fed will have his back. He hopes because of the trade war the fed will offset that. It will offset the negative impact if there is one, and there is one, hard to measure. Second, he wants the economy to grow more rapidly than 2 . Third, he thinks that over a d of time he will intimidate the fed into doing it. That in the end is probably not going to work, because it is not just jay powell who is resistant. There is an open Market Committee of people from various parts of the country that all vote. It is not just jay powell, and many of them do not agree with the notion of the president pushing the fed. Most modern economies around the world believe in an independent central bank, and it has served us well over many decades and is not going to change, or the fed succumb to pressure from the president. , and other fed governors have not done that either. Francine it must at the margins have an impact. If you are constantly and berated and attacked as the fed does. Luke i dont know that it does. I worked for the Philadelphia Fed and i watched people on the fomc disagree about everything. The one thing they all agree on is the need for independence of the fed, and that is right because it is really a critical feature of the institution that it operates independently from politics. That is simply because the time horizon is different. This has happened before. The president would like to have lower rates to help the economy, but longerterm is what the fed needs to think about. What doesractice, that mean when you have a Federal Reserve setting rates indirectly in response to tensions with respect to trade, which is politically driven . Luke this is where things get difficult, but the feds job is to respond to what is going on in the economy, so if there is a political issue that will end up affecting the economy, they need to respond to that. Economy is going, if yields dive, they will respond to that. Lisa just to push back a little bit, because you are seeing jay powell saying a lot of what we do depends on trade, so it is not necessarily they are waiting for the economic fallout, they are waiting for what trade will be. Luke as he said, they are trying to mitigate risks so they are monitoring risks of the economy. It does get a little sticky with political actions like this, but he comes back to the economy and inflation. Francine is the fed now central banker to the world . Luke yes, it certainly is, and that is what they will hold onto. Jay powell as well as the other chairs come back to the status of the fed is to promote growth, maximum employment, and stable prices, so they will respond to those things. Francine thank you so much, luke tilley and Robert Hormats. The former u. K. Chancellor Philip Hammond said the worst election outcome could be a very small conservative majority. We will talk about why that is. That is up next, and this is bloomberg. I let let mma get. Here the year weirdo weirdoweirdo this is bloomberg surveillance. To run exclusive interview with the former u. K. Chancellor, Philip Hammond sat down with us. He said a worse outcome in the u. K. Election would be a slim majority for the conservative party, and weighed in on the trade tensions and protests in hong kong. Who went through the 2017 election will be a bit wary of predicting the outcome, but at the moment it looks sure the conservatives will be the biggest party, and polling suggests Boris Johnson will have a majority. Francine the bigger the majority, the more watered down brexit is . How do you view that . Philip not necessarily. Thebigger the majority, more personal authority the Prime Minister will have and the more he will be able to use flexibility to operate in the way he thinks is the best interest of the country. I personally hope you would use that authority to deliver brexit and do it quickly. That is on everybodys agenda, but then to ensure that we invest the time and energy and effort that is needed to get the best possible trade deal with the European Union so that we have a good, solid relationship Going Forward. Francine on december 12, is the u. K. Voter voting on brexit, spending . All of thosell be and it will be difficult to use an election to resolve those problems. It is not a referendum, it is a general election. People will be looking at the wider question and both parties think public spending and plans on public spending would be a major part on what a turn the determines the election. Francine can they afford those plans . Philip it depends on what happens to the economy. If we get brexit right and have solid economic growth, we get a brexit bounds and a deal, yes, bounce and a deal, yes, it will be a possibility to increase public spending, not on the scale of what Jeremy Corbyn is proposing, and his policies would undermine confidence in the economy and undermine investment. Francine the majority will have a real splitting. Philip if it is a thin majority, the fear is the hardliners will always be able to hold their leadership ransom. Francine that was Philip Hammond, former u. K. Chancellor of the exchequer. You cannot escape brexit, not even in beijing. Lisa never can escape brexit. It is time for single best chart. Still with us are luke tilley and Robert Hormats. To me, this is the story of the day. We have a slew of Economic Data out of the euro zone and it has been better than expected, although mixed. Butfacturing seemed ok sentiment and services was weaker than expected, leading to concern about a bleeding over and spreading out of industrial pain into other sectors. The euro zone, you can see it trying to get above zero and trying to get the highest level since june, but the white line is the euro stock index, well outpacing the gains, and the surprises in the Economic Data. That is an interesting development, given the fact that the 2020 outlets outlooks that keep coming out, they might outperform the u. S. Because of a bit of resurgence in select data. Do you think this sort of recovery, if we can call it that, that we have seen in france and germany, is enough to sustain the region . Luke it is not quite a recovery, but the markets have bounced back. That happens often, the markets are a little ahead. We moved to overweight and International Developers for these reasons. It looks like the data is starting to bottom out. Germany is still in russia but it looks like it is starting to slow down, and this goes back to the u. S. China trade dispute, if you think we will get a phase one deal. If we do not get an acceleration in tariffs, that will reignite growth around the world, and International Development is highly levered to world trade, global trade, and asia. Francine how difficult is it to model this . Lets say it lasts for five or 10 years, and the alibaba founder thinks that will last at least 10 years, at some point even if it is status quo it must hurt the consumer. Luke if it is status quo it is hard for the consumer but we already have all the tariffs we will have come in. We have a different situation from may where there was so much bellicose rhetoric and brinksmanship. We have the u. S. And china economies in much worse shape than they were then. In the u. S. , we have three consecutive months of manufacturing pmi in negative territory and we are starting to lose manufacturing jobs in very important states nsylvania, ohio, michigan have all lost around 30,000 jobs. Not anything else but to stem the bleeding and not amped up the tariffs. It will only hurt the economy more. Francine thank you so much for joining us, luke tilley, wilmington trust. Staying with us as bob hormats. 2. 5 ofel accounts for global co2 emissions. Airlines are being forced to adapt. Bloomberg caught up with some of the biggest names in aerospace. Accused, we are designated a kind of enemy, that is the new word. Ashamed to fly. Is notink the accused flight very fact based, but this is useful for the debate we need to have. Marketsonmentally, the are looking for something. We are at least a year away from making a decision. We believe we do more than any other airline in this area. We are in line with the test with what the customer want. We want to explain that this industry is doing everything it can, now has been doing that for 10 years, to reduce the carbon footprint. Thecine she is the head of succeed angelato merkel as chancellor but people had some doubts. Joining us is our Bloomberg Government reporter and there is concern as to whether this will hold between Angela Merkels party and their coalition partners. Will they try and avoid the question over the person who was just speaking at the podium . Am i on . Francine you are. Can you hear me . I think we are having some technical difficulties. What i was asking i know it is very loud, you are like at a big rock concert who will lead . Speaking. Still i would say she gives a rather weak speech afterward. Say there i would wont be a rebellion, but she doesnt look very good at the convention. Lisa we will let you get back to it. It looks pretty loud and raucous and fun. Still with us in new york as bob hormats, Kissinger Associates vice chair, and i would like to get your thoughts as we move into this friday which does not look very active on price action moves. It seems to be there is a feeling that there is much more uncertainty than there ever has before in the Global Economy, based on some of the populist movements and trade. Is that the case . Robert we have had a lot of uncertainty over the years that i have been in government, since the 1970s. From an economic point of view, we are facing competition from the most competitive countries that we have had to compete with economically in the last 70 years, and that is a resurgent china. Ai, are competitive in 5g, new materials, quantum computing. They are in very competitive economy and now we are in the middle of a trade war with this economy. It is not just about tariffs, it is about competition on a new range of technologies, and they are very independent with a lot of innovation. The challenge for the United States is to strengthen our own capabilities. We should be doing a lot more investment in new technologies and the National Science foundation and stem. Thise not doing enough in campaign to improve our competitive capability in the world. We need to find some way of working with china within at least agreed rules that as we compete with them for markets and various economic areas, we do them in a context that does not lead to confrontation and we can compete without confronting other countries, that we honor them. That needs to come out of negotiations. Third, in the near term, stop the escalation of tariffs. Disruptive for both sides and would have a disruptive impact. Francine i spoke to a number of european officials in beijing and they were fed up with being stuck in the middle, the german deputy finance minister telling me it is difficult to choose between the u. S. And the u. K. In the trade war. Robert as the trade war escalates, there is pressure on these countries that are in the middle. Rely very heavily on the china market and the u. S. Market. The china market is important to you country like germany and manufacturing, so these in thees have no role trade war. They will be adversely affected if we and the chinese dont come to some agreement, to have this phase one agreement, even though it is not a perfect one, and stop a tariff escalation. Between now and december 15, it is important to make an agreement and have some understanding that we are not going to engage in additional tariff escalation. That will hurt us and it is for the u. S. And china. , thank youob hormats so much. Investing ks advancing, investors focusing on the trade war between the u. S. And china, and whether we will have a resolution. Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone wifi up there . Uhh. 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 local xfinity store today. Alix china works hard to avoid a trade war. President xi jinping speaks out for the first time on a partial deal, saying china does not want a trade war. And lagarde to europe, believe in yourself. Lagarde calls on europe to invest in the future as growth in the region stagnates. Unveilingbotches its of its ev truck by smashing two windows as elon musk tries to break into a very but it of market. Welcome to bloomberg daybreak on this friday, november 22. Im alix steel. Tgif. Happy friday. Shortened week next week. 3107. L, s p futures at we are at risk of breaking a three week winning streak for the s p. Yields a little bit lower. The dow jones is reporting that ray dalio now has a 1 billion bet on stocks, that they were going to fall by march. Is it time to start