Transcripts For BLOOMBERG Bloomberg Surveillance 20240713

May. Ease trade tensions. This is the euro stoxx 600,. 8 her, eurodollar 110. 2 1. 1024. 1. 78. S. 10 year yield up at theup, the president Info Institute for economic research. It is not having much of an impact on eurodollar. We will see what that means for the health of the european economy. Thatn Business Confidence 95, in line with continent estimates. Lets get to the first word news in new york city with Viviana Hurtado. Green to buy is a tiffanys for over 16 billion and the deal is for 3500 a share. Lvmh isnt as dominant in jewelry as fashion or cosmetics. The taiex gives it access to 160,000 hearings 160,000 diamond chains and the deal is expected to close 2020. Michael bloomberg is running for president in 2020, joining a mix of race and brings a moderate policies and experience and business. The 77yearold says President Trump is an existential threat to the u. S. And its values. Michael bloomberg is the founder and majority owner of bloomberg lp, the Parent Company of Bloomberg News. Saudi aramco is briefing potential investors in dubai as part of a sales push for the Energy Giants initial public offering. Cleveland the invitationonly meeting includes strategy and dividend. Sell 1. 5 of its stock. Italy may be ready to compromise on europes push for a banking union. The minister for European Affairs says he is confident a deal can be made and says italy wont delay the eus bailout fund. Some elements are under unionsion, like the bank and roadmap to complete the bank union but we are confident in the next stage toward the december meeting. We can achieve a compromise. Global news 24 hours a day, onair and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im Viviana Hurtado. This is bloomberg. Turning to hong kong and it has been a big win for prodemocracy candidates. Won 86 of the more than 440 seats in the District Council. More than double the number of n the previous election cast ballots. Winne, will this resounding is 1 these tensions in the city . Hard to say because we have seen a couple of days of calm, and it has been more cheers in celebration last night as the result Election Results trickled in an flash mobs this morning in the Central Business district, but it comes down to carrie lam. The ball, some say, is in her court. How will she respond to the resounding support for antigovernment protests . A lot of prodemocracy candidates who did win this weekend said now is the time for the government to concede or address their demands including the likes of setting up an independent Police Commission to investigate into the latest behavior and actions the last six months or so. A fullnt heard exactly Public Statement from carrie lam apart from the official statement saying she respects these Election Results and she is listening now. We saying the protests are over after this election, but certainly a lot of ashtons on what the government will have to do next. Francine do we have any response yet from beijing . Ne we heard from the foreign minister and it seems that at this point, they are digging in their heels, say no matter what, hong kong is still a part of china and still the special Administrative Region of china. At this point, we havent seen beijing showing anything of any kind of submission or tightening they continue to tighten their grip on hong kong, but at this point, there are questions on the beijing side of whether they continue to let the government oversee the political crisis and whether beijing can continue to support carrie lam, which they have done so for the last six months now. Francine talk us through exactly the district counselors with little political power, do they have any leverage at all in the big issues the city is facing . Yvonne it is interesting because usually, the District Council elections are quite quiet. This time, we saw people lining up for hours trying to cast their ballots and most of the time, people were voting for their local candidate that can help change their trash pickup schedules were change the bus stop near by their street. This time, it wasnt about these types of issues. It was more about a political stance and we heard that loud and clear this weekend, but they dont have a lot of political , but when it comes to electing the next chief executive, perhaps they have a bigger say because with this majority in the District Councils, they now have solidified the 117 seats in this 1200 Member Election Committee that elects the future leader of hong kong. No way do they have a say in choosing the next chief executive, but they have a bigger say and a bigger voice now. Francine yvonne man from hong kongs Victoria Harbour with a stunning shot behind her. Penaltiesaising on intellectual property violations, one of the Sticking Points in trade talks. Beijing is looking at lowering the threshold for criminal punishments and wants to make it easier for victims of ip theft to receive compensation. , are we closer to a trade deal . We ask ourselves this everyday. If we have a great deal, what would be the first time . First of all, i dont know is the honest answer. It fluctuates back and forth and we also had a weekend where donald trump i think he said the chances are very good or Something Like that, so we simply dont know and i think what you are really asking, if you dont mind me saying, what are the first indications we might where do we see it first . Will see it isu particularly in treasuries because weve seen that reaction to a trade deal tends to be treasury negative. You also see it in the equity market continue to rise. It is more dubious because equity markets seem to be rising anyway, but my first focal point would be the bond market. Francine if we have a phase one and nothing after . Does it move markets . Peter i think it does because the way to look at this in my mind, we wont be reducing all trade tensions back to the point we used to be, but but the question for me is do we escalate them further or scaling back . If we have a phase one trade deal and scale back a little bit, it implies ahead of the next u. S. Election, we wont be escalating further and that will give the market at least 12 months of breathing space. Betever comes after will incumbent on the next president , anyway. Francine does the economy need . More than phase one or will it be enough . Peter i repeat my point that first, the economy needs no further escalation. Down, thatalming would already be quite good. One of the things we have seen and can talk about later, we think it is seem to be seeing a bottoming out in the manufacturing, anyway. If you had calm on the trade front, that would do some. Rolling the ball back to where we came from would be a better solution but that is unlikely. Francine Peter Schaffrik from rbc Capital Market stays with us. Safety first. Boris johnson launches the tory manifesto to in a half weeks ahead of the election. We will discuss the polls. Plus, the lvmh snaps up tiffanys for 16 billion. We will discuss the biggest ever luxury deal later. This is bloomberg. Francine this is bloomberg surveillance. It is the biggest acquisition in luxury ever and Bloomberg News is just speaking with the head of lvmh. He says they will try to develop and will issue bonds to finance the tiffany deal. The questions surrounding how they would pay for it. In the interview saying they will issue bonds to finance tiffany and will add some 500 to 600 euros to revenue to lvmh from europe. They will transform, develop is another way of saying it, tiffany using the bouldering market. On to other news. Two and half weeks until the election, Boris Johnsons party has launched the safety first manifesto. Cutbrexit hire nurses, and, taxes. He is hoping to avoid the repeatable lost election. According to blooms five poll average, the conservatives have a 13 point advantage over labor liberal democrats. We are back with Peter Schaffrik. Peter, do you trust the polls . Peter yes and no. There is a wide split. The question to ask is even if have this gap, will it translate into an equally large majority and that is very much in dispute, but i think we should all work on the assumption there will be a fairly sizable majority. Francine it is the market, you need to know if you trust the polls. What does the market look like under jeremy corbyn. Peter i can tell you everyone i speak to on the investor side is reasonably afraid of such an outcome. A littletill caution bit, if you look at the current polls, and lets assume we trust them for a second, it is very the toriesat even if do not have a majority, the labour party alone will not have a majority, either. They need support from the smaller parties and that probably also means the more controversial policies wont see the light of day, but that is a different question. The market is very happy with this poll. Francine we look at whether we can afford measures offered in the deficit. Peter schaffrik from rbc Capital Market stays with us. Coming up, we speak to the president of germanys yvonne institute. This is bloomberg. Francine this is bloomberg surveillance. Todaysg economics says ifo survey, the economic slowdown has reached a bottom. Subdued gdp growth in the fourth quarter. We are joined by clemens fuest, the president of the Ifo Institute and he joins us now. Thank you for giving your time to bloomberg surveillance. How concerned are german business is about the lack of a trade agreement between the u. S. And china and how concerned about other things . Clemens they continue to be concerned about the lack of trade agreement as one of the risks but it is not everything. The brexit situation is unresolved and the uncertainty will continue. There are domestic issues. The German Government needs to do more in the areas of energy policy, infrastructure spending, he still find it difficult to get infrastructure spending. We need avestment, Corporate Tax reform, so there is a lot to be done. It is not all trade. Francine how much do you worry about what the auto sector in germany will be, and are you lower thee u. S. Can extra tariffs on it . Clemens the auto sector is important for the German Economy, one out of 10 jobs in manufacturing comes from that sector. That sector is in a big restructuring. Otto tariffs in the u. S. Continue to be a risk but there is more. There is the diesel scandal, the , the sector is facing the challenges. It is a big transition. Francine the most writing aspect of the German Economy this year is deterioration of the manufacturing and industrial sector. Are we bottoming out now . Have we seen the worst . Clemens that is not clear. It is a divided economy of Strong Service and construction, but we still see very low orders. Most companies are planning to cut production, so i dont think we see the bottom bottoming out yet in that sector. Francine many market participants, in addition to the new president of the European Central bank, have been urging germany to do more in terms of opening the Purse Strings and doing more fiscal spending. Number today point to the fact germany can loosen the Purse Strings . Clemens i think it doesnt. We have some stabilization, we do have growth. It is mostlys coming from the outside, from exports, which are weak. What the government do with traditional fiscal stimulus policy is difficult. I think structural policies are more important. Improved investment conditions in germany are in the longterm, if you imagine increasing fiscal spending on infrastructure at the moment with the construction sector, which runs at full capacity, it is difficult. We need a more mediumterm perspective and do the right thing in the mediumterm. Francine you also have a Weak Coalition politically. How difficult is it to get reform through when politics are rocky . Clemens that certainly is a challenge. The Political Parties forming the coalition at the moment are mostly worrying about themselves. The social democrats are looking for new leadership. There is a contest within the conservative party for the candidate for the chancellorship. This coalition should focus more on the situation of the economy rather than itself. Francine thank you so much, mr. Clemens fuest, o the Ifo Institute. We are back with Peter Schaffrik of rbc. So far, has Christine Lagarde been effective at getting what she is expecting from government . Peter frankly, we dont know. Only spoken on a few occasions and particularly the most recent communication was not very relevant for policy, fiscal or monetary. We all assume, including ourselves, that as far as physical is concerned, she will be blowing the same trumpet as draghi has been, because they realize within the ecb that a, their policies have limits, and secondly, they cant do much more heavy lifting. Someone else needs to take over. We assume she will blow the same trumpet, but we dont know. Francine do you think germany will do more fiscal spending . Peter first of all, i want to underline the point we just heard from clemens fuest. Germany is already doing something. Sometimes that is not appreciated. However, i do think there is more that can be done, particularly as far as infrastructure spending. Im not entirely convinced by the argument we heard nothing can be done. Will it happen is the more likely question and important for markets. I wouldnt bank on it, that we get a big spending splash from germany. Francine because we need a contraction of 5 to get to that point . Peter unfortunately, i think that is typically the way this goes. Before the German Government makes radical changes, it needs a radical crisis before hand and well keep our fingers crossed. Soont think that is likely, if we are bottoming out as we just heard, and i think there is a decent chance, we will probably get more trickle rather than a big deluge. Francine what happens to euro given the backdrop . Peter eurodollar is just as much driven by what is going on in the u. S. My hunch would be if we get a rebound, stabilization to a small rebound in europe, the euro will probably benefit from it, but overall, will it be a massive euro rally . I dont think so. Francine Peter Schaffrik from rbc Capital Market stays with us. Next, lvmh go shopping. It snaps up tiffany for 16 billion. We will discuss the biggest ever luxury deal and how they will transform tiffany, and what kind of opportunities they see elsewhere. Bloomberg, speaking to the lvmh chief executive shortly. Makingre talking about tiffany more like another company, maybe a way to hire and eventually. This is bloomberg. When it comes to using data, everyone is different. Which is why Xfinity Mobile is a different kind of Wireless Network that lets you design your own data. Choose unlimited, shared data, or mix lines of each and switch any line, anytime. Giving you more choice and control compared to other top wireless carriers. And now get 250 off when you buy a new Samsung Phone during Xfinity Mobile beyond black friday. Plus, you can save up to 400 a year. Click, call or visit a store today. Francine a review to china. Hong kong prodemocracy forces win by a landslide in local elections in a vote against the government. Boris johnson launches a manifesto pledging to hire more nurses, cut taxes for working people, and get brexit done. And lvmh puts a ring on it. They agree to buy tiffanys. This is bloomberg surveillance. Im Francine Lacqua in london. Lets check on the movers with annmarie hordern. Annmarie lvmh and tiffanys, Bernard Arnault is having breakfast at tiffanys. Than 6 inp more premarket, and lvmh higher in european trading since they inked the deal. The bidding started at 100 20 and they got to 135, the biggest deal in the luxury space. Lvmh is getting a portfolio of jewelry. Tenddoes cosmetic clothing, but not so much jewelry. With tiffanys, they can unseat richemont. Medicines this morning after novartis in europe, also buying them for 6. 8 billion. 22 , a 45 up premium since before Bloomberg News reported the two were in talks. What novartis is really getting for medicine is the cholesterol drug. In 2019, medicine tripled in their stock value because of the excitement about this cholesterol drug and that is what novartis is blanket banking on with this deal. Francine to the first word news in new york city with Viviana Hurtado. Raising punishments for those who steal ip carried beijing is looking to lower the threshold. China wants to make it easier for victims of ip theft to receive compensation. These moves, an attempt to address a key Sticking Point in trade talks with the u. S. To the u. K. Where the conservative party promises to and a packagerses of tax cuts for working people as part of its manifesto. It commits to deliver brexit after deadlock. Tois johnson is looking consolidate his lead in the final weeks leading to the campaign. To turkey, where the country is beginning to test a radar detection system as part of the antimissile battery they bought from russia. Turkey has been sparring with its nato allies over the system known as an f400. The purchase risks sanctions from the u. S. , president erdogan remains confident his personal rapport with President Trump can ward off punitive actions. Trade talks continue between the u. S. And china. Some news coming out of beijing. Berlin zoo, putting out this video of twin giant panda cubs born in late august, the meng, givenmeng to germany by china. Global news 24 hours a day, onair and tictoc on twitter, powered by more than 2700 journalists and analysts in more viviana countries hurtado. This is bloomberg. Were here to talk lvmh, buying tiffanys. The french luxury goods giant will pay 136 dollars a share. It raises the jewelry profile of lvmh and gives more access to the u. S. Consumer. Still with us, Peter Schaffrik from rbc Capital Markets to talk about the consumer and of course, erin from our guilt in. Deals team. How much will be concentrated in luxury goods . That is why he is doing this deal. He wanted a bigger presence in jewelry because he is strong in is oneg, strong but it of the areas he is not number one and is willing to put firepower behind it because there is growth, especially in china. Francine can they afford it . They definitely can. It has a market cap of 200 billion plus. The have plenty of firepower, and all caps deal and that shows when the deal initially broke out, it was 120 and everyone knew they would have to bump. Is, it is a lot of money but for lvmh, they can do it. Francine they wouldnt be doing such an acquisition if consumer wasnt strong on the highend. Peter across the board, it is strong in the u. S. , europe, and in the most struggling areas. As long as that is the case, as long as employment remain strong, i dont see that changing. Francine our colleagues will speak to him and what he says he wants to do with tiffany is make it more like bouldeulgari. What is bulgari doing so right . Highend and watches. Is that what we can see tiffany become . Aaron we could see a Huge Investment in marketing and a push to see it more upmarket. The reality is, there is room to make it more exclusive and the idea behind that is you open more stores and maybe make brands more pricey, limited selection on goods, and you have a good way of bringing the Chinese Consumer into the store to buy a luigi the Louis Vuitton purse and they buy a tiffany diamond and everyone is happy. They been trailing richemont in that space, in jewelry and this gives them a huge push in the u. S. And in asia, but i think from the perspective that he is a dealmaker and has the money to invest longterm and tiffany has been on a bit of a turnaround. It does make sense. Francine are we going to see many more companies trying to go into jewelry . Ppr rival. Former will they buy something in the Jewelry Market . They could, but this is the last big publicly available target. Will richemont make a counter move, they didnt want to and if youh lvmh step back, what we have seen in november is a tripling of acquisitions of u. S. Targets. The u. S. Is still a growth market, big consumer plus you can take the experience and use it in asia and it is a winwin. Francine erin kerch felled, Peter Schaffrik stays with us. Looks up, saudi aramco for more support for share sales. We will bring the latest on the saudi aramco ipo next. This is bloomberg. Francine this is bloomberg surveillance. Im Francine Lacqua in london. Lets Viviana Hurtado get to the business flash with Viviana Hurtado. Viviana novartis agrees to buy snapping up a promising cholesterol drug that adds to a string of acquisitions. Get 85 ars will share, a 40 5 premium to the Closing Price on november 18. It is surging in the premarket. Plans to signugot its merger deal with fiat according to reuters. Understanding is scheduled to be signed in december as the carmaker dismisses allegations there was a role in a corruption scheme. Request tong xerox open its books after turning down its unsolicited merger offer. It has improved its healthy enough for the deal. About thencern business and outlook remain. It said the 22 a share bid undervalues hp and that is your Bloomberg Business flash. Focus on thes worlds biggest ipo, saudi aramco meets investors in abu dhabi to drum up support for a share sale after pitching the offering in dubai. The firstgs are outside saudi arabia since the worlds most Profitable Company said this month it would sell 1. 5 of its stock on the riyadh exchange. Ofmco is seeking valuation 1. 61 . 7 trillion. 1. 6 trillion to 1. 7 trillion. To overtake apple as the worlds biggest public company. Lets begin Alan Robertson and Peter Schaffrik from rbc to look at the oil side of things. Ipo,you look at the aramco how attractive is it looking compared to peers . Is a Profitable Company with a strong cash flow. In terms of the dividend yield, it is not that competitive as ,ts peers and the evaluation the crown prince has been seeking is reduced. The roadshow in london was wall street banks run sidelines, so what we have been hearing is there have been fairly positive responses, but we will not know how successful it is. Oilcine the wider issues that they are facing . The Global Market has been oversupplied for a number of years, opec and allies primarily russia, they have been trying to balance the market by agreeing to coordinate production costs. Next week, opec and allies will meet to decide the future. What was supposed to be a sixmonth deal will be entering its fourth year. What they are dealing with at the moment is essentially prices that have been stuck around the 60 a barrel limit for the last year, and the International Energy industry says demand will grow by one Million Barrels a day next year, the slowest rate in three years. There are all sorts of fundamental issues and climate change, obviously. Concern over that, the impact that might have on hydrocarbon production. There are things aramco is dealing with and the world is dealing within the context of the ipo. It is a difficult time for them to be launching this. Thecine when you look at price away from aramco, when you model a growth forecast, it is a very wide range for oil. Peter generally speaking in the energy market, one issue is everything you just talked about. The deals, the cuts come all these things. Put them to the side and if we focus on the things i know best and look at, the Global Economy, demand in general. One of the things if you look forward, it is difficult to paint a picture that sees a rapid increase in demand for pretty much anything. One of the things that we do see is a little bottoming out, but that is it. We get slightly better numbers for next year than last year, but not rapidly so and if that is the case, it is difficult to see whether a significant increase in supply for energy should come from. I find it not credible. Francine we are talking about peak oil. How does that change your view of the World Economy . If it comes in 2025, 2030, or 2040, does it change the composition of the World Economy . Francine peter these are things that are very far in the future, so almost certainly, we has a company put a lot of resources to predicting these mediumterm trends. Yes, there will be changes but if you focus on the next year or two, i dont think we get any significant change on that. Francine on saudi aramco, when will we see it list . Thats a good question. There are all sorts of Unanswered Questions. We dont have any details at the moment, but in terms of the information that was offered at the meeting today, a lot of what we have been hearing is there wasnt much Additional Information so there are all sorts of Unanswered Questions around that at the moment. Francine thank you, Helena Robertson and Peter Schaffrik stays with us. Plenty more on aramco, tiffany, and next, plenty of data on the worlds biggest economy. We will focus on the u. S. Next. This is bloomberg. Even though i would probably be 6040 that we get phase one rippingat that means, the two economies apart, putting a line down the middle of the pacific im not sure we are in a trade war. We may be having a little skirmish. Confident that both countries want to find a resolution, certainly a phase one resolution. Ofchina has been on a tear trying to be nice guy in negotiations. The inescapable it he of china is superb and is hard to replicate that anywhere else in the world. If there is a deal, it would be one where the americans do the most of the giving. The first motive and thought is suspicion rather than trust, and i think that is the environment we live in. We should be open and we should cooperate with each other. We should seek winwin outcomes and more portly, all players in the sector should trust each other and. Each other. Francine those were the views of guests from the new Economy Forum in beijing on the trade war. Here is a look at what else watch for. Speakingilip lane is about Monetary Policy in london while in the u. S. Come all eyes will be on the fed chair jay powell giving his first speech after meeting President Trump. Alibaba makes its trading to viewing hong kong tomorrow with plans to raise 12 billion. Wednesday, data from the u. S. Including the revised reading of the gdp for the third quarter. Claims, durable goods, and income spending, u. S. Equity and bond markets are closed to mark thanksgiving thursday. Black friday will be watched for signs of consumer strength. Lets stay with the u. S. And key data points. We will go back to Peter Schaffrik from rbc Capital Markets. Let me bring you to the yield curve chart. It is flattening. What does that tell us . You look at the behavior all the time, it has been steepening in an environment where the fed was reducing rates and the market was expecting more to come. The flattening is essentially coinciding with the fed stopping their midterm cycle cutting. The market has been pricing out. What you have been seeing in the the is the typical thing, front end is Still Holding or holding again and now with the fed unlikely to reduce Interest Rates, it seems difficult to get a significant steepening without a massive selloff. Francine will the consumer in the u. S. Stay put . That is the backbone of what the u. S. Needs. And we haveutely, been saying this for years now that so far, there is very little evidence that the consumer in the u. S. Will stop consuming. As long as the labor market remains strong and i said this on your show before, we have a circle here. As long as the labor market is strong, people have their money in their pockets and they can spend it and as long as they do, consumption remains strong and that keeps hiring relative. That has been the case throughout the skirmish we have seen and throughout the weakness in manufacturing, particularly in the u. S. As the sector is very small compared to the rest of the economy. Francine this chart looks at global manufacturing, gauging climbing off the lows. Are we bottoming off . Manufacturing, we saw a mixed picture in the u. S. And elsewhere. China manufacturing didnt look great. Peter no, but you are right. Weve also said in our research that the first signs we might be bottoming out and in terms of how i phrased this, it is a careful way of saying it. We have two months of data where we have not decelerated any further. Globally,lcome, but particularly in europe, when you look at the numbers, they are still very low. Weve seen pmi fall in the u. S. , isn, but manufacturing is weak. It doesnt get any weaker, and that is the good news. It is too early to say it has bottomed out, but we have seen some more stabilization here. Francine what happens to the u. S. Economy in the next 12 taking months . If we are bottoming out, where would the risk of a recession come from . Peter there is always risk to recessions, but we have been saying for a while they are extremely low. Clearly one of the risks would be the labor market slowing but there is little sign. The market has traditionally reacted poorly and recession has been preceded by over tightening of fed policy but that doesnt seem likely, either. The fed has indicated it will not raise Interest Rates for a while. Last but not least, one of the typical things that drives in economy into a recession is you have growth imbalances but in the u. S. , there are some imbalances, but the big ones that have driven us earlier into recession dont exist. Leverage in the household sector is very low. Francine what about shadow banking in the u. S. . Peter it is always there, if you brought in it, the risk of the Financial Sector, Financial Risks are always there. Corporate debt is also an element you could raise. Are not zero, but we dont think they are as imminent or as dangerous to drive us into a recession in the nearterm. Where do you see the deficit . The deficit will be the problem in the u. S. , but can we fended off for the next five to 10 years . If i take a step back, one thing you have seen in the u. S. , the reshifting of the leverage. Before the crisis, we had leverage in the Financial Sector and in the household sector. And you have it in the Public Sector and the corporate sector. The risk is there, but the u. S. Treasury markets are the backbone of every investors portfolio. It seems very unlikely that this is going to change, so if you try to conjure up a scenario where the Global Investor base stops purchasing treasury bonds, i think you need much bigger numbers than we have and even then, if you look at a proactive said, it doesnt seem , the dozensfed incredible. Francine if you could do one thing, would it be dollar or inflation . Peter inflation, because the second you have a moderate amount of inflation if we are talking about 10 inflation, that is different but moderate inflation, that will give lower income bracket higher wages because only through that positive loop between Wage Inflation and Consumer Price inflation, you would get the ball rolling. That would alleviate a lot of our political tensions, which would be positive for investment, but it would also spur consumption. I do think a moderate amount of inflation, a return to moderate inflation is needed. Francine Peter Schaffrik, global macro strategist at rbc Capital Markets. Happy monday, everyone. In the meantime, news on lvmh. We know they have agreed to buy tiffany for more than 16 billion in the largest luxury goods deal ever. That raises their conglomerate the conglomerates presence in jewelry. The executive said they want to do tiffany much more like bulgari. Premarket, tiffany gaining 6 . The other one, another bit of m a in the medical space. Tom keene will be joining me out of new york and we will talk to the global Goldman Sachs goebel head of commodity research. This is bloomberg. A rebuke to china, hong kongs prodemocracy forces winning the election by a landslide against the asian backed government. Nurses,es to hire more cut taxes for working people and get brexit done. He puts a ring on it. Louis vuitton agrees to buy tiffanys in the biggest luxury deals luxury goods deal ever. Bloomberg surveillance. Tom, if you look at the tiffany reporters have talked to the executives. No bernaudo arnault segmentation and a big focus on the watches tom i just flew back from beijing. What you need to know worldwide is that at the corner of 57th street and fifth avenue in new york, there is tiffanys and then there is bogart he bul gari. They are going to own three of the four on the corner. 16 billion is the biggest ever acquisition in the luxury world. When you walk in, you buy your. Ag bag and your diamond tom lets move on. Francine lets get onto the review. With a stunning rebuke to china from voters in hong kong in an election for local District Council. They handed a overwhelming victory to pro democratic candidates. The prodemocracy candidates 186 of the seats. China trying to address one of the Sticking Points in trade talks with the u. S. They will raise the penalties on intellectual property theft. Trying toson consolidate his lead in election polls. He has unveiled a conservative Party Manifesto that promises tax cuts and plans to hire extra nurses for the nhs. He is bowing to get brexit done. The election is december the 12th. Im Viviana Hurtado. Nice correlated bounces morning. Currencies commodities, lets look at the good news in the market. You are seeing across all of the complexes onto the next screen. A little bit of curve steepening there. You have got to like that number 12. 0. 2. 24 . I have to put that coin up here, francine. Over theot hammered last couple of days. Francine im so glad you brought up bitcoin. I failed to mention it in my data check. I am looking at some breaking news out of uber. , one of theng to pa main news channels. Uber has not been granted a new license to operate in london. There was meant to be a decision, and uber, we grantednd, has not been a new license to operate in london. That will have implications for people trying to move around the capital of the u. K. Uber falling 4. 4 in premarket. Withthis was a u. S. Battle lyft. This is, of course, london. With the best cap service in the best cabndon is the vice in the world, there are other cities where this could pile onto as well. Lets keep going with the gdp chart. This is a deceptive charge. This is the atlantic gdp. This is the acceleration of the economic slow down that we have into going into the end of the year. All of the candidates have to focus on the sharp pullback that we are seeing in q4 of this year. There is great disagreement on the kind of recovery we will see up to june of next year. Francine hilary clark brought it to my attention the 210 the two 10 year curve flattening after rising quite significantly. China is raising penalties on intellectual property violations. That as it tries to address one of the key Sticking Points in trade discussions with the u. S. It easier forake victims of ip theft to receive compensation peering joining us is jeff and randa maranda. Readda, it is hard to whether this could unravel at any second. Most of this is china signaling willingness to address key u. S. Issues. Getting into ae bit like may. We get very close to a final agreement and then it is the nittygritty how do we enforce it, how do you monitor where the risk of the final deal actually falling down arises. I am european and when you see how the European Commission works, where there is a will theres a way. Is china different . China would have been willing to find a similar deal 18 months ago. It can import. It does not have set targets. It can import more u. S. Agricultural goods. But this works in chinas interest. It encourages Foreign Investment in its market. China has more intellectual property itself, so of course it wants to protect it as well. This plays very well into chinas hands, but what does the u. S. Get out of it is more of a . A phase i one deal. Where we might push back a bit is could we look back to a phase two deal . Uncertainty, or unlimited uncertainty on the trade side, but does that mean a lot more certainty . Tom i have been dying to get you back on here to talk about a key question and that is how we talk about economics. If we look at the politics of beijing, we have an isl m , with dollar dynamics as well. Does their system have the elasticity to withstand any given shock, whether it is a vote in hong kong or 5 gdp . Right now the planers in beijing will be wondering if its time to visit the trilemma again. What is that one angle . Will it be the capital account . This will be a part of the longerterm reform process. The rigidity is something they will need to deal with. Tom to the trilemma which is a key economic idea. I know you do not want to talk about hong kong but i want you to talk about the reaction in beijing to the buffeting of domestic a little color affairs domestic political affairs. Can they leave the politics separate . The trouble is, yes, the trade war has moved from the trade deficit to larger a larger geopolitical clash between the u. S. And china. The fact that the u. S. Wants to tackle chinas state led economy , that is not an option. Influence around asia itself, these are huge issues. These are not going to go away with the trade deal. We are likely to see similar to the 90s,nd japan in you have constant issues of one issue coming up, being dealt with, and then another issue. Longterm negotiations will settle things down, that is the key. Francine are the two parties talking a different language on tariffs . China wants to go back to the table of tariffs are removed. Donald trump thinks tariffs are very useful while negotiating. They have been talking past each other for most of the negotiations. Just the way that negotiations have happened, the u. S. Going on the attack, trumps tweets. Have been multiple problems in the negotiations. Once a gets to phase one, and interestingly phase 2 they may never happen. The negotiations are really quite hard to keep on track. I would call that into question as well. Francine maranda and jeff will be back with us. London transport for saying that uber has been denied the license from the road the london regulator. In 2018, at the time there was concerns that uber would not get its license back. It did get it back. Today dfl has stripped uber of a license to operate in london. If they canw appeal it. It is the second time they have done so, so im not sure if it will go through. We will have a lot more about uber operating in london next. This is bloomberg. Francine this is bloomberg surveillance. Im Viviana Hurtado. Service hasling been denied a new license to operate in london. Transport for london says they identified a pattern of failures. Uber has 21 days to appeal. Novartis agreed to by the medicine company. The 18th. On november that is when bloomberg reported that the two companies were in discussions. Carl icahn is trying to seize control of occidental petroleum. He plans to nominate a slate of 12 directors. He is valued at about 1 billion. The takeover over of antarctica petroleum. Res have fallen that is your business flash. Thecine alibaba says retail portion of its Hong Kong Ipo is oversubscribed. It is increasing the number of rito portions shared number of portions shared. Andre back with jeff maranda car. If it goes smoothly, can i take more market share abroad . In terms of alibaba . Francine in terms of alibaba going into the european markets, yes. That part of it is global strategy, but it struggle in the u. S. Has not been as it successful as in the chinese market. A lot of European Companies have wanted to get on their platform. If they can get a bit more of a twoway flow, then yes they could see a rise in Global Market share. As a not as easy protective market of china. Away from what one individual company is doing, i hong kong. Erested in estors are separating the Chinese Companies on the other hand are seeking to move away from the home market. They need to understand international preferences more. Are we going to have a deaf of alibabas largest Chinese Company do we presume that there is government ownership in some form of alibaba . Alibaba is one of the private do not have you like with the soas direct ownership or direct influence. It operates and what is a state led economy. In still have involvement how gets license in the operates. In a state led system terms of direct ownership in terms of what they are telling the management to do, that is not the same as a lot of the others. Long ago and far away, ubs led on analysis of chana. Analysis of china. To they migrate from 40 up 50 of gdp or is that just a pipe dream down the road . The Chinese Consumer will be the dominant driver of the chinese economy. Producing enough consumers over the medium to longer term . The more we look at the chinese benomy, that probably will the focus. If you want to help the consumer, you have to help them consume. Mostine what is the fragile thing in the chinese economy right now . Miranda up until now, the consumer has been very strong. They have been benefiting from the tax cuts. They have been forming fantastically this year. Coming to the spring festival, the question is does that confidence continue. Go people then going to flush with their cash if you have a significant squeeze on domestic spending . The consumer has been a strength this year, but as we commented 2020 as we come into 2020, that is in question. Francine stay with us. You should stay with surveillance. Coming up, Boris Johnson launches a tory manifesto weeks ahead of the election. Shopping. The french owner of Louis Vuitton snaps up tiffany for 16 billion. Uber losing its license to operate in london. This is bloomberg. Francine lacqua back in england. I am tom keene. Lets go to the chart right now and look at the train wreck that is lyft. Lyft is good come petition to uber in the u. S. Uber during worse worser,uber doing thats what i would say. The londone had mayor saying he supports the t fl decision on uber. Uber tripsout 15,000 have been with unauthorized drivers. Uber has 21 tales to launch the appeal. This canch of uber when the appeal and continue operating in london . It came as quite a surprise. We were not expecting a flat out nenial like this, or perhaps a extension. Uber was operating on a twomonth license that was due to expire tonight. It is going to have to make some wholesale changes in its app, which is where tfl has identified the problems. Unauthorized drivers are able to use accounts of other drivers. The person taking the right is not being driven by the person they think they are or should be. Major changes needed to the apt is goinge tfl and that to take some time. Francine how much has the chief executive chain tightened up safety for uber . He has made huge strides. That is evident from a writers perspective. Just the amount of information you now get in the app. A lot of these discoveries, these unauthorized rides and drivers that you mentioned just now, this is emerging quite late in the review process. It will come to quite is it will come as quite a surprise to uber as well. This is not just specific to uber. There are other users of apps like this and it could be well that we see these other companies being looked at as well. Electricll give the taxicab i took in london last time i was over. It is exquisite. An uber killer for sure. There are many other stories today, including the secretary of navy. It changed hong kong. There are new headlines at this theof the University Polytechnic university where there will be a discussion, where they will persuade protesters. We will have much more on that next year. Hong kong after a historic election. This is bloomberg. Bloomberg surveillance. London. Lacqua in a lot of good stories today, including a market with a nice lift on it. Right now to the history of hong kong and the history made over the weekend. An absolutely historic election. We are joined by the leader of our coverage in hong kong. , so glad you can find time for us on your monday evening. The Democratic Alliance for the betterment and progress of hong dab, it was essentially wiped out. How did those that support beijing, how do they regroup . Of searching now after this stunning upset for these pro establishment camps. What was the ultimate swing factor this week it was the young voter turnout that came out. Recordabout the 71 turnout. Double the amount from the previous election. It was these firsttime voters, most of which were pretty young we have never seen numbers like this before. It was not just the people who lined up for hours at these polling stations, it was the young candidates as well, most of which were key players during the occupy movement years ago. This was a resounding support from the people after six months of these demonstrations that they continue to stand by it and Public Opinion has not changed. We might be seeing a Seismic Shift politically speaking when it comes to pro establishment, probeijing lawmakers here. They will have to regroup and see what happens next. Francine how much power do these District Councils have and how will beijing be viewing this . That is what we heard from beijing. The foreign minister china speaking today they said no matter what hong kong is still a part of china. One thing he mentioned is that any efforts to create chaos in hong kong or damage hong kong stability or prosperity will not succeed. We heard similar statements from a spokesman for the foreign ministry. Continuing their support for carrie lam and the Hong Kong Government at this point. The ball is in carrie lams court. You mentioned with these district counselors, they do not have a lot of leverage here with what they do. We see these types of candidates as fixing public parks or organizing community events, when it comes to electing the next chief executive, may be there are some implications here as well. They have the majority of have 117 seats in this 1200 Member Election Commission who elects the future leader of hong kong. They will not be able to choose the next leader, so to speak, but they have a bigger say now. Now, we willmonday see where the protest goes through the week. Leadership with Hong Kong Television and Bloomberg News. Your first word news with Viviana Hurtado. Raisea china will penalties on the theft of property rights. That will that was one of the Sticking Points in u. S. China negotiations. U. S. Up at the Pentagon Navy secretary Richard Spencer has been ousted in a controversy over a navy seal accused of war crimes. Our casper learned that spencer had privately push the white the seal. A deal with President Donald Trump granted the seal clemency. Michael bloomberg plans to take a path in the president ial race. He has put formally joined the race. He will skip New Hampshire, insteadvote guessing focusing on states like california. The parenter of company of Bloomberg News. Im Viviana Hurtado. This is bloomberg. Tom it is extraordinary and wrong. This from uber as we get huge news flow. Uber can still drive in london, but they only have 21 tales to appeal. At 82820 7 only have 21 days to appeal. Francine two and a half weeks until the British Election. The conservatives have pledged hire 50,000t done, createfor the nhs, and jobs. I do not know what people are voting on december 12, so it is difficult to see if you trust the polls are not. Is it all about brexit does this election can we trust the polls . People knowhink themselves. They dont know what they are voting on. Sometimes we think that it is a quasireferendum on brexit, or is it a test of personality. There are some issues to that are important to individual voters and individual regions. How do the people in scotland and wales and Northern Ireland feel its up for grabs. The tories arent taking anything for granted. Francine same thing with the trade war. As a no deal brexit off the table . Geoffrey yes. The downside. On from an allocation point of finance risk on . Probably not. We are rating for the ffreyng for the geo manifesto any day now. Is it still about lever remained . Geoffrey most of the party fromrs are moving away talking about brexit because established. Ns are there talking about what they will do with nhs, labor pledging to launch a bold spending plan regarding state participation in the economy. This is where they are trying to differentiate themselves. At the end of the day, on polling day, what are people going to vote on . Is it brexit or the individual leaders . Spaceo they have fiscal in the United Kingdom . Would define, i there are longterm institutional biases. Way. Ame in the u. S. By the this is when people ask about are you worried about fiscal do notr too much debt, i think that is something we need to look at in the short term. Andcine what does the u. K. Jeremy corbyn look like . I know they are a number of Percentage Points behind. Is it something we need to start modeling . Do they go from a medium level of a medium level a state participation to a higher level. What is the template you use . Do you use france . Do you use scandinavian countries . Actually desha has traditionally scored poorly on redistribution has traditionally scored poorly on redistribution. Thank you so much. Here is what you should be looking out for this week. Today, eyes will be on powell giving his first speech after meeting President Trump. Alibaba makes its trading debut in hong kong, with plans to raise 2 billion. That is all ahead of thanksgiving and black friday. Equity and bond markets will be closed to mark the holiday. This is bloomberg. Bloomberg watching surveillance. Im Viviana Hurtado. A. P. Has rejected xeroxs request to open its books. A. P. Turned down xerox is unsolicited hp turned down xerox is unsolicited bid. Xerox by the way is not commenting. Saudi aramcos ipo is turning regional after the oil giant canceled its european roadshow. Aramco is pitching the ship sales tobuyers the investors in abu dhabi. That is the Bloomberg Business flash. Francine thank you, viviana. And the largest luxury goods deal ever, Louis Vuitton has 16ht tiffanys for billion. It gives the French Company access to american buyers. Joining us now from london is our bloomberg executive editor. We broke this story a couple weeks ago when we heard about this potentially happening. Does it hundred percent make sense . Does it 100 make sense . Where louis look at vuitton is strong, one of their big weaknesses is jewelry. They get access to the american market, plus they have all that growth in china that they can tap with tiffany products. Francine we spoke to lvmh. He says he sees tiffany becoming gari. Like bul bulg doing right . Is bulgari doing right . Ncine tom this is what you do when youre talking to aaron. Take a trend off a given point and then you go to the recent high and you nicely get out two standard deviations which is in the vicinity of the 130. Did everyone win in this transaction . Was there any level of desperation to get this deal done . Aaron no. They happy with the deal and tiffany shares are soaring. When we reported on it a month ago, we were talking about 120 ashore. They have bumped to 135 we a share. Ing about 120 they have bumped to 135. They are able to offer a nice premium. Tom they said they are going to store to a popup while they are redoing the building. If youre going to go in there and find airings, you can find the silver ones on the third floor. Or francine can go large. Do they want to go large and give up that younger more modestly priced market . They want to go to the customer who wants to buy a Louis Vuitton purse and as they are walking out they see a nice diamond and say i want to buy that. My wife are girlfriend will like that wife or girlfriend will like that. Francine they can afford this right . 60 million is quite a lot. Is there anything left that is independent . The market is pretty fragmented. They have a market cap of they have the financing. Yu is taking notes. Continue. Francine just in time for christmas. Our tom keene knows that a thing or two about jewelry. Trust me. All for Market Research of course. This goes back to the consumer. Is the consumer in luxury encased anyway . A lot of the positioning chinas tourists going overseas it and buying as well. Theres a lot of that going on. Is there enough economic demand . , longterm demographics even though they are spending here is basic idea china going to buy this stuff at 57th street and fifth avenue or is china going to buy tiffanys in china what is it . On boxing day in the u. K. , theres a lot of chinese and sending it back home. There is i do think vulnerability between everything. Once your purchasing power gets to a certain stage, it does not matter if youre buying onshore onif you see a spike lair lafayette or fifth avenue. They need to see a sparkling a nice sparkler on lafayette or fifth avenue. Tom thank you so much for being with us. We will continue with jeffrey geoffrey yu. Guess who has enjoyed the move of gabelli. Gi stay with us. Say good morning. Francine lacqua in london. Tom keene in new york. We have not spent nearly enough you geoffrrey ey yu. It has been quiet and fx. What does that signal . Expectingtheyre not changes. If there could be risk events ahead, there will be a flaw. There will be Central Banks stepping in to offset the downside. Environment you what is the mystery for with the negative rate experience meant . What are you experiment . Geoffrey cash. Cash on the sidelines. Studies show there is a lot of it, but there is more that is stranded. Insurers, theyre stuck in fixed income with negative rates, but if they are allowed to go norwegian or go to a more liberal environment, where does that go . Equities. Although we are concerned about cash right now, have not even begun to see how much cash can reenter the markets. We have argued that you cannot be negative on earnings, do not stand in front of a cash wall. Francine would it not go into private equity . I think their condition and their clients expect it. More circumspect about returns. On top of that, if you have cash from the institutional side trying to push into private equity, it is going to be an even madder scramble. Real assets could capture more. Francine what happens to bonds and treasury in this environment . Policyy this monetary should work. Some steepening could happen. Tom thank you so much. Francine and i will set up for your folks. Raceloomberg entering the and the changing u. S. Political landscape. The secretary of the navy has either been forced out or removed that is according to the white house. Us,t and center for all of huber with a new battle in london. Francine uber with a new battle in london. Do you live by it, francine . Andcine it is cheaper sometimes more efficient than the black cabs that are iconic. What they were saying today is that a lot of the licensed drivers were not up to scratch. The chief executive has done a lot to ensure safety. We are speaking to someone who manages uber for europe. What else can they do. We know they will appeal this case. Look out for more uber news in the next couple of months. Tom we will have that in the next hour. We are thrilled to bring you in of next hour Chris Marangi gabelli. And jeff currie will join us. We need an update on oil and soft commodities. 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. 65 to a morning, from stunning 13 , it is democracy in action. Kroger reefer carrie lam. Dissatisfaction. There is dissatisfaction with American Economic growth. Does it mean for stocks . Of the valley and jeffrey curry of Goldman Sachs gabelli and jeffrey sachs. Of goldman toistoric moment going back may 1975. Discount brokerage will never work and here it is a dominance in our life as they go to scale because they are giving it away. Francine, you have perspective. Perspective is a beautiful thing. Seas what doesr this tell us about the health of the industry . Aaron i think what it says is since they cut emissions to zero theres been a huge touch and what it allows them to do is cut costs and gain scale which will jack up pressure and others like e trade. Economist had in speak about the need for scale and find profit. The mergerse off and acquisitions people that this trend will keep on going into next year, the search for scale . Aaron in a certain industries, yes. Equity markets are up but if you want a deal you want to do it now. We have seen a bull run on m a and no one knows when that bubble is going to pop. Now is the time to pull the trigger. Tom we are thrilled to bring. Ou this morning Chris Marangi you involved in a transaction and you own shares in either stock . Chris we do own stock in them. Tom when you see a transaction, how does this translate over a given sector . Seeingwe are certainly Financial Services not exempt from that, scale matters as commissions went zero. That put pressure to find ways to make money. A little surprising Charles Schwab is the buyer. Tom francine we see the Dominion Bank toronto will hold a 13 stake in the final product. Francine this is a huge deal because it combines do of the mind to of the Biggest Companies run by Financial Advisors what is the scrutiny in this kind of deal . Chris some have flagged antitrust risk has both companies have independent advisors. We can assume there will be a tough look at that. They wouldnt do this deal unless they had some conviction they can get this done, maybe sell assets to address concerns. Tom thank you for your coverage of uber and schwab and Td Ameritrade. He is our global mergers and Acquisitions Team leader. Her is more to talk about. Schwab sees 15 to 20 accretion. It is called synergies. When i first heard the news, here is Viviana Hurtado. Viviana voters in hong kong, District Council had an overwhelming victory to prodemocracy candidates, coming after months of increasingly violent protests. The prodemocracy candidates winning 80 of the seats. China trying to address one of the Sticking Points in trade talks with the u. S. Aging will raise penalty on International Property theft. China will look to lower the criminal punishments the for those who steal ip. The largest luxury goods deal. Tiffany bought for more than 16 billion. That will raise the profile in the jewelry. It gives the parent access to a bigger chunk of american shoppers. The deal values tiffanys 37 posing price on october 26. Initial approach in october. Global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. Im Viviana Hurtado. This is bloomberg. Tom it is a risk on feel here without question risk off field. Futures up. When i am looking at european stocks, they are on the rise with a lot of focus on chinas ip move and what that means for a trade deal between the two economies, treasuries. The dollar steady. Not huge moves. Market seems to be stabilizing somewhat. Tom a quick feel of hong kong and we are doing that with yvonne mann. What happens when the sun comes up . What happens to carrie lam and the leadership with aging guidance in hong kong . How does the world change tomorrow . We are going to hear from the chief executive tomorrow who will do a regular press retheme with reporters. We will see press release with reporters. Victory forounding the prodemocrat. What can she do now . What form can this type of negotiation take . We have heard from her before about she is ready to listen. She said she respects the Election Results and it is pointed towards discontent we see in the city. The District Council elections are usually lowlevel types of elections. Tem pro democrats who have won say its time to address the five demands. Does that include independent inquiry into Police Abuses or bringing up the universal suffrage again . A lot to deal with after the election result. Francine will this resounding win ease or inflame tensions in the city . Say at it is tough to this point. We have seen a couple days leading up to this election and today where it was mostly about cheers and celebration last night after the election winds from the pan democrats. Whether we they continue this question be the key for the democrats as well as the antigovernment protesters. We are still talking about 30 trapped inedly been the Hong Kong University and police trying to negotiate with them. If they continue on this momentum and restore order and bring down the violent, perhaps violence, perhaps the government will listen and engage again with what we have been hearing from the opposition side. A lot of russians on that front. We are still seeing a relative call now. If carrie lam calm now. If carrie lam does not try to meet these demands perhaps we could see protests escalate. Tom yvonne man, thank you so much. Youre thrilled to bring Chris Marangi. History right now that the place to be is in america. Can you reaffirm right now the that 2020 will still be a u. S. Centered stockmarket or do you finally shift internationally . Chris if you look at what is happening in the u. S. In the last 10 years, the expensive names has outdone the cheapest names. The u. S. Has been among the most expensive and most performers in the last 10 years. We are seeing a perhaps tilt to value in the u. S. And it maybe we will see that on a global scale as we come into the new year. Tom is gabelli buying globally . At that asave always it is cheaper than u. S. Markets. We continue today get and find value. Exit. K. , as we get through uncertainty through the brexit uncertainty. They are pretty interesting. Francine are you suggesting when it comes to brexit and emerging markets there is too much bad news priced in . Chris there is a lot of bad news i stand but maybe not enough in u. S. Markets at the moment. There is a lot of uncertainty in the u. S. Next year with policy outcomes and perhaps investors look outside the u. S. Francine if you look at the firstcomeets why is there bad news . First, why ise there bad news . I am not sure a lot of people think it will be better. If it is, where do you put your money . Chris if we look at transactional and translational risk in the u. K. , what happens to the pound, not sure it will be impacted at the polls. People in the u. K. Get up and do what they have done the matter what is in power and no matter what the relationship with europe is. We look at Domestic Companies in and companies that make things in the u. K. And sell pound and perhaps if the declines for them that is a positive. Of goldmany currie sachs will join in a bit. Is it merger monday . It is at least announcement monday. Lets look at three transactions. Nate lanxon and london saying over is a surprise. Td ameritrade with a done deal left. Deal. Y is with a nice uber below 28. This is bloomberg. Viviana we begin with a huge deal in the retail broker. Charles schwab agreed to by Td Ameritrade. 26transaction is valued at billion. The two were among pioneers this year in flashy commissions on trades to zero. To london, the Transit Authority refused to grant uber a new license. That endangers the future operations there. Transport for london concerned unauthorized drivers can manipulate the app to carry drivers. Uber can still operate in the city. That is the Bloomberg Business flash. Andcine onto earnings overall better than expected. It margins seem to be quite high. A lot has to do with cost instead of Revenue Growth. Lets get back to Chris Marangi in new york. Were you worried when you saw Big Companies report earnings about what they were expecting for the future . Chris expectations were well priced, sluggish top line was well understood earlier this year. Margins have held up better than we expected, not as much labor inflation as we might have expected. We have gone through this maybe an flat in 2019, idea for companies to increase with strength in the economy. Tom what is the strength and revenues . Chris the market is looking forward to a bottoming in gdp sometime next year. That is generally what statistics would tell you. We will wait and see. Tom that is a really good 2020 title for the year in review. Every shop will use this. We will wait and see what Jeffrey Currie has to say with Goldman Sachs. He has talked to us recently about gold and oil. What a great way to start monday. Jeffrey currie and Chris Marangi. That is good. This is bloomberg. Everyone. Morning Francine Lacqua in london. Im tom keene. Chris marangi and Jeffrey Currie , what a great duo. Oil is a microeconomic supply and demand. Let me begin with you, jeff. What are the dynamics of demand giving the slowing Global Economy . Jeff it is important to separate the new economy from the old economy. The new economy is actually doing fine. The old economy is where we see the weakness. If you think about demand being allocated to capex related demand and it is the side where we see the weakness. Capex. Weakness. E see the gasoline and jet fuel are doing well. Oil demand is relatively benign, not great, not bad. Id is the oil sector will drift away and the other technologies, is that an opportunity for Gabelli Funds . Chris we tend to like dying industries. You have to find the right price. We will have a petroleumbased economy for as long as i live, whether used in engines or other products. There is an opportunity there. We generally have avoided energy. Francine jeffrey, what is the biggest unknown when it comes to oil . I know it is hard to predict. What would hurt that range . Is it trade or breakeven prices for a lot . Jeff the one observation you can make about all commodities is while demand was week last year, supply was equally weak. When we think about manufacturing part recession going on, manufacturing and output is supply. Inventories across the commodity complex are sitting near the fiveyear average, particularly oil. We think about the Downside Risk inventories are relatively average. Wee is the key with oil think that is an investment opportunity. Withine is the agreement opecs plus going to hold . Jeff we are seeing cap x in the Global Economy old. Beingterest of not focused on energy right now is that these companies and i like to point out that you take the enterprise value and divide by gross cash and it implies they destroy . 52 on every dollar they are given. On everystroyed . 52 dollar they are given. No wonder why they are not getting capital and china is not stipulating the stimulate the economy. Look at the rig count in the u. S. That is dropping. When is the risk of cutting production and writing this out maintaining prices . We are main confident they will maintain prices. Tom lets look at inflation ingested bloomberg commodity. It shows gross disinflation over time of the commodity price. We are breaking down new weakness over a solid 50 years. You mentioned cross support. What is the next technology that will give support a new low valuation. There is a firmness there until there is not. How close are we to cost support drifting away . Jeff the biggest thing that could drive down cost support year and Going Forward is consolidation in the industry. Lets go back to the company with poor returns, the best way to shore up is through rationalization. You look at the Top Five Energy companies they represent 80 of the market cap and the other 50 represent 20 . Look at their production. That is 50 companies producing two thirds of u. S. Oil output. If you look at the ceo confidence, going down recently, the reason for that is old economy ceos vastly outnumber the new economy ceos. As a result, we need to see consolidation in the old economy. As you consolidate, what does that do question right it rationalizes the cap structure and brings down cost. That will be the big thing thinking about cost structure in 2020. Tom do you care about ceo confidence are is it just immediate distraction . Chris we care about it. We tried to get the sense from companies how they are feeling about it. They feel not as good as the u. S. Consumer feels, is my sent. Is my sense. Uncertainty about making longterm investments globally china. Tom Chris Marangi thank you so much. Jeffrey currie also continuing with us. This morning on one of jon foros properties, you look Morgan Stanley in a timely discussion. Is Morgan Stanley readjusting the surge in the equity markets . On the data front, a better than good monday. Futures upws flows, seven, dow futures up 68. Weaknessof days of getting down to a revisit of a 109. A negative Interest Rate and where will that cash go for 2020 . U suggesting into stocks. Stick with us. This is bloomberg. Seen fromtom and fran london tom and francine from london and new york. I dont know if we could go as far as calling it m a monday. It is quite significant. These are share prices in pretrade. Td ameritrade, Charles Schwab will acquire Td Ameritrade and a deal that will reshape brokerage business. People we have been speaking to are worried about regulation and whether they will get the green light. Tiffany gaining from 5. 8 in premarket after it was acquired for 16 billion. Share prices up. Uber, this is not a consolidation story but has lost its license in london. They said they will appeal that but for the moment down in premarket 6 . Lets get to first word news. Viviana a trade war with the u. S. It will raise penalties on the theft of intellectual property rights, a major Sticking Point in trade talks. The u. S. Wants china to commit on cracking down on ip theft. It wants chinese to quit forcing American Companies to hand over commercial secrets if they want to do business there. Turkey began testing air defense radars at the center of the dispute with the u. S. It required a Missile System from russia and the move could lead to u. S. Sanctions. The two nato allies have sparred over the potential risks compose to the f 35 fighter. Former new york mayor, michael raceberg, is taking on a for the democratic nomination. He will skip iowa and New Hampshire and focus on california and other states voting on super tuesday in march. Go bloomberg is the founder and majority owner of Bloomberg News. Boris johnson trying to consolidate his lead in election polls and has unveiled a conservative Party Manifesto. It promises cuts and pledges to hire 50,000 extra nurses for the National Health service. Johnson has rallied to get brexit done. The British Election is november 12. Global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. Im Viviana Hurtado. This is bloomberg. Francine thank you so much. Two talk again with Chris Marangi and Jeffrey Currie. This pieceo back to put out later earlier your are we underestimating or overestimating when it will be here . Chris when we look at what decarbonization does, it is a local solution for a global problem. You got more recycling, reduction and consumption. You look at elementia him in the u. S. Aluminum in the u. S. , that hit trade and out of the trade flows. Argumenthy we make the that the decarbonization starts to look like deglobalization. Francine is also the forefront for the next European Commission. Is it too late to enter that market . Next year we expect to see Asset Managers incorporating esg strategies into the portfolio derives from 22. 5 trillion to 45 trillion, an enormous increase. This is a substantial increase on Oil Companies adding to the fact they cant make money and the reason why the reduce in cap x. One reason why we are bullish on oil from a structural is the capital has diminished. Tom on the soft commodities,way from oil, gold, iron ore is there an opportunity there or are they stuck the same technology disinflation track . Jeff they are sitting on cost support similarly to the hard commodities. One thing that makes them different from the commodities is that the currency component is much greater in terms of driving price support. When we look at the overall dollar, it is relatively strong. It could get stronger but the Downside Risk is nothing like it was several years ago. It is hard to argue a soft case more broadly. Iny are equivalent to shale short farming and supply. The only way to get upside is you need to have the macro tailwind begin to create a weak dollar and stronger demand. Tom Chris Marangi has long adjusted corn adjusted to his brain. Is there an opportunity in the Food Companies because this stuff is cheap . In food stocks . Jeff there is always opportunity and we do own some food names. It is an industry undergoing technological change, change in consumer tastes and companies have to innovate. One i talked about is conagra, and that has actually innovated and come out with new products. Health and Health Awareness is a big for them. They have their own version of the beyond burger. Decent beyond burger and meat will work . Jeff i dont think it is going to work in my house. Wants to beration responsive and it is it real. We see it every day and that is where funds are a flowing and tastes are going. Meatless alternatives are going to work. Maybe they will come down with more research. Away from meatless burgers, how does the trade war between the u. S. And china effect commodities . The first to benefit other farmers peered whats that mean for soft commodities. The problem with getting a big increase for u. S. Soybeans is the swine in china has had a Significant Impact on the overall demand. We dont have the same number of hogs in china to consume that increase in soybeans you would have had to or three years ago. The second factor is the resilience have taken significant market share over the past several years. It is a positive but unlikely to get you the big bang because the prices andt in pork hogs where you have the global bottoming. Much,ne thank you so Chris Marangi and Jeffrey Currie. All eyes will be on the fed chair speech after meeting President Trump. Raise and a could be a bank stock offering. Later in the week, u. S. Data, claims. G gdp, jobless equity and bond markets closed to the holiday. This is bloomberg. Tom good morning, everyone. This is bloomberg surveillance. Word on they political front and pentagon front, Anna Edgington covering Congress Joins us. Is excellently extraordinary to see a secretary of navy shown the door it begins with fdr and those hundred years ago to frank knox in world war ii. It has always been a different position. Explain the shock of the secretary of navy shown the door by the president of the united states. Day we can another rip up the script in washington. President trump looks like they try to work out a compromise with the secretary of navy and as so many of these things do, it blew up in his face. It will be a huge risk when it comes to how lawmakers will react. The president is facing impeachment and the more he risks losing support in congress. Tom explained the delicacy of the chairman of the joint chiefs of staff, mr. Miley, and working to attempt to save face for all on this transaction. How will the republican senators react to the chairman of the joint chiefs of staff acting as a gatekeeper for mr. Trump. Look for a split in the Republican Party between those who support this navy seal and other members of the military that trump hardened. Pardoned. This was something that President Trump got from fox news that they should be pardoned. There will be some support among some republicans. There are another set of republicans that are institutionalists. It will be interesting to see how this plays out in the publican party. In the Republican Party. Tom the innocent that mr. Bloomberg will run for president. So many viewers worldwide are aware of this. The distinction seems to be the four primary event before the super tuesday. Globalgington, leave our audience on what is different about New Hampshire, nevada, south carolina, and the like from that big day in march. What is the political distinction . Anna for traditional candidates in the race, they are trying to come out big in the first four races. Harris saidkamala she will move to iowa to build up support their. That is why joe bidens camp is worried he does not have enough support in iowa to make it into the top three candidates coming out of that caucus process. The fact that the goal bloomberg theoing to put his eye on later races, that is a strategy that makes sense for entering this late in the race but when we havent seen in modern president ial politics and also one that is not shared by the other candidates in the race. Tom Anna Edgington in washington this morning. Michael bloomberg is the founder of the majority and the majority owner of bloomberg llp. Francine lets go back to the u. S. Heine u. S. China trade war and what that means. We are back with Chris Marangi and Jeffrey Currie. We were talking about the impact it has on commodities. If you look at iron or and the other commodities, what kind of chinese economy do we need and does a 5. 5 growth in China Support those commodities . Jeff if you look at what is going on in iron ore and the old economy more broadly, they are structural issues. You look at the old economy and it represents 85 of global gdp 90 2 3 of corporate losses, is nonfinancial. It is overbuilt and over polluted. These are structural issues that need to be dealt with. In 2015 thatk prices need to remain low enough to keep capital out of the markets. What happened . U. S. Fiscal policy and opec production cuts. We are beginning to deal with these problems because it is backing away. These markets rebalance and you make the case for sustainable reflation. What is going on is a good thing. Trade war exacerbates it but it is not the core root. The core root is the structural problems. Francine when will the problems be fixed . Jeff is going to take a decade. The old economy has physical assets that can be used as collateral. The new economy does not have debt, emissions, and capacity overhang. The problems sit in the 35 of Global Economy. It is going to take time. We are sitting on cost support for many markets. Assk reward is rebalancing takes place is sufficient. Tom absolutely brilliant. Are we a microeconomic cost support of amazon . Real world. G in the in the world of all the sexy stocks, is there an underlying microeconomics . Chris we look stock buy stock in microeconomics at each one, and once we havent talked about today is what is happening with late stage venture. You are seeing reflections of that on the you werent on the uber news. That is backlash of these economies that will have to be worked through. We are getting a chance for Traditional Companies to strike back. Tom next year will be be starved for doubledigit growth Revenue Growth . Chris yes, absolutely. Growth has been trading at a premium for several years. It is one of the reasons amazon trades where it does. It has to be grounded in reality and the consumer remains healthy and we will have a good christmas season. Tom there is point of debate on that. Francine a lot of these companies we spoke about commodities and amazon, but what is the risk of underinvestment in five or 10 years . Craig that is the goal jeff that is the goal. Declines. E some we will see cap next declines. Declines. This is the same story we told in the 1990s. It was called the revenge of the old economy. You will get there, but it will take at least five or 10 years before you can get excited. In the meantime, there is upside in being long is why we recommended a long and the enhanced way of oil and opecs will throttle back production and defend that low rebound on oil. While it will take a long time to get to rebalance, i think now is the time. Tom very good. Jeffrey currie, thank you so much. This came out 20 minutes ago. The esteemed logistics in Ocean Company and they will move to general electric. Really interesting choice as he rebuilds general electric. Francine nine minutes ago, the chief executive of uber actually pleading this we understand banned. Er uber was he said we understand we are held to a high bar but this decision is just wrong. He says we have fundamentally changed how we operate in london. We have come very far and we will keep going for the millions of drivers and writers who rely on us. A full round up on uber and the banning in london. That is coming up next. This is bloomberg. Viviana this is bloomberg surveillance. Books,st to open up its hp turned down the unsolicited takeover bid. It says xerox hasnt proven it is healthy enough to raise funding or complete a transaction. Xerox hasnt commented. Maybe elon musk will have the last laugh. He says tesla received 200,000 orders for the cyber truck, his bite having two windows unexpectedly shatter in the debut. There is no risk for wouldbe buyers because they are 100 deposit is fully refundable. That is your Bloomberg Business flash. Francine lets get back to uber and transport for london said it cannot operate in the u. K. At first, the headline crossed in premarket law 6 . Tomorrow, if you want to get a uber in london, they will appeal and during the appeal they can operate. Nate it will be business as usual as far as drivers and riders are concerned. A have 21 days to appeal and they said they would. As long as the appeal is in process they can continue to operate. If they lose their appeal, it could take it to the Supreme Court which can take years. At least in the immediate future, there should be little change on the streets of london. Francine what are they taking issue with . Nate it is centered around the app and it is possible and there has been evidence that an unlicensed driver or a driver that once had a license and had it revoked was able to use app and you are essentially driving in an uninsured vehicle and that is massively against policy. Massive changes are needed to the app. Francine i thought they had done a lot to ensure safety of passengers. Nate they acknowledge improvements have made been made, but since the announcement, other things have raised the head and one is there is not quite enough security in terms of how the app is used to verify whether a driver is the correct driver. More work needs to be done on that. Francine can they do it in time for the appeal . Nate i will certainly be asking that. I dont see why not. London is one of the five biggest markets for over for uber. There is interest to do it for it appeal, how much time takes is anyones guess. It could be months before we know anything. Francine thank you, nate. Our bloomberg editor. Tom keene and Jonathan Ferro will open the Program Shortly and talk about commodities and the eurodollar. With the the market u. S. China trade. This is bloomberg. Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone 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 chinas ip crackdown. The country goes after companies who commit intellectual property theft, a key demand for the u. S. In trade talks. Prodemocracy candidates sweep hong kong. Local elections see record turnout in a big win for prodemocracy to mens traders. For prodemocracy demonstrators. Welcome to bloomberg daybreak on this monday, november 25. Im alix steel. A shortened trading week. S p futures are up modestly higher, potentially on some kind of trade Movement Forward if the ip worries right actually be lifted from the u. S. Not a lot of movement anywhere else. Watch the 10 year yield. A lot of supply and coming online. Time now for global exchange