Markets are struggling for direction. Stocks in the u. S. Are looking at record highs in markets around the world are trying to figure out how to put that against the fact the chinese economy is slowing. Andpean stocks getting 0. 2 you can see the 10 year yield at 1. 74. A good day to talk policy. Coming up, we speak to the Incoming European Commission her team of commissioners faces a confirmation vote in parliament. Lets its rate to new york with first word news. A worldbeating brexit trade deal. Thats what british carmakers want the next government to deliver. The society of Motor Manufacturers and traders say the key requirements include a friction this border, tariff free trade, and regulatory alignment. They spent more than 5 Million Pounds preparing for the exit from the eu. Of Chinese Industrial enterprise falling for the Third Straight month as Producer Prices continue falling and domestic demand slows. Early indicators suggesting the economy slowed for a seventh straight month. Another Major Swedish Bank reportedly used for Money Laundering, according to the state broadcaster. Sbc alleges they can trace the case back to the death of a Prominent Russian layer, lawyer, saying millions float through and can be involved in russian tax fraud. Seb maintaining that have not found evidence of systematic laundering. Jeremy corbyn is defending his party against the case of antisemitism after suggesting a rabbi leader is unfit for office. They trail boriss conservatives but appear to have made gains on the back of plans to reshape the british economy. A white house budget official said he warned superiors that a hold on aid for ukraine could be illegal but says he waited months without any response. He told the impeachment inquiry that officials learned in mid july that President Trump had directed aid to be held up. President trump denied wrongdoing and called it a witch hunt. Opportunity of the turkey pardoning ahead of thanksgiving to make a joke about impeachment. Thankfully come up and butter have been specially raised by the jacksons to remain calm under any condition. Which will be important, because they have already appeared subpoenas to appear in adam schiffs basement on thursday. Its true. It seems the democrats are accusing me of being too soft on turkey. News, 24 hours a day and on tictoc on twitter. Powered by more than 27 hundred journalists and analysts in more than 120 countries. This is bloomberg. Anna donald trump says the u. S. Is in the final throes of a trade agreement with china, signaling progress on a deal that has been in the works for two years. Francine he says it is going well, but in an interview with bill oreilly, trump also says he is holding up a trade deal. So lets focus on what this means. Joining us is the senior managing partner at a Swiss Private Bank specializing in wealth and Asset Management. Thank you for coming on, you always give us a good, global view. When you look at markets and trade as we head into 2020, what is the one thing that makes you nervous . Can the World Economy stay at these levels . Trade will of course dictate sentiment. Are risks, there are opportunities. What worries me most is being able to catch those opportunities correctly. Francine what kind of opportunities . Its so difficult finding yield. Patrick yes it is, but there are still opportunities. Looking for higher yields in the global yield market, in particular in dollardenominated we useents making sure these opportunities of sectorial rotation towards Industries Using solutions for sustainable industrial processes. All these are opportunities we have to seize so there is a risk of being under rather than over invested. Francine is this on the assumption we get a phase one deal . Patrick under the assumption that the trade deal is going to happen there is going to be a solution. We all needed, because that trade, no growth or market developed. Development. We also have to be careful about the mastering of technological trends. We are basically in a position where we have to look at the longterm and perhaps what worries me the most is the number of investors who are still focusing on the shortterm. Francine is this because we are incycle . There are things that are difficult to model. What is your number one concern . Could we see china turning . Patrick i think we could. We are also concerned about european stability. Uncertaintiescal are also sources we have to be careful about. In the world, debt will probably be the big thing to worry to tackle. Francine dear clients want exposure to they asked to go to cash . Patrick cash is expensive, as you know. When you are in cash, you pay with security but it is the wrong security today. We should be looking for Investment Opportunity in equities as much as in convertibles. Idea will be at good diversification model. Given the uncertainty and from the mixgrowth of good, quality equities and convertibles could be a good idea. Francine equities are telling us one thing, bobs the other. Other. S the do you think it is technical because of all the qe . Patrick partially. The worry is really the liquidity issue. Whether there will be enough liquidity at the time where we have to look at another trend. The second thing is to have the ability from a credit point of to look at the types of instruments we can find in good corporations. Francine what makes you confident about equities . Theres concern about Central Banks coming to the end of tools available. Patrick you can still go lower in terms of rates. What is important is trust. You have to give this impression by way of Monetary Policy measures but also political will that growth is going to be protected. At minimum, growth levels are protected. You have to get used to the fact that we have to to be underserved in the u. S. And in europe. We have to live with it, but cash is expensive. You have to look for Investment Opportunity. Francine where do you think more value in equities is . Europe has been unloved and so there is potential, or is it companyspecific . Patrick we are getting back into the manufacturer sector. If growth is invigorated, we could see industrials going back into favor. In this respect, theres a certain degree of rotation. Francine and this is with a strong u. S. Economy. One the chris at strong levels with a strong consumer that grows at strong levels with a strong consumer. Patrick correct. Looking at europe in general we are having a negative view on the world. But in europe, there has been late restructuring and gives us momentum we could take advantage of. Francine thank you so much. Coming up, it may be a happy thanksgiving for the turkeys President Trump pardoned, but what about the u. S. Consumer . That conversation a little bit later on. This is bloomberg. I give you a full and complete pardon. Francine economics, finance, politics, this is bloomberg surveillance. Lets get straight to the Bloomberg Business flash in new york city. Down for thetep ceo and longtime ally of president donald trump. Blackwell capital say it has lost confidence in his leadership. They took control of to stop to avoid a shareholder exodus. Blackwell says the Company Quote desperately needs change. He says he has already made quote significant transformational progress. The owner of Manchester City has agreed to sell more than 10 of stakes in private he ever firm silver lake. 4. 8, aued business at record for a sports team. The reported transaction showing how surging tv revenue is drawing attention from investors. Lucky strike maker British American tobacco lowering its outlook for a full year. Health concerns and a price war are weighing on cigarette sales in the u. S. Bat and rivals have run promotions for vaped starter kits for as little as a dollar. They also face restrictions on sales. President trump says he will raise the legal age for purchases to 21. Citigroup has been fined 44 Million Pounds for years of accurate reporting. It is the biggest fine from the regulation authority. They say between june of 2014 and december of last year, three units failed citi to give Accurate Information to regulars. And thats your Bloomberg Business flash francine. Flash, francine. Francine parliament votes to get today at we will have plenty from the new commission. Joining us from the European Commission in strafford. Is maria tadeo in stratford tadeo. Trassburg is maria this should be the final hurdle for the commissioner. Andnow she has been delayed has been more of a compromise candidate. She does not really have a majority here at the European Parliament and that is perhaps her biggest problem. In terms of the policy agenda, we just heard from the Incoming Commission president really wants to tackle Climate Change. Priority. R number one you can see why she is doing this. This resonated strongly with european voters in may and they want to see the change brought forward. She has given herself very Ambitious Goals and wants to do it quickly. Asre are many question marks to whether she will be able to fund this and how quickly she can push through her agenda. Francine maria, can the british Commission President get her green deal done . Maria she wants to make europe the first continent to cut down on omissions that emissions and become Carbon Neutral. Countries are concerned about the economic implications and businesses wonder how they can be a Major Industrial power yet press ahead with Major Industrial targets. We are looking at 100 days to get a major major reform through that is going to affect pretty much every district. That she is confident and wants to do this. She says this is something that resonates strongly with european voters. Francine thanks so much, bloombergs maria tadeo in strasbourg. Still with us is patrick. When you look at the people in charge, we were given the first speech, saying green energy is at the center of what they are trying to do. What does it mean for banks . To what extent do banks need to be sustainable . Patrick its very important such statement is made. We need is encouragement to make sure all industrial sectors do take measures quickly enough to ensure we avoid political decisions that will impair the future. But the Banking Industry simply has to manage our rates very carefully. If he take it from a credit or investment perspective, we have a duty to ensure we manage risks for clients. Risk on one hand come inequality on the other are the two major overwhelming trends we have to understand and translate into holdings. We are looking for solutions that will help facilitate priorities. Francine the client if a bank selling investable, renewable funds while being part of a big oil ipo . Patrick our economic model has come to its limits, so we will have reactions. We will have many more reactions of the future. Capital in thee right direction to benefit and to avoid the risk of stranded assets and accelerate the transition. We believe this will be the single most important source of returns in the coming year. Francine what do you need from the new commission . Your definition of something may not be the same as another banks. Patrick correct, we need common standards. We need to agree on the nature of the data to assess the sustainability of a model. Then we need a common taxonomy. Then we need indices that little by little, move towards identifying the right at the Biggest Companies that should be held in a portfolio. The assetmove Management Industry to move faster into that trend. Francine how will this impact economics . While the commission or companies have a clear plan of how to retrain people . Patrick there are two aspects. Did you go too fast, you will have huge collateral damage. I think the commission and or authorities must ensure that your keeps its leadership in this respect. Going everywhere, everyone is interested not everyone is taking measures. You have to create parameters that allows freedom of enterprise to move freely. Facilitate asset allocation, perhaps by prudential or capital measures. Or perhaps by simply having Tax Advantages for certain investments. Francine but you see a real shift . Is it clients but also Companies Ready to be more transparent . Patrick first, we are completely convinced. We saw the Immense Development of methodology data, and interest and now we see clients demanding solutions. And fast. But we have to report Carbon Intensity and other aspects of their portfolios. It is going fast, demanddriven to and that is the good news. Driven, and that is the good news. Francine private equity heavyweight tom barrack faces calls to step down immediately as ceo of colony capital. That story straight ahead. This is bloomberg. Francine good morning, everyone. This is bloomberg surveillance. Tom barrack is facing calls to step down from his Investment Management firm. In a recent letter, a shareholder said he should step down immediately as chief executive and chairman. With all the details, heres dani burger. Dani this year has seen its fair share of highprofile departures, but this one is unique. Rather than getting pressure from lower cost alternatives, is one shareholder in particular that has been pressuring him to step down. Tom barrack has said he will step down in 2021 but blackwell says he needs to step down immediately. They own 1. 9 of shares, but in the letter, some searing words. Criticizing him as the head of President Trumps inaugural committee which is under multiple investigations. It says he is distracted and has an abysmal record. Also under fire, his frankenstein combination, a threeway merger he pursued. I would a shave just how much that merger has hit shares. I want to show you just how much that merger has hit shares. It continues to underperform at this is when blackwells get him to add three Board Management members and undergo strategic review. Since then, it has lost 21 . It needss has said drastic change or will face shareholder exodus. Francine thanks very much, we will follow the story very closely. Coming up, we speak to the Incoming European Commissions president and her team as for team of commissioners faces a confirmation vote in parliament. This is bloomberg. Whether youre out here on lte. Or here on a wifi hotspot. Xfinity mobile has more coverage to keep you connected to what matters most. Thats because its the only Wireless Network that automatically connects you to millions of secure wifi hotspots and the best lte everywhere else. 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 in the final throes, President Trump says phase one , withal with aging beijing, chinas slowdown continues. We will be live from strassburg with the latest. And the risks to growth. Political instability, the trade war, and negative rates are all weighing on investors minds. Looking ahead to 2020. Good morning, good afternoon, good evening, everyone. This is bloomberg surveillance. Lets check in on what is moving in the stock markets. Here is annmarie hordern. Nemarie a swedish bank, and even while the state broadcaster says they have involved themselves in moneylaundering, the biggest shareholder has come out and defended them, saying they still trust management that is esther a be. On top of that, seb says they have done everything they have rollsroyce on the downside, down 1. 5 . Morgan stanley says they are no buy. R a b and britt vic, the soft drink maker, organic Revenue Growth was disappointing, missed rbc estimates on top of that. They say this implies is slower britvic in the second half. Francine lets get to viviana hurtado. Viviana President Trump says the u. S. Is in the final throes of the trade agreement with china and it is going very well. In an interview with bill oreilly, President Trump later said to ensure better terms with the u. S. , he is holding off on the trade deal. Another Major Swedish Bank reportedly used for Money Laundering according to the countrys state broadcaster. Alleging it can trace the flow back the cash flow back to the death of a Prominent Russian lawyer. It can be linked to a Companies Involved in russian tax fraud. Seb maintaining that it has not found any evidence of systematic laundering. Jeremy corbyn is defending his accusationsonse to of antisemitism. Ahead of next months election, labor trailing Boris Johnsons conservative, but the party is making plans to dramatically shape the british economy. I want to make it very clear, we will come in government, protect any community under any threat of any sort. We will support the necessary funding to protect synagogues, temples, and mosques. We will protect the cemeteries also. We will not allow antisemitism in any form in our society. Viviana global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in im than 120 countries, viviana hurtado. This is bloomberg. An independently owned bank solely dedicated to managing wealth in one of the a total asset for their clients, providing Wealth Management solutions to both private and institutional clients. What our clients actually looking for as we head into 2020, and what more consolidation could be ahead for the industry . Our guest joins us now. Thank you for sticking around. In this world of negative rates, what do you what do your clients ask . I guess it is returns, but have you found an elegant or innovative way of getting them away from negative rates . I think we have to offer an alternative to cash. Cash is expensive. This goes back to the longerterm view, the agility with which in times pressures such as the one we have from a risk perspective, we can ask. Markets, wein the try to diversify risks. Negative Interest Rates for us is not so much of a big issue. Makes a is that what difference between a private bank and one of the we are not being asked to have a shortterm view. They asked us to have a longer term view, and they are there for the long term. The longest established client relationship dates 1801. I am still looking at this relationship. It was a family at the beginning, now a nonfor profit entity. That is what we independent owned firms have to do first. The longer term and add value, where, and how do we want to emphasize the role of capital. Second, make sure we have the technology to do that. So expertise, value, technology. Francine do you ever feel too small . We talk about consolidation. At some point there will be across the border consolidation, perhaps. To 300 i think close billion in management, we are large enough to be heard and small enough to be counted for our clients. We see the consolidation, we are consolidators, mostly on the Asset Management side, but also on the colleague side as well. Our platform is used by other banks. We see it as a tremendous from a sector point of view. Francine co. Where will the biggest disruption come from . Is it the technology, the payment system, or something similar . it will replace processes that have been slow, inexpensive, and perhaps not as secure. Of Course Technology will replace that. And it will be true from an operation standpoint and also Wealth Management firms. It will not replace the firms themselves and not replace the toan approach that is needed guide our clients demanding longterm views for their Portfolio Allocation note also to plan. Rbc is not only to manage those wealth but also to plan the transmission of that wealth. That is first and foremost the human aspect. What kind of year do you expect in 2020 for growth managers . Patrick reasonable optimism, i think, a year where i think it will cost more not to be invested as to be invested. You have to be agile, moving you have to break sometimes, you have to accelerate. Ensure you look for yields work quality is also insured. Quality longterm and having more buy and hold time while at the same time agility. Francine thank you so much. Patrick stays with us. We talk about the state of the luxury market. In the former senegal chief executive. We will talk about m a after swooping in to buy tiffany. That conversation is next. This is bloomberg. Francine this is bloomberg surveillance. Lets get straight to the bluebird business flash with viviana hurtado. Viviana we begin with stepping down the longtime ally of ce of donald trump, tom barrack. Controlling just under 2 of colony stocks to avoid a shareholder exodus, blackhole blackwell says the Company Needs chang. Already madet has significant progress in the last 12 months. Ridge American Tobacco lowering its outlook for a fullyear growth in smoking alternatives. Vap and rivals have run promotions for as little as a dollar in recent months. The sector also faces restrictions on sales. President trump says he will raise the legal age for purchases to 21. The u. S. Faa says Agency Officials will conduct relatively routine approvals just coming off the assembly line. They were previously done by boeing. Boeing prepares to finalize Software Fixes for the grounded 737 max. The Company Hopes that max will be able to return to service before the end of the year. That is your Bloomberg Business flash. Francine . Francine thank you so much. Less focus on luxury and the u. S. Consumer. Lets focus on luxury and the was consumer. Itsal to add tiffany to basket of 16 billion. Still with, us, patrick, senior managing partner at lum bard. Oda, thank you for staying with us. Welcome to the program. Tiffany, it ist such a huge company. What should they do with it . How difficult is it to absorb it, how difficult is it to make it more premium for higher margins . I consider it a fair operation. I think price was also is what the market expected. I think there is great potential. Sleepingen somehow beauty, for many years with the same board, very quiet. I think even in terms of positioning, probably an higher withto get better offers. Presenceaving a strong in the United States is fundamental, at a time when you need really a local company to impact the market. That it point for me is some placell serve in the industry because i would it to move in some way up her this will take the industry to further aggregation of a large group than the competition becomes. You are francine you are on a number of boards. Are the numbers in high majority . I would say in some cases they are higher and i would say watches as a kind of investment, not consumption, there is a very strong competition. But jewels remain not only for european and american but also for chinese. The potential is huge. Francine when you look at china, you are quite bullish about longterm growth. They are dependent on luxury products. The initial downturn we saw in the chinese economy is it just a blip . Patrick i dont think it is a blip. We have to get use to more reasonable levels of growth. It is an adaptation. Inhink what is fundamentally china, china has successfully brought the middle class to a level where it can now play a role in shifting the demand for Chinese Services and products from external to internal demand that will be a stabilizing impact. Francine how are Consumer Trends changing and developing for luxury goods in china compared to the u. S. . Decline, a is a domestic decline. But if you look at department , it isand the number difficult to think about a stronger growth in the american market. On the other come you see the transformation of the chinese consumer, so from one year to ther, you see how people they look like japanese. The learning curve has always been much faster than any other country. In the second, the population in china will be getting older, so there will be an important consumption and spending from the older generation. Becausel be interesting they spend locally. The prices get reduced. Asncine i dont know if it if it has hit switzerland yet, but i a lot of retailers, especially Department Stores, make so much money during black friday. Is it bad if they discount too much . I think it is a disaster appeared i was in new york at the end of october. Neiman marcus and the Top Department stores, i must say ,nline, there were discounts all the brands have started at least one week before, so there is an impact on the margins, which is quite substantial. To price not go reduction, you are not spending anything. Patrick consumer patterns of the main theme of investments today. If you look at the changes today, things are radical. Nowks to companies that will not be existing anymore because they are being privatized, which is a chance of success for the company. That is why tiffany was a great position to hold. So those changes in terms of consumer, in terms of consumers is really important. Francine what are the changes that you are seeing . Travel . Patrick people travel. Trend,e the demographic changes toward certain types of services. It is interesting that we have to look at very seriously the luxury goods industry is also an issue, the global level of disposable income in society, so the big markets such as china, externally important for that industry. This is sustaining some of these trends. We do it on a permanent basis. Francine are there too many Luxury Brands . No, because i think the creativity still exists. They start from small and then they can get big with larger growth. I would say a percentage of Small Companies become big, but this is the most creative, both in terms of lever and and this is really where you can find new plans for the future. Francine i guess some of the concerns is that the french companies, these creative companies, all happen there are rumors of ipo with a company like that. Within a timeframe of four or we have a lot of opportunities also to extend a brand into licenses. Gotten acquisition of the home line. Something you have to start with a smaller amount. Is better for advertised, so this is an opportunity. I think it is part of a brand which will never become very big, but having brands that are within 300 million or 400 level . , a sustained i really hope that these Companies Find an agreement to consolidate because an italian platform would be nice. Francine when we were talking about the various markets, is it too risky to see the sectors that will consolidate . Because it could automatically mean that values go higher. Patrick i think we have to look at sectors that are consolidating because they are also getting certainly more expensive but more efficient. They are getting more efficient, they are getting more profitable. If they are getting more profitable, there are more interesting opportunities. The industry is certainly an industry where we have to watch carefully. The same trends that are affecting us will affect the luxury industry. , the richmonday group was quite successful in trying to discover and create an double other ways of promoting Luxury Brands. And Digital Brands for instance. It is true also for sustainability. In this industry, we will see the main challenges that we have. It is more a source of opportunity than risk. Francine thank you both. Great conversation. Both stay with us. Coming up, and i on politics. And worry it an eye on politics. And worry about negative rates. This is bloomberg. Economics, finance, politics. I am Francine Lacqua in london. What does 20 20 hold . Here is what finance chiefs are watching for. Political uncertainty can cause hesitation on indecision. Concerned about liquidity and negative bonds. Still with us, our guests. Let me start off with you. What is your biggest risk for 2020, and how are you preparing for it . Patrick the biggest risk is that i am wrong in the fact that there is not going to be a deal between china and the u. S. This, asi am wrong on we have in previous year, a shock in the market will be detrimental come of course. Look for quality, you the longer rather than shorter term. Perhaps also go into real assets. Real estate, gold will be playing an essential role. Risk and your biggest how to prepare for it . Michele i think it is political environment. 2 less turnover, and there are so many areas which are under fire in some way which can be why the duties are not so impact for for the industry is because the luxury at the end makes it pay for the consumer. Have is a system where you lower gaps between china will , brazil will be 35 . Is aine Hong Kong Financial hub but also a luxury hub. Where does that move to in asia if the protests continue . Hong kong represents approximately 5 of the luxury industry, with some companies that have higher rates and some are lower. You could see 50 of the business, it is if the impact could be 2 , 2. 5 , where are they going . Definitely in china because people go to shenzhen or different destinations, i think there is a big potential for singapore, which is going to hub up i think the traffic and some residential companies. Forthere are opportunities other different locations. Francine thank you you both for joining us. Bloomberg surveillance continues. We will look at your markets. 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 the final throes. President trump says one of the trade deals with beijing is near completion, but the economic fallout continues as chinas slowdown also continues. Theliament votes to new commission today. And risks to growth, political instability come the trade war, negative rates are all weighing on investors minds looking ahead to 2020. Good morning morning and good evening, everyone this is bloomberg surveillance. I am Francine Lacqua in london. Tom keene is in new york. Collecting evidence im not sure if a lot of people have walked into that campus, but certainly it is one of the things that we are keeping a close eye on. Tom the story continues in a quiet weekend you one day you wonder how it sets up. Last week it was quite out of respect for the elections where the people against carrie lam, the people against beijing spoke. What a turnover. Still reverberating in hong kong this evening. According to rt hk, the Hong Kong Police will enter the campus on thursday, not today. This would be to collect evidence paired we will have plenty more on hong kong throughout the two hours. Lets get to first word news in new york city with viviana hurtado. Viviana the u. S. And china are on the verge of completing the first phase of a trade deal, according to donald trump. He says the sides are in the final throes of a very important deal. Still, stumbling blocks remain. One, how to rollback tariffs. For the seventh month in a row, chinas economy has slowed down according to early indicators. They show there is a worsening picture for trade, Sales Manager sentiment, and factory prices per last month profits of Chinese Industrial firms falling the most on record. An invitation for President Trump to the next phase of the impeachment process next week as a public hearing of the u. S. Judiciary committee. The president will be allowed to present his defense his lawyer could make a request in question a panel of witnesses. They will discuss the constitutional basis for impeachment. Elizabeth warrens rise in the poll are hanging you turned it since october, a quinnipiac poll finding the democratic president ial candidate dropped by 14 points per that is when she led the field of candidates. Attacks for her medicare for all plan are taking a toll. Joe biden now has a clear lead. Global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am viviana hurtado. This is bloomberg. Tom thank you so much. For the global audience, thanksgiving in the United States is upon us, meaning it is ifferent wednesday equities, bonds, currencies, commodities, you lift and we get that precisely this morning. Dow futures up 36. Curve comes in a little bit, euro has not moved since time began that is my only screen today. 11. 54, showing the lack of volatility up there. Francine i like your data check today i like it every day, but i like it today. European stocks are trying to make up their minds what they should be focusing on. Partly they are driven by equities in the u. S. At record highs. Partly they are worried about the u. S. China trade in the figures from gdp from china. Treasury. E u. S. Tom there will be lots of football tomorrow. Michael barro telling me, the Detroit Lions will play as usual. That means we will have car ads, which means down the road you will have wealth, you have to come in and take it into the shop, it is broken. Fiat chrysler moments ago recalling just under 100,000 trucks in the u. S. I am pretty sure that is not trucks like mack trucks, i think that is like the pickup truck. We will have to see. But that is a big number. 100,000 is a large number. Let me get to my bloomberg on this wednesday. My chart of the year, a movable feast get that, francine . Movable feast, like thanksgiving. Francine i like it. Unitedstoms into the states treasury, and this chart of the year was in the vicinity and we have legged out six standard deviations off a wellplaced trend going back a good 40 years. It is an extraordinary chart. I have never seen a hockey stick like that ever. Francine you know what, my mind wanders through thanksgiving, i needas asking myself, to google the pardoned turkeys. Tom we have that in the 6 00 opening scripts. Butter, 45, it is pounds and 47 pounds. Francine who named him butter . Tom they went with bread and butter. Francine lets go to my chart. This is what i am looking at. If you look at a lot of the hedge funds and the funds shorting the dollar, they are saying the some of them are particularly attractive, given the volatility. T is the money charts you can see whether global volatility is hovering near an alltime low and what that means for the future. So a good way of looking at the risks for 2020. Joining us now is the Hsbc Private Bank chief market strategist. If we kick it off with you and look at the risks for 2020, where do you see market do you look at liquidity or is it more about valuations . The most important thing for 2020, i think it is less about the cycle because i do think we are going to avoid the recession. You probably want to be in a neutral position in terms of cyclicality, but one needs to be diversified because it will be that uncertainty, the political and geopolitical risks that will continue to be there. If people are not diversified through safe haven bonds, they need to find it somewhere else, in hedge funds, and private equity. Francine when you look at the trade wars, will it continue as it is, or will we see a reprieve in 2020 . Obviously at is political question, i believe. At this moment, it is rather uncertain how President Trump wants to play the trade word the trade war card. Our assumption is likely that he will take a step back and we are seeing that he is quite interested in striking a deal shortterm with china, so i think we will see some recovery and some easing in the trade war tensions in the upcoming year because of the u. S. Elections coming up. Willem, is your trade Analysis Part of your market call for next year . I think what the market is trying to do, it is starting to price in a potential bottoming of the data. There is some evidence we are seeing that, but i would not jump into cyclical trades because even if you are finding a bottom end of the data, you have low absolute growth, especially in europe. That is the relative preference. But do not go through cyclical. Trade, you get almost no volatility. That is remarkable, other than sterling moving around, with brexit, how quiet has been. With trade war and any outcome of a trade war toward a trade piece, do we get a more playable foreignexchange market . The trade war was quite decisive this year. At least in the Foreign Exchange market, now that we have seen some easing of tension. That is why volatility has dropped. No one is anticipating Monetary Policy to move in the foreseeable future. Markets aret now relatively calm, but as soon a deal has been struck between the u. S. And china, it will get noticed again. Tom this is fascinating, and i go back to the aj specie call on the u. S. Equity markets 12 onths ago the hsbc call the u. S. Equity markets 12 months ago. Can you assume volatility off a trade piece . Willem the implied volatility, one of the reasons why implied volatility is so low, people are celebrating selling it for volatility. Peoplee to kelsey have difficulty. To stick their neck out and say we are going with a certain assumption on politics come on trade come on brexit, all of those kinds of things. That is why you are stuck in a range for a lot of currency. That being said, i do think there is still upside for the u. S. Dollar, if simply because of the growth element but also in financials. Francine where do you see the most value overall . A little bit it is risky to go into the things that have the most value. You need to really look at value outside of risk. I dont think people are ready to jump into things that have the most value. Certainly, you also then look at end,isk factor, the bottom the value stocks are seeing a little bit of support here, but it is again a cyclical trade if you jump into that. I think that is a little bit dangerous. Thank. E both of you stay with us. Tom, you have some news out of Norwegian Air, naming a new chief executive. There was concern about some of the flights that would operate from the u. S. To stockholm, but they will cut some of the flights to stockholm and copenhagen, but flights from oslo will continue. I would also point to a couple of other airlines, including alitalia, including speculation about what will happen to alitalia. Tom the italian junket is very expensive right now. And a lot of kids flying in the United States this Holiday Season. U. S. Markets will be closed tomorrow. I will be in early. Two be in early francine cook. Tom the goose. The oven. Francine this is bloomberg surveillance. Tom and francine from london and new york. This is whylts also people here not come coming in, pretty much with expectations coming in. Great reviews but also concerns about some of the hardware inside. We will keep a close eye on it and show you where they end up. Years, baby soon appeared markets anticipating a flow of Economic Data in the u. S. Today. Durable goods, personal income spending after that. The fed will also release tom has charts for each one of these indicators. Ofare back with global sales talk about the u. S. Economy that youre seeing right now. With then only agree fed assessment that at the moment the u. S. Economy is in the private goods space, the situation in the labor market quite robust. We are seeing some weakness in the manufacturing sector, but we are seeing that everywhere else, and certainly even more negatively in europe. Comparatively, it is still thereforete well, and u. S. Monetary policy is also in a neutral place at the moment. We continue to see this situation for the future. Thecine where do you see dollar going from here . Willem we see a little bit of strength. When we compose a bond portfolio for our clients, you automatically end up in the u. S. Dollar space. You do not end up in the euro space because it is too low. The consumers i think that is what the picture will show. The consumer might have picked a little bit in terms of sentiment, might have peaked a little bit in terms of sentiment, but it is still weaker. Tom i want to go to getting to january 15. One of the things the pros do is ignore the holiday and get onto the beginning of the year. Sels, what is the to do list as we frame for january 15 . In 2020,e think that the u. S. Will remain our favorite market. We are positioned in really the growth sectors and in technology and in the longerterm trends, because again, from a cyclical perspective, it is difficult you need to weigh the relatively low Growth Outlook against a potential bottoming. It is both a level and the direction that are important. So people still i think in 2020 people will feel much more comfortable with the longerterm structural trends and companies that are supported by that rather than the cycle from an optimistic perspective. Sels justmr. Mentioned is absolutely critical. What matters in the next year, the vector or the relative level or adverse carnage of a year ago . We we would still will play the longterm direction, not the cyclical direction, because i think that is going to be very volatile. In a year, with the loafer longer in terms of Interest Rates, slow for longer the low for longer in terms of Interest Rates, slow for longer, youre going to sell the rallies, buy the bottom. Hedge funds will do that for you or you can look through that volatility through private assets. Francine if you look at volatility in your space, fx in 2020, will it be stronger than in 2019 . Thu well, the reason why volatility is so low is because Monetary Policy in the main areas is a neutral space right now. Both the fed the ecb has cut Interest Rates, and it is unlikely they would move in the next couple of months. Therefore, we are seeing that volatility is low because expected movement in Interest Rates, there is no movement in exchange rates. The deciding factor is if one of these Central Banks will move again. In our view, the risk is higher, that the fed will cut Interest Rates again. At least for the near term because it has room to cut Interest Rates. Therefore, in our view, there is some room for volatility to go higher. And certainly the risks are to the down side in the Dollar Exchange rate. Tom thank you so much. A really interesting idea of gaming the Central Banks forward. Much more to talk about. Noon today, this is an important conversation. How about trillion dollar deficit . With david westin, Douglas Holtz eakin. On the nations debt and deficit. This is simulcast. Here it on radio, see it on tv. This is bloomberg. Viviana this is bloomberg surveillance. Lets get your bloomberg . Dell lowering its annual revenue forecast because of shortages in intel. Dell faces falling demand for servers and networking gear. Demand for itsng third offering a fallen bonds. American investors american investors stayed on the sidelines. Central banks and sovereign wealth funds took up the majority of the sale. Barrackapital ceo tom is under pressure to step down. A ally of tunnel trump, blackwell says it has lost confidence in barrick, and says he is distracted by at least two congressional investigations per colony said it has made significant progress. That is your Bloomberg Business flash. Tom thank you so much, on a wednesday we regroup with six or seven charts on the year. War onto a trade peace. Bring up the chart, if you would right now. It is real simple. It is american stock versus international stock. American stock up, up, after those 28,000 dow points. International is a generalization going nowhere. Hsbc has a storied view from queens road in the Central District of hong kong. When does international go up . What is your what do the pacific rim people say . When does it finally move . The outperformance of the u. S. Stock has to do with the u. S. Economy, which is resilient and has a good degree of visibility. The consumer there is the second thing is, the International Stocks have probably more exposure to the uncertainty, the political uncertainty, and the u. S. Companies that are exposed internationally as well have the morerperforming, domestic ones, because of that uncertainty. Clarityably need more on the political side, which investors are unwilling to do at this point in time. Lacqua, daytrading through schwab or one of those if i have a longer perspective francine quite illegal, in the u. K. , tom. Tom if i have a one year perspective, three years, four years, do i go in international now and wait for that catalyst, or can i wait and stay in American Securities . Americann stay in securities. You will not underperform very much. If you look at europe, the optimal will be what will europe do to lift itself out of this low growth environment. You will get fiscal stimulus. You do not have a technology sector, which is very big. Structural outperformance in our view in asia, because the imf reckons that 50 , more than 50 of Economic Growth in the next five years will come from emerging markets. If you look at the next 10 years, it might even be 70 or it cyclically in the near term, the longerterm story is in favor of asia. Francine thank you. Europes top table. We talk about the commission and their priorities. Surveillance. A big day in england, no one cares. Francine some people do. The american. Tom a quiet news flow but some interesting trends. We begin with the u. S. China trade situation with talks in the final throes. Trump insists unless it is a good deal he will hold it up. Upon the chinese commitment to buy more American Farm products but a stumbling block is how to rolloff tariffs. In an online interview, trump would not say a few was continuing considering taking military action in mexico including drone strikes. He has offered help in dealing with the cartel. Federal regulators signal they are in charge of the grounding of the boeing 737 max. Will handleyees routine sign offs and by the end of the year, deliveries of the 737 max may resume. In brazil, the central bank shocking traders, intervening in the foreign currency market to prop up the real. The currency hitting a low. 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. Francine the European Parliament votes again on a new European Commission. If approved, the cohort will start december 1. Joining us from strasburg is maria tadeo. Are we expecting today to go smoother than in the past, and what are the top three priorities for the commission . Maria good morning. Today should be a good day for the commissioner. She had a number of issues happening. She did not run in the european election. She was marva compromise candidate between them more of a compromise candidate. Be members of the European Commission where rejected but the European Parliament will finally give the new commission the goahead. In terms of the policy priorities, she made it very clear in a speech where she spoke in french, german, and english that she wants to focus on Climate Change and make the European Union climate neutral by 2050. You can see why she is focusing on climate, because this resonates with european voters. This is a top priority in the european election. She mentioned europe needs to do better when it comes to digital taxation and innovation, and that should be a policy priority. ,he commission has many issues the trade dispute with the u. S. , brexit, and an economy that has slowed with germany flirting with a technical recession. Francine if you transition to a Carbon Neutral economy, workers will be displaced. How well the European Commission deal with that . Promised ones trillion euros over the next 10 years to help this transition, but you make a good point, the fact that this will not have the same impact on western and eastern europe. We talk about the north and south dividing the europe dividing europe and there is still a division between east and west. You can see why they want to get Financial Aid if they want to be seen as taking part in this transition. You have to look at European Countries test companies. Some tell you there is no clear answer. Tom what is the difference between brussels and strasburg . You are usually in brussels, but everybody goes back and forth and i heard they could save if they moved to brussels. Why are you in strasburg and the next day in brussels . Maria to put it very clearly, because the french want to keep this year. This is the second part to the European Parliaments second seat. It is a sign of power in europe and the french do not want to give this up. They see it as a way to influence other countries and you have to see it in a practical way, a lot of jobs depend on parliament. What changes, practically nothing because we have to move once a week to come here. People say it is a waste of because money and time, getting here took me seven hours yesterday. Tom there wego, maria tadeo, go,tly appreciate there maria tadeo, really appreciate it. Willem sels is with us. And mean are european multinationals versus 10 years ago . Willem we have a productivity problem around the world, and this is therefore question is really what our company is going to do. A lot of companies are sitting on cash but dont want to put it to work, even though there are exciting opportunities through technology to improve your operations. We are talking to clients on how to get out of this low growth world and corporates need to invest. Thee the green plan of European Commission can kickstart the economy, give ,ompanies a little more current and start to invest, but it may be a difficult process. Is roslynng us matheson. Where to beginow ,ith you on a given wednesday but lets start with europe. Joining tall will be the parliament. Capitalism meter right now . Is it becoming more capitalism or the will there be a new town next year . Tone nextxt year year . Rosalind we saw a speech from ursula von der leyen and she will get her role officially. Awaylimate change, a shift from the idea of regulation which is a key one generally, and more towards politics. She says brussels needs to better defend european values. Be idea that they need to managing the fiscal picture overall and showing responsibility for jobs and regulation, and this tension with the idea, does brussels go beyond advocating in a geopolitical sense, and she is advocating that. It will be difficult in brussels and strasburg as a result, because we are seeing a fight emerging between france and germany over nato. She will have to dance between all of that while trying to Keep Companies countries on the right footing financially. Francine if you are the commission and its president , how do you manage success . Is it getting closer to the people, is it because of brexit, or keeping the commissioners inline . Both,nd probably behavioral management, keeping everybody in order. Real questions are emerging on the geopolitical side. Macron does not want to bring in new members. We havecedonia said, done everything you have asked and you will not let us in the door. The question is, does the e. U. Continue to grow . Does it shrink . Chaosy try to prevent after brexit . She has fundamental problems to deal with and the budgetary issues with countries like italy, the north south divide keeping those states inline. Matheson andlind willem sels. Dombrovskis is the e. U. Commission vice president. This is blue. This is bloomberg. Clear. Be very we will in government as in opposition, protect any community under any threat of any support, and will support funding to protect synagogues and mosques. We will not allow antisemitism in any form in our society. Francine that was Jeremy Corbyn defending his position against recent oppositions that his labour party has not dealt properly with antisemitism in its ranks. Thank you for sticking around. December 12 will be around the corner. We have the policies, the interviews, the head2head debates. When will we know which pole we can trust and when there are changes . Rosalind polling is increasingly viewed as tricky and unreliable. My polling shows the tories remained 10 to 15 points in front and there will be a key out tonight that will show if those other pauls are tracking correctly polls are tracking correctly. Many people are voting for a thirdparty to stymie another party. It is unclear how that might play out. These polls are showing that Boris Johnson will be back in and the majority is what he needs. Everything is on the table. Francine how difficult is it to understand what people will vote on . Is it about brexit or some of the policies we saw on the leaflet . Rosalind a lot of people are voting about domestic issues. Jeremy corbyn is trying not to campaign on brexit at all. Boris johnson says everything is about brexit happening first. Ordinarily ordinary people care about crime, education, very much bread and butter issues. It does not talk about brexit and how your local candidate will work to get better on that front. Last 24 hours, i am absolutely fascinated by scotland. Smp majority, miss sturgeon is doing what we would expect, but what is the backstory in scotland . Rosalind scotland matters because in the last election, they delivered as much as they code for theresa may under the former tory leader in scotland. Scotland matters in this election. There are a lot of forecasts that the tories could lose several seats and that could swing things. Jeremy corbyn has promised the scots he would look at having another referendum on scottish independence, and that is important for the scottish people. They dont particularly want brexit, have been concerned about that. They are tapping into nationalism in scotland and nationalism against brexit as well, which may play against the tories. Tom in america, if you are not going to win in a state you do not campaign there. While the Conservatives Campaign in scotland or do they give it up . Rosalind they have been going north because it does matter, even though those states might be lost to him. He needs to make a big effort to try and keep them because if you lose across the board in scotland, he could lose entirely. He has been active up north, as has Jeremy Corbyn, because they know how much those seats matter. Francine a redhot headline, important piece of news. I will break that for you and we will go back to the election. This is a bloomberg story saying Deutsche Bank has sold 50 billion to Goldman Sachs. Insightl get a lot of into how strategically Deutsche Bank is trying to cope with the pressures from the outside. They are selling securities tied to emergingmarket debt. Tom these are derivative instruments and im not sure what the underlying cash value is off 50 billion, but that shows the urgency. I am hoping steven arons can join us this morning. You are listening to rosalind play the political odds. Is there an Investment Opportunity in the United Kingdom december 13 . Willem there is with lots of gifts and bots. Ifs and buts. Assets are cheap relative to International Markets and sterling is undervalued, but clearly people do not want to take a view and bet on the elections because if we had a deal and it was voted on and approved, we think sterling could go to 1. 35 but people do not want to go there. That would be cheap in terms of fundamental value, but even deal, you needn to start negotiations. Political uncertainty continuing and people want the risk premia to stay there when u. K. Assets remain cheap relative to fair value. Tom thank you so much for being with us this morning. This Deutsche Bank story is a little but important story, 50 billion notional. That is the size of the em derivative portfolio that Deutsche Bank is moving over to Goldman Sachs very price. That is usually set far below the 51 billion value. Steven arons and Justin Carrigan do not have that statistic, but it is an important signal of a Deutsche Bank on the move. From london and new york, this is bloomberg. Bloomberg surveillance. This past weekend, i put out on twitter a global wall street shut up and read at tweet, and you do that when it is steven arons in frankfurt on Deutsche Bank. Steven arons on bloomberg out the out the view the best view of their ceo. This is absolutely superb story. Arons and our Justin Carrigan drive forward the story this morning. What is the level of desperation . How desperate are they to unload these things from their past . Steven thanks for your warm words. It is part of the plan. The bank is desperate to fix itself and has been desperate for many years. This is the latest plan down big chunks of its equity trading and derivatives Interest Rate derivatives. It seems to be working well. Francine this is basically to out sell off assets. Assets doore unwanted they have . Steven they put about a quarter of their total assets in a wind is the size of the book on the balance sheet. Tom you have a beautiful graphic of the ever shrinking bank and the ever shrinking saving. He is doing too much. Will he be able to allocate executive and leadership responsibility, or is he going it alone . Steven that is going to be an important question for next year. He decided to take on a lot of responsibility. He has given himself oversight over the Investment Bank after firing the previous head. We have reported that regulators do not think it is a great idea. He is moving out of the initial stages of the turnaround plan and once that is showing some green shoots, he will reconsider. ,rancine thank you very much steven arons joining us from frankfurt. We are back with willem sels. I want to ask about the financial industry in europe. They have to contend with negative rates. How much longer can they withstand negative rates . Willem i think it is counterproductive to a large extent, and it comes to this question, can we lift the economy out of negative rates . We were talking about the plan for the European Commission. It is more than that. And needs to be the European Commission working with the central bank and in the longer term, plans to make the european economy more competitive will come out of those negative rates , which is a positive plan for the future. Tom willem sels from hsbc banking, a measured view on the path forward into 2020. It will be an extraordinary end of november to december certainly within the United Kingdom. At westminster, it is about leave and remain, but as we just heard, the domestic issues come up. We will have full coverage forward of brexit, and i love that phrase, brexit and the beyond. And election december 12. This is bloomberg. Stay with us. 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. Tom this morning, higher is the path, 29,000 is defined. Yesterday, volume 30 lighter. All votes rise. Futures up six. The president is holding up a partial but substantial trade deal to get a better deal. But her, the 47 pound turkey is pardoned. It is the fourth wednesday of november. Surveillance going home to mom. Weather in the west, be careful. The weather in the west is beautiful. What do you do for thanksgiving in london, ignore it or think it . Francine cooking, which i dont wish on many people, the tradition is starting to arise in the u. K. Mainly because of black friday. Every Department Store in london is doing black friday with sales , something you would never have seen years ago, and thanksgiving food slowly catching up. For you guys, it is a big holiday. Bigger thanr christmas . Tom that is an issue. I would say they go 50 50. The Detroit Lions is the traditional Football Game we have. The weather this thanksgiving is quite serious, including wind in new york and substantial snow out west. Areana the u. S. And china on the verge of completing the first phase of the trade deal according to donald trump. He says the two sides are in the final throes of a very important deal. Stumbling blocks remain with how to rollback tariffs. Down. S economy is slowing there is a worsening picture for trade, managers sentiment, and factory prices. Industrial firms following the most on record last month. Toinvitation for mr. Trump the next phase of the impeachment process. The president will be allowed to present his defense. His lawyer could make a request to question a panel of witnesses. Rise in therrens polls are hanging a uturn. A quinnipiac paul finding the democratic candidate dropped by 14 points. Attacks on her medicare for all plan. Joe biden now has a clear lead. 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. Poll, should note in that Michael Bloomberg coming in at 3 . Mr. Bloomberg is majority owner of bloomberg lp and Bloomberg News. Equities, bonds, currencies, commodities, lowvolume, up we go. 3149 spx. Futures 28 158. Euro, a little lower. Francine investors are torn between worse than expected chinese data and the record beating equities in the u. S. I am looking at treasuries, dollar climbing, and oil trading sideways. Tom this is my chart of the year and im showing it because it has changed. Lets look at the trend in customer seats in the trade war, a hockey stick straight up, money coming in off of the tariffs, a little bit of a wiggle, but in the last two months out six standard deviations. That is an extraordinary statement on a changed american import and export economy as well. Francine lets get back to trade. Donald trump says the u. S. Is in the final throes of a trade agreement with china. Signaling progress, the u. S. President says it is going very well. And an interview with bill oreilly, trump said he is holding up the deal for better terms for the u. S. We are trying to make sense of this. Do we know if china, because of worse data we saw today, needs a deal at any cost or are they more flexible negotiating with the u. S. . John china definitely wants a deal. The data says that. Will china sacrifice some of the things it holds dear that donald trump wants to get that deal . Maybe not. Xi jinping said the key to getting a deal was for that deal to be equal. That speaks to the chinese deal not to be seen as giving in to u. S. Demands. Francine what is the next phase . We talked about phase one. If it is not early december, does that mean it is difficult to achieve the next month . John december 15 is a big day. Tariffs are supposedly coming in and if we do not get a deal, President Trump will have a tough decision. Some of the Things Holding up a finalizing phase one deal is what will we put on paper . We have reported before that the u. S. Wants china to put down specific commitments on how much it will buy in agricultural goods, and the chinese do not want to commit to dollar amounts. To you,derful to speak a view from beijing versus the interviews in hong kong. President xi spoke to the communist party a few days ago. With all the issues he has, how is he doing with his core party . Ok. as of now, he is doing for example, hong kong, the protests have strengthened his position because it has resulted in a growing sense of nationalism on the mainland and the protests have been seen as antichina. I dont think he is in a position where he has to for something, although that said, if he has a strengthened hand he has the ability to give up more. Tom what signals will you look for as we go to a substantial deal . What are the signals you will look for from beijing . A visitthink if we get by the chinese to washington or if we get an american delegation coming to beijing, that would be a good sign that a deal was close. Tom he is our executive editor for greater china, huge responsibilities in the Bloomberg News flow out of china. We need to frame on a wednesday into the new year, dow 28,000. Greg boutle joins us with bnp paribas. What do the derivatives say now about up, up . Is it a derivative melt up . Greg the most obvious thing to look at is the vix. Breaking down on the downside through that 12 level. We have not been here in over a year so there is a risk on field to the market. In terms of positioning, if you look at the short interests in terms of the vix, there is record highs. They haveis critical, not covered yet and a lot of people are betting for the turnaround that has never come. Greg we see a growing interest of people selling the vix, expecting the vix to remain at depressed levels. What happens to the market if we get a phase one deal . Greg a phase one deal is largely priced by the market. We have had a series of headlines from policymakers teasing a deal was likely on its way. Hike isember 15 tariffs not priced by the markets at all. The equity market is pricing a benign outcome, whether that is a phase one deal or the tariffs being pushed back to enable the discussions to continue. Inncine what is priced dollar . Greg the dollar has been resilient all year. U. S. Assets have performed well, so the markets are telling you they are not too concerned about the delivery of this phase one deal, and the expectations are that we get something before the end of the year. Alpha, talked about gamma, delta, and the odd greek letter nu, a volume dynamic. What does it mean we ate when we are down what does it mean when we are down on volume . Lowvolume have a environment, if equities start to accelerate we could get some outsized moves and there is still potential for decent moves into yearend. U. S. Is it focused most on largecap or do we get the smallcap to sustain . 2000 thessells russell 2000 has broken with a level it has seen this year. The 1600 level has broken and some of the worst performing stocks are starting to join the party. Tom francine . Francine if we focus on some of the news from the airline sector, lets take a look at Norwegian Air shares. They announced plans to cut flights to the u. S. From the share price is down some 1 in the trading session. Tom much more to talk about, the fourth wednesday of november, and there is a tradition, mrs. Trump assisting. The House Intelligence Committee got in on the discussion. This is bread and butter. I dont know where the other one is. 45 pound beast. That is a big one. They usually do not look that nice. He has been styled. Francine groomed. A groomed turkey. Tom this is bloomberg. Good morning. Bloomberg surveillance, good morning. Even though it is the wednesday before thanksgiving, we are trying to look forward to the year, and that means the american political system. Here is Kevin Cirilli. I thought John Bernstein did a good job of getting out to the conventions regardless of what happens. Bernstein,athan Bloomberg Opinion with a short but terse piece. This is John Bernstein on getting to milwaukee, Kevin Cirilli already planning brewers tickets next year. It is possible that no candidate will reach the majority before the Milwaukee Convention opens july 13. There is no mechanism for resolving a deadlocked nomination at the convention. Possibility of a descent into multiballot chaos could be real. The era of the clintons, i guess it is over. The era of obama, i guess it is over. Now we have multiple candidates. It could be an original convention. Kevin i respectfully disagree with jonathan bernstein, because i remember covering the democrats republicans in the last cycle, and ted cruz was going to come and pick delegates from trump. There is the iowa caucus. Has joenipiac poll biden with a respectable lead and it is a fourway lease race. I think now what you are seeing is could there be a delegate race . Yes. Is that likely to happen . No. Tom Michael Bloomberg with a 3 statistic in that paul, one of , oneirst in that poll of his first this is sticks. Statistics. Explain to our american and global audience why they do not just say enough, why do they stay in the race . Kevin there is so many people running for president , it is a marathon, not a sprint. Race havecs of this not significantly changed in the past six months. , theyhe biden perspective are going all in on super tuesday states, and the fight for control of the Democratic Party at the lower tier level between the likes of klobuchar, castro, harris, there are other roles besides the democratic president ial nominee that could go on. I dont think there is an incentive for any candidates to jump out simply because there is so much going out. Haslook at that poll, biden time. Tom what is the issue resonating with Democratic Party holders . Kevin how to beat President Trump, and then everything from Climate Change, gun control, medicare for all, and national security. From an electability standpoint, that is the number one issue. Francine when you see the strength of the economy and the weakness in the economy, does it give any insight into what President Trump wants to do with china to make sure he is ready for the 2020 election . Kevin President Trump is willing to have the debate on the economy every day of the week. If you look at the polls, he is running very strong, and in some cases beating democratic match ups. In terms of getting a deal, he wants to say he is running tough on china and tough against president xi jinping. I would gather at the president and his surrogates and the republican is fully prepared to draw a contrast with any democrat as it relates to going headtohead against china and president xi. Thank you so much for the update, our chief washington correspondent. Bellwether for the american economy, and the numbers are pretty good, but the view forward has some negative statistics on it as well. Stock is lighter by 3 excuse me, 1. 5 lighter on deere, on john deere, very clearly here, agriculture and turf Equipment Sales with a legitimate negative statistic. That will be of attention. This is bloomberg. You are watching bloomberg surveillance. Deutsche bank selling another chunk of unwanted assets to Goldman Sachs. Involvest sale security with the notional value of 51 billion tied to emergingmarket debt. The bank is exiting businesses where it has been unable to compete. Dell lowering its annual revenue forecast, component shortages from intel hurting prospects despite purchases. Dell faces following demand. Chairman,ital ceo and tom barrack under pressure to force step down. The firm holds about 2 of colonys shares. They have lost confidence in ck, who is distracted by at least two investigations. That is the Bloomberg Business flash. Francine the path to the december 12 election in the u. K. Continues today. In a couple of seconds, Nicola Sturgeon will unveil the manifesto for her party. We understand she will say Boris Johnson is dangerous and unfit for office. She will also demand that labour increase its nhs spending. If you look at the various possibilities if there is a Hung Parliament and who could form a coalition, it is fractious and you do not see anything that is a good fit. Also happening, the e. U. Parliament votes on the new leaders of the e. U. Commission, plenty of Economic Data to look out for. Core pce for the third quarter. The fed will release its u. S. Beige book. Greg boutle still with us. What what i policy mistake from the fed look like . Greg i think the market has come toward the fed being on pause this year. What could be difficult for markets, if we have a slowdown in terms of the macro data, and the fed waits, it remains on pause while the data gets worse . There is a chance the markets have to get worse before the fed reacts. Francine will the markets start believing what the fed says or continue testing the fed . Greg the markets always test the fed, so rather than watching the fed, watch the data. Some of the weaker manufacturing side of the economy that has lagged will start to catch up with the firmer service side of the economy, and the labor markets remain solid. There is a chance we could be solid through q4 but the markets are challenging. Francine thank you so much. It is a done deal in france. The European Parliament has elected their new president for the e. U. Commission and the lawmakers have confirmed the new executive arm. Path, we haveult confirmation. Tom live pictures from strasburg. Maria tadeo is live in strasburg. On john deere, i cannot say enough about the clarity from john may, there chief executive officer. Financial services results have come under pressure due to operating lease loss. We have a new European Commission president , ursula von der leyen. She has just been confirmed by European Parliament in strasburg, elected as president. About herextensively priorities and what she can and cannot do. Joining us from European Parliament is bloombergs maria tadeo. How will this commission differ from the old one . Maria you are right. Ursula von der leyen finally confirmed. She will take office in the first week of december, replacing jean Claude Juncker, who was so strategic and so many issues. You look at them i grayson crisis migration crisis, he was there. He was one of the top negotiators for brexit. He always spoke freely. Ursula von der leyen is softer, especially when she talks about brexit and continues to say she and the u. K. R should stay as an ally. , saying thes European Union needs to take a more assertive role on the global stage. The priorities are slightly different. Jean Claude Juncker had to deal with the financial crisis and she will not. Thewill have to deal with Environmental Crisis and technology. Tom will she have to deal with , therenchgerman tensions exiting mr. Merkel and mr. Macron who has held at a distance, how will that tension be handled . Maria it is a tricky balance for ursula von der leyen, because she got this job because of emmanuel macron. He first put forward her name and then she got a nod from angela merkel. She has worked with oracle for years merkel for years. We are seeing the tension between berlin and paris. Is still key to the European Union, according to ursula von der leyen, and the two will need to work together. Nothing will get done if paris and berlin do not agree. Today, a conversation theh ms. Bonder line new European Commission president. Talksa donald trump says on a china trade deal are in the final throes but insists unless it is a good one, he will hold up an agreement. Block, howstumbling to rollback tariffs. Designation for mexican drug cartels, mr. Trump would not say whether he was considering taking military action such as drone strikes. He says he has offered assistance but the offer was declined. An explosion and fire at a tpc Chemical Plant in texas around 1 00 at the beaumont factory in the port arthur area. At least three people are hurt. They make products for chemical and oil companies. In the foreigned currency market to prop up the real. The currency heading a record low and then in two surprise auctions, the central bank sold dollars. 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. Tom thank you so much. This is an important conversation and on a thanksgiving traveling across the nation on those roads in moline that caterpillar built. Not mince words about trade tensions. Ardt joins us. What i notice is not the usual trade war verbiage but the operating lease losses. It is having an effect. That may be largely in construction, but in the last cycle they lost on their operating leases. Values were overstated and they had to cut them. This is the second time it has is bigd and construction for deere. America problem for even with a record stock market, there has to be industrial confidence and industrial will to move forward. Karen companies are cautious and it is down a lot. Parker hunt hannah finn is down. Tom what do they do . Karen they may components that go to every end market. They track ism closely. Tom what do they say about the effect of the trade war on the will to move forward . Karen now you are seeing it on the capex side so it is happening in the long cycle. They are pushing projects out. It is confidence, a lack of confidence in going forward. North the market is still the strongest region but is not growing much. We will have a tough first half at least and maybe comps will help in the second half. Francine if the trade war gets better, if we have a phase one deal or something more, what is the lagging time of these investments . How long does it take to buy a tractor . Karen they buy them seasonally so they would be buying them in january, february, prespring planting. There is another cycle in fall and they dont buy anything in between. A lot of the soybean demand has gone to brazil. I dont think this will turn overnight, but there will be large return purchases to get the confidence back up. They did buy 45 of soybean imports, so the farmers are hurting. Francine is it across the board to fix farmer crops hurting more than others . Largestoybeans are the and when china put retaliatory tariffs on, what is the top of the list, soybeans. The two biggest profit overall in ag, soybeans and corn. Into ais dovetails cautious bnp paribas outlook. I just got an email from brandon , a farmer outside of memphis, what do you do on a nominal gdp . Greg what the market is looking for is the industrial side of the economy that has been weaker, to recover next year. The forecast is for almost 10 Earnings Growth from the s p next year, so the fact that we have had weak earnings is not so much cause for concern if you believe that we will see a trough or a rebound. We think we will see decent earnings downgrades come down next year unless the picture changes. , why do stocks go up when you are giving me gloom . Greg there is optimism around trade. We are in an easy liquidity environment and there are hopes we have seen the worst in terms of macro data. Q1. Is why we see risks for francine do you worry about the u. S. Consumer . Greg absolutely. When we look at the economy over the last year, it has been a two speed economy. Labor has been robust, manufacturing has been weak. If we see signs it is turning into broadbased weakness and the labor market starts to soften at the margin, that would be taken as a challenging thing for u. S. Equities and growth in general. Forwardt will we see from agriculture and Industrial America . Karen the next couple of quarters, you will get inservative expectations january. Third quarter, the margins were betterthanexpected. The Companies Got in front of it and lowered costs dramatically, but volumes keep declining so you will have a tough Fourth Quarter and first quarter, and rough expectations running into the quarter. Tom it is extraordinary to hear the gloom, light gloom. Industrials. I am in the triple leveraged allcash fund. That is working out as well. There is much more coming up. In the United Kingdom, and edinburgh, quite a statement on austerity and the idea that there will not be a brexit for scotland, Nicola Sturgeon speaking. This is bloomberg. You are watching bloomberg surveillance. Conocophillips wants to see shares of a unit of venezuelas company because they have made payments on a multibilliondollar settlement. Awardedillips has been 10 billion for assets seized 10 years ago. A virtualehind reality videogame. Terms were not disclosed. They will join facebooks oculus gaming unit. Facebook has been trying to expand. Leaving,cult leader is the departure described as mutual. Soulcycle is facing headwinds. Soulcycle was also hit by a boycott last summer because the chairman of the Parent Company hosted a fundraiser for President Trump. That is your Bloomberg Business flash. Tom out with the bicycle cycle thing before thanksgiving, how welltimed . How about a single best chart. Greg boutle with us. A broader view of american exceptionalism, capitalism, this is the bits and study off the dow. Dow. Botson study off the there is that idea of remain. Where do i find the confidence to remain invested . Greg my view is im not sure you should find the confidence to remain. Tom 100 cash . Greg think about being defensive and the growing risks into q1, whether it is investing or speculating. Andations are elevated fundamentals are challenging. The vix is back below 12. It feels like a euphoric bull market and whether that will last, there are a number of challenges ahead. Tom where are the greek numbers of rotation . Are we rotating apple to amazon, amazon to apple . Greg one thing we have seen is rotation driven by bond yields. Markets seem to rally when yields go up or down. That drives the rotation between the more bond sensitive sectors. Tom you mentioned the midcap and smallcap have lagged. Is this the year for them to do better . Greg potentially, if there is a catch up, it is more likely it will be driven by the Growth Stocks and the indices that have outperformed such as the nasdaq, potentially underperforming in q1, rather than a catch up on. Alue francine greg boutle. Lets go to strasburg for a conversation on the European Commission, joining maria tadeo. A woman who has been lauded as watchdog,ch industry margrethe vestager. Maria we are joined by commissioner the commissioner. The president from that europe needs to be more assertive in technology. What does that mean . Promote what we have going for ourselves, because you find a lot of impressive tech. You find engineers and an impressive start up environment. The willingness to balance all of that to the downside. We hear from u. S. Companies that you are so focused on taxation because there has not been real innovation in europe. Is that fair . Ms. Vestager that is not fair. Many businesses who pay their taxes in europe, every company should contribute where they do excellent business. The bottom line in europe, there is very good business. Maria is that something you think after 2020, there is no international agreement, for the e. U. To go it alone . Ms. Vestager of course it would. We are strong believers in a global agreement and i am proud to see the progress by the oecd. That solution cannot be met, when you look at the businesses who pay their taxes, it would only be fair we pick it up if a Global Solution is not possible. Maria based on what you hear from the oecd, there is momentum to get this down. Ms. Vestager normally i would not be optimistic when it comes to taxation, but there is a momentum, a deeper understanding that we have to update corporate taxation to digital times. Also, the Global Dialogue is changing. Maria we heard today from the president that data is key for the commission, data is power but can be weaponized. What measures to protect consumer data in europe, and how will you deal with that . Ms. Vestager we will make a comprehensive strategy because for ai, data is the main entrance. Commodity,e than a it defines us in digital ages. We have taken a number of steps in the Citizens Rights in the gdpr. We need a comprehensive strategy for data to be the driving force of the european economy. Maria what timeline are you looking at . Ms. Vestager it has to be fast, because it ties in very well with what we are planning to do on artificial intelligence. The two things will have to come together, but for people to see the full scope of what data can do, we have to make a specific strategy. Maria mergers and acquisitions was a big theme for the old commission and you specifically disagreed. That led to criticism with the new commissioner and we will see changes in the rules making it easier to create that european champion. Maria it is quite easy already. We have giants that come here with a mass majority. They are approved because we see no competition confirmed. We do not question the business logic. It is so rare that this happens, the examples we are discussing have not been the prime examples. We want to make sure that when it comes to data, you cannot just acquire, access the data that you would otherwise not be able to have. Maria i have to ask about american tech. There has been a number of probes and big fines. Are there is there anything you are looking at specifically . Ms. Vestager everyone who plays by the book has nothing to fear. We have an investigation into amazons use of data. We are asking a number of questions to apple and facebook right now. Maria what questions are those exactly . Ms. Vestager it is a lot of questions, because we try to get the full picture. I dont think you want to waste your time by me lining up all the questions. Maria thank you, commissioner, always good to see you. That is the commissioner who is back for the ursula von der leyen commission. She wants to focus on digital tax and data protection, something the europeans are increasingly concerned about. Francine maria tadeo on the ground and strasburg. Later today, she will be in conversation with the incoming president ursula von der leyen. Valdez dombrosky has, the e. U. Dombrovskis, the e. U. Vice president. A lot of Economic Data from the u. S. Today. Starting at 8 30, gdp, jobless claims, durable goods, and personal spending. After that, the fed will release its beige book. When you look at the data coming out today, will it give us a how strongtion of the u. S. Consumer is . Michael business spending too. For the Federal Reserve and investors, it is the u. S. Economy snapshot in one day. Report,see not the gdp that is a revision, but Consumer Spending for october, we will see if it declines. We have seen a slowdown going into the Holiday Season and not is not what people want to see. We have had weak business spending for quite some time and we will see if that continues. Francine you have caught up with a lot of fed president s. Is it a theme that things have picked up but there are Downside Risks . Michael stabilized is the word they would use, the economy is running at 2 or possibly a little bit slower. They do not see much movement. Tradeare Downside Risks, the biggest one, and the global slowdown, what happens with brexit . What happens with the European Countries over the next few months . What will happen in the u. S. . Francine lower rates have been here for so long, how will the fed navigate this . Michael they want to sit and watch because they have changed the way they talk about it. They would like to see inflation go higher while avoiding a big spike. Monday, jay powell said they expect inflation to move decisively to their target, itches is kind of an adjective using not used before, an adjective he has not used before. Francine what is the biggest headache, the trade war or attacks on independence . Michael the trade war. Small,irect effects are the direct effects are large. They do not know what the rules will be. The attacks on the fed, that is nothing new, happens all the time. If the president tried to fire jay powell, that would create more of a crisis, but some tweets will not affect him that much. Francine Michael Mckee will be following everything the fed says and we will be following that data. We want to take a moment to remember one of our beloved colleagues. Adrian mitchell Adriana Mitchell died after a battle with cancer. Bloomberg, she was a wellknown voice on market watch, sirius xm, and Associated Press radio. She was a consummate broadcast writer and had a unique talent for taking complex business stories and writing them in a conversational style. Her friends at bloomberg and radio stations around the world will all miss her. She was 59 years old. Vincent final david final throes of a china deal. The december deadline for new tariffs looming. If at first you cant succeed, europe finally gets a new commission after weeks of negotiation with women setting the floor and climate right off the agenda. Morningdata out this ahead of thanksgiving tells us about gdp, inflation, consumption, and jobless claims. That is all less than 30 minutes from right now. Elcome to bloomberg daybreak 27. His wednesday, november im david westin. Alix steel is off today. Sb futures are up. The dow is up, the nasdaq is up, right across the board. Euro versus dollar down slightly as we get a new commission. The u. S. 10 year is unchanged after several days of buying