a strong asia filtering through the european stoxx 600. markets putting fears to one side of the trade tension will escalate but we still have time for them to deescalate. pound all has to do with salzburg and brexit. you can see the dollar index a little bit down. it's important on some days like today to look at dollar. danske bank shares down as the bank deals with a money-laundering scandal. the chief executive also bows down. dansk a down by 5%. coming up, beth comstock joins us at 11:30 a.m. u.k. time. let's get first to a bloomberg first word news. the u.s. china trade war deepened as beijing announced retaliatory tariffs on $60 billion of american goods. that came in response to donald trump levying 10% tariffs on about $200 billion in chinese goods starting next week an increase that rate in january to refuses toing concede. in retaliation, beijing announced plans to hit u.s. good hikes to 10% tariffs. bank to thee piggy world. we have been ripped off by china, we have been ripped off by the european union. we have been ripped off by everybody. taylor: south korea said that the president will meet donald trump on monday after they negotiated a north korean missile state that site being visited by inspectors and other steps are denuclearization. moon said the complete denuclearization of the peninsula is now, quote, not far. the u.k. in the european union have signaled their readiness to work to break the deadlock in brexit talks as britain's prime minister prepares for a crucial summit. may needs to persuade eu leaders to back her plans. michele barnier -- asked for a hard border between the u.k. and ireland. may market is unacceptable because it cap northern ireland and the eu customs to -- customs system. a public said committee hearing andet for monday and's -- kavanaugh's accuser says it should be put on hold until the fbi investigates the accusations. the republican chair says the imitation still stands. on air and at tictoc on twitter powered by 20 70 journalists and analysts in more than 120 countries, i'm taylor. this is bloomberg. francine: peggy so much. we are getting some breaking news from danske bank. -- we heard about a half an hour ago, the chief executive will step down under allegations that the bank is at the center of a major money-laundering scheme with as much as $234 tinyon flowing through a unit in estonia. we are expecting a press conference over there in copenhagen shortly. we are following it very closely. user, you a bloomberg can just type l.a. the ego -- type l.a. the go. .e live chinaours after retaliated against the latest increase in tariffs, the offshore yuan is extended gains after beijing says they have no intention to use the currency as a weapon. joining us now is bloomberg's china correspondent, tom mackenzie. did the premier offer any concessions? he had an opportunity to do that at this speech in front of the world economic forum. it's a city just south of beijing and in front of a business audience and he gave a nod to some of the issues, pay lip service, including intellectual property violations that he said will be crackdown upon and also producing are creating a level playing field for foreign businesses. but really the key takeaway line was his reiteration that the yuan would not be weaponize in this trade war. we saw the currency strengthen on the back of those comments. steps he saidsome would be taken to celebrate support for businesses and sectors here impacted by the trade war including speeding up tax cuts and cutting some fees as well. he said monetary policy would remain prudent but there would not be any major stimulus. support measures but no major stimulus. we did not hear of any concrete opening upl around of any sectors here. longer-term, with the two economies get along? this is something businesses may have to wrestle with. if you listen to the likes of eurasia group that say some in the trump missed ration who are administration who are intent on decoupling these two economies. it will have a significant impact on supply chains and in this as anght see incentive to make american companies remove their supply chains and build them in allied countries. you're going to get some nations in the southeast asian region who could benefit, vietnam, thailand. longer-term. issue here in beijing, we have been hearing from officials in the government saying they're coming around to the idea that this will be a long term scenario. and indeed they are starting to view this as a way for the u.s. to try to contain china on a number of levels, not just economic but technological and military. francine: thank you very much. tom mackenzie, our china correspondent in beijing. join us now for the hour, paul donahue. also covering the chinese market, hao hong. thank you both for joining us. see the fact that china is cutting their u.s. treasury holdings, is this only a trade were something else? paul: we have to be very careful about this. this is a leader of an extremely dubious quality. i don't actually believe china is cutting its treasury holdings yet. i think it is changing how it is managing the treasury holdings. reported,e numbers that appears is domestic thatngs but i do think whilst china is very unlikely to go down the nuclear option of selling treasuries, they may choose not to show up at an auction or two or reinvest payments. is the case, there is a reminder that the balance of payments is a two-way flow. in the current account data, you have the balance of payments in the capital flow on the other side of the equation. if the americans are getting very hostile, there is the reciprocal side of maybe we don't by so many of your treasuries. francine: do you agree with paul? they would not cut treasuries just to make a point to a trade war? the chinese government holding on the u.s. treasury has been done through some other less obvious channels. holdingsant to reduce they can do it through those channels. on the other hand, we have to consider the possibility that the chinese government is doing this to send a warning to the negotiation table. so far during this negotiation process, the chinese government is getting a lower hand. there is some necessity to tell the other side of the negotiation table with the chinese government can do and what they have up their sleeves. that may bring a chart that looks at the chinese ownership of treasuries. we have china and belgium. that's one of the vehicles. it's one of my favorite charts. paul says take with a inch of salt. we have a viewer question and we want to thank the viewer. please continue sending these questions and. this person asks, what are the likelihood of high-level talks between the u.s. and china? additionalare the two or 57 billion u.s. dollars of tariffs threatening to be levied now that china has retaliated? does this escalate? hao: i think the situation is getting worse as we progress. with this new tariff on the table and there was a condition of the end of its saying if china retaliates, which i'm pretty sure that china will do that, donald trump is going to put on even more tariffs. at this point in time, the biggest question for the market looking for an answer is what is besides two countries punching each other. at this point in time it is getting worse. i'm not looking for any improvement. francine: paul what is your take? paul: i think the likelihood of talks is been reduced. the attitude of the u.s. administration has led to a situation where the chinese are saying no, were not going to talk, there's no point. i think the prospect of additional taxes is actually quite high. i think there is a recognition within the administration that when you do a consumer tax like a tariff, it is the u.s. consumer that suffers. the midterm after elections, 25% after christmas, that's not a coincidence. the chinese are paying the tax. every cent is paid by americans. that suggests a confusion within the administration that the president is more willing to put in place taxes on effectively everything china sells to the nonstate. francine: hao, what is your take on the chinese economy? is there a danger that it slowing down to a point where they have to focus all of the efforts to spirit domestically? -- to spur it domestically? hao: china is in the middle of an economic slowdown. it has shifted focus monetarily and physically to a stimulus cents. a couple of months ago, we saw the chinese central bank increasing the size of the corporation to increase liquidity in the market. time, the premier has been talking about standing for china. we are seeing some stimulus packages coming out. we are just not sure what kind of size they can do relative to what we have been talking about. 2008, when they did the stimulus package, the chinese economy was substantially smaller. now you actually need to spend potentially more to stimulate it. government iscal heavily invested in after 10 years of expansion, the leverage in the chinese economy is very high. francine: thank you so much. .ao hong paul donovan stays with us. the danske bank chief executive is out and the bank reveals details of its part in a money-laundering scandal. live in copenhagen next. this is bloomberg. ♪ francine: matt: -- francine: economics, finance politics. bloomberg. the chief executive of danske bank is stepping down under allegations that they are centered in a major money-laundering schedule involving billions of dollars of illicit funds over several years. joining us now from copenhagen is our reporter. in paris, our head of financial negotiations. -- investigations. what have we learned today? tom: the band doesn't -- annmarie: the bank doesn't even have a number on the 30 money. they do have a number on the money coming through. they don't know the exact amount of the dirty money. did they know what they're looking for? asy say is minute -- as much $9 billion. we know the ceo is stepping down. he will resign but stay on until they find a replacement. their outlook has been downgraded. behind me is with the ceo and chairman will be meeting along with other members of the board and the press. they were answer some questions. francine: is this going to be the final word for danske bank? alan: there are several criminal probes on the way. denmark has a criminal investigation and law enforcement it will continue to do its own investigation. a criminal investigation, france as a criminal investigation which dansk a bank is a related party. and the u.s. has been looking closely at this as well. marcia billingsley, u.s. treasury official, said this to a newspaper several weeks ago. francine: how does danske bank it back on its feet? first it's going to take several months. was saying, there are these criminal investigations that can drag on. the main obstacle is what kind of fine with a be paying? we have this management reshuffle but that doesn't mean the issue is put to bed. they will be paying some sort of fine and it could be close to what ing paid for their money laundering. many analysts are saying they could pay somewhere between $800 million and $900 million. damage onational denmark's business and banking industry altogether. s&p said just last week with a look of the sovereign rating for the country, they will take this into account. aaa and theyir will take this into account and many are shocked because denmark has in terms of across the ande, low corruption financial transparency. this is tarnishing not just the bank but financial reputation of a country as a whole. overall, regulation of money-laundering was very strong but will this lead to more or different regulation? alan: it's hard to say at this point. there have been a lot of calls for more and different anti-money-laundering regulation in europe? the ecb has called for a regional body to do it itself. it and does not want to do it itself. you might be with to come up with agreement amongst the various eu countries to have a coordinated anti-money-laundering framework or investigations but having a single body that oversees it seems difficult. yourave brexit a nikkei, populist rising in italy and hungary and poland. it seems quite a long road. francine: thank you so much for our bloomberg team. andriy and alan. annmarie and alan. blackrock has switched to a long position in italian debt based on optimism for the nation's politics but as the optimism reasonable? paul donovan is still with us. finance ministers said we are not going to break the rules. it was shorter details. even the populist are making noise. when we you become -- comfortable that nothing will derail this? paul: derails a strong negative scenario. how much of a problem is there? the italians are going to be pushing the limits on fiscal policy. that's fairly clear but not of extremes. when theal calculation two parties came together was 6% of gdp. it's not going to be 6% of gdp fiscal deficit. thatalso worth remembering the entire economy is an extraordinarily wealthy country. italy is far wealthier than germany us. all andth is grandmothers savings accounts and things like that. italian government does have a will of investment to can rely upon to support its bond market and deal with some of the potential downside of a fiscally profligate government coming in. what is that mean francine: -- francine: does that mean -- francine: what does that mean for bonds coming in? international investors are likely to overreact because a politically driven situation. you get some bad news in every international investor is during of their hands in horror and good news means they are reacting positively. countrys of any understand the politics less than the domestic investors do. the italians are being far more pragmatic and far less volatile. when we are looking at the bond market, we are still in a situation where debt costs are falling. as a bond matures, the italian government is funding it at a far lower interest cost them they were paying on a month ago because the bond would have been issued 10 years back. they are still in a falling that cost environment. they are going to be moving some fiscal stimulus in an election year. that i think is understandable. i'm inclined to say don't panic to a little bit cautious when it comes to italy at the moment. they you as a whole or just for italy? paul: it's more specific to italy. i tell clients whenever you say eurozone you need to add except italy in every sentence. the economy is doing fine except for italy, bank lending is fine except for italy. francine: german carmakers, he could hit them hard. paul: but the german economy is not just about making bmw's. there is more to germany than that. it's an important chunk but it's not the be-all and end-all. cars funneled to the united states are not the be-all and end-all. we are not at that stage. we should remember that europe is not a trade war with anybody at the moment. dispute.even a trade we are not in that situation. could the news from italy infects fact the eurozone hours of the exception of italy? itlor: it depends -- paul: depends on where you are. the further away from the eurozone you are, you see it through the bloomberg headline. if the top story is italy has another problem, then that will affect international funds. what we have seen is that europeans are not overreacting. francine: thank you very much. paul donovan states this for the hour. eu leaders are gathering to break the brexit deadlocks. we will see whether mr. barnier connection put the differences aside with theresa may and come to a decision. this is bloomberg. ♪ comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers. 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"all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. francine: economics, finance, politics. this is "bloomberg surveillance." i'm francine lacqua here in london. marvel films will have another -- spring next year with captain marvel coming out next year with oscar-winner brie first female headliner. to face a set criminal probe. jpmorgan cuts u.s. stocks. s u.s.cuts it' treasury -- it's u.s. treasury holds. i am seeing a little bit of an impact on pound. 0.7.month on month, inflation is accelerating somewhat.i'm also looking at house prices index. you're on your, the month of july. it is a little backward looking. it is frequent 1% instead of the 2.7% we were expecting. let's get a little bit of the impact. we will get to paul donovan in just a moment. just a quick reaction. do we have an inflation problem in the k? -- u.k.? to hike of england has rates. paul: i don't think we have an inflation problem, particularly. inflation is somewhat higher. this is reflecting the strength of demand in the u.k. economy. dding.k. consumer is plo along perfectly well at the moment. retail sales are doing fairly well compared to most of europe and not the sugar high we have the -- in the u.s. the u.k. consumer is still prepared to go out and spend. it is not a runaway inflation number, when you see it light up like this, there is usually some work in their. re. -- there. francine: we will get back to that and brexit. let's get to bloomberg first word news with taylor riggs in new york city. taylor: an internal report shows 200 billion euros flow through its unit at the center of a money-laundering scandal. toy have failed to live up its responsibility in the case of possible money-laundering in estonia. china will not devalue its currency amid the trade fight with the u.s. that is the message from the premier just hours after his country retaliated against the latest increase in terrorist -- tariffs by the u.s. administration. beijing announced retaliatory on $60 billion of american goods was came in response to donald trump ordering his administration to billioniffs on $200 starting next week and to increase the rate in january 2 25% if beijing refuses to offer concessions. beijing plans to hit u.s. goods with 5% to 10% tariffs. >> where the piggy bank of the world. we have been ripped off by china and the european union. we have been ripped off by everybody. holdings of u.s. treasury fell. beijing's ownership of american fell to $1.7 trillion. is the largest foreign investor in treasuries after china increased its holdings, as did saudi arabia and france. south korea has said that president moon jae-in will meet donald trump on monday. that comes after north korea agrees to dismantle a cheap missile test site under the watch of international inspectors and take steps toward it denuclearization. the meeting -- announcement came after the meeting of moon jae-in and kim jong-un in pyeongchang. in the u.s., lawyers for the woman who accused brett kavanaugh of sexually assaulting set a public set hearing on monday should be put on hold until the fbi investigates the allegation. the senate judiciary chairman responded that there is no need and thebi investigation invitation for her to testify still stands. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and anaylsts in more than 120 countries. riggs.lor this is bloomberg. francine: thank you so much. eu leaders are meeting today ahead of a potential special brexit summit in november. talks signaled yesterday the talk could be announced in the gathering. the crown has resumed more than 3% against the dollar last month as sentiment has been improving. our reporter is on the ground in salzburg with the latest. what exactly can we expect from the meeting? this is an informal summit. the hope and expectation is that we get a roadmap to a deal today. for that, theresa may has a working dinner. we have the context of her speech. she is also going to stress she cannot accept anything that comprises the sovereignty of the u.k.. clearly, that is a reference to the irish border. that is going to be a problem from the european perspective because they have been to clear there has to be a backstop in the brexit deal, or there is no deal. also, we are waiting for confirmation there is going to be a special brexit summit in november. the expectation is that we need more time to work in the technical deals, but also that theresa may will make no deal until the end of the conference at the end of the month. maria, thank you so much. kept up-to-date with any new news from salzburg. paul, is this really crunch time? is a moment lot, it of truth, but what we have a clear picture today on whether we will have an ok deal with the eu? this is europe, we are never going to get a clear picture until the last minute, and probably after because europe is always pushing things until the last moment. i think the announcement of the summit is widely expected in the markets. the november summit is clear. were we not to go there, there would be a concern. with the comments we have had from the british government, from european leaders and perhaps also from barnier recently, there would be an expectation that a deal is down in november. deal,er, this isn't the this is the temporary transition deal that we do while we are waiting several years for the deal to be done. francine: what happens to the u.k. economy, how much of an impact will it be? think the u.k. economy is showing a fairly reasonable front. it is reflecting the fact that there is strong employment. there is a fairly decent level of consumer demand. one of the things the u.k. has been doing is coming up with new ways of looking at the economy, better ways of trying to measure the economy. we are finding that the u.k. economy is doing better than rigorously supposed. the savings rate of households is higher. it is certainly to the investment spending has been slowing down, or changed its structure. long-term commitments are not being made on the investments tied. that is a moderate concern. investment is not the be-all and end-all. it is something being affected by this. if you have got a clear path to an end game, i think companies can invest a little more. francine: will we have an idea today of what the end game is? paul: no, i think that is wishful thinking. i'm not even sure in november we will have a clear idea of what the anend. is. by alls to be ratified of the 27 members of the european union. there are still hurdles to go even after november. an obscure politician and a small country can come out and say i disagree, and they get a problem. there was still be uncertainty and volatility. the journey we are traveling along is broadly in the right direction. this is just another step in that general direction. a signalwe don't get that everything is going to blow pricinghink sterling is a lot of the good news. i don't think there is much news for eurosterling over the near-term. if the dollar pulled back a little bit over the course of the next six months over the euro, cable would move, but they'll be in the context of a fairly stable euro-dollar in my view. as a broad forecast, obviously, there is noise. if boris johnson speaks, sterling goes down. that is noise around a trend of stability. francine: the barometer, boris johnson. thank you so much. up next, tesla versus the doj. the carmaker is set to face a criminal probe. we will discuss that next. this is bloomberg. ♪ francine: this is "bloomberg surveillance." tesla has more problems than just the chief executive and living up to investors's bullish production targets. shares fell a by as much as 6.5 percent yesterday as it was set to face a criminal probe. the investigation is running alongside a previously reported signal by shareholders. what do we know so far? chris: bloomberg sources have , federale is prosecutors are looking at investigating musk, and the company did confirm they have had contact with the u.s. justice department since musk tweeted about going private a month ago. we know there is smoke there. it is early days and these kinds of investigations can go on for months. it will take a bit of time before we know whether or not the authorities will bring charges. francine: chris, where does it leave investors right now? chris: it provides more uncertainty for tesla. there at a critical stage of their business. we know the model three is ramping up. they seem to be getting the production issues and shape, but musk is now in what he calls a delivery hell. for tesla to really turn the corner and prove its business model has sustaining power, it has to turn these deliveries into profit and show it can generate cash. in the meantime, you have german automakers pertain d -- breathing down their neck with a whole range of electric models. francine: thank you so much. chris joins us from berlin. let's keep the conversation on technology. donovan.h us as paul last time you were on, we also talked about tesla and productivity and how these companies really take off, it would change the way the economy is composed. across, whateader we are seeing from tesla but also the investment? paul: the problem we have got here is the microeconomic data doesn't really capture a lot of the technological changes going on. we talk about this with the u.k.. the u.k. is an economy which has been transformed by technology more than many others. the u.k. spends more money online as a share of total retail sales than anyone else in the world. it is not really being properly captured in the data. when you look at productivity, it is the old-fashioned method of measuring the economy, divided by the number of people in work. we know how many people are in work. in the economyn is not a very uncertain concept. this is the sort of challenge we are running into, into how we manage all of this. we really need better quality data. the problem is, most countries are spending less money on collecting data, not more, because who wants to talk about boring statistics? that is the problem. francine: you're talking about data, but will a con -- fundamentally change the actual economy in 10 years? paul: absolutely. we're already seeing that. the movement towards celfin -- self-employment is a pretty radical change in the economy. we have seen that here in the numberere you have the of people per square meter going up and up year after year. real estate agents know it can't last. we are being more efficient in how we use the assets that we already have. in an economic sense and an environmental sense is very good. it doesn't really show up in the data and creates problems for how we think about how the economy works. francine: thank you so much. paul stays with us. up next, behind the curve. you pay investors are lagging most european peers when it comes to sustainable investing. are they missing out? we will discuss that report with paul donovan. this is bloomberg. ♪ francine: "bloomberg surveillance." let's get straight to the bloomberg business flash in new york city. here is taylor riggs. bank's ceo is stepping down. at the center of a money-laundering scandal. he said it is clear that danske bank has failed to live up to its responsibility in the case of possible money-laundering in estonia. the ceo was reported to run 2014rk's biggest bank in will continue in his job until a replacement is appointed. bloomberg has learned that the deal is split between a 1.5 billion euro portfolio of nonperforming mortgages and eight 2 billion euro of real estate owned properties as residents -- have failed to sell at auction. qualcomm and apple, embroiled in a global fight got mixed messages from a german court that is hearing one of many lawsuits between the two companies. yesterday, it providing judge said qualcomm has not convinced the jury of any apple infringement. with exclusive interview bloomberg, qualcomm's ceo says he sees the chance of a settlement. >> we have a dispute over the price of ip. we think that is moving out into a period of time where our strategy is unfolding and the environment is such that i think you are in a position where a deal can get done. taylor: you can see that exclusive interview at 2:30 a.m. u.k. time next wednesday. that is your bloomberg business flash. francine: thank you so much. sustainability, when it comes to everything fashion is becoming a primary concern for business. that just a shows bit of heightened worth investors have a sustainable aspect to their portfolio. in the u.s., that number is even lower at 12%. more than half of chinese and brazilian investors allocated to these asset classes. in the u.k., investors have expressed concern about global returns and find a lack of understanding in the sectors despite a growing body of that factors can result in outperforming benchmarks. let's discuss this with paul donovan from ubs wealth management. this is another interesting report. people invest in emerging markets because they don't see the impact of non-sustainable investing? paul: in the u.k. and u.s., fewer people invest. when they do invest, the invest a lot more than money in sustainable investments. but i think has happened is that in the u k and u.s., people are harder to convince, but once they are convinced, they are really convinced by the whole process. i think one of the obstacles is this understanding, the jargon. one of the problems we have with sustainable investing, because it is about the global environment, that is a large and complex issue. a very complex jargon has blown up around this. it can be very offputting and difficult to penetrate your way through to find out, is this really having an impact, and what sort of an impact is it going to have? i think that is one of the challenges. talk to: how do you people about this? paul: the u.s. also has low -- if you look at summer like china that has higher impact of sustainable investing, somewhere like china, the negative consequences of massive health. you have very direct pressures there. those are less pressing in the u.k. or to some extent, the u.s. i think what needs to happen is that there needs to be clearer communication. we need to be better at making the case because the returns are as good or better. most people understand that the returns are at least as good, but they don't understand how does this have an impact and that is where we need the education. i wrote a couple of books. we had the rule, one jargon word per chapter because we can never agree if it was an environmental jargon, that is the principle we need. get rid of the jargon and talk about it in ways people understand. francine: if i am to ask you how do i construct a portfolio that is sustainable, good go for industry orpik company? the traditional approach has been exclusion. we don't think that is necessarily the right approach. with think you should be taking an inclusive approach. i will start with ground zero and then we add in companies which pass over certain thresholds, which meet the governance and environmental sustainability that we need to see because those are the companies that are going to succeed. francine: paul, thank you so much. skethe meantime, dan bank chief executive will step down amid money-laundering. we will discuss that next. ♪ this isn't just any moving day. this is moving day with the best in-home wifi experience and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows. this is staying connected with xfinity to make moving... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. danske's dirty money scandal. shares tumble. we are live in copenhagen. beijing opposes new tariffs on american goods as the trade war grows. deal.sit to a eu leaders meet in salzburg to map out a brexit deal. we are live from the summit. good morning, everyone. this is "bloomberg surveillance." i'm francine lacqua in london, tom keene in new york. once again, we look at china and how much they hold onto that. i'm also very focused on brexit and whether today in salzburg, michel barnier will sit down with theresa may. almost on the edge of new territory. danskn skipping story -- e bank a story is extraordinary. it almost borders on shakespearean theater. francine: it is something quite significant. the chief executive stepping down amid allegations his bank is at the center of a major european money-laundering as $240with as much billion flowing through. get straight to the bloomberg first word news in new york city.here is taylor riggs . president trump has praised north korea's leader for agreeing to further steps to giving up nuclear weapons. kim and south korean president moon jae-in discussed their summit at a press conference. meanwhile, moon will meet with president trump on monday. china will not devalue its currency to make its exports cheaper in the midst of a trade fight with the u.s. the premier said that one way devaluation would do more harm than good to china's economy. he spoke hours after china retaliated against the latest increase in tariffs by the trump administration. both sides have agreed to impose new tariffs starting next week. the u.s. and canada will be waiting for each other to blink when nafta talks resume in washington today. robert lighthizer and canada's foreign minister will hold their first in person session in eight days. they are at odds over several key issues including dairy products and how to resolve disputes. the u.k. and european union are both signaling they want a break in the deadlock in brexit talks. eu's chief negotiator has repeated his offer to make concessions for aborting a hard quarter between the u.k. and ireland. theresa may will try to persuade eu leaders to back her plans for leaving the block. as we have been mentioning, one of europe's largest money-laundering scandals has cost the head of danske bank his job. he says that even though he lived up his legal obligations, he resigned. as much as $234 billion flowed unit,h their tiny estonia almost nine times estonia's gdp. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and anaylsts in more than 120 countries. i'm taylor riggs. this is bloomberg. we are just getting breaking news out of qatar. ofing the chief executive the wealth fund. what we know about him is that he was head of risk management and the office director of the chief executive of the latest qatar investment authority. i wonder that will actually change direction in what the q ia want to invest in. it took a lot of people by surprise that the chief executive stepped down and now we have the new person in charge. tom: a lot of minority investments worldwide out of these wealth funds as well. as you mentioned, yields higher. that has my attention. the euro back above 117. the vix 12.75. the dow grinding higher. into the yields which are flied out extraordinary. 3.21% in the 30 year bond. indian rupee, almost getting out to a 73 over the last 30 hours. francine: something we definitely need to keep an eye on. european shares taking their cues from morale in asia. the u.s. and china have now time to iron out differences in the wake of the latest tariffs. china said it won't devalue its currency. the story of the day here, the chief executive has said he will step down amid allegations his bank was at the center of a major european money-laundering scandal with as billion flowing through a tiny estonia unit. what is interesting in my chart is that if you look at the balance sheet, it really outpaces the danish economy. not only important news for the banking system, but also denmark. sworn it won't weaponize its currency as the trade war between the worlds to largest economy deepens. the local joined by head of fx strategy. we wake up to the news that china has cut down on the amount of treasuries it holds. data that suggests that in the past, it is not necessarily a trade war maneuver. elsa: we know that china has for a long out pairing of time. the bulk of what they hold is in treasuries. there was speculation they could sell a lot of treasuries to the u.s. francine: do you expect this to escalate? steve: i agree this has got nothing to do with it. there's no limit to the capacity of american bonds. the fact that china is not doing any buying is not going to affect the price at all. it is certainly a slap. i would say it is more of a figurative thing. even if the chinese say it will have more a figurative than it is real. tom: why is this trade war different? the first time america has faced arrival bigger than it is, also arrival that has grown as donald trump rightly complains by the relocation of american manufacturing and the acquisition of american technology to build industrial bridge that china now has. it is monica transition from the dominance of the u.k. to the dominance of the united states than anything we are seeing in the postwar period. historical the perspective, it is actually the economic dynamics involved. what is the trilemma china faces? is it a worry about flows, massive depreciation or a shift to a revaluation of stronger anonymity? what is the dynamic you are watching? elsa: i think you hit the nail on the head with that comment. we saw fears that china would use the renminbi as its primary tool. i think they have a fun balancing act because we saw what happens when a feel the situation is getting out of control and capital outflows multiply. the comments overnight suggest that fiscal policy is a much more logical lever for the short run. that is where the market is taking its comfort from, the fact that china is going to upset some of the impact with the fiscal side. francine: where do you see renminbi going from here? elsa: we still have the same target. i think i mentioned last time, we had a target of 6842018. we are pretty much there now and we have been looking for some consolidation around these levels for quite some time. traders are looking to play it from the short side. that is the trade we like for now. francine: do you see this escalating? will it escalate even after the midterm elections? steve: yes. it is probably the politics of donald trump. whether it makes sense or not, he wants to be the center of attention, and it will continue escalating for that reason alone. it is also a seminal shift in global power. we now have a new, dominant global economic power, and that is china. america is responding just about as pleasantly as the u.k. did when going through the same experience. elsa and steve both staying with us. this is bloomberg. ♪ taylor: this is "bloomberg surveillance." let's get the bloomberg business flash. tesla is being investigated on fronts. bloomberg has learned that the carmaker faces a justice department criminal probe over public statements made by the company and ceo, elon musk. securities and regulators are already running a sizzle inquiry. the probe was opened after musk said it may take tesla private. revitalizelans to and oil industry that has fallen into ruin while turning away from cash rich customers like the u.s. a $5resident plans to use billion loan from china to double oil production that has fallen to a seven-year, seven decade low. venezuela has the world's largest oil preserve and is now pumping about half the crude it did in 2005. the world's richest man does not like early-morning meetings. tozon ceo, jeff bezos spoke david rubenstein for the latest episode of the david rubenstein show, peer-to-peer conversations. >> you don't like meetings before 10 a.m.? >> no. i like to putter in the morning. i like to read the newspaper, have coffee, breakfast with my kids before they go to school. i have my puttering time that is very important to me. that is why i set my first meeting for 10:00 i like to do my high iq 10:00.s at by 5:00 p.m., i can't think about that today. let's try this again tomorrow at 10 a.m. all of you can watch that interview tonight on the david rubenstein show on bloomberg tv. that is your bloomberg business flash. much.ne: thank you so eu leaders are meeting today in salzburg ahead of a potential brexit summit in november. the meeting could be announced during the gathering. the u.k. international trade secretary says exit naysayers have been proven wrong. we have added 600,000 jobs to our economy. foreignr, we have more direct investment projects land in the u.k. than any year in our history. i understand the nervousness around it, i just think we need to be rationally balanced about the armageddon predictions that came with the referendum results, that is not materialized.the opposite has happened . maria was on the ground in salzburg with the latest. what do we know about when michel barnier and theresa may will meet? is that a breakthrough? this is what we know. theresa may has a big -- today. she is expected to tell european leaders, i've done my bit, now you need to show me what i can sell to my lawmakers back in the u.k. this could be a problem that she is going to insist she can't take anything that compromises the sovereignty of the u.k. that is a reference to the irish border. europeanour report, leaders are not willing to budge on this. the backstop in the northern irish border has got to be there are there is no deal. i do want to tell you the town has shifted. it is a lot more friendly. you can tell that both sides really want to get at least a roadmap to a final deal. of this, is the incentive of the eu. i think we understand the incentives of prime minister may. what are the incentives of the european union to go through the cadence and efforts with britain? think the brexit, you cannot look at it as one off. you see thist that election after election, there is a mismatch between the economic recovery and what people's votes were. there is a diversions of opinion. some european leaders will tell you we have to make brexit a cautionary tale. others will tell you let's just get on with it. 2019 is going to be a big year of political change. the european election is a top concern for european leaders here. theybeen an in europe and they face another big upset. they want to get this done by christmas and get brexit out of the way and focus on the other big crisis they have, migration, and try to win back support from people on the ground. francine: maria, thank you so much. still with us our elsa and steve. the concern is that this is never going to be out of the way. this is going to be a transition deal. we are going to be dealing with this if it gets approved through parliament for the foreseeable future. elsa: that is it in a nutshell. it makes it particularly difficult to take a long-term view on sterling. the way we have been trading it is very tactically. we were shortselling a few weeks ago. we're long selling at the moment. i think you have to be opportunistic because if you try and hold a sterling position for now, even until the end of march 2019, it is impossible. francine: what is the real moment of truth? is it when it gets voted through parliament? this is a minor distraction now for the european compared to a fair facing with emigration and even in france with macron. he is falling flat on his face because the policies are not working. he is aggravating his electors there. what is happening in europe and the ok, they were trying to give the soft version to discourage people from leaving the european union. in that sense, they euro is like the berlin wall of western europe. people behind it don't like it. it isately for the u.k., becoming a sideshow to the real game and europe. tom: we will get to a good discussion on some of the challenges of this gilded age with you in a moment. there is the utter in denmark, shakespearean theater. this has riveted the nation, without question with the idea of danske bank ceo to step down. the last reporting i got is that he may stay until there is a replaced, but you wonder if they are going to get there. the shares it really have plummeted over the last couple of days, down 7% today. stay with us. this is bloomberg. ♪ -- francine: theresa may speaking at the summit. the market is certainly hoping for a special summit being announced for brexit in november. this coupled with concern about italy. we were talking about it with our guests, and the fact that the last couple of days we had, the bloomberg capital market union conference yesterday in the lawn or the finance minister was explaining to us that they were going to stick to the limits, but it was unclear how it would be funded. today, lawmakers seem to be wrapping up the rhetoric on the finance minister that saying that he needs more funding for programs. back to our guests, elsa and steve. thank you both for staying with us. buddy look at italy, there's a little bit of -- when you look at italy, there's a little bit of volatility in the spread. people forget at the volatility of italy, is this binary scenario going to go on my best for a while longer? elsa: it seems that way and that is why we are seeing euro dollar, whereas normally you have a clear signal. actually trading quite risk neutral at the moment. on the one hand, you still have investors wanting to short it. on the other hand, jockey, last week -- draghi, last week showed -- same time, thee people in italy are populist, but their base is wealthy entrepreneurs who want to be making money and be competitive. they are looking at the spread. they have no reason to aggravate markets.steve : they do have a reason because they are suffering because they are being forced to have an undervalued currency. liraey still had the lira, would be 30% cheaper. the reason italian many fracturing has gone backwards is because every year german inflation has been trivial. if you compound that over 20 years, you get a 20% process advantage. tom: that is a really important idea, the sense of a chronic in europe. are we added tipping point where things unravel when you link in populist democracies with these spreads, or can they play about longer? steve: i think the latter because try to predict the future is that trends that you know are unsustainable can go on for far longer than you expect. when they fall apart, the collapse faster than you want them to. keeping it going, we going to have the deindustrialization of what was on industrial powerhouse. tom: they're going to talk about the gilded age when we come back. speaking of the gilded age, john has seen it all. in his public service to the international monetary fund at salomon brothers. john is in the 3:00 hour later today. stay with us. this is bloomberg. ♪ francine: this is "bloomberg surveillance." tom and francine from london and new york. let's check in on what's trending across the bloomberg universe. fans of marvel films will have another film next year. it is "captain marvel." if stars brie larson, the first woman to lead the marvel movie. the bloc's chief negotiator has repeated its offer to rewrite its blueprint for avoiding a hard border between the u.k. and ireland. ishird place, tesla set to face a criminal probe over elon musk statement. up top, china cut it to u.s. as the trade war intensifies. let's get straight to the bloomberg first word news with taylor riggs in new york city. taylor: the leaders of north and south korea have announced the next step toward getting rid of the north nuclear weapons. agreed to shut down a missile facility and will also close a nuclear facility depending on u.s. action. that fall short of what the u.s. has been demanding. still president trump praised him in the late-night tweet. the president meets with the south korean president monday. china has not completely close the door to new trade talks with the u.s. despite president trump decisions to impose terr tariffn more chinese goods. one chinese official tells bloomberg it might be better to hold talks informally out of the public eye. a potential blockbuster showdown over brett kavanaugh could be in jeopardy. lawyers for the woman who accused kavanaugh of sexually assaulting her years ago says a public senate hearing should be put on hold until the fbi and thus against the matter. chuck grassley says there is no need for fbi involvement. the governor of north carolina is pleading with people who fled record flooding to be patient and not return home just yet. governor roy cooper says the flood from hurricane florence may get worse in many places. the city of wilmington, north carolina is mostly an island. people there waited hours in line to get food and water. global news 24 hours a day on air and on twitter powered by 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. francine: thomas morgan is stepping down as an internal report shows 200 billion euros float to the center of the money laundering scandal. the bank's chairman says he has also considered stepping down. a bloomberg news reporter joins us now from copenhagen with the latest. where does the bank go from here? it's a huge part of the danish economy. how does it when back investor trust? >> that's right. they are clearly not winning back any investors trust as the stock is down 12% at the moment. the big question is how much of the dirty money was flown through estonia and the baltic regions. they are saying the flow was 200 billion, but how much of that was actually illicit funds. many analysts say it is somewhat of $8 billion or $9 billion. the fact that the bank has not given a figure means they do not know what they're looking at and cut their target for earnings target. the ceo is on his way out so analysts are saying they have left investors poorer but not much wiser in what's going on in the situation. francine: what does it mean for extra regulation? you look at the money laundering. i'm not sure whether regulation gets changed afterwards, but this is a pretty big deal. annmarie: it was. they are a target now of criminal investigations not just in denmark but in estonia. local reports are saying that the u.s. is looking into what is happening at this bank. the doj and the treasury department and the ecb says they may set up some sort of regulatory, but it's very difficult to do right now with what is happening around europe when we have populism and the likes of italy. can you have one solid figure looking after all of europe? regulation is certainly going to be the next big topic of discussion because the bank is certainly going to be facing some sort of fine. we don't know how long it. considering they are the target of investigations from many countries, this could go on for several months. tom: this is a tiny bank. this is not charter bank or others accused of money laundering. they have 1/12 or 1/14 the size of jpmorgan. can this banks survive? they are tiny when you look at jpmorgan, which is the biggest u.s. bank, but they are still denmark's biggest bank. downhare price has been more than 30% year to date. many say they can survive. goldman sachs says even if they have to pay more than $2 billion worth of fines, their ratio will still be ok. now iswhat this shows that it tarnishes their reputation. this is an about danske bank but denmark's financial institutions as a whole. they're going to consider this money laundering case when they look at the aaa sovereign credit rating for the country as a whole. is a reputational issue for the country. , ourine: thank you so much bloomberg reporter on the ground. intelligenceberg's banks analysts joins us. philip, when you look at the application implications of this this a one-off? what's the case? feel it may be getting ahead of them at the moment with the share price down 30% even more than today. we saw the data come out without a conclusion of what happened and they will begin the process. there are still a number of questions unanswered. we don't know the extent of the money laundering taking place. it feels like it is going on and on. us perspective about danske bank. they have always got interesting research, but this is a tiny bank. is this a national bank for denmark where at all costs they have to save the bank? or is the bank threatened by the mess of this laundering? philip: it is by far the biggest of the danish banks. they are in a strong capital position as well with $3.5 billion of surface capital. if you look at what happened that img, their totals are $900 million. even if you had multiples of that and cost on top, they still have capital. tom: what does it mean for the nation? does everyone have their christmas card account at dansk event? p of is the relationshi dansk a bank to the people denmark? philip: it is seen as a local institution. it will hurt the local people quite hard. typically the scandinavian banks, including sweden as well, did very well through the crisis. the feeling is now that is at risk. francine: what does it mean for the danish economy? this is our chart of the hour. you can see the balance sheet outpaces the size of the danish economy. philip: first of all, the capital position is still strong. there should not be necessarily risk. the economic impact should be limited. it's much more of a case of how the shareholders being affected than the economy as a whole. tom: greatly appreciate it this morning with "bloomberg intelligence." i want to tell you about an interview that's exceptionally important. this is a gentleman from seattle. an interesting guy with brilliant academics out of new mexico and he's the leader in the force of amazon. this is a piercing one hour interview with david rubenstein. to ther you do, listen entire hour tonight at 9:00 p.m. and across bloomberg through the weekend. this is bloomberg. ♪ francine: this is "bloomberg surveillance." , and francine from london and new york. the krona has reached its keyest level th ahead of a policy meeting tomorrow. they will raise rates for the first time since 2011. een ared steve k still with us. when you look at some of the nordic currencies, is there one we should be watching out for? elsa: it was a very popular trader earlier this year. it has taken up a little bit in popularity, but this time people are shorting the swedish krona than the other way around. on the norwegian side, there's consensus. and was the favorite pick this week. francine: when you look at dollar flows and the emerging-market currencies are headed, where do you see value? elsa: that's a really interesting question because at the moment we have seen a bit of a pullback in dollar em. we like taking other side of that trade at least technically. you are seeing a lot of people using this as an opportunity to get back to those long dollar e.m. trades, but if china is going to take a more measured approach, it could be a decent environment at least in the short run. tom: do you see the amplitude you saw a number of months ago with a significant move in dollar yen to where was it again? elsa: 1.25, absolutely. tom: justify that right now. that is the outlier call on the foreign exchange right now. elsa, discuss. elsa: so 2019 target, 1.25. it's very much a call on the fed. we have said that the dollar-yen is the most leverage para to u.s. policy rates. that hasn't changed. if we see this deepening of the yield curve in 2019, that's going to force the change in behavior from japanese investors. they cannot afford to hedge their huge stock of treasuries. tom: the partial differential here is more yen dynamic than dollar dynamic. this is a yen story less so a dollar strength story? elsa: it's a bit of both, but certainly the yen should also underperform at the cost flow is right. ofthis is an increased cost hedging, it will affect japanese investors much more than european investors or canadian or australian investors more than anything else. francine: thank you so much. elsa and steve keen are staying with us. tomorrow the nor just bank governor at 5:30 a.m. in new york and 10:30 a.m. in london. this is bloomberg. ♪ taylor: this is "bloomberg surveillance." i am taylor riggs. let's get the bloomberg business flash. the european union has let mcdonald's off the hook. the eu ended the three-year investigation by ruling that the fast food giant does not get unlawful state aid. it's a rare reprieve. been forced to repay the eu nations that taxes considered unfair assistance. mastercard is investing in competitive video gaming. the credit card company will become the first global sponsor of the league of legends. themulti year deal paris card with the game that has become the most popular eastport. gamers will get rewards for in game purchases with mastercard. the uk's competition regulators agreed to backtrack its review of the $9.6 billion takeover of walmarts opt out. the competition of markets authority has 32 weeks to decide on the deal. it says that the two grocery chains overlaps and hundreds of local areas and it could lead to higher prices. that's your bloomberg business flash. tom: thank you so much. we have tried to inform over the last number of leaks on where we are -- where we are in the greater economy and the distraction of the emerging-market trauma that we see right now. one of the great voices is steve keen. he is someone that each and every one of us has to listen to whether we agree or disagree. i want to get to the crisis where we are now. there's a great essay this morning in "the new york times." first, i want you to address our inequality now in this gilded age. the spectacular book out. the first 60 pages were written by you on economic history. she does a clinic on economic history. are we in a gilded age right now? steve: we are certainly. we are very good friends and compatible in our thinking on that front as well. the level of inequality now as pointed out in his master book is now greater than any time in history with possibly the sole exception of the gilded age. yes, inequality is driving both poor economic performance and global social conflict we are seeing. tom: this is a question for global wall street. driving they financial engineering that got 2004-2005 and in 2006? i got to simon jackson at m.i.t. and the idea that in the summer of 2004 when the sec allowed the banks to leave th we leverage u. a positive feedback because the financial engineering has driven the inequality as well. the inequality gets worse until you get a breaking point, which is what 2007 was. what the federal reserve has done quite foolishly by not understanding what cost the crisis in the first place is extending through qualitative easing. it's great for owning shares but not so great if you don't. the vast majority of americans on a trivial amount of shares so the federal reserve has amplified the inequality cause. francine: this happens until a breaking point. what is the breaking point? steve: when the debt bubble came to a crashing halt. you don't get this level of asset prices without the leverage driving up the asset prices. it rose from about 50% of gdp to about 170% over the first period i. it hit the breaking point in 2007 and saw the market plunging, which ben bernanke he and company don't understand. that gave us the crisis and the breaking point. they are tugging the rubber band once more and i'm looking forward to what happens when quantitative tightening takes place of quantitative easing. francine: here's a chart that we are going to bring up. talk about what that means. steve: let's see. this is one of several charts that to me simply explains what is still inexplicable to conventional economists and that is what caused the bubble and what caused it to burst. on the housing front, what gives you the fundamental source of demand for housing is new mortgages. what i'm relating is new mortgages to the level of house prices. you can see one and the other are completely overlapping. mortgage credit drives house prices. which is what the federal reserve to quite happily, that is what caused the bubble and led to the crash as well. the peak of those two lines is when greenspan told congress there was no bubble. tom: steve, where are we now? are we setting ourselves up for another bubble? there was all doom and gloom yesterday. we will get out to 2020 and the world is going to end. drew mattis at metlife says there is validity to trump growth. which is it? steve: i disagree on the world ending in 2020. i think there will be a recession in 2020 because the federal reserve doesn't understand this stuff still and is pushing up interest rates with no regard for the impact it will have on forcing the private ver, but not on the scale of 2007 because we had credit demand seeking at 15% of gdp and it fell to 6% during the crisis. they recovered to 5% to 6% now. it will fall from that level a cause a recession, which the federal reserve won't understand still, but still not as bad as 2007. tom: some people are wondering why is this coming marxist on again? this guys to the left of nancy pelosi. we have got a few elections going on where we have a populist tone. what kind of populism are we seeing in hungry or sweden or whatever the next election is? is it just authoritarian or does it get back to something to? new? steve: it gets ugly and is a beautiful paper sometime ago that if you want to take over the center of politics in america, you've got to move left not right because the vast majority of the population is to the left of nancy pelosi, not just me. if you have only a right-wing group putting forward policies, which include racist policies, xenophobia, anti-migration, they all get the populacist vote. do you want the blackshirts or do you want people to wear leather jackets occasionally? francine: let's leave all this kind of fighting talked to one side. what is the right economic policy for the world right now? steve: reducing the level of private debt. this is what i've been arguing for more than a decade. what caused the crisis was too much private debt. what caused the golden age of american capitalism was the low level of private debt. we have to get back to that level. francine: how? steve: the government has done q.v.. e. a trillion dollars was raised by buying bonds off american corporations. that same money could have been done by the stroke of a pen by reducing household debt and democratizing share ownership. francine: this pension funds and 401(k)s. everyone owns shares. steve: a trivial amount is owned by the working class. a huge amount is owned i the risk. that america is a capitalist tomography, but it's a capitalist oligarchy. tom: where are you on the theory that we are not seeing wage growth all in is because we have incentivized the elites with various incentives like capital gains and treatment and such on a dollar for dollar basis? if the system gives wage growth back to labor, it comes off the hide of the elites. do you like that idea or can productivity grow wages? steve: i think we are mistaken where the money is going. we can see the money going to elon musk and jeff bezos, but it's going to the financial sector as well. we can actually boost what the workers get and it comes out of the pockets of the financial speculators and not out of the industrialists. i can see that money coming back from the front door because workers spend virtually everything they are. keen, greatly appreciated. much to talk about again. i want to remind you about the jeff bezos interview with david rubenstein tonight. looking forward to that long conversation. it is penetrating with mr. bezos. in the next hour, jeffrey dennis joins us on the day when the indian rupee slips through two new weakness. morningsage this has eu meetings and salzburg and danskeallenges for bank in copenhagen. stay with us worldwide. this is bloomberg. ♪ tom: this morning, something is rotten in denmark, a money laundering scam out of estonia. we are in copenhagen. risk is on, 10-30 yields surge. seattle way, a jeffhy conversation with bezos. david rubenstein gets it done. this is "bloomberg surveillance." i am tom keene. francine and london. what did you learn in the lawn? -- milan? francine: the finance minister of italy is saying they won't flaunt the eu rules. today, one of the tie in newspapers, populist leaders attacking the finance minister. the budget plan is and whether the finance minister can survive the turmoil. tom: lots of news flow copenhagen. right now, first word news. >> president trump has praised kim jong-un for agreeing to further steps for giving up nuclear weapons. met in moon jae-in pyongyang to discuss their summit at a press conference. kim has agreed to dismantle the main nuclear production site. moon will meet with trump on monday. china will not devalue its currency to make exports cheaper. chinese premier said it would do more harm than good. after china's latest increase in tariffs by the trump administration. both sides imposing new tariffs starting next week. the u.s. and canada that will be waiting for each other to blank when nafta talks resume in washington today. hold their first in person session and eight days. key issues, including dairy products and how to resolve disputes. one of europe's largest money laundering scandals has cost the head of one bank his job. the ceo is leaving the danish lender. he says even though he lived up to his legal obligations, it is best that he resigns. billion flowed through the small estonian unit, nine times estonia's gdp. the u.k. and eu are signaling they want to break the deadlock in brexit talks. has makeief negotiator concessions for a hard border between the u.k. and ireland. tome minister may will try convince leaders to back her plans for leaving the block. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. thanks so much. equities, bonds, currencies, commodities with the risk on feel. buttressed up against new resistance to high spirit spreads have widened. steeper yield curve, oil churning. euro not part of the picture. the vix 12.72. the doubt resilient, higher, 3.20 for ten-year bonds, a 23 bps move. indian rupee out to new weakness. francine: i like that. the indian rupee deserves more attention. this is the market i am looking at. u.s. futures drifting with stocks. chinese government saying they will not devalue its currency. we know that she kick executive --danske bank is resigning the chief executive is resigning. that bank is at the center of a money laundering scandal. let's get you to the bloomberg terminal. tom: please. francine: this is what we will push out on social media. you can see the size of danske banks balance sheet compared to the size of the danish economy. tom: wow. that is something. we need to start our coverage of enforcing 10. yes, it is on trade. importantly is a debate. has been watching the kavanaugh hearings. it is an overnight issue, the idea of the fbi looking at a matter from i believe 30 plus years ago. what is the likelihood the fbi will be in the process of mr. cavanaugh's nomination. kevin cirilli we don't know yet. >> chuck grassley says this hearing will proceed on monday with testimony from brett kavanaugh, who is denying these allegations made against him. yesterday, i was at the white house. president trump in a press conference defending judge kavanaugh and saying he feels sorry for judge kavanaugh and his wife and two daughters. he made no mention of the woman, and democrats saying the hearing on monday -- tom: i'm going to suggest this is original territory within the political nominating process. say?do legal experts law professors at georgetown and george washington come a what do they say? >> there are several issues. turf or story between the doj and fbi. conserved is make the doj would have the ability, it should have been referred to them. the doj said they would have jurisdiction over has reviewed judge kavanaugh six times in terms of a background check. there is that, then there is the issue of how chairman grassley ought to handle this. should he delay this until there is more conclusion? with the clock ticking down until the october 1 deadline of when the court reconvenes. then, the issue of the top democrat and how she handles this allegation, senator feinstein. she is facing criticism. , i bottom line is that this was talking to cry gordon, the bureau chief. he said this is any need a hill scandal on steroids. tom: i can't convey and just the last 12 hours have this conversation has shifted and riveted washington. francine: the question is and i know i keep asking the same question, does it impact the midterm elections? what do women voters do? this is being handled, the gop rejecting the good for the fbi probe. do people take it badly or move on? >> we have to note the backdrop is the me too movement. thatcomes at a time institutions, politicians, ceos well,host of others as media titans being question regarding the me too movement. question the movement has been the backdrop to all of this. you are seeing support from women's rights activist groups for professor ford. that said, to your question directly about the midterm was a momentere yesterday on capitol hill when senator graham spoke directly to reporters and was asked point-blank whether or not he believes this incident is true from 36 years ago, if there is any way, shape, or form he could support judge kavanaugh's appointment to the supreme court. he said no. the next 24 hours, this has moved so quickly, but there is so much pressure on this particular story in washington. i think it is moving so quickly. tom: nice day reported. kevin cirilli, our chief washington correspondent. this has transfixed washington. we are transfixed on emerging markets. jeffrey dennis joins us. he is in boston today. it seems like whenever we talk equities, you always go to the foreign-exchange face. visit the delta on indian rupee. i want to use this as a proxy for brutal moves. will we see little moves in em equities if we see this kind of long weakness in the indian rupee? alone willan rupee not drive em equities, but the rupee is an example of what we have seen for a good chunk of this year, especially for the third quarter with the lira week, and also in q2 as well, so , our argument has always been where the dollar goes will drive flows into or out of em, and we have had a strong dollar this year, which has sucked money out of em . that has picked out the weak brethren with weaker fundamentals, and with oil higher and inflation picking up, that is one of the reasons the rupee has come under pressure. the weaker dollar over the rest of the year, added to 2019, this will solve all of this stuff as far as em is concerned because it will push money back towards the asset class. francine: good morning from london. what if china is slowing down to a point where china had to be inward looking and focus on domestic. that would hurt em. >> it would. there would be demand impacts on a lot of emerging markets, in particular those that trade closely with china, korea, taiwan are obvious examples. if there were to be a shop slow down -- sharks slowdown in china, much more severe than now come of that would put the asset class under pressure. that does not happen to be part of our scenario. fromt our growth forecast 6.2% to 6% on the back of the latest tit-for-tat moves on the tariff front, but we still believe over all that china is slowing in a controlled way, the soft landing continues to play authorities in china have got room to ease policy at the margin, or perhaps should say reduce the pace of tightening at the margin, which will support the economy come is so a crash in china will be unhelpful, but we don't see that happening. tom: thank you so much. opinion,differences of the informed opinion of ubs. know what our guest will say, the chairman of the president's council of economic advisers likes economic growth. this is bloomberg. ♪ >> this is "bloomberg surveillance." i am taylor riggs. union has let mcdonald's off the hook. the eu ended a three-year tax investigation on unlawful state aid. it is a rare reprieve. mcdonald's escape the fate of other corporations forced to pay back taxes considered to be unfair assistance. tesla is being investigated on two fronts. faces atric carmaker justice department criminal made byer statements the company and ceo elon musk. securities regulators are running a simple inquiry. the fraud probe was opened after musk tweeted he might take tesla private and had funding secured. tesla said it is cooperating with authorities. the world's richest man does not like early morning meetings. jeff bezos spoke to rubenstein. >> you don't like meetings before 10:00 a.m.? >> no. i go to bed early. i get up early. i like to potter and the morning, read the newspaper, have coffee, have breakfast with my kids. i have my puttering time. to me.mportant that's why i set my first meeting at 10:00. i like to do my high iq meetings before lunch, anything mentally challenging, that is a 10:00 meeting. i can'tp.m., i'm like, think about that today. let's try this again tomorrow at 10:00 a.m. >> you can watch that davidiewed tonight on the rubenstein show, 9:00 p.m. new york time on bloomberg tv. by 10:00 a.m. taylor and i are vegetables in the states. >> it is naptime. tom: i will not mince words. this is a huge hour of value with jeff bezos. i can't say enough about this. i'm going to throw it out there as the interview of the year, rubenstein and jeff bezos here it it is lights out. i want to get to the chinese market. i don't have this out on gtv . i will release it later. shanghai composite. i'm sorry. this is on the edge of bear market. what does a bear equity market in china mean to you? >> it is within china the domestic market, that does not have to bring down in emerging markets overall, unless what that bear market has been singling -- signaling is a sufficient slowdown in the economy that weakens the global economy, and that would pull em equities down over all. the tone within china has been bearish. the hong kong-china into price index, the hong kong listed chinese stocks which go into the msci benchmark em index, they china.t been as weak as that is a reflection of what foreign investors think of china. further weakness in the chinese local market would undoubtedly give you concern over what does it mean for the economy going forward. as i said in the previous of the economy is slowing on track. the danger is the height and tariff action between the u.s. and china. we willgoes further, mark u.s. and chinese growth down, and then you will have a problem with economy, so it depends on context. francine: i will take it from here. briski -- lipsky at 3:00 p.m. in new york, 8:00 p.m. in london. it is all about dollar dynamics and world growth. this is bloomberg. ♪ s bloomberg. ♪ francine: this is "bloomberg surveillance." india, em.king about now let's talk brazil. in chiefberg editor emeritus joins us after having .ublished a brilliant piece also joining us is jeff dennis of ubs. thank you for joining us. this is an interesting piece. you say there are people excited about the politics. buty managers, watch out, against as one-time mayor. it is polarizing. >> it is polarizing. today, the biggest vote-getter would be somebody not on the ballot. lula.s he is still the most popular candidate. the most important person is not in the race. the rest of the competition is fragmented. for those people paying attention to what happens to the economy, they are in despair at the moment. this was supposed to be a breakout year for brazil, and it has gone the other way. francine: what have investors been telling you about how they've you brazil and what they worry about? a handful of investors who say it really doesn't matter who wins, because if you look at brazil, you are going to see a correlation between commodities and the stock exchange index everybody follows. we can see that on the bloomberg, in fact. 1990's,o back to the there is a pretty good correlation between how the stock market has performed and commodity prices. chartne: tom has a great looking at the real. you brought it back to the 1980's or 1990's? what is your take on brazil? example ofs an emerging markets that has seen a major deterioration in fundamentals in 2018. first of all, you have the uncertainty of policies. we were supposed to see a clear path by now for a right-wing reformist market-oriented politician like the ex-governor to win the election. that does not look likely. second, the economy was supposed to grow 3%. it will grow 1.5%, so disappointing. the reason the result of the election matters is brazil faces a huge fiscal challenge next year to push through the pension reform that the current president was not able to do, so the big fiscal challenge. ,hat is helping brazil commodities clearly help brazil a lot, but here the currency is super cheap against the dollar, so were there to be some good news out of brazil, you can see asset prices improving because of the currency, but they have fiscal challenges next year and the economy is very weak. tom: thank you so much. really centering on commodity dynamics within brazil. look for that. coming up, she is five chair emeritus at general electric. an important new book. we will take advantage of this. is a different twist. stay with us. a beautiful new york this morning. this is bloomberg. ♪ this is bloomberg. ♪ xfinity mobile is a new wireless network designed to save you money. even when you've got serious binging to do. wherever your phone takes you, your wireless bill is about to cost a whole lot less. use less data with a network that has the most wifi hotspots where you need them and the best 4g lte everywhere else. saving you hundreds of dollars a year. and ask how you get xfinity mobile included with your internet. plus, get $300 back when you buy a new smartphone. xfinity mobile. it's simple. easy. awesome. click, call or visit a store today. tom: good morning. bloomberg surveillance. this morning, much going on. looking at danske bank. maybe an important interview at 7:00 as well. in new york city, here is taylor riggs. at their summit in pyongyang, the leaders of north and south korea have announced next steps on getting rid of the north's nuclear weapons. kim jong-un has agreed to shut down a missile facility and close a nuclear facility, depending on u.s. action. that falls short of what the u.s. has been demanding. president trump raised -- praised kim in a speech. china has not completely close the doors to new trade talks with the u.s. despite president trump's decision to impose tariffs on more chinese goods. the finance minister says it is open to dialogue with the u.s.. one official tells bloomberg it may be better to hold talks informally out of the public eye. a potential blockbuster showdown over brett kavanaugh could be in jeopardy. whoers for the woman accuse kavanaugh of assaulting her said a public hearing should be put on hold until the fbi investigates the matter. chuck grassley says there is no need for fbi involvement. the governor of north carolina is pleading with people who fled record flooding to be patient and not return home just yet. governor cooper warns the flood caused by hurricane florence is far from over and make it worse in some places. the city of wilmington, north carolina is still mostly an island. people have waited for hours to get food and water. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. thanks so much. thisjeffrey dennis with from ubs. the real commodity deflation is tangible come of the single best chart is a blended commodity index. we adjust for inflation, south, south, south with a new retest of new lows, copper as well. our commodities, equities an opportunity? >> we think it is more of an opportunity than oil. oil prices have remained pretty strong. we are more skeptical about the forrial side, the metals example, because they could be telling us of an impending significant slowdown, although that is not part of our base case. ,ll the concerns about china the impact of the tariff war with the u.s. and impact on global growth, that will impact metals prices. ,il is based on supply issues basically what is going on with saudi arabia generally, and we would be biased of energy because the earnings story will be strong. we are more skeptical about metals. tom: where is the value trap in em right now? >> we think the value trap in em is to go back into those markets , and turkey is the best example of that, which have come down so much that they are extremely cheap. this is a good opportunity. the issue is that if you time it right, dollar comes down, confidence returns coming you could make a lot of money in turkey, but timing that is difficult. low valuations are and the challenging fundamentals in turkey, we don't think it makes sense to be making that call. risky stocks, risky markets trading cheaper than they were six to 12 months ago, that is where we think the value trap is. francine: going back to turkey, is it the central bank that should give the signal of more independence for investor sentiment to turn? i can't see what they can do that is in their hands for sentiment to change. >> high think that would obviously help. did a dramatic rate hike that help to stabilize the lira yesterday. the problem is not just inappropriate monetary policy, they have this large current account deficit, which is financed by short-term capital flows. they need to adjust the domestic tighten cool it off, fiscal policy, and improve the external accounts. then you have a better chance of this being a good fundamental story, so the higher rates stabilizes the currencies, but the fundamentals are still relatively weak. this is why we are not recommending investors go back into turkey at this time. francine: this is a regression chart. you can see it breaking off completely that trend. where do you see value? we talked about india. that seems to be pretty volatile. is it mexico, someplace else? mexicos of what we like, is a cheaper market than it has been historically. we do like mexico a lot. that is a market where we think the currency is cheap and the economy is holding up quite well. of thek of the redo nafta deal will get done ultimately. think isorea, which we cheap and should not be as cheap as it is. because ofe market perceived weakness in fundamentals in the strong dollar is indonesia, which we think will come out of this very well going forward. we like eastern europe, small markets for sure, but relatively defensive in this environment. that is a part of the world we like. stories,hese high risk because we don't know if this is the turn. it is risky. tom: to swing it back to central banking and economics, we have a good understanding that chairman powell is central banker to indonesia. is mario draghi central banker to eastern europe? buto a certain extent, chairman powell is really the central banker to eastern europe as well. he will contribute to a trend in u.s. bond yields, the u.s. dollar, that will impact to the euro. the dollar-euro are two sides of the same coin. that will impact europe as well. our weak dollar view, strong euro view comes from our assessment that fred has priced and what it will do. we think the fed will cause in december, which will help the euro. meanwhile, the ecb is gradually moving towards a tightening phase that will alternately holtby euro higher against the oldltimately pull the year higher against the dollar. -- the euro against the dollar. tom: thinking -- thank you so much for looking at equities today. where else will you see this but bloomberg? jeffrey bezos tonight with david rubenstein. at 1:00, a conversation with innovators, the google chairman, john hennessy. stay with us. this is bloomberg. ♪ ♪ >> this is "bloomberg surveillance." i am taylor riggs. is investing in competitive video gaming. the company will become the first global sponsor of the league of legends. the deal mary's mastercard with the videogame that has become the most popular east fort. rewards for in game purchases with the mastercard. the uk's competition regulator has agreed to fast-track its forew of the takeover walmart. chains the two grocery overlap in hundreds of local areas, and the combination could lead to higher prices. american airlines has a warning for congress. mighto says the carrier prevent passengers for exchanging nonrefundable tickets. to change fees can run up $200. consumer groups are pushing congress to oppose caps. that is your bloomberg business flash. francine: thank you so much. the latest episode of the david rubenstein show airs tonight. jeff bezos spoke about his initial idea for the company. propelled you to say i am quitting this and will start a company selling books over the internet? where did that idea come from? ini came across the fact 1994, nobody had heard of the internet, very few people him and i came across the fact that the world wide web was growing 1990 four.year in anything growing that fast, even if it is race line usage is tiny, it is going to be big. i looked at that and said there on thebe a business idea internet and let the internet listaround it, so i made a of products i might sell online and started ranking them. i pick books because books are super unusual in one respect. there are more items in the book category than other categories. there are 3 million books active and in print around the world at any given time. amazonnding idea of was to build universal selection of books. the biggest bookstores only had 150,000 titles. that is what i did. i hired a small team, built the software. >> you told your parents you were going to quit making a fair amount of money and told your wife that you would move across the country. what did they all say? immediately and reflexively supportive after they asked the question, what is the internet? [laughter] >> this is right. with your loved ones, you bet on them. you are not betting on the idea you are betting on the person. it is one of those decisions are made with my heart and not my head. i said i don't, when i am 80 want tod, now 90, i have minimize the number of regrets that i have in my life. [laughter] [applause] --[applause] the path untraveled. those are the things that haunt us. bezos, i can't say enough about this one hour. it is arguably a triumph of the one hour interview for bloomberg across 10 to 20 years. fortunate to dovetail the experiences of jeff bezos with beth comstock. she has put in a few lightbulbs at general electric over the years, but far more, messaging and what we are doing as we think and disagree. the new book is imagine it forward. the first word is all that matters, courage, creativity, and the power to change. wonderful to have you here. i want to talk about jeffrey bezos and we will dive into the book. you have a quote in there that defines your experience, " backbone, disagree, commit." it comes back to courage. >> too often in business people are afraid of losing something, losing face, taking a risk. i love that quote because it is basically have that courage. often companies we think we have decided when somebody goes behind you and says we would do it differently. tom: i want to put you in a person, allnother the women talk is great, but here is the reality. steve jobs is going to hire you and you told him no because of the linkage. talk about the courage jeff bezos talks about? iscourage to be a mother doing what your gut tells you to do. you do the best you can. i hear from a lot of women when is the right time to have a child? i say you never have the perfect plan. just do it and work through it. hopefully you work for a company that gives you the flexibility you need. you just have to work your way through it. francine: i love this, ideas are really the problem. what holds us back his fear. do women view fear and failure differently from men? >> i think we all feel fear. i think we bring it to work in uncomfortable ways. i try to share the struggle and the tension that goes with trying to drive change. myself as apeak for woman and the womaen i know. our fear is are we being held to a different standard. for myself it was make sure the work is really great, but you can't change who you are. i being held to a different standard because of my difference, as opposed to my difference being celebrated? there is that kind of fear. francine: this may be an obvious point, but can you really change anything at a company if you are not a top person? you can try, but it is really the person in charge. if you are the founder and chief executive, you get stuff done. as a number two or three, you don't necessarily have that leeway. >> founders and leaders are critical. they have to set a vision and say here is where we are going, but one of the reasons i tried bookint out and bring my to life, is we forget about the people in the middle, middle career, mid-manager. how will change happen in an organization if managers don't do it? leaders can only do so much. i have seen the opposite where a leader says we will do this and everybody says, yeah, right. tom: what is the jeff bezos distinction? he has had a lot of fou failure. what is the jeff bezos distinction to clear failure? >> i assume it is to get to the customer. admit you failed. that's what we don't do well enough and companies. tom: google seems to be one of those companies where if a project doesn't work out, it doesn't drag on. >> we held a convention of failure. it was really fun. brownback lunch. i had to start off sharing a big failure of a company that went belly up. i thought i was going to get fired. some people went back to fourth grade to define failures. especially when things are successful, that is the time to think what did not go right here. let's not get too full of ourselves. what are we going to do better? francine: what kind of advice would you give your 20-year-old self? >> not to worry, for sure. i would give myself the advice to try, take these risks. how bad can it really be? i've talked about scenarios and creative problem-solving. do, andhe steps you can i would have told my 20 ural itself, how bad can it really be? what is the worst possible thing that could happen? it is fears that keep us from taking a risk. are you really going to lose your job? will asking that question really challenge you at your job? probably not. francine: thank you. beth comstock author of a great new book called imagine it ford. she stays with us. bloomberg users can interact with the charts shown using gtv . have encouraged to steal our charts and dazzle your boss at that 11:00 a.m. meeting. just use gtv . this is bloomberg. ♪ tom: president erdogan manages the message and he says there is no crisis in turkey. people waiting to see the financial linkages of politics. the lira not moving that much, 6.29, but for turkey an important moment. we thank our team out of istanbul for their continued coverage. comstock for darkening the door. i said make it thinner. it is a little thick. imagine it forward. it is a great anti-thought leader book. in the middle of it you have a beautiful vignette of the love and kisses of beth comstock. buody -- everybody it screaming is led by jeff mlp not that that would -- jeffrey immelt. not that that would happen that bloomberg. where does it fit into constructive management? >> may be a case can be made for passion, but usually it does not fit in. it means you are not being heard and don't want to listen to other people. it is passionate screaming, i love this idea. i say bring it on. the delegation of leadership, tasks, tactics, so many people are afraid to delegate. >> if there is one thing you take for my book, it is give your self permission to grab agency and make things happen. tom: i love that phrase. >> i even have a permission slip in the book. i will give myself permission to take a step. what it is is we have not trained ourselves to be good managers. that is lead with the vision, let your team figure it out. give them room to figure it out. they will make mistakes and you have to learn from that, not kill people because they mess up. were you taught this, management school, or does it come from your family how to manage, take risks, and move forward? >> it is both. i am worried about what our kids are facing. record levels of depression and exide he because kids are expected to be perfect. they can figure it out. not hover over them. it is the same at work. ares worried that people not being encouraged to take risk. our models of management are wrong for where we need to go. do your daughters read your book or throw it at you? >> both. tom: thank you. it ford, the anti-thought leader book goes perfect with tonight's interview with jeffrey bezos and david rubenstein. really interesting ideas on courage. francine: courage is something that resonates with all of us. we speak to chief executives and to bring theut how next manager up. tom: all the emails from the control room. no screaming tomorrow, just delegate to just relax. imagine it forward. good morning. ♪ to rent a movie? showtime. or buy the hottest shows. even here? we've got you covered. now they are all yours. to take on the go. on any screen. bingo! alright! and watch whatever you buy. wherever you are. head to xfinity.com/stream to start watching. simple to rent, easy to buy, awesome to go. ♪ alix: danske's dirty money drama. ole andersen.rom china to the world, we won't weaponize a currency. ruled out.an companies fear retaliation. we talk to the economic council of advisors. j.p. morgan says cut u.s. stocks and by emerging markets. the latest analysis saying the sugar high from tax cuts will fade. david: welcome to "bloomberg daybreak." story to say that danske captures your imagination. they put six times the gross national product of estonia through the bank. alix: i understand you want to resign as ceo. he can't be the only human responsible. where is the board? david: a

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