Is come down really sharply on the brexit news. Walk johnson prepared to away. The pound is plummeting on the back of that. We recovered a little bit, but still down. 9 . 1. 12. E sterling is at in europe, the equities are rolling over, the euro stoxx the euro stoxx down. We have money moving back into of bonds, in the same in the United States. Lets talk about brexit. Prime minister Boris Johnson and the European Commission prime minister, set to start a crucial phone call starting about now. Could it be make or break . Pound falling sharply . The counseling sharply. Walk away. Pared to the real deadline appears to be eu summitahead of the on thursday. Joining us now, we have our bloomberg governments and brexit reporter. What are we expecting from the phone call with Boris Johnson . Reporter one of two things, either we get them saying we will keep talking. Think we could get an agreement here or this is the moment where they say, we should notkeep talking, so why into this now . We do not know which of those we will get, but this could be the make or break moment. Alix i feel like we have heard this many, many, many, many times. Time bed this different . Why not a rolling deal conversation . E this time they seem to have come to a head on what the real issues are. You get to a point in the argument where you see both sides are not willing, and so you say, were clearly not getting anywhere, lets just stop now and give people time to prepare. There is the eu summit on thursday. I think it is looking increasingly like the moment where it is decided youre right, deadlines have come in the past and they could be going on, but i dont think this time. Fixable and is the real problem the level Playing Field . Joe i think fish does feel they are finding ways to resolve it. The level Playing Field that is where the eu is more stock and the u. K. Realizes it does not want to compete with the eu, and that may mean powers proposed by the eu. The u. K. Has to make the decision, does it want the freedoms of brexit at that cost . This is the decision johnson is having to make here. He may come down on the side of, no, i dont want to. Joe mays, thank you very much. , thank you very much. This is the setup. Lets get to the market reaction. Jeff, how much downside to you need to present to sterling if there is no deal and how much upside do we need to price and for bonds . Is actually asymmetric. There is it is actually asymmetric. We get a deal, we retrace some of the losses that have occurred over the last trading day or so. You mentioned bonds. Brexit deal or no brexit deal, the response has been more consistent. Andes a lot more upside, that money may come under review. Lets talk about that in more detail, geoff. My understanding was if theres no deal, thats inflationary, at least shortterm inflationary. Geoff shortterm inflationary under normal circumstances. Is when you have demand operation, perhaps the greatest since the great recession. Even if it is price reflation, youve got the market drag that is not going to offset that. That could be a done deal given where the boe is. Are we going to see steepening . U. K. Security profile in 10 years . Where is the potential for growth . Boltsso, on the nuts and ,evel, weve got the phone call what is the conversation that has to happen, what do they have to say to get headlines that will be positive for the deal . The surprise is the eu has not been involved, but it is going up to the highest level now. Germany wants a deal and ursula von der leyen is german. They dont want a messy deal. They want some flexibility and compromise. The fact that she is open to johnson now this is the rig second round of the big second round of talks, it is going down to the wire. Its Boris Johnson in a position to compromise . Is the European Commission in a position to compromise . All of the Member States have been stuck together and absolutely forced that brexit should not set a precedent for other countries. Guy friends seems to have decided over the last few days they want to take a tougher line. There was a meeting where Emmanuel Macron was involved and he said, i got to go now because i got to speak to Angela Merkel. How united are they and is the risk that france could veto a deal if it does not like what it sees in front of it . Judy its very difficult to say. Hasresent, president macron taken a hard line because the negotiations have dragged on. I think france has lost in off a lot of patience on this. Also it does not seem that clearcut. You think, is it good cop and bad cop being played out with these Member States . Perhaps berlin is slightly hiding behind paris to do the mayh rhetoric, while berlin be wanting to give a little bit of edge. You want to be careful. Think moment, i dont anyone is in a position to veto for either side. Actually, the ball is in Boris Johnsons court in some ways. Alix hmm. If the ball is in boris is negativeurt, rates in the cards . Think negative rates is in the cards. If you look at the last em statement, it was not mentioned. In sweden, we saw it in new zealand. There are three tests for the boe on buying and i dont think any have been satisfied yet. Qey will just wrote to the root for now. Guy judy, your sense of talking to people in berlin, is europe prepared to pay the shortterm price . All indications are they do not want the Single Market underlined. They would rather deal with britain. But is there a sense now that the pain is coming towards germany in particular and theres an awful lot going to the united kingdom. Is germany prepared to pay that now . Angela Merkel certainly has a lot on her plate. Berlin,it is paris or they do not know where they stand with Boris Johnson. Back and forth. It is such a tiny percentage of the gdp its a minnow, frankly, fishing. I go back to my position the level Playing Field element i think the pandemic has jolted germany. You have to depend on britain and the brexit negotiations for this to happen is, i think, shortsighted. Guy ok, we will leave it there. Judy. Yu, are hungary and poland . Going to continue with their budget talks . . This is bloomberg. Alix this is Bloomberg Markets european close. Angary and poland staring at ultimatum with the eu. They could risk losing billions in aid. Joining us from brussels, maria what are poland and hungary andly to do act to do what is the workaround the eu is looking at . Is key is the European Union is flexing its muscles and we heard from diplomats who is thisd the plan b is something they are really going to look into . This really increases the urbanre on irvine and and they could be seen as powerless. Your veto does not change much that could dea real could be a real shot for someone like viktor orban. Youre not going to get the money, but isnt going to matter if you veto or not because we can come up with a workaround thiscould change or flip when the european leaders meet and brussels. Look for to your coverage. Maria tadeo. Still with us, judy jim judy dempsey. Have you see this being resolved or not resolved . New, what nothing poland and hungary have been doing. Suffered and they did not take any action. Neither did germany. Is allegedly using the eu funds for his own football staggering, the systematic erosion of the judiciary. Members. Eu if they try to set some values, those values are being threatened by hungary and poland. Aboutwhat does it say moving forward . Cold water onhrow all of that conversation . I dont think so. If you look at the eu as it is, its a home of many different rooms. Theres the eurozone, the defendants area. Many speeds of europe. We have to get this into our minds, the first thing. Has allowed the corporation of leaders. The kind of a coalition of willing. Ts not damaging the eu i think actually the eu is beginning to take itself really put its money where its mouth is on this very issue. Guy judy, it europe usually together with the crisis in front of it. It takes a web to get there. The problem is, over the last few crises, europe has not really done everything that is necessary. It has not gone far enough, and i wonder if this is another case where we find ourselves with a similar problem, that europe has to figure out a plan b and is figure out do we quite figure out what it needs. A good question. What does europe need. What does it wants . What does europe need . What does it what . You have one side and then the other, represented by brussels, they want more sovereignty. You see the sovereignty to the eu when you joined up. In some ways, this is being played out. Theres one other point you make them people do say come out when theres a crisis, the eu overcomes it and emerges stronger. It has not, actually. This pandemic package is so important for getting europes economy off the ground. At a fundamental crossroads. It seizes the moment and moves ahead with the determination this is about the future direction of europe. It is so fundamental, what takes place. If europepoint, ties, other countries are already hiding behind poland. Theres huge corruption in poland, hungary, romania. If europe gives in now, its a green light for other countries. Alix judy, where does this leave the Climate Initiative . The Climate Initiative, the real push . Oh the Climate Initiative, oh, the Climate Initiative. It will be there. The point about planning plan b, they do not want to climateze the initiative especially if biden and the Incoming Administration in washington gets itself sorted out in january. They really have to see this through. You, judy. It was a pleasure talking to you. Judy dempsey. Thank you very much. This is bloomberg. Ritika it is time for the Bloomberg Business flash. Im ritika gupta. Apple is looking to outperform the intel chip, looking at a series of new mac processors for early next year. They are looking for successors to the m1 chip. ,f they live up to expectations they may outperform machines running intel chips. Facebook will be facing state and federal antitrust lawsuits, being accused of sorting competition. This is being brought by the attorneys led ftc and general led by letitia james, a new york state democrat. Two domestic banks talk about mergers, but they are very, very hard. This is a very unusual time. This is very high uncertainty. Suchch an environment, also be much more difficult, so i do not expect these things to happen. Ritika over the weekend, the ubs chair said the merger would not be unreasonable. Guy it does seem that the dance has started though, hasnt it . Both talking about it so quickly as insist in such proximity. The banking merger story is fascinating because in some ways it is the center of what is happening in europe at the story debating. About the Single Market. The banking union, that is miles away. ,ingle banks, domestic banks that feels like a long, long way away. Europe has so much ground to cover. Alix i wonder in the middle of covid, what will the stomach the for these mergers, because they value. Include that is where you have to bring out the value. How are you going to make money . You are going to fire people when you wind up merging. I dont know how that works. Guy in spain, they are happening. In germany, to an extent they are happening as well and the retail left over layoffs. I think that there is a recognition the deals need to happen. They are happening domestically, putting the big crossborder deals together remains elusive because we do not have the backing. For theve been changes , but they are still miles away on some of this other stuff, and coming back to weber, that is why he is saying the city of london will be able to maintain its dominance. He said that a few days back. Talking of the Financial Markets we will talk about those. The european close is coming up. This is bloomberg. Are you frustrated with your weight and health . Its time for aerotrainer, a more effective total body fitness solution. announcer aerotrainers ergodynamic design and four patented air chambers create maximum muscle activation for better results in less time, all while maintaining safe, correct form and allows for over 20 exercises. Do the aerotrainer super crunch. The prestretch works your abs even harder, engaging the entire core. Then its the back extension, super rock, and lower back traction stretch to take the pressure off your spine and stretch muscles. Planks are the ultimate total body exercise. Build your upper body with pushups. Work your lower body with the aerosquat. The aerotrainer is tested to support over 500 pounds. It inflates and deflates in less than 30 seconds using the electric pump. Head to aerotrainer. Com now. Now its your turn to lose weight, look great, and be healthy. Get off the floor and get on the aerotrainer. Go to aerotrainer. Com, thats aerotrainer. Com. The sessionpping up in europe we will not start with xp we will start with the pound and exchange rates. The pound down sharply through asian trading. Boris johnson prepared to walk away from talks the sun newspaper. Massive moves to the downside. Were off our lows by point evan percent. We have rallied. 7 . We have rallied, im doing a little bit of that. I will stay with the u. K. This dominant story with ursula von der leyen and Boris Johnson. The euro stoxx 100 does not really have anything to do with the u. K. Or half of it does not have a thing to do with the u. K. Half of it is made up with big multinational mining companies, and we have the translation back into the house, the pound is down, the value of the revenue goes up, and aggregate you would raise and at seven pounds, so largely stable today. The markets have gone down in europe. The more useful reflection of they go to the 50 and that has significantly underperformed. Thats a reflection of what is happening in the u. K. Just by way of comparison, the dax is down by. 2 . In the euro stoxx 100 initially we rallied lower there really big issues here in europe. What is happening in hungary in parliament, what is when to happen on thursday with the ecb, what is happening with rights that a really big risk with europe, stocks broadly going sideways. We will come back to the issue of the u. K. Stocks to wrap up id preview that conversation, want to show you what is happening with the domestic stocks. The house is under pressure. Banks are down by 4 . Down. Dia companies are the ftse basically has gone into different direct shins, driven directions, driven by the story. Alix lets stay with us story. We have more on the importance of reaching a deal. 80 of our economy is in tech,sional services, in creative industries, and currently the bill being negotiated by the government consider the issues they have and it appears even may not go over the line, so we are very concerned about the possibility. F a no zeal for exit the irony, of course, is the usa has a president that is putting usa back on the world stage and we, the u. K. , may become a very lonely country. What is the future for the brexit talks . At the moment, it appears that a hope for a good deal for the eu is not included. Professionals for services, the legal, tech industries, they will have less favorable access to the Single Market than they had as members of the eu or during this transition. That is weight is so important that the u. K. Government understands the importance of issues like equivalents. System relies on people as well as the European Union. Down andhave a locked no deal brexit, would that be the perfect storm . What would job losses look like . We have suffered is usually because of the reduction in footfall caused by the pandemic. Those sectors, retail, hospitality, leisure. They have really struggled and of concern, the combination the continuation of this theemic, the combination of no deal or the poor deal would be really severe for london, and as he said, its the perfect storm, i double whammy. That is white is so important that our government wakes up and realizes that we are heading toward a deep recession. Sadiq khan speaking to bloombergs francine lacqua. Lets get deeper into the conversation we were having a moment ago. Christine leads the market side blog. Lets talk about the divergence we can see an u. K. Equities were we to get you no deal. Today is kind of a classic example. In the ftse 100, domestic stocks being battered. And theres the International Revenue stream from an equity point of view benefiting from the cheaper pound. Absolutely, guy. This is more of a dichotomy we should expect if we do get a no deal brexit. The story has not been about brexit. Pandemicen about the and its impact on the economy and we have seen that flow through the economy earlier this year with the jobless rate spiking and the utility indicators and pmi trending low and now there is the added layer of exit, and really hammering this picture in the u. K. And it has already been battered by the pandemic and now that we have brexit, its just another reason for these stocks to be weighed down. So having the retail, absolutely, the domestic these are companies that rely on the domestic consumer. And now because of the pandemic and brexit, its difficult to make a case for their progress moving forward. If i am a ceo of a business, what am i doing right now . I hear that Boris Johnson is ready to walk away. What am i doing. Doing . E yeah what my what am i doing . Alix, that is the question. What can they do to prepare . They can only do so much. Earlier on, we were trying to sell the stockpile, of course. We were so staring down the deal brexit. No and at we have the u. K. This point its still a question on the table. , a lot of these decisions, they are not really able to make , untilhe law is in place the detail is in place and that is what they are looking for now and they are not getting. Super cheape 100 is from a value point of view, from a multiple point of view. Does that get undermined by a no deal brexit, or does the case change the margins the u. K. Will still be cheap and you could argue that the biggest story wil