partyne: the commonest meets for a fix. it is big central-bank week. it japan, mexico, and treason -- sweden will meet to discuss interest rates. wii's exquisitely to the italian foreign minister. good morning. this is "bloomberg

surveillance." we are just getting some figures. this is quite telling. this gives us the mood of german confidence. withseems to be in line what economists were telling us. the volkswagen scandal has not impacted germany as bad as we were expecting. a lot of the shift might be on the fed later on this week. we saw the index go up a little bit. the overall headline number is better than expected. maybe that could give hope that the ecb is getting through to the economy in europe. we do have the fed later this week. it's not expected to do anything. that is what we are hoping for as well. draghi, theseis a

businessmen in germany are seeing. francine: european leaders are battling over how to handle refugees. vonnie: angela merkel and other leaders managed to come up with short-term fixes. one of them is emergency shelter for 100,000 refugees. the western elkins have been swamped with refugees. the european union will start falling apart if there is not a solution. opposition party will have a majority in poland. that's the first time that has happened since the reintroduction in 1989. they have promised more government control over the economy. has acceptednyahu a deal to ease violence over

holy site in jerusalem. the deal was brokered by john kerry. there was concerned that israel would change some things. blair suggests the invasion of iraq gave rise to the islamic state. he told cnn it was hard to apologize for removing saddam hussein. vice president joe biden says he decided not to run for president because he couldn't win. he said he concluded he could not put together a campaign that would derail hillary clinton. that is the first word in news. mike: it's amazing how the euphoria of friday has disappeared into the mist today. china cut rates on friday and everybody got happy. today, everybody is not so happy.

futures are leading stocks around the world lower by about 3/10 of 1%. on friday. sharply they are up a little bit. call it unchanged for the 10 year. the euro did fall. it is stronger today against the dollar. oil prices are relatively stable. here is where you are seeing some good news. higherg markets index is on the back of the china rate cut. they hope to china will continue to stimulate its economy. yields rose. the two year yield is lower today. there is little changed on the day with west texas. the the pboc cut rates for sixth time since november. leaders are meeting in beijing.

what is the motivation behind this cut? i think there are a couple of factors at work. discontinued concern by week inflation. they want to cut rates again. this would give the economy a boost. the second concern is related to capital flows. we have that surprise defoliation -- evaluation. record seen funds with capital flows in september. onsaw a lot of rate cuts friday. that is intended to release funds to offset the flow. francine: does it mean they have

to lower the growth expectations? there is too much uncertainty? tom: i think that's the big question and one of the questions china will be wrestling with this week as they agree the plan. from his chinay needs a cushion in terms of stable growth so it can continue to deliver painful reforms. the economy is going through some difficult transitions, from manufacturing it to services. it's much easier to make those transitions if you're still growing at 6% or 7%. it would be much more difficult to be aggressive with reforms. mike: the interest rate cuts are like taking a horse to water. if people don't want to borrow, you're not going to get much

bang. do we see a physical response? it's an all of the above strategy from china's leaders at this point. we had six interest-rate cuts. bailout of highly indebted local governments. the government is really trying to pull the monetary trigger and the fiscal trigger at the same time. francine: thanks so much. now let's bring in eric nielsen. thank you so much for coming on. we spoke to you a couple of weeks ago. you are still an optimist. this is what we discussed last time. we had a surprise cut by the eeoc. -- pboc. argue -- how much more worried

are you? that the figures that they give us are not real? eric: i think the growth numbers, i don't know. the people inom europe who deal with china to not see a slowdown beyond 6.5%. i think the numbers are up. now we get the stimulus. percent is still night enough. and there arentry pockets which are not doing so well. i am more about the longer-term outlook. in francine: the structural reforms they are talking about? these are not stock reforms. massacre -- massive

demographic problem. it makes europe look like a walk in the park. it's a completely different situation. you have this need to change from to a consumer economy. it's massive. they have a real piece of work cut out for them. given what we are seeing, will markets focus on the wrong thing? everything is focused on the manufacturing numbers. erik: i think that's right. it's amazing how the world has changed from a year ago. everybody thought china would be just fine all the time. now they don't believe the numbers or the policies. i think you are right. ok with chinabe

for a year or so. theye next year or two, will do a lot to keep the economy rolling and the growth rate at 7%. people don't worry so much about the five-year out, which they should. that's a long way out. mike: could there be some physical stimulus? erik: i am sure. thisare -- they don't have fight between fiscal authorities and monetary like you have in europe. i wish they would do it for the consumption side. they could get that shift going. that's not what they are going to do. i think they are going to put more infrastructure projects in place. that is what they know how to do. build another bridge or what have you. francine: thank you so much for now.

up, we have an exclusive interview. we will talk about refugees and immigration. ons is "number surveillance" bloomberg television.

mike: let's get to the business/. vonnie: general motors and the auto workers have averted a potential's strike. they reached a deal that will provide races across the board.

uaw members will vote on the deal this week. the union wanted a richard neal than the one it got earlier this month. regained its has global sales lead over volkswagen. it sold 7.5 million of vehicles. vw is bracing for consumer reactions to that scandal. mayswagen's investigation have turned a blind eye to the fake tests. this is according to the new york times. some managers may share lame. they knew about the test and fairly -- failed to take action. francine: now to a bloomberg exclusive. there is a deepening immigration crisis. the migrant crisis came to another political scout -- scalp.

let's get to rome. he is the italian foreign affairs minister. thank you for speaking with surveillance. how concerned are you that this crisis will stifle moderate politicians? that politics in europe will become more extreme? paolo: the crisis is there. i think europe with hundreds of millions of people can accept hundreds of thousands of migrants. we have a common policy and we don't think to leave the burden only to porter countries. it's unbelievable that we did not have until now a common policy on migration. we are slowly building a new common policy. behout this, the crisis will ever and ever serious. francine: how do you feel about the role played by angela

merkel? she is becoming the fact of leader of europe. months,n the next three migration flows past from the center of the mediterranean to the oreo -- oriental route. i don't think we have to blame turkey for this flow. turkey can have a role and contribute to the solution. that is the origin of the crisis. it is a syrian crisis. francine: how concerned are you that the eu has never been this week? we have so many divisions, it's impossible to have a porter force let alone coming up with a common policy. paolo: we are concerned. we have to think to the fact

that until the last month of april, there was no migration common policy. italy asked and convened a summit on migration at the beginning of may. this was after the tragedy in the mediterranean. months, we five built some basis for a common policy. singlek is that countries are blaming their neighbors and everybody is saying that the porter shouldes, italy, greece have the burden. i think this is ridiculous. this is such a measured problem. this should be faced by the entire european union. steps are there.

we need a little bit more engagement. you mentioned syria. talk to me about syria. do you believe that we should see a short term role for mr. assad? italy has always been convinced that we need a transition. this should be a political transition. assad bynk to out military means, we risk creating avoid and this void it will be filled not by a the medicament others.on but by factve to be aware of the

that the political transition is needed. in this transition, even russia could be a positive contribution. could it europe lift sanctions in january? think we have to mix the syrian crisis in an ukraine. we will decide on sanctions according to the level of implementation of the minsk agreements. the situation has some good progress. the postponement of the local election by the separatists. that is still very fragile. we will decide not thinking to syria, but thinking to the minsk protocol and that implementation in the next two months. francine: thank you so much.

that is the foreign affairs minister of italy. the important not to mix syria crisis and the ukraine crisis when we talk about putting more sanctions or lifting sanctions against russia. is "boomerthis surveillance" on bloomberg television. ♪

mike: this is "bloomberg

surveillance work out have breaking news. a very large earthquake has nearn the hindu kush area afghanistan and pakistan. this is near chad giga stand. stand.q we will keep on top of this. it's a 7.7 earthquake on the richter scale in the hindu kush area. time now for the morning must-read. francine has that. tony blair indicated was part ofq war the rise of the islamic state. this is a huge deal in the u k. this is the first time he has apologized.

wet are your thoughts as were speaking to the foreign affairs minister. the refugee crisis stems from instability in the middle east. tony blair admits that some of what he did in the middle east may have given rise to isis. this gives us the eye he is that this is not a bad versus good. erik: i think that's exactly right. one cannot escape the conclusion that the eye invasion of iraq brought this. this is out of sync. things unraveled in a way. it's very easy to draw the line to the refugee crisis to that. francine: i always ask, we are seeing tens of thousands of

refugees and reporters on a daily basis. this is escalating. erik: there is no easy solution. i think we should take all of them in a sense. these are people living under terrible circumstances. i am appalled when i hear some of the political leaders say we don't want them. they don't have any right to our type of life. ago, they cut down fences. we paid them tons of money from the west to prop them up. now they are turning their back on other people in need. francine: what you missed. carl icahn joins us. don't miss that interview. ♪

mike: this is "bloomberg surveillance." let's get to the first word news with bonnie area --.

vonnie: there are reports of a major earthquake in pakistan. it is 7.7 on the richter scale. it is centered in northern pakistan. no report yet on injuries or damage. warn theleaders continent is buckling under the strain of the refugee crisis. there were some short-term fixes over the weekend. there was emergency shelter for 100,000 refugees. angela merkel spoke afterwards. this is one of the greatest litmus tests that europe is ever faced. vonnie: the balkans have been swamped with refugees. slovenia's leader warned the european union will start falling apart. been an election like this in poland since the return of democracy in 1989. has won ation

majority of seats for the first time in modern history. they are promising more government control over the economy and a tougher stance on refugees. argentina, there will be a runoff for the first time ever. the runoff is set for november 22. no matter who wins, investors are betting on a shift to a more market friendly policy. spawned by hurricane patricia have ended in texas. some highways were shut down and trains derailed. there were no deaths. there was no widespread destruction either. this is what we are looking to for the rest of week on wednesday, there will be monetary policy. reports on the international energy agency.

let's get more on these events with eric nielsen. we talked about the rest. we start the conversation by saying they cut interest rates. did they do it because we're looking at a fed rate hike possibly this year? were they worried that we get more qe? erik: i don't know the chinese well enough to say that. my guess would be they did it for domestic reasons. you see is that when the expectations in the world. forfed is going to stay put longer than indicated. chinese are worried about the slowdown. francine: we have a 30% probability that there will be

something in december. talk about what we saw from the ecb. you are uneasy that we might get a deeper rate cut. erik: i think it's completely unnatural and its reaction to the policy mix. aursday's statement was genius of leading us along. now we see where we are actually. my big concern was what changed over the last year? they said we were there. all jockey gave this was things have changed today. francine: we have a chart of inflation expectations in the eurozone. stuck. it's not going anywhere. draghi made a meal out of that. he is very worried about it.

the real interest rate is higher. think they are too worried about this. at the end of the day, the , this is acators lacking indicator. that's all it is. that's not that dangerous. the five year has started to react to oil prices in the wrong way. i think the market -- at the end of the day something happens in oil prices today and the market says this is an impact for inflation 10 years out. i think it's pushing the lock. uck. you have switzerland and sweden using them. is i doe first thing know exactly what effect they

had in denmark and switzerland and sweden. everybody says they stemmed the upward pressure. denmark and switzerland spent enormous amounts to do it. i think that is what is the story here. the other point is as long as the banks don't pass on the negative rates to their consumers and to businesses, it's a direct tax on the banking system. why do you want to tax the financial when you want to get more money and deliver capital? i don't know why you would want to do this. if you wake up tomorrow morning and the banks of europe had imposed negative interest rates across the board, the ecb would start to panic. mike: if we get a european move

in december, does that mean the fed doesn't have to move? is it likely to move? good i think that's a very point. onon't think the fed decides the back of what the ecb does. i think the ecb decided or announced this because of what the fed does or does not do in december. francine: the third of december is when we get the ecb meeting. let's say that draghi goes to town and makes a bank. does that make it more difficult for the fed to hike, even a very small hike? if whatever the ecb does, i think they will do more than you expect. they all deliver. i think they are going to do a big number and a rate cut.

if that drives the dollar down then the fed will have a little bit more of a problem. that increases the risk they won't do anything. yellen says they will do it this year. francine: we had a huge movement last week. how much longer can it go? if you look at the year out, i think the dollar is higher. how low does it need to go? erik: that's a good point. i struggle to know. everyone i talk to in the markets says this is a signaling effect. what is the signal if you don't have any truth behind it? i struggle to understand the

transition. you can put off interest deposits, those who save money , we are all completely tied down by regulation. the amount of money that will buy dollars instead of euros is going to be extremely limited. up on the radio, we will talk about the future of the chinese economy with its recent rate cut. this is "bloomberg surveillance." we are streaming everywhere. you cannot get away. ♪

francine: this is "francine: bloomberg surveillance workout --." let's focus on food. most isolated restaurant. they can only accommodate 12 diners each night. how can they make money? we are joined by the head chef. he launched a new book. thank you so much. it's like a nordic duo here. it's quite questionable. you opened theow restaurant a while ago. you cut down the number of weeks you are open. how do you get food out there?

magnus: it's always been about making a really good product. that's something i have enjoyed doing. it's been quite successful. francine: how did it work with netflix? we don't get any money to do a series like that. you get a lot of coverage. isting good media coverage how we create customers and restaurants. erik: how does your food differ from copenhagen? i am danish. it's quite interesting. what you produce is everything you have ever experienced. even though we have known each other a long time, we have the same toolbox.

what we produce is different for different people. francine: what kind of people come to your restaurants? you have a big book coming out. it's going to be very different. magnus: the restaurant is people who are interested in eating as an experience. the book is different. it's a documentary book about the traditions of eating in the market -- nordic region. how long does it take to get there? 15 hours from london? erik: the you have a place i can sleep afterwards? magnus: yes we have a hotel. want to keep this

affordable to more people? magnus: very expensive to produce. the level of ambition. it costs what other restaurants in excitements cost over the world. famouse: eric is a economist. you close your restaurant for 20 weeks to invent these great recipes. would you like 20 weeks off? erik: i did three months in berlin. i like 20 weeks. i went to come eat at your restaurant area. magnus: we have not done that every year. next year we are not going to do it. it's very costly. we have to have specific projects in that time. it differs every year.

francine: we speak to creative directors and captains of industry, you need time to think and innovate. the decision to close for 20 weeks at the expense of profit to make sure that you delivered a good product. did it work? did it change things? me, the ideas come all the time. then you have to have time to realize them, too investigated the research. francine: we have pictures. erik: i am definitely going. francine: thank you so much. later today on bloomberg tv, we had.have the goldman sachs this is "bloomberg surveillance ergo --." ♪

mike: this is bloomberg

surveillance. i am in new york. francine is in london. it looks like a bit of a cloudy or rainy day in hong kong. stay dry there. watch bloombergs business/vonnie quinn. oracle keep pushing into cloud computing. leadership in the industry is up for grabs. the cloud has changed his companies world. , thewo biggest competitors two we watch most closely over the last two decades have been and we no longer pay any attention to either one of them. the cloud is still up for grabs. general motors has averted a strike.

lastreached an agreement night on a four-year contract with the uaw. it covers 53,000 workers. it includes wage gains. they will vote on the deal later this week and there may be more problems for volkswagen. they are collecting airbags for testing. they are telling regulators that getting replacement parts will take more than a year. they have been blamed for eight deaths. that mounted a recall of 19 million vehicles. it keeps getting worse and worse for volkswagen. this is a big deal. china is vw's biggest market. this is a crucial source of income. the top spot in terms of global sales. it is now toyota.

they were kind of neck and neck. now it's toyota again. poland's opposition party is on a landslide victory. they promised for more state control over the economy. does this mark another challenge for an already divided european union. let's bring in hans nichols. they are lurching to the right. how would angela merkel view this? talk to ais going to lot of people she works with closely. he is from the opposite party. he was ejected in these elections. we have a little -- of nationalism. they campaigned against migration. there is a lot of economic populism. they are talking about increasing pensions.

we have seen them we can on this a little bit. most of the calls out there are four expectations. weaken andy will there will be volatility. we expect to find that later today. the latest tally puts them at 232 seats out of 460. francine: we spoke to the italian foreign minister later on. this goes to the root of the problem. the selection in poland means bigger concerns for extreme parties in europe. hans: that's a possibility. in the mayoral contest and the end. you did not have the right wing party take the outright majority. they lost. they increased the share of the vote. we will have more elections. we will have more time to sort through this.

there is a fair amount of economic populism. these sound a lot like greece. going into the meeting today of ministers, if they don't solve the refugee problem, europe could start to disintegrate. hans: inverplayed? some ways you have unity. if you don't have a comprehensive solution, you are going to have a disintegration of the european union. you heard that from the hungarian premier and from angela merkel. there is great disagreement on what to do to achieve unity. francine: thank you so much. erik nielsen.ck we talked about the challenges of absorbing refugees. this goes back to the problem that the eu doesn't have united voice.

policies in terms of growth aren't really credible unless we have qe. erik: i think that's right. there are a number of things going on. it's clear that a big part of the european population is unhappy with what they have been through or the outlook. unemployment is still very high. participation is not as good as it could have been in many countries. that has put people to the left or the right. fearinggee crisis is the right side of the political spectrum. you see what law and justice want to do in poland. it's not completely different from some other things you saw on the left in greece. sometimes things come together. it's a bit concerning to me. bringing it back to economics, are you concerned we are throwing money at the

balance sheets? we will not see any real support of popular markets? i am as an economist, concerned that there is no help on the physical side. policy can't do the whole thing. we have this idea that physical policy is hopeless. the deficit numbers are high. we talk about the issue of investment. this europeat after has not invested and there is nothing to do? are they out of ideas? is there nothing that needs to be done it? that bothers me. francine: where does that go? example.s is a good i am glad that the investment issue was brought to the table.

15argue that you can take billion of money that should have been spent elsewhere in the budget and put it in with no risk of taxpayer money and make it into 325 billion, i think that's like food. i don't believe you're going to get a lot of effect from this. francine: i like that. we continue. we are streaming on your tablet phone. we have a huge week for central banks. isseems that the market taken up calls. ♪

mike: it is a busy morning.

shock in argentina and surprise in poland. it looks to fiscal policy. in washington, they look to paul ryan. i am michael mckee in for tom keene. joining me is francine in london. anybody in the markets is looking to the federal reserve this week. francine: what's that? is that coming this week? it's all about the federal reserve. move on be a preemptive what we are expecting the fed to do. we have that german business confidence. it points to global pressures. we talk about those every day. it's interesting to see the data coming out of data. mike: it's a lot for central banks to digest. let's get the news with vonnie quinn. vonnie: there is a powerful

earthquake. the seventh two magnitude quake centered in northern afghanistan. strong tremors have been felt in india and pakistan. no word on casualties as of yet. the head of the eu says refugees will start freezing to death if they don't get help. a plan to shelter 100,000 migrants was worked out during weekend meetings in brussels. nations in the park and say they are overwhelmed. the refugee crisis threatens the structure of the european union. voters in poland rejected the government. the opposition party will have the majority in the lower chamber for the first time in 26 years. they promise more government control on the economy. benjamin netanyahu is excepted deal to ease violence over a holy site in your islam.

the deal was brokered by john kerry. they were afraid that israel would change rules. that led to a wave of palestinian attacks. joe biden says he decided not to run for president he comes he could not win. he told 60 minutes he did not think he had time to assemble a campaign that could challenge hillary clinton. those are the top headlines. let's get you caught up in the markets. although happy people on friday are less so today. s&p futures are trading down. they are off the lows of the morning. yields the bond market are higher on friday as well. today is a little bit lower for the 10-year note. the euro, the same story. it fell significantly on friday. it is up a touch this morning. look at the dax in germany. that is a big turnaround.

the business confidence of germans was higher than forecast. the same story in emerging markets. this, they are holding on to the happy news. we are seeing a rise in merging markets. the two-year note yield is unchanging. the german two-year gave up some of its yield over the weekend. crude is very little changed on the back of the chinese news. but if the end of last week. central banks were riding to the rescue of global markets. investors don't seem to be quite as convinced. what has changed over the past two days? this would have a much longer shelf life a couple of weeks ago. mike: i think it's an interesting paradigm shift. the equity markets that risk,

they seemed very limited. as stocks rallied and would get higher, the odds of a rate hike would increase. i think that correlation weakened because of the ecb and because of the chinese central bank actions. now it's looking like the fed is not necessarily focused on the equity markets on the risk sentiment. they may be thinking that the ecb is going to ease further. week, ifof japan this they are going to add more qe, it paints the fed and a little bit of a corner. they don't want to risk that strong dollar being counterproductive to their goals. little bit of a break between the correlation of this and the equities. mike: are we trading on earnings or the fed? earnings have been better going

into the quarter. i'm guessing it's 80% earnings and the rest fed grade the fed picture is not changing all that much. the big super bowl of earnings season is tomorrow with apple. and $11 billion quarter is expected. it's hard to take your eye off the earnings picture and worry too much about the central banks unless the picture changes dramatically in the outlook for a rate hike. are they less impacted by china? erik: the currency devaluation was the big one. it does not appear they are going to do that again anytime soon. we did not expect that the last time they did it. the interest rate decreases added to the risk on friday. francine: investors seem to have

to assess china's latest round of easing. are they worried that this points to weaker growth. do they not know how it will filter through their own economy? mike: i think it's a little bit of both. i think a lot of american investors think china is unpredictable, this ashley with the communist party meetings coming up this week in i don't think people are comfortable having any idea what's going to come out of it. it's a little bit of both. you were talking about risk on an risk off. the problem is markets were meant to be more sophisticated this year and they have fallen in the old patterns. i know you're talking about earnings in the u.s. when will this change? erik: the fourth quarter is always interesting. mike: we had a consistent gain every fourth quarter. i was reading a note from goldman sachs, 25% of the stock

buybacks will occur in november and december. have a decent support coming into the pipeline for stocks. you have a tendency for active fund managers if they are not doing well. they start to beat those benchmarks at the end of the year. that's the mechanical thing that will make things optimistic. none of that is set in stone. that is what has happened in the past. i think there is something there that the fourth quarter tends to be strong. they are still expected to be negative. if we get an ecb move in december, the markets go crazy? i don't know about crazy. to 3% away from the highs we set in may. i think it's going to be tough

to get back there. think -- unless there is a big surprise out of washington dc with the debt ceiling, that is the big wildcard. expecting the drama to get ramped up there. that is the wildcard. i think we could get back close to the high by the end of the year. it would he surprising if we broke through it. did set -- predict the increase. mike: that could be. fingers crossed on that. angus where.t is i know follows the middle east more closely than you do.

all the things that mike was just talking about, what's happening in the middle east is not on that list. is that because we don't have oil in syria? issue,i think this invariably you're looking at stocks. you get dragged into the day-to-day noise of companies. this is not a global noise. it's a very big issue. it's very big for issue -- europe. it's an issue that will become more important. unless there is a peace plan that president carter has opposed, that noise continues. i think it's more important to europe directly. it will impact the economy. its changing, politically. i can see why people don't think

it's important. important. it's you've got changing politics that are very important for long-term. vonnie: what does russia's role in syria, how can we make it or? vladimir putin has a huge influence on a sod. hasia's president in syria come under criticism. is there a way to harness that power to find a resolution? angus: it's interesting about the russian involvement. i think this is it just coming to save a sod. the trajectory of a was ago, theya few months were losing territory and isis was gaining ground. if damascus was lost, there would be hundreds of thousands of refugees. millions would be

leaving syria. they have stabilized situation for good or bad. about and, it won't be sod. the regime will change. russia wants to get away from ukraine? do they actually see themselves as bring years of peace to the region? angus: ukraine still continues. syria offers a warm water base in the mediterranean on the coast and that will be problems in the future for nato. not that before. that is where the west and nato have to rethink. you haven't interlocking it.

this was being taken seriously. the position of no discussions sad has been a week would. we will talk more about what's going on in the middle east. up, the publisher of the report will join us at 90. this is "bloomberg surveillance. ♪

mike: this is "bloomberg surveillance." vonnie: a strike at general

motors has been avoided. the contract will offer raises to union members. they will vote on it this week. toyota retakes the top spot as the world's leading automaker. play at a sold 7.5 million vehicles during the first nine months of the year. volkswagen's investigation of that scandal is including managers who may have turned a blind eye to the fake test. some managers will share blame because they knew about the tests and failed to take action. that is your latest bloomberg business flash. the pboc cut interest rates on friday. this is ahead of leaders gathering in beijing. like ining in tom or beijing.

rates that target growth slower. we are expecting new targets this week. that's right. china's leaders are meeting in beijing against the background of that rate cut by the idiocy. china's leaders are meeting not to discuss the growth of the next few months, but the outlook for the next five years. they are planning reforms that time. it's a difficult transition from an old investment driven model to a new market consumer driven model. the reason they are moving so aggressively with this next cut in interest rates is to make a point economy. they hope that growth is more

point and it will be easier to push ahead with those reforms. mike: some people are saying we might see a re-valuation of the yuan. are people talking about in beijing? tom: one thing is the current stance they are adopting is not sustainable. they are spending vast quantities of foreign exchange reserves. they are holding the u.n. stable. china's exports are contracting. they are spending is national two maintain an exchange rate. that position cannot be sustained. in the short-term, i think there is going to be concerned from china's leaders because they let go of the currency at a moment that could add further risk to the stability. mike: thank you.

we have some headlines breaking on valiant pharmaceuticals. they are confirming their deal. also appointing a board to look into the deal to cf it area.ropriate we going to go back to china. we are going to bring in angus blair. we were just talking about the chinese trying to stimulate. they are trying to make deals at the same time. we don't hear a lot about the chinese showing up in the middle east. russia, but not china. i live in north africa.

companies and government has been expanding economically through africa. they are helping ethiopia build a dam on the nile. egypt, he has visited beijing twice. it's a growing up. control having to lose and find ways to manage an economy. geopolitics, of they are becoming more elegant in managing relationships. say as long as there are negotiations between ,he major parties geopolitically this is one of

the most important issues. i think your must be some negotiation in the next six months. mike: or on syria and the middle east coming up. we will have more on china. ♪

mike: good morning.

this is "bloomberg surveillance. it's time for my morning must-read. politics makes strange bedfellows. they are writing together in the new york times in favor of the cadillac tax that will be applied in a 2018. this tilts the playing field in favor of pain workers in insurance rather than cash. this is interesting. hillary clinton just came out against the cadillac tax. we are going to get another vote to repeal obamacare this week. phil mattingly joins us.

that is one of many things on the incoming speakers plate area --. : we will get the vote on a thursday. the next day will be the first major deadline. the highway bill runs out. he will need to figure out a way to increase the debt ceiling. he's not going to be up to celebrate his new rule as speaker of the house. those deadlines will start coming fast and furious. is john boehner going to be able to negotiate before he leaves office this debt ceiling? the conservative republicans are tying obamacare to the repeal of -- to the debt ceiling. phil: john boehner takes this off the table so paul ryan doesn't have to deal with this. over the weekend, there's been constant negotiations between the house and senate.

there is no real pathway forward. it looks like we are going to go up to the deadline and it might fall on paul ryan's plate. it's limited on the shutdown. the funding resolution mr. december 11. when it do the markets spooked? will that have an impact on republican lawmakers. this is the third time in four years. lawmakers have not really been spooked. we will see if it's different this time. later today, carl icahn speaks to us about his new super pac. you are watching "bloomberg -- youlance you ♪

(ee-e-e-oh-mum-oh-weh) (hush my darling...) (don't fear my darling...) (the lion sleeps tonight.) (hush my darling...) man snoring (don't fear my darling...)

(the lion sleeps tonight.) woman snoring take the roar out of snore. yet another innovation only at a sleep number store. francine: welcome back. this is bloomberg surveillance. we change the clocks here over the weekend so it feels like it

is nice until late morning and feel like it is dark early afternoon. it is london, we still love it. it is still dark. cities across south asia rocked by a powerful earthquake. the quake was centered in northern afghanistan but tremors were felt in new delhi, india. no reports of casualties as of yet. the geological survey estimates magnitude at 7.5 on the richter scale. european leaders say the continent is buckling under the strain of the refugee crisis. a summit in brussels led to short-term fixes. among them, short-term shelters. uggla merkel says the situation angela merkel says the situation is dire. >> this is one of the greatest litmus tests europe has ever faced. vonnie: western balkan nations say they are overwhelmed by the migrants.

rejected poland have the government that oversaw europe's fastest-growing economy. the party promises more government control over the economy. in argentina, the presidential election is heading for a runoff for the first time. the main candidates of both ended up with about 35% of the vote. of the runoff is set for november 22. no matter who wins, investors in argentina are betting on a shift toward more market from the policies. in texas, storms have ended after dropping more than a foot of rain. some highways were shut down and a train was derailed. there were no deaths and there was no widespread destruction. called $50i official a barrel oil a gift to the world.

predicts oil will hit $60 a barrel in two dozen 16 after a low of $45 this year. -- in 2016 after a low of $45 this year. duke energy is buying piedmont natural gas. a middle atlantic natural gas dealer. $4.9 billion. $60 per share to the piedmont shareholders. duke says it will be accretive to earnings in the first year. the proverbial tree falling in the forest for all wall street cares. december, a different story. janet yellen has scheduled a speech to the washington economics club. janet yellen scheduled testimony before the joint economic committee for december 3 and december 4, we get the november jobs report. carl riccadonna's chief u.s. economist for bloomberg intelligence. you almost think chair yellin was trying to tell us something. carl: she might be telling us

see you in 2016. we are losing momentum in a lot of economic data. i suspect the next job report may show further erosion of momentum. she is simply not prepared to go it alone with the rest of the world will be in the opposite direction. china easing. ecb, likely to deliver additional qe or clarification on some kind of expansion at the december meeting as well. francine: no one is looking for anything at this meeting. 6%. will we get any change to the statement? any words that might change? carl: in terms of inflation assessment, i think they can leave things. a couple of points i would watch . they highlighted international concerns at the september meeting. it is not clear whether that was growth concerns or financial contagion concerns. growth concerns are still present. financial contagion has largely

settled down. that could be reworded. they talked about solid labor momentum or solid job gains. i think that has to be adjusted in light of those two week job reports we have seen since then. francine: we trying to read too much into when they may announce? the indications of when janet yellen is speaking not. had to so many participants saying, it is crazy that we think nothing would happen in november. are we getting ourselves a twist? carl: i think the fed has to be clear that there will be a press conference. just saying we can raise rates and call a press conference afterwards i think creates the potential for the markets to go haywire in the period between the rate hike and the start of the press conference. october, out of the picture. policymakers worked great pains to keep october's a live

meeting. that has fallen by the wayside and i suspect same will be true for december. the fact that she is scheduled the speeches made be to provide advance warning that they are not moving in november. mike: i was talking with john williams, the san francisco bank president. he would take issue with the characterization of the jobs reports as weak. jobre going to have a lower rate. the important -- what is important is that the unemployment rate. carl: we should see the pace of job creation slow. supply and demand economics. as the price of something goes up you consume less. if labor becomes more expensive we should see the pace of hiring slow. we have seen slower hiring because wages have not accelerated to any degree of the last couple of months world the last year. what i think we're seeing is a

heightened sense of caution from the private sector due to the financial events of late august and early september as well as what seems to be a weak quarter for earnings as well. that is a different reason from what president williams is highlighting. mike: angus blair from the whent institute, we saw people first started talking about a rate increase, a big impact on emerging markets. we are seeing shares rise again. if the fed stays on hold, is that a green light for emerging markets? angus we are seeing the markets going back in terms of perception rather than some nuance. i think after some knee-jerk reactions to emerging markets earlier this year, people think there is some value in the end and growth in some areas. a realignment as the markets become used to more volatility that they are able to accept that there is good value.

think you have got to stand away from some of the noise and take a longer picture. you have people on the program that will take a longer-term view. l of still a major bul africa. numbers greater than market cap. francine: isn't africa -- angus: the chinese companies are there but they usually helping governments rather than private companies. i know india pretty well. the major bull of india. in terms of the middle east, i am still bearish in terms of overall trends because of the effects of oil prices. what that means for government budgets.

the biggest budget deficit in the world, 20% of gdp of the buz budget deficit. mike: we will have to follow up on that with angus blair. watch for that fed decision. 2:00 on wednesday afternoon. global headan sachs of commodities research jeff curry. they will get his call on oil prices. this is bloomberg surveillance. ♪

francine: this is "bloomberg

surveillance." we are looking at live pictures from hong kong. surveillance. here is a look at what we are watching for the rest of the week. on tuesday, twitter and apple report earnings. wednesday, fomc announcing monetary policy decision. friday, doj announcing its rates decision. it is time for the single best chart. .onnie: two gears of drama single best chart courtesy of cut you poor zukowski -- cut you poo can't tear pours it in katia joining us now on the future for argentina. a quick reaction to yesterday's presidential vote. very surprising.

katia: i came prepared to talk runner onehe front but in the end we will have a runoff and that is unprecedented in argentina. generally very unusual for latin america. you usually have the presidential candidate who is being supported by the current president in power just when and that is it. mike: what are the odds the opposition can pull this off? katia: we need to see were the votes go of the third candidate. kind of in the middle between ratio marquee. we need to see results go. -- thethe two of them opposition candidate was ahead. he is the one the market wants to win. and exciting couple of weeks. argentinian politics

are pretty colorful to say the least. this is the only country that i know of where a president actually calls a national -- if we have the opposition coming into place, how much will argentina actually change? how much will it become a modern country? katia: the thought is no matter who comes into place, changes will have to be made. the reason is because they are running out of reserves. it widening fiscal and trade deficit. happens -- if they want to come back to markets they need to -- they need to take care of the 2001 default. in order to have any changes, they need to do that because they need that inflow capitals of the can start bolstering the peso and having a free-floating exchange rate. francine: it seems that no matter who wins this election,

investors in markets will take it positive view cousin will be better for markets. this 19% return has correlate how correlated is at politics? katia: it is correlated with expectations. the market likes to lie to .tself or dream about a change return.n. it is a price it is all about expectations of a future. you need to hold onto your stomach until that happens. mike: angus, you went through this in egypt. --august change issue.it is an important all theion of change,

young people connected to the world to social media who have enormous expectations. like, you see in brazil and chile, questioning of governments everywhere. there is a disassociation between the people and politics. i've been reading about churchill and churchill used the phrase of refreshing the relationship between the population and parliament. i think the body politic all over the world has to realize that young people are removed. social media has altered the dynamic of the relationship between the people and the people who lead them. theink in the middle east, leaders for the most part are in a major removed from where young people are in terms of aspiration or supplying jobs. that has long-term implications. runoff election coming up. katia porzecanski, thank you for

coming in. photos making news today. vonnie quinn has those. vonnie: let's take a look. thegby world cup final for southern hemisphere. -- itlia beat new zealand is the first time the teams will -- it is the first i must really and new zealand will face each other in the world cup. cricket and rugby seem to be the domain of new zealand and south africa and australia these days. francine: there is no one from the northern hemisphere at all in the final. number two, landmarks around the world lit up blue this weekend in honor of the you and's 70th anniversary. the egyptian pyramid, the empire

state building amongst landmarks lit up. the u.n. officially started on october 24, 1945. a lot of people saying this is an outdated organization but when you look at all of the security concerns around the world, they have a lot of their plate. sometimes it takes things like this to allow us to reflect. vonnie: mexico breathing a sigh of relief. feared it would be the greatest storm in history with 155 mile per hour wind. it did uproot trees but by saturday, patricia had been downgraded to a tropical depression. thousands were evacuated on mexico's pacific coast as the storm hit the country friday. luckily, not more damage done.

mike: we have to keep an eye on texas. we will see if there is a possibility for tremendous damage if it continues. huntsman in the 8:00 a.m. eastern hour. we are on your tablet, your phone and bloomberg.com. ♪

mike: this is bloomberg surveillance. it was sunny we started the show. for the forex report. the euro has got -- made a big drop on friday after the chinese move. the european central bank on thursday. it has gained ground. let's get to the bloomberg business flash. francine: the major energy deal

emerging this morning. duke energy buying piedmont national gas. worth $4.9 billion. a new board member joining valiant pharmaceuticals. -- a researchit firm saying the accounting connection between the firms is in proper. we have doj -- boj headlines. larry ellison says oracle will keep pushing into cloud computing. oracle posture and says leadership in the industry is up for grabs. our biggest competitors, the two companies we much -- we watch most closely over the last anddecades have been ibm

sap and we no longer pay attention to either one. vonnie: allison says -- allison says the most formidable competitors are microsoft. morning -- ours guest host, angus blair of the signet institute. oil prices in the region, a big geopolitical risk does not seem to be priced into the markets. angus: locally, i think there are a lot of disappointing sentiments. scaling back infrastructure programs at the wrong time. the demographic structure means you have to invest in forms of transport, housing particularly and health. that scaling back means it is driving sentiment the other way. they have been noisy on the

global markets, buying up assets. now looking to sell some of those. you will see sovereign wealth dhabi,f kuwait and abu looking to sell assets to raise cash. if the oil price remains low over the next year. vonnie: how do you model this refugee crisis? absorb, are we able to these immigrants and if not does gdp take a hit? is there political risk like we saw in poland of more extreme parties as there is a population lash populous back against immigration? angus: it is in the mindset of thedparents and some cases parents, the memory of what happened during it after the war in the fact that we had migrat ion across europe to read we are

saying we are paying the price of not watching in detail or giving advice to many states. it has come back to bite us. it will be with us for quite a long time and i'm concerned about if morocco, algeria, to an easy a, don't -- two knees you -- if libya is not stabilized, that we are going to get refugees coming from north africa as well as syria. i'm concerned about what it means domestically within europe. economy slowing down. i think we're going to have a political effect. mike: is there any good news coming out of the middle east now? angus: amazing startups in egypt, jordan, they root --

beirut and dubai. mike: angus blair from the signet dude. -- from the signet institute. bloomberg go is up next on television and bloomberg surveillance continues on radio with me and francine. ons is surveillance television your tablet and bloomberg.com. up -- mark coming weber ♪

>> argentina making history for the first time. the presidential election goes to a runoff.

expect more market friendly policies. guru wouldertising rebrand troubled companies and presidential candidates. stephanie: welcome to bloomberg go. david: we have a big program. kershner.a, lewis stephanie: we will be talking about valiant. a pharmaceutical company that cannot get out of the news. they added a member of the board from the activist investor behind them. david: they had the department of