>> ahead of next week's central bank. europe opens in the green. backing the bid. support buyers new $46 billion offer. and not enough union in this union. he first post dasheds. good morning, this is bloomberg 's "surveillance". i'm francine lacqua in london

with toni collins in new york. -- with tom keene. in new york. tom: i agree with you totally. how alone is mr. ewinger in strasburg? francine: he struck a very different tone to the past years. this was a ewinger that was very reflective. he thinks the european union is frail and the 28-member countries, 27, if you leave out the u.k., are pretty weak at the moment. here's sebastian in london. good morning. >> breaking news, a new bloomberg politics show shows trump leads clinton 48%-43% in a two-way race. the public and presidential

candidate polled strongly among white men without a college degree. hillary clinton faced a lot of acklash when she referred to some trump supporters in a negative way. and still the russian authority -- they say syrian troops have not returned the fire. a panel of british lawmakers -- the overthrow of muammar gaddafi, they say it was based on bad intelligence and faulty asutchingses. they said the prime minister at the time didn't properly towards threat. the u.s. has agreed to its

single largest pledge, the u.s. and israel are expected to sign an agreement today. it replaces another long-standing deal and calls it to eventually be spent on u.s.-made equipment. and japan pasting stimulus. according to the latest bloomberg survey. and actions designed to boost the rate at 306789 they say the review will not lead to the -- rebel news 24 hours a day. this is bloomberg. francine? tom? tom: the equities-bound bond momentum. we'll touch on that in a moment. real dynamics in the market. the yield much higher. f you would, the better market

after a brutal market yesterday. two-cent spread is steepened. we'll show you that, brent crude also the steepening of the yield curve. up a higher 10-queer yield really gets your attention this morning. let's go to bloomberg right now and the idea of big news. michael mckeon will be along in the next hour. this is my chart of the year maybe three years ago. this is the exceptional growth in median household income, inflation-adjusted. and then mass failure we've all felt. down we go into the 2000 recession, and yesterday the census bureau announced a spikeup in that median household area.

michael mckee will have much more on this through surveils. qua.rasburg, francine la -- francine lacqua? francine: we should bench mark it against europe. because europe is going through a crisis. he couldn't have been more clear. that of course is because of the household feeling poorer. is this because of the threat from asia? we're seeing viewer's discontent when it comes to elections. let's get street blackrock's global chief investment strategist. joining us from london, richard, thank you for being on the program. we're saying we don't have

enough volatility in the market. it's too flat. that's not what we saw over the last 24 hours last friday and earlier this morning. what's going on? it's more angst. -- it's more anxious. >> yes. fiscal paul: potentially playing more of a role in growth. and some short-term value so we are seeing yields start to move up and volatility return to the markets after a period of exceptionally low volatility. francine: is this going to stay? or is there a turning point? do we just need a small set of hikes for the volatility to go away, richard? richard: well, first, we need

to bear in mind as an investor that we are in a low turn of the market. in the markets where valuations are lower than we've experienced but we should expect to see a more normal return to volatility. what we have seen is not extreme but it comes after this prolonged period period of sexeppingsly low volatility, so going forward, we should expect more normal levels of volatility. we've been seeing it in commodities and currencies and it's now starting to return to the u.s. equity market. there's obvious capitalists for volatility ahead moving into more of an economic phase of the political cycle. and we got paul: uncertainty notably around the fed and also around

the bank of japan. all of these are contributing as they crabet to a normal level of volatility. tom: what does it mean as far as a jump in volatility? can it be done in a smooth manner? richard: i think we've seen the markets have been remarkably restill i can't. resilient. nd we saw earlier with the chinese rise in volatility. so no reason to be concerned that we are moving to a dramatically new regime. i think we are returning to an old regime where you will get

intermittent spikes in volatility but this prolonged period where the volatility is exceptionally low, that appears to be coming to an end. tom: as we go to september 21st with a little bit of -- i can't talk this morning, folks. with three, two, one, curve steepening. there it is! a little bit of curve steepening this morning, rachel, how important is this september meeting? or are you already looking beyond september 21? richard: what's important is what we get about the path of the future monetary paul:. monetary policy. more likely the normization of

interest rates as a result of some indication inflation and wages are picking up. it's still extremely low, though, because the long-term path is weak and demographics are significant head wind. i'm also seeing some pick-up in inflation rising from a very low level. so i think we will see an interest rate hike in september. more likely december. but still a very low interest rate environment. tom: how do you allocate given that low for the regime? richard: what you're seeing in the markets right now are that bonds are no longer the safe haven they once were and volatility in bull markets, that's just a mathematical

result as you see rates increase so we aral recommending investors move into three key areas. we still think this is a great time to look for yields and income-paying assets. high quality investment-grade credit. you're still being paid without taking an increase in volatility. and that's an importanting disstinks we need to make. remaining an extremely attractive place to go and lastly emerging markets both on the equity side and increasing sides of recovery. tom: and that's one of the things we bet on. we will return with richard turn hill of blackrock. francine lacqua and strasburg, france. i had a von trap moment in my head. but not strasburg.

rance. a european union commissioner for economic and financial affairs. moss can a veesy on yield curve and prime minister may. this is bloomberg. ♪

tom: we welcome all of you worldwide. particularly our audience in continental europe and francine lacqua in strasburg, france. and front and center as the debate is not entirely but for the most part about london and the united kingdom. right now to our bloomberg flash here's sebastian taylor. sebastian: to protect its new

galaxy smartphone from overheating. it caps the capacity of the phone's battery at 60%. for now the update will be available only in south korea. there have been reports of the battery overheating or catching fire. according to people familiar with the offer, buy was rated at about $1.50 per share and it will double the antitrust fee to about $3 billion and it would create the world's biggest maker of seeds and pest cridse. that's bloomberg business flash. tom and francine? francine: sebastian, thank you so much. we're here live in france where yonker just gave his speech and happy to speak to one of the most controversial leaders in the u.k. now member of the european parliament. thank you so much for speaking

to bloomberg. you're a skeptic and you managed to push brexit through. any gets? >> none. how can you regret taking back control of your own life? what we signed up to 40 years ago was to work closely with our neighbors. well, that all makes sense, to have tariff-free trade deals. that all makes sense. this is so what we have stayed in protects it is clear. we are not against europe but we agree on making our own laws. francine: there were promises made in brexit that will not be upheld. >> well, i didn't make that. some people did but compared to the other side was tittling. we were told by campaigners there's no plan for a european army but this morning mr.

yonker has reveeled a plan for it. lots of ideas get discussed on either side whether it's a general election or presidential election but key thing in what was the greatest democratic exercise in the history of the united kingdom, we have voted to leave this political union. francine: we heard it took five, six, 10 years to leave the european market. gigal: there's no reason why it should do that. here in the e.u., we give notice to to leave. francine: but they are still recruiting. nigel: i'm afraid that's right. all our talent has been stripped out and we've got recruit people who understand how to make trade deals. getting its ducks in a row. getting ready to start this process. but i think what you will see, what i hope you will see is the

rmy triggered. francine: did you think we will have the -- to go through? nigel: i think it's arrogant how they were. they genuinely did not have a plan. francine: but the brexit could have also had a plan b. nigel: well the brexit wasn't in government or control the governmental service. francine: how do you think brexit will be looked back on five or 10 years from now? nigel: quell there was a meeting where four of the eastern european countries are saying to germany, no, we are not going to accept migrant posts from you. it was a big move towards yes, european with trade but not -- i believe brexit was that moment.

francine: do you think it's ueling -- today? nigel: why did brexit win it? because 2.5 million who don't normally vote at all went out and voted and i think trump is beginning to reach some people in american society who have just been out of the voting properties for decades and haven't felt a part of it. so those the least in brussels, there are real powers. francine: i remember when president obama first came to the u.k. you said we don't want foreign intervention involved in something with the u.k. nigel: i didn't endorse donald trump. i just happened to be there. i happened to be in mississippi and i didn't know there was a trump rally in town. i was invited to speak.

i did. francine: were you surprised by the amount of people who turned up? high energy 8: i had been to cleveland and the republican convention in cleveland but what surprised me was how big the brexit talk was. rexit is a major global event. francine: but were you concerned that donald trump was king claims of things he could do? nigel: well does trump represent change? represent linton change? i don't know. francine: that is if he can

follow through. thank you nigel. ♪

tom: from straus strauss burks from new york. francine lacqua in strasbourg with important interviews pierre moscovici. but first, richard, it's gone back and forth in history but i 126 ninthal captured from

the to t freedom impearl city of the roman empire. you don't have to say much more about why brexit happened. how important is brussels to strasbourg? wherever they go next year, how important is that to the brexit debate? >> well, you're clearly seeing the rise in -- and the united states. i think the full imply occasions of brexit will take many years to play out, and in that period of time you're going to see heightened political uncertainty and it's going to have some impact on economic growth but also a shift in paul: shifts over time. and potentially more fiscal we around the world

think the vast majority of the pricing of sterling took place very quickly after the brexit announcement but we think the so we still see it weakening. tom: we will continue. we're going to rip up this strip. karl tannenbaum and he and michael mckee on the bombshell of the more prosperous united states of america. this is bloomberg. ♪

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one interview said few things said during the brexit debate said mildly irresponsible but others were drawing the parallels between what you're seeing in the united states and the rise of donald trump and brexit. he said it could be triggered sooner than what president yonker said. they believe this could be triggered as soon as january but mentioned the u.k. for the moment really don't have a team negotiate the exit for them from the e.u. first the news with sebastian. >> underscoring how the presidential race tightenmented trump has pulled ahead in one state. higher lled well or

-- a share of americans without health insurance dropped to an all-time low partly because the program under the affordable care act. according to the consensus bureau, % of americans still lack health insurance. president obama meets today with the leader of american companies watching for any sign they will get access to one of the fastest growing -- but they mar p to 70% of mine companies are off limits to american companies. and now headed toward china the winds headed up to 11 miles an

hour and toppled street signs. there's been no reports of casualties. global news 24 hours a day powered by more than 2600 journalists and analysts. i'm sebastian. this is bloomberg. tom: a bombshell yesterday in washington the census bureau releasing sterling, sterling data on a better middle class and a better american economy. michael mckee with me right now pierre joining us moscovici out of chicago. simply he is very qualified to talk on these stunning numbers. was this political? can the president? do they take a victory lap on these numbers? michael: they already did. tom: but did they cause this? michael: it's hard to attribute

it to any particular president but remember this was your chart of the year a couple years ago and everybody was complaining that median incomes were going down and the census bureau comes out with the latest figures showing a big rise in household median income. 50, you look at the number there as a trend. because we obviously took a big hit in 2007-2010 when the great recession began. after a period of stability when we were no longer growing. so now the trend is starting to go up again. now, we are still below where we were at the peak of 199 that was $57,999 but still we are going in the right direction. this of course undermines donned trump's argument that things are terrible in the united states but things still aren't great because if you

look under the hood, income disparity is still rising. in the middle half the people make more and half the people make less. the top line is the top 5% and the yellow line is the top 10% and look at the slope of the lines. the richest 5% gained 50% since the numbers began while the median income is -- we are all doing better but the rich are getting much richer. tom: this is a is this sustainable or do you see a trend? pierre: the demand for employment is lifting the fortunes of those are already in the labor market but i think what is missed on this, and i

wish we had more scales. tom: wait tannenbaum criticizing our chart work? carl: well the bottom 40% are still falling and that's the ones that are angry and those cohorts exist not just here in the united states but overseas where the income disparity has also been growing and it's really a fertile ground for the message that -- michael: the richest 5% their their of the income is 10.5% and since 1967 it's gone up from 3.3% so they have made almost no gains despite all the gains we've made in fighting poverty. tom: if we raise the minimum wage, does that help the people that are angry, carl?

carl: maybe temporarily but maybe what to do would be to decompose those in the lower cohorts. what you will almost always find is they have lower levels of education and that makes it very difficult for them to even get on the bottom rungs of america's job market level so perhaps the way to address that so make to them available the training. many of them are 40-55-year-olds with less than a college degree and need education as opposed to forcing wages up. tom: and an open question to both of you. what portion of america is not part of our two americas. we talk about the haves and the struggling middle class. how much of america is just people that are being left behind, carl? carl: it's hard to put a fraction on it but i would say

20%-25% is a reasonable estimate. the waves of open trade and capital markets and also to a more modest degree technology that's made some lower levelers obsolete. that's what is making it harder for those lower levels to get ahead. tom: we have less poverty. that's the heart of this news. michael: the poverty levels have fallen significantly as well but one problem we have is measuring poverty. who is poor? because the poverty statistics that came out yesterday don't include a lot of the ways the government helps people and doesn't include the earned income tax credit or food stamps all those things, so it's hard to tell where we are exactly. we know we are a little better off but --

tom: for the dumb question of the day we go to carl tannenbaum what's a household? we don't really know, do we? it's not the two parents and ward and june and the two kids, is it? carl: no. but i think it's some of it is a unit that has a primary wage earner and there may be primary depend nts. and ld be a house earner then maybe kids, up to five. maybe before you were both married you were middle income workers you then put two together and now you're household is in the upper 5%. tom: talk about mergers and acquisitions. this is the chart michael had up. it was as clear as this. carl tannenbaum the green line there looks like the ascension of the chicago white sox. this is what ronald regan spoke

of. the aspiration. does that red line move back to being a green line? carl: so if that's really the chicago white sox, i'm not sure it's going to happen anytime soon and i'm not sure what stim russ the team needed to get to that kind of progress. tom: but can we get back to that aspiration? carl: it offers hope that if we can raise the tide in the harbor, all folks can benefit but you do not want to go down the path of excessively redistributing the tax but if we can equip more of our citizens to compete in the market with the education and infrastructure they need, we will pull more of those families up off the bottom. tom: we could talk for three more hours about this. wait, that's what we are going to do michael mckee and us on "surveillance" on this wonderful news. carl tannenbaum continues with

from northern trust and later steven wieting of citigroup. a perfect day to speak to mr. whiting about profit in america and that bombshell report from the census bureau. this is bloomberg. ♪

francine: this is "bloomberg surveillance" i'm francine lacqua. with tom keene in new york. we are heard from the european commission president saying things are not rosy and we need to have an extensional reckoning and he, himself, for the first time really acknowledging the fact that the

european union has in some ways gotten behind because we have 28-member countries and some are weak. one person who is not weak madam vest ger, and tom, we spoke about apple and the fact that since she announced that she would make apple pay a lot of money to ireland, something the irish government did not want, a lot of critics have come out saying this is an anti-pro business european stance and she fought back against that accusation. >> every member state can set their level of corporate taxation. in ireland they have decided at 255.5%. that's completely -- what they cannot do is give selective advantages to specific companies, because that, of course, tilts the playing field and makes it, well, unfair competition. francine: tom, i also asked her

directly if she was going after certain european companies because at the moment she is punishing some because they are not paying their fair share of tax and she said yes, she certainly will and has no gets about what she is saying. now we go to richard. the problem with the european union is at the moment people think it's broken. they -- you speak to insiders and they say it's just the federal union and we need time. do you think investments will go else -- investors will go elsewhere instead of pouring into europe because of the miscon deleapings europe is just so slow and can't agree on anything? richard: i think we are at a very important inflection point seeing a shift that monetary -- alone is not enough to thrift economy.

and we need other policies to come through if we are going to see stronger global growth. so we are going to need further discussion about that we are seeing it in the u.s. and the u.k. and clearly in japan and canada and also getting increased talk about structural reform. there was a fear of getting left behind in the structure because of more radical shifts in policies taking place and although europe made a weaker, low-growth economy, there's not a sense of crisis. it's not an economy that's falling back into recession. unemployment is zpwradgely coming down, so there isn't that sense of crisis that is more likely to lead to a more radical change. francine: rachede, there's a feeling in the markets and i guess amongst market participants, certain members of the press that we need a silver bullet. we need a silver bullet for europe which may be more

monetary stimulus or maybe you argue against that, that it could be a turn of fiscal policy but is there really a solution that could be taken in the next six months that will make that whole region a lot better? richard: i think silver bullets are not the answer because there's not a simple solution that will lead them knows six months. in recent markets the anticipation of greater policy and structural change, there has to be a recognition that this is going to take a long time to implement these reforms even with the political will to do it. it's going terry: to take a really long type. the challenge in europe is there's not the political will to take and make these changes so we grind and ax on and muddle through coont in an environment where investors are likely to be low and interest

rates and particularly the impact on the domestic or banking system is there's likely to be a significant head wind for large parts of the european economy. francine: hmm. thank you richard of blackrock global chief investment strategy talking to us from london. we will also be talking a little later on with the european commissioner of monetary affairs. we will be asking him about growth and unemployment. tom was talking about household income in the united states. how does he see the prospect for our european household. this is "surveillance" live from strasburg and new york. ♪

tom: good morning, everyone. breaking news, i was just looking at the bloomberg terminal the bring you a chart on man sano. bring it up right now. this is huge news, talk about a re-price tag get that deal done. 120th red circle there's 128. i believe the stock up 2% but really it brings it back to the highs of 2014. right now let me bring this chart. this is how we make sausage on "surveillance." back to 2007, and you can see

we are back near that 1.40 peak of 2007. i lost the circle. my cusser right there is where the price is at 120, carl, this is part of the price of free money. ken row golf with us yesterday on negative interest rates, and even it's not negative, this lower regime creates distortions and do i understand a misallocation or misallocation of capital? carl: well it's a proper misallocation but you see them making investments they would not have made that the level and what worries me is in the long-term this may not be the sort of investments we would want to promote. you get sense we have some investors in the markets they don't normally inhabit which could end to make them more skittish if times turn around so i hope it's something

someone raises in the boardroom toot fed. tom: bring up the banner. we do the banner. we communicate on "surveillance" to bring you the key questions of the moment. carl tannenbaum with us for the moment. the idea that we get lower for longer, longer, longer, the idea of allocation or capital allocation within a new terminal -- will it be rational? we don't know. carl: and because we really don't know where the destination is, we also don't know what the road is to get to that destination. think one of the frustrating things on the corporate side we are seeing a lot of combinations but not a lot of investment. new investment has been soft they are in this new expansion. that's the kind of thing that raises productivity to with where as they don't seem to be able to create the new ideas and productivity we see.

tom: we see 1 the and it's a big move off the close yesterday. strasbourg, france, our francine lacqua. francine? francine: tom, we have an important interview with the commissioner for immigration and former mayor of athens. he is commissioner, thank you so much for joining us. we heard from president yunger. he seems to have a stance on migration. is this the new commission? do they want to soften their stance on forcing countries to take in refugees? >> no. we tried to get the states to be part of our managing this. and they are on the top of our agenda. i believe the president has a he nger speefment he was -- is giving answer to all these

extension problems in europe and focused a lot of migration as you correctly said before. but as far as this we are hearing, they are good and there and the only way to address this issue in a more efficient way. the allocation -- and all other states should show more solidarity among them. francine: of course the e.u. and turkey agreement shut down a popular migration route. foote implementation is at risk if they do not receive this idea? >> i was in europe last year and i don't think this deal is at stake. on the other hand turkey has started delivering. turkey has made a great progress on that. has already met 67 out of 72 benchmarks. there are five remaining now, and they are committed to progress and move ahead. so i don't think that the deal is at stake as long as this deal works, the management of

the problem on the ground will be better, and this indication right now, the flows to the part that turkey is mplementing that deal. francine: but is this something the prime minister of turkey was fighting back against a month ago? >> turkey has a lot of terrorist attacks in place and at the top of the terminal domestic policy agenda but it's true turkey from the beginning moment has aspired to -- adapt to the european standards. francine: can you just remind me the numbers of refugees we're expecting from now until the end of the year? >> you cannot foresee but right now the situation is quite pressing. greece there's about 65,000 people there, as i told you before the flows were stemmed.

but on the other hand telestration is bad, i say bad because more than 120,000 people have already arrived during the first month, and now this progress has found a new way. thy dive low toward bulgaria. so we can enhance the operation with bulgaria to address that issue. francine: thank you. commissioner. tom, this is an important question not only from a humanitarian point of view because it is our duty to help a lot of the refugees but it's a complicated issue for the e.u. we will be talking to pierre moscovici, the growth commissioner, next. ♪

tom: this morning, a new curve steepening. september 21 is one week away.

the market vigilantes test. $106, is it transatlantic dinosaurs mating? once again, rebecca minkoff rules of the fashion show on the streets of manhattan. this is "bloomberg surveillance ," live from our world headquarters in new york. wednesday, september 14. i'm tom keene in new york. francine lacqua, tell me the why juncker inl strasburg. is he does a why state of the union address every year. you mentioned brexit. there is nothing he can do about it, but he says he regrets it and is very sad. reflection point

for the european union. we saw a reflective, moody paul ker at times. we need to decide whether we integrate more or go back into the project. tom: we will have important interviews, coming up with francine. here is sebastian salek with bloomberg news. donald -- sebastian: donald trump now .eads hillary clinton the republican presidential candidate polled strongly among , without and women college degrees and among union households. in the past few days, clinton has faced backlash for calling trump supporters deplorable. russia's warning that u.s. backed rebels in syria are violating the cease-fire.

the truth that began monday appears to be holding. authorities say that artillery 23 times,e fired mostly from areas controlled by rebel forces. they say syrian troops have not returned fire. economists seized the bank of japan boost stimulus. according to the latest number survey. actions are being reviewed designed to boost japan's inflation rate to 2%. governor kuroda says the review will not lead to increased stimulus. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries, i am sebastian salek. this is bloomberg. tom: thanks so much. let's go to equities, bonds, currencies, commodities, and we will get to this transaction between monsanto and bayer. talking about more education in the market, as the french would say. bid, 45.11 there. let's move on to the next

screen. oflose the complacency august, the dow threatening 17,000. , 47.1 a four per barrel. let me go to the bloomberg right now. the idea of the monsanto transaction. to give you scope and scale, bayer, 115,000 employees. 23,000., that gives you some scope and scale. the real news is the bid, 90 to 106 228 takes monsanto back near 2007, 2008 period as well. it really fuld into our fed debate.

mr. tenenbaum is with the northern trust company, a former president of the national association for business economic meetings. we get lucky on the monsanto transaction, the best analysis of profitability in the american economy. steven wieting is with citigroup. what is the state of profitability in america? are doing the broader asset analysis with citigroup, but you earned your stripes on profit analysis. america is profitable right now, right? en: most companies are, have grown a little, grown profits after a long run of dragging profits. it is dissipating. i think that we are going to be seeing a mild further extension of the profit cycle. tom: you need to work day in and day out with the cautious views of willem buiter on nominal gdp.

when you see transactions like this, are they nothing more than the capture of nominal gdp? steven: this is the kind of sector and the kind of instrument that grows on a secular basis. this is innovation. tom: financial engineering. yes, that this is an area that is not cyclical. growing farm output around the world is not about the ups and downs of the business cycle, not about the auto industry going to 18 millionn and back to 17 million again. tom: you have been great on this. is this innovation or nothing more than the financial engineering of the modern age? >> the results will not be apparent for a while, but it seemed more like shuffling than accumulation. the combination of large

companies does not seem to result in any new release of energy surrounding is this fixed invention -- business -- of businessrrounding fixed infection. i am looking at -- come on, steven wieting, getting money for free. monsanto has something in the vicinity of 17. i have a 0% cost on bayer's 20% debt. buy or bill, you're going to buy. but there are copies that grow, and those will rise up in value, particularly when the alternative is -- tom: thank you so much for staying around. carl tannenbaum, the former president of the national association for business economics, and with the northern

trust company, chicago white sox. , white sox p i will state again. coming up from strasburg, france, a conversation with p or muska vinci . this is bloomberg. ♪

francine: this is "bloomberg surveillance." inm francine lacqua strasburg. tom keene is in new york. -- when you look at growth, inflation concerns, the state of the euro, this is

pierre moscovici, commissioner of financial affairs. thank you for giving us your time. how would you quantify the state of european growth at the moment? pierre: we do not have yet the figures. i would say that our growth is now quite solid but still too weak. we are also waiting come expecting the results of the brexit discussions at the start of it. in order to raise, it is important -- it is important for us to raise from uncertainty. amit lasts for too long, i afraid investors will start being too careful and start to wonder this is why jean-claude genter said that. juncker claude ji said that. francine: you will hear the bell

because the next session is about to start. what struck me is that you have given a kay's in the press that you have communiques. in terms of timetable, what is your optimum time for the u.k. to trigger article 50? but you'ret ready, talking about uncertainty and not wanting that uncertainty lasting too long. pierre: we understand there is a need to recruit people and forge a position inside the british government. that is normal. but if it lasts for too long, it will look as if they are not clear and that they are hesitant. this is why we say at the end of the year, the beginning of 2017, will be the optimal moment now .o start negotiations before is too early, but after will give the wrong signals. this is why we are ready. we have our negotiators, the former french commissioner.

the parliament has its own negotiator, former prime minister, and they will form a team. we are now waiting for the british government to form its own opinion, to raise the article 50, and then start negotiations, which will lead to a positive spirit. we regret that the british people chose that. we know that great britain will be a very important european partner with britain, a european country. , we needave got to do that corporation -- we need that cooperation. francine: would you be open to transactional deals for the , to bridge the gap when they leave and when he trailed deal -- to bridge the gap when they leave and when a trade deal is put in place? pierre: we have so many

agreements of all kinds that create that union, which is very kind. and to get out of it would be very complex, very difficult to rent and for us, it makes a package. i will give an example. we have freedoms inside our market. these freedoms are inseparable. we are not going to distinction between the freedom of movement for goods, for services, for capital, and for people. again, it would be quite complex. for the time being it is clear union, has not left the that it is fully in the union. francine: we are trying to get a sense in europe, maybe considerations or at least alliances, that when there is a will, there is a way. how easy can you try to make this for the u.k.? this negotiation would

last for i don't know how long, only for one or two years. longer?: not steven: 2 -- pierre: two years at most, which is a long time. what must be clear is that as long as this negotiation has not entered with britain, the u.k. is a member of the european union, with full rights and full duties, and we will stick together. the nomination of -- we must move orderly to start a negotiation, leader negotiation, and after it is different, not like before. have a bigut if you ceo in front of you, basically the u.k., who asks for some kind of reassurance, give me a sense of what kind of deal we end up

with, what can you tell him? pierre: i cannot say that because we have not started the negotiation. what i can say is we have the security of the market and the present agreement, and they are solid and they will go, as long as we are not out of the union. francine: i know you respect the independence of the central bank, but does this make your life a lot more difficult? pierre: it is not only respecting, i believe that draghi is leading the right monetary policy in the european union. he takes a decision for the general interest of the european union as a whole. herust not only is competent, but also his choices. francine: do you trust the politicians? there is a cat and mouse game, where mario draghi is doing all he can with monetary policy, but continues telling politicians in individual countries that it is

up to you to put the structural reform in place. you know how difficult it is to do these things, especially when there is no market pressure. ownre: we have our responsibilities, and that is juncker'sclaude mr. speech was about. this is why he announced the fact that we are going to double fromo-called juncker plan 360 billion euros to 630 billion euros. -- which must be intelligent. have stronger growth and more balanced growth in europe as a whole. given by theo be

head of state and government two days from now. collective signals and then complete actions by each of us. francine: commissioner, what a great pleasure to speak to you. the challenges for a lot of the juxtaposition between monetary policy and fiscal spending. we will have plenty more from strasburg throughout the day. we will go more in-depth and analyze the state of the union speech. we will be talking about where the next crisis lies for the european union. this is "bloomberg surveillance." this is bloomberg. ♪

tom: it is the beginning of the best time of year in new york city. not only new york fashion week, rebecca mink off with an annual visit. we will do that later in the hour -- rebecca minkoff with an annual visit. we will do that later in the hour. really doing entrepreneurship in new york. she will join us here in a bit. keene in rebecca minkoff's new york. francine lacqua is with us as well, the important european union meetings. i want to turn to steven wieting of citigroup and talk about the center around september 21 and the power game of the fed. i do not really want to get into that. every but too much time on that.

but the bottom market moves -- let me bring up the chart. this shows the quiet, that lack of volatility, the yield curve. there is a tension in the middle of the chart. do we see it again at the margin? steven: i think that the bond market will probably settle back something when you go to jackson hole and think about what happened there -- central bankers talked about different tactics. they did not talk about retreating from battle and saying we did it all wrong easing monetary policy and trying to be countercyclical. i think that the bond market itself is not going to be leading to some genetically higher yield level. they are talking about different tactics. perhaps it is the bank of japan cutting rates deeper into negative territory per the ecb is more likely to ease monetary policy than it is to taper off. tom: what will that do to the marginal tantrum? steven: the bond yields for some of these companies, we had new issuers in the corporate sector

marketing negative yield bonds to investors, saying we are a better storage fee than some thing else. for cash and zero and bonds below zero to coexist, but the effect it had on other markets, on every other market in the world, the brazilian debt with a nominal 12% yield had the same impact that the german bunds below zero. tom: that is the inflation of yield dynamics down to one story. steven: it is about dangerously high correlation. if you look at this year, we have seen equities and credit follow bond yields down. you look across asset classes, there has been almost nothing absent from following the lower bond return for the lower yield. tom: what does this signal to you to get to the tight correlations of july and august to whatever is happening now he? steven: it requires hedging and real hedges, and not just diversifying across asset classes. there is going to be a setback in markets as there has been, and it is going to be across all

asset classes per you could see this coming. there are real issues when markets cannot let you diversify risk. tom: does the fed agree with the wieting analysis? do they understand the import of the september 21, or the november or december meetings? ofven: bear in mind that end july, the japanese bond market was already signaling trouble. the lack of adding to the time period, which the ecb will explicitly purchase assets -- the fed is in a situation where the easing of the years passed may have been too much to keep us on a sustainable path, so that is why the difficulty for need to knock the american economy down. tom: this is about a u.s. central bank that is -- that was alone and appears to me to be extremely alone.

steven: right. tom: they are ever more alone. steven: think about it this way. we had all of this easing by the federal reserve, which everybody thought was crazy. you look at 2015, and the u.s. dollar had the third-largest rise in the history of freely strained -- of freely traded exchange rates. tom: that gets you to the marginal tantrum. steven: the external sector has been very important. some of the risks that he had had in european bonds, japanese bonds -- tom: let's go away from institutional. do we need to go overweight in cash and equity investment? steven: we are overweight in cash, tiny weight in gold, as may be trouble when you have interest rates rise, but at least it has a negative correlation to risk assets over a one-month or three-month period. 1326 on goal -- where does

that go? steven: the thing about gold, it very far.ll but bonds are extremely expensive. we are underweight in global bonds, big diverse differences which bonds we like and dislike. wide yield differentials make that case. the story with gold is that there are several examples. either a deep decline in risk assets or more comity to central banks would push it up. tom: steven wieting with us on a cross-asset analysis. we will go to commodities. lower oil prices -- this is truly must-listen. "bloomberg surveillance" on radio this morning. good morning. ♪

tom: good morning, everyone. "bloomberg surveillance" from strasburg, france, which is where french in the prize.

i am tom keene in new york. let's get to sebastian. jerez has the present changed. donald trump has pulled ahead in one of the key battleground states, ohio. the polls have him leading hillary clinton 48% to 43% among likely voters in a two-way race. he pulls higher among men, independents, and union households. one of clinton's problems there, 57% of those polled in ohio says the trade agreements from her husband hurt jobs and exports. programs and rules under president obama's afford will care act expanded coverage to affect health insurance negatively. president obama meets today with the de facto leader of myanmar. american companies will be watching for any sign that they will get access to one of the fastest-growing economies in asia. business groups and the u.s. have complained that economic factors have shut them out.

a super typhoon with record-breaking wind and heavy rain battered taiwan and is headed to china. the wind got up to 117 miles per hour, top links treat -- toppling street signs and trees. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries, i am sebastian salek and this is bloomberg. tom, francine? francine: thank you so much. -- in in strassburg strasbourg, france. schulz, the president of the european parliament. thank you so much for speaking with bloomberg. you saw a lot of crisis, the immigration crisis, migrant crisis, the political crisis, brexit. .e avoided brexit what is the next crisis that the european parliament will face?

martin: as you just mentioned, we have enough crisis. not solve youth unemployment, it is a known or us that it is an enormous problem. investment -- attracting more investment to create jobs in other countries, we will be in an even deeper crisis. francine: do we have a silver bullet? do we not need to show the world that europe means business? is there one thing the parliament could do today to put at ease all the concerns that there are about europe? the government has to do after brexit, show unity. it is the precondition for every investor. landscapeolitical

with everyday confrontation between member states with tensions ideologically, we will never attract an investor. the member states must act together. francine: why are we where we are? there is a lack of commonality. martin: i think there is a misunderstanding in a lot of capitals. the lost of trust to institutions is a worldwide phenomenon. francine: and you see it in the u.s., right? martin: cities, especially those who are working hard and playing by the rules, do not feel respected by the institutions. union, of the european member states feel it, governments feel it, and there is a scapegoat. that is brussels. delegate all responsibility on the shoulders of the european

, there is trust in the national institution. francine: is that because of brexit? martin: i think yes. ,verything coming from brussels the real advantage is the national government. it is the same national or of the table in brussels, returning home and saying we have nothing to do with it. this creates mistrust, signaling unity. the union is a strong as the mobile states -- as the member states below it. that would be enough. martin: are you -- francine: are you sort of concerned about a european spring, some kind of social revolution, if the politicians do not do the right thing? it is unclear to me what that is at the moment. martin: some of the member states look to greece. see of the member states

what is happening with the united kingdom as an alarm signal. discussing-- we are today 20 billion for here, 40 billion there, 100 billion here, another 90 billion for you and .or me in million euro is a lot of money. also for those who look at bloomberg, 1000 euros is a lot of money. if people feel they are talking about 9000 euros, i need to survive every day, the credit of trust. therefore, we have to focus on the interest of ordinary citizens. jobs, reliablele , not threet salaries jobs to survive, necessarily one

job and a decent salary. ordinary citizens paying the bill alone. this is what people leads to mistrust in institutions. francine: but how do we come to this point? are we elitist without realizing? the biggest single market in the world with enormous profits, creating , betweenwealth countries and within the society. francine: european parliament president martin schulz, thank you very much for your time. you can see there are parallels between what is going on in the u.s. with the election and donald trump. in partso boiling over of asia, with the occupy movement in hong kong. wake-up call be a for politicians to start listening to their citizens. as martin schulz so rightly put, trying to make a difference with

what matters to their daily life. tom: what i noticed there was gridlock. air.seems to be in the citigroup has done a terrific analysis of what happens after the first tuesday of november. steven wieting is with us. i'm sorry, it is depressing to me. let me cut to the chase. it is more of the same, right? steven: it seems like we have some powerful forces, both right and left, neutralizing. sort of a stalemate. thinking about markets for a moment, there is sort of a fragile equilibrium here, where slow growth and low rates, as long as you keep that in some stable credit, you are in decent shape. but if you move and have large policy changes to anything, far right or left, unified government in the united states, you can upset the apple cart. why is this important? there have been 11 recessions since world war ii. eight of them have overlapped a

new president's first year in office. if you look in the current context, some of those have been action. the opportunity for a big breakthrough in economic roof and policy -- in economic growth and policy would be lost. the assassination of a president was a great catalyst. do you see for market stability and asset class benevolence, if you will, a need for a new president, president clinton or president trump, to get along with speaker ryan in congress, or is it a good thing to have gridlock? steven: it would be much better to have a bipartisan agreement to signify -- tom: we are not going to get there. i see no indication. steven: yes, but also making very big changes, those proposed by the far right or left, given their own way to run can be

disruptive to the american economy. it is unlikely that will occur. if you think about some of the math of why -- forget the swing states for the moment. you have 40 states, in the last four elections -- two when republican, two went democrat. when you think about the house of representatives, we have not had a change in the house of representatives when a new president was elected since 1960. if democrats were to win as many seats as they did in 2008, we would still have republican control. there is a lot of reason to believe that all of the outcomes out of this election are going to move into the same status quo. we protect the copyright of all of our economists and analysts. coming up on bloomberg radio, from ubs, drew matus will be with us. we need an update on the

optimism that ubs has on the american economy. we certainly saw that yesterday. income data.ling from strasbourg, france, and new york, this is bloomberg. ♪

francine: this is "bloomberg surveillance," live from strasbourg and new york. john claude younger -- jon klein juncker -- jean-claude juncker talks about whether they decide they want to integrate further or not. let's get straight now to the "bloomberg business flash" with sebastian salek. sebastian: the head of denmark's central bank says the u.k. should be worrying about brexit and not the rest of the european

union. he spoke to bloombergtv today. >> we should take into account that although britain is a very important country, the impact is limited. will come tompact the british economy. sebastian: he also said prices will gradually increase in europe. he blames the low rate of inflation on the collapse of the economy. monsanto -- offering an antitrust breakup fee of about $2 billion per day for deal goes through, it will be the biggest acquisition ever by a german company could monsanto was rejected in the first two offers. tom: new york city is about fashion, and it is an annual visit with rebecca minkoff. it started out with handbags and

has blossomed into one of new york's best things. the entrepreneurship of rebecca minkoff, marching down the isle and breaking rules. this is wonderful, the outdoor fashion show directly on the streets. did you learn to do that? did you take modeling lessons? : i was practicing for a long time. i hope i did an ok job. i told them do not be serious. have fun with it. but like you had a great time the night before and are still thinking about it. tom: fashion week is different than it used to be. it used to be a lot of money within luxurygle to stand out, and now it seems almost more subdued and more tactical and more surgical about getting the brand out as you go from city to city. what is the view this year of new york fashion? rebecca: some people are still figuring it out. to retail, and our

view is the closer we can get to our goods being on the consumers , from the time she sees them on the runway shows, that is the ultimate in what we want. that is everything we are doing to tighten that. tom: how do you adapt and adjust to the mega brands in luxury? you are in the trenches of the sausage making of new york fashion. we love that you do that, but then how do you battle the juggernaut? i love: my cofounder and the fact that we own the weority of our company, so can do that without the corporate layers and have a runway show on the streets of new york. tom: you do it at such a luxury level. rebecca: i am happy to say that no longer can they copy us. we get it to our consumers first. there is no longer that six month delay that they can get into the stores before me. tom: talk about the madison

avenues in the 10 or 12 major cities per not that i see empty stores, but i see turnover from stores. tell me about bricks and mortar luxury right now. rebecca: brick and mortar is going through an extreme transition. you will see more and more stores need to figure out what their experience is for the consumer. it is no longer about going in and shopping. it is what is the added benefit you will have for the consumer once you are there. tom: what do you do with that? what do you do with the battle of luxury and the battle of brick and mortar and the battle of digital? rebecca: our strategic plan is that we have events twice a week, almost twice a month, and it is about giving her something more than just about shopping. we do shopping nights, membership nights, entrepreneurship nights, where you listen to a female speaker, a female entrepreneur, coming away with something great. tom: do you feel like you

invented this? thisllow this, talk about with robert burke of "the new york times." fivere literally inventing and six years ago where everybody is trying to get to right now. do you feel like that every day? rebecca: thank you for the compliment. tom: you just say let's go, right? rebecca: the goal is to be nimble, quick, and disrupt areas that we see are broken. traditional brick need something more. tom: you do charities well. what is the charity focus now in new york city for rebecca minkoff? rebecca: i wanted to end the show with something bigger and greater than fashion itself. we had these jackets, we parted with a female artist, and we go to a charity called not on our watch, inspiring millennials to remain active in combat human

rights abuses. tom: you have real people. is that true? rebecca: we have four bloggers. tom: is youtube going to take over the business? rebecca: i think it has something in the game. tom: rebecca minkoff, thank you so much. you have the sophia handbag, ini sophia? -- m rebecca: how did you know about that? tom: i was told she is going to be on the show today, "ask about handbag."ophia how about a data check as we continue with steven wieting as well. , 17.78, twovix sense wider.

this is bloomberg. ♪

tom: good morning, everyone. francine lacqua in strasbourg. we will get to her in a moment.

i am tom keene in new york. we look at foreign exchange. can francine afford a fancy lunch in strasbourg? 1.1228. dollar stasis there as well. david westin took three bayer aspirin this morning to get through "bloomberg ." david: the only question is is aspirin or "buyer"? i will be curious to see if he still thinks the markets are too complacent. we also have jim tisch of lows. -- of lowes. tom: there is a much bigger

energy component than people think. david: particularly exploration. with hisgreenberg -- lawyer -- and hank greenberg -- with his lawyer -- they just opening arguments. it has been 11 years. remember elliot spitzer when he was attorney general? they have been fighting this thing through and will not give anything up. the basic claim is that there were some accounting misdeeds back when hank was running aig, back in 2001 comes in big reinsurance deals. tom: we are finally there or that is all there is to it. him,: i am going to ask where is the line between honest mistakes and stepping over the line? when we hold people accountable. om: on "bloomberg ." we look forward to that. steven wieting from citigroup, usually looking at the u.s.

beu.s. reports, there will -- and then there is mexico. -- mexican peso, dollar-peso there it goes. and up toout of 2014 a 20 level. we extrapolate out from a weaker 19. rebecca: that is the dollar -- steven: that is the dollar strengthening. tom: what is your backstory on this important move? seen,: this year we have as commodities have found a ,ottom, particularly petroleum as the federal reserve has backed off a full normal cycle, american commodities have strengthened. they have strengthened the lot. weaken --continued to mexico has continued to weaken. bring up the chart again

here once more on mexican peso. i'm sorry, it is long linear. that is a log charger that is a wicked straight line. i'm sorry, that is a wicked straight line. there we are on the mexican peso, steven wieting of citigroup. francine lacqua isn't shots board, france. -- francine lacqua is in strasbourg, france. francine: i would go back to the words of jean-claude juncker. this is not like president obama. he does not have an executive power to force countries, member states, to do what he wants. but he was reflective. he brought it back to the founding said the eu and said this is an essential crisis at the moment -- that this is an existential crisis at the moment . he wants countries to go back together to find that commonality and purpose for the eu going forward. francine lacqua in

strasbourg, france, stepping out on the brexit debate. there is much more across bloomberg radio and bloomberg television today. with markets on the move. i might say this is the day where we really begin to look forward to september 21 and that fed meeting. within the education and the correlations of asset classes, we will speak with philip verleger and why du care? care? why do you he looks for or lower oil prices come way outside the consensus call of stability. carl tannenbaum joining us as well, with northern trust. minkoff'st of rebecca new york. wonderful to have her with us this morning. ♪

jonathan: $56 billion.

expected to reach an agreement to buy monsanto. david: volatility returns to the market as investors prepare for central-bank decisions. european commission president keeps his first post-brexit address on the stage of europe. i'm jonathan ferro alongside david westin and alix steel. the biggest german takeover ever. the issue is between the offer price and where we train right now in monsanto. david: another part of the reported deal is a $3 billion breakup fee. there's a lot of concern about regulators. if it wasidn't know $2 billion or $3 billion. china national chemicals. you ve