francine: political warfare. seven days to go until the u.s. election, after the fbi director could set the reset button. boe -- will he stay or will he go? the future of mark carney overshadowing any policy decision. and central banks look at european stocks falling, mixed corporate earnings interlinked. in londonne lacqua with tom keene in new york. tom, we have quite a busy week ahead of us.

here in europe just wants to know what's going on in the u.s. tom: a whole bunch of things to talk about. we have the fed meeting, the bank of england meeting, job state. i want to know why you aren't doing a 4:00 a.m. are you slacking off? francine: it's the european way. i really don't know who sets the international clocks. there is always one or two weeks where the europeans go down in our. tom: this is what has ripped up the script all the way across the new york times and every other paper in america, for our global audience -- all i can say is there is no other story. --will be joined in a bit just stunning what happened in the united states this weekend. francine: it is. people are transfixed. let's get to the bloomberg first word with taylor riggs.

taylor: the european union side of free trade agreement t delayed in belgium.just injured was in belgium for the ceremony. the agreement will cut tariffs for eu manufacturers on hundred million dollars a year. the eu had to overcome objections from belgians regions. italy has been rocked by a third powerful earthquake. no deaths were reported but the quake destroyed a cathedral and scores of other buildings. the quake was a magnitude 6.6, the strongest ahead italy and 36 years. spain's 10 month political impact came to an end. mariano rajoy was reelected as prime minister. his rival socialist party abstained from saturday's vote, clearing the way for him to win enough seats to form a new government. the bank of england governor is

said to be leaning toward staying for his entire eight-year term according to the financial times. friends he will likely make a statement this week about his term. theresa may is said to want him to stay on and has tried to smooth over any misunderstanding. and hillary clinton's e-mails appear to be having some impact on her support according to a new tracking poll -- she holds 46% to 45% nationwide. last week it had her with a 12 point lead. the poll was taken after james comey said the bureau had discovered files that may pertain to its investigation of her e-mails. global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. tom: thanks. let's get to the data, equities, bonds, currencies, commodities. a busy economic week, we start

out flat. oil is sagging over the last 48 hours of training. six, watchinge the mexican peso a proxy for trump. all in all it is weaker. i notice the german bund was elevated as well. francine: this is what i am looking at, energy shares the world'ser biggest crude producers failed to agree on supply cuts. european stocks down due to political anxiety. tom: over to the bloomberg. this is dollar-peso as we go eight days into the election. here is the clinton surge off those three debates and if you

need a graph of what has happened the last number of there is the trump surge coming off the great set of debate performances -- that shows you the size and scope and scale of the market given the swirl of politics we are within right now. after the newsis broke of the fbi investigation. you can see a move to safer blue and gold is in the pink is in japanese yen. the yen goes higher, stocks falling. and then we need to look at the mexican peso as well. let's get more with eric nielsen. eric, always a pleasure to speak to you. you have some smart thoughts on what's going around in the

world. if you look at the markets, there is a lot more unease about the u.s. political election. are we really focus on the election? >> if you look at the economy around the world, last weekend there were a whole set of good numbers. room iselephant in the the political uncertainty and nothing is bigger and more in-your-face than the americans. francine co it is largely being ignored or has been ignored. will it have an economic impact? >> it will have a very big impact. i think people have come to the conclusion that hillary clinton you have to win and trade one way or the other. it looked like she had him under the fence and it was rolling along and whatever you think about her, it was stuff that we

know and it was in the framework of what markets can understand. but tomorrow or maybe even wednesday, we will have enough detail to really make an assessment. chart,t's look at this this is u.s.-united states real gdp, we have shown this many times before. then you have the idea of a much , theer economy over here 2.9% statistic on friday is right there, but when you take out inventories and exports it is a moldy american economy at roughly 1.4%. in your experience, can tepid gdp into an election affect the vote? >> at him think so.

-- i don't think so. what number is not going to make the difference. it is more about jobs and even about the prospect going forward. i have seen people being skeptical about it because when you bring out the inventories and export numbers, there is no reason we can't have a number of exports. chanceybe there is a that global trade is starting to pick up, which would be phenomenally good news. tom: this is a really important thing and it's a real u.s.-european sentiment. that you canelieve to take exports out, that there are a lot of people who are looking at u.s. analysis. francine: and that is something you need to look out for -- it is how you measure things and

whether it has a huge impact. this brings it back to 2007. blueis u.k. inflation in and in purple is u.s. inflation. none of the central banks are hitting their target. will they in the next 18 months? >> no, no. no chance. states, inflation, if you clean out the temporary stuff and the health care stuff you wo. slightly above t there is no great mystery to it. we just have a very big output gap still. tom: marty shanker will join us in the moment. 15 has been looking at this story. eight days until the election.

we have been looking at that all through the weekend. in the next hour, we are honored to bring you peter hooper on an american economy. a lot of data this week. this is bloomberg. ♪

francine: this is bloomberg "surveillance." let's get straight to the bloomberg business flash with taylor riggs. taylor: general electric is said to be posting a deal to buy baker hughes. the wall street journal says the agreement is valued at $30 billion and will be announced today. it is the third-largest oil services provider. sony has cut its full-year profit forecast by 10%. the company says there have been losses and its components unit.

they also reported in impairment on the sale of its battery business. and there is a different take today on brexit's impact on the financial industry. the report says the biggest banks could gain an extra $14.6 billion a year in revenue after they leave the european union. the report is from the pro-brexit group. that is your bloomberg business flash. tom: thanks so much. what francine and i wanted to do is talk to people that have darkened the door of the judicial system in the united states -- let's start with the former attorney general eric holder, clearly in support of secretary clinton. the airplane meeting between the attorney general and bill clinton led to perceptions among some of inappropriate communications.

here is the key sentence -- perceptions matter. this is a difficult piece for me to write. he is a man of integrity and honor by good men make mistakes, and he has committed a serious error with potential he severe implications. we go to marty shaker in washington who has given us terrific perspective. good morning. you will be on with us a couple times a day. what do mr. trump and mrs. clinton do in the next way for hours on this uproar? clinton,k for hillary her strategy is to turn the focus away from the investigation and put the omey, whichn c he has been successful in doing. donald trump's aides say he needs to stay out of the way.

has madest, he outlying statements that takes focus away from her problems and onto him, and his people are saying he has to stay on message, stand back, and let the investigation do the work for him. tom: absolutely fascinating. i walked down fifth avenue, and there was the usual protest outside the trump tower we have seen for weeks. marty shanker, what will be mr. trump's message as we literally go into the dash? >> for him, he has to continue to claim that she is not appropriate to run for office because of this e-mail issue. he has to solidify his base. republicans you have questions about him and were thinking of voting for hillary clinton might now reevaluate that and some of the polls this morning are showing a hardening of the position on both sides, democrat

and republican. francine: what exactly is the accusation? does this go as far as saying that this could be perjury, what do people say? that theeople think people who are supporting hillary clinton have discounted the e-mail controversy -- and don't forget that 20 million people are more have already voted. peoplerepublican side, who refuse to ever vote for hillary clinton will not be swayed, will use this as evidence that they made the right decision. in the next day or two, we will see polls coming out and it will be interesting to see whether this has a significant effect on the election. it will he close, it was close before this and it will be close after this. francine: will this way any undecided voters? >>it will he close, it was close before there is a very small

percentage who are still undecided and it might be people who were trending republicans may be moved over to donald trump but people who were trending towards hillary clinton will probably stay the course. the key things are what happens in the states of florida and ohio. tom: i was taken by chuck todd's effort on "meet the press." he did a whole historical thing, back with secretary kissinger announcing that the war is over. as we both know it went on. there has been a whole sequence of gaffes by administration officials near an election time. place this one in perspective versus the kissinger moment or others. >> well, since the 1939 passage of the hatch act, there has never been in my view and outlying event such as this.

it is unprecedented and extraordinary and as attorney general holder mentioned, good men make bad decisions and this make the one of those. francine: thank you so much. marty shanker. we will get back to him in the second hour of surveillance. eric, you were saying that you would wait for a couple days to see the polls and how it plays out. the markets will be in jitters until november 8. -- it puts this to rest and says her lead in the key swing states is still so big that it's pretty safe. as was indicated, there is some erosion and then if you see the next two or three days, pennsylvania, florida, ohio, some combination of the swing states getting too close for

comfort, i'd be very nervous until tuesday. and eric nielsen, extraordinary moment. you wonder where we will be by thursday of this week. to give you perspective, we have job stay on friday. the fed, the bank of england. through it all, america's politics. look for mark halperin and john heilemann, "with all due respect" tonight at 5:00 p.m. from london, from new york, this is bloomberg. ♪

francine: this is bloomberg

"surveillance." tom, this is our morning digressd -- we want to and talk about central banks. this is a piece by one of our columnist to says the events of this week are likely to highlight the extent to which good policymaking has been undermined by unusual uncertainty caused by institutional and political sectors. we are back with their nielsen. there's the fomc, the only inflation, boj. when you look at all the political uncertainty, it seems the boe is taking the brunt of it. >> yeah. it says to me that there is a a couple years ago and until now with the expansion of the balance sheet and how it weakens the exchange rate, and now it is not so clear.

may be coming to a point where the only game in town is not so powerful. francine: and it's a conversation that we have every couple weeks, but do they need to step back? it's very difficult if you were the guardian of growth and inflation to realize that you have come to the end of what you can achieve. >> yeah. i don't think there ought to be any discussion on whether they step back until the job is done. the u.s. economy is ahead of europe and japan -- you can make a very plausible argument that they should normalize interest rates or should have done already. backhey are still holding and there's a little bit of uncertainty. we need policy stimulus

-- the big problem is it shouldn't be the central banks. tom: help me here with the word from the press conference which seems like years ago. chair yellen in search of evidence. eric nielsen all central banks, waiting for evidence. isn't that where we are, waiting for evidence? >> the evidence is not there. with the possible exception of the states, where we have moved discussion about where the neutral rate is. here is the central bank having a public discussion about where the neutral rate should be. no one suggests it is here but it is somewhere higher. it's quite an extraordinary experience. tom: december, quickly? what is hard bundle say about it? >> i couldn't hear that, sorry.

caroline: tom was asking about interest rates. are we expecting a december hike? >> yeah, we think they will move in december. in a sense, their communication has become better for being terrible in 2016. it looks like we are doing december, unless trump wins, and uncertainty is back on, and we come out with no hikes. francine: thank you so much. eric nielsen of unicredit. this is a picture of a lot of the energy stocks. we are focusing on opec, on energy, and we are also watching gold, nearing a four-week high following the reopening of the fbi investigation. ♪

i've spent my life planting a size-six, non-slip shoe into that door. on this side, i want my customers to relax and enjoy themselves. but these days it's phones before forks. they want wifi out here. but behind that door, i need a private connection for my business. wifi pro from comcast business. public wifi for your customers. private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. francine: a live picture over london. we need to look at the pound.

i don't know if it is gorgeous. tom: gorgeous. that's a real shot? [laughter] francine: i'm sure it is less foggy, but we will have to wait until the daybreak. let's get the first word news. taylor: hillary clinton's allies have ramped up their attacks against as the eye director james comey. senate democratic leader harry reid says that he may have broken the law by breaking the review so close to an election. and iceland, the man who is likely to be the next prime stand.r's party took a he was the big winner in sunday's snap election. govern there is a way to

against populism. in iraq, a battle over mozilla. militias are allied with u.s. troops in the us-led coalition. about 15,000 shiite militiamen are involved in the battle. in venezuela, nicholas aduro met with the opposition. opponents are calling for a recall election before the end of the year. they also want to release with a call political prisoners. italy has been rocked by a third earthquake in two months. it was magnitude 6.6, the strongest to hit italy in 36 years. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries.

this is bloomberg. tom: thank you so much. there have been so many earthquakes here. help us with your italy. is it really prepared for earthquakes in the major cities? one image of one of the oldest churches in rome. is the nation prepared for the big one? francine: you cannot tell. you don't know. one of the most beautiful cathedrals in central italy was built 2000 years ago. pictures that are extraordinary, 3000 people had flee their homes. no one has been killed or seriously injured. at 7:00, people are usually up, but they are not in churches. it's the evacuation system and how you read house it. i don't know if any of these

triggers can withstand what we have seen. tom: this is like the third one, this is a huge deal. withine: this have to do the way it is built. let's turn to the bank of england. speculation is growing over mark carney and whether he will serve a full eight year term or leave early. leavinganing towards early. with us, chief economist eric nelson. when you look at brexit and the fact that actually people worry that mark carney will go, this would not be, by people who know him, no means because he has been tracked into the political arena. it would be for personal reasons if he decides to not stay on. >> absolutely.

the problem ec has become a lightning conductor for people on the brexit side. . prominent, heso attracts a lot of unfairr brexiters. from bric right francine: people say the real person saving england is just tin trudeau.just and tru theho would not want challenge. it willot predict how unfold. if you get it right, it is quite a perspective.

people are saying it is likely he will stay. he had a split of thehe had a sn some hearings saying the person who comes after me, into your frame. your thoughts are that it is unlikely at this point because of the huge challenge that he wants to gain, i guess. >> i share your view. it is an immensely interesting job. outn't know if you can come and look good. that is the question. it's a huge job. it is obviously a job he frame s doing. he already indicated, after came in, it is a job he

would want. certainly, international. you see this, and the prime , i think there has been a conversation and he is not as radical as he made himself sound in birmingham in his days. give us an of date on how the government will frame immigration as the topic over the next three months, four months, five months. we have only just started on having a prop post-brexit debate and what we want on immigration policy as a country. it butts up against what has been interpreted as the kind of driver from the brexit result

which was anxiety about immigration and population populism in the u.k.. how will sell back to the public. hows not really clear to me the government is taking on that role. it is certainly not the prime minister. said.ell what is the who, what, and when when the government will assert of view? forced to do something anyway. unless it has a view on labor, it cannot enter into serious negotiations with other eu states. the prime minister plans to trigger those negotiations by

the end of march. between now and march, they have to sort themselves out and what they want to do. to me, that is crucial, in terms of hitting the politics lined up negotiated position. with they don't want to do is argue among themselves. there is a great story on the fact that here and the u.k., there is a great story on the some are in jeopardy depending on the immigration policy that is put in place. if you get the immigration mix wrong, it could significantly hurt the british economy. >> sure. there is so much at stake. if you could imagine a scenario disentangle and the cherry picking, which they certainly cannot too. there is a model there that

theoretically would work. a compromise on immigration, i kind of doubt it. at stake. huge amount not short-term, but long-term, for britain. whitman onrofessor where we are going on inflation. here is northern rock, over here. the great disinflation, down we go. inflation expectations have really moved up. . to say the least intoill it full to over the political economics of brexit? >> that remains to be seen. there is aptly no -- absolutely no question in my mind. you have a 15% depreciation, or so of the sterling.

that has a relatively small opening. know how thete political fabric and households react to that. we were not fake good at predicting the effect of the higher income from low inflation. now, it goes the other way. francine: thank you so much. daybreak on bloomberg america, a conversation at 8:00 in new york, 12:00, london. this is bloomberg. ♪

tom: good morning, everyone. bloomberg surveillance. eight days away from the u.s. election. extraordinary. francine lacqua in london. i am in new york. the bloomberg is this flash. here is to their mix. -- taylor. taylor: a deal between boeing and iran will be over soon. in september, the u.s. granted boeing the first licensed to

sell jets to iran since 1977. the three biggest shippers in iran will combine their operations to become the largest box carrier. all three of thein september, td shippers say they will lose money this year. that is the bloomberg business flash. francine: now, let's look at the political climate in europe. the conservative an independent party merged in iceland. we take this as an excuse to talk about populism. in iceland, the populism pirate party exists. i will not ask about ice and specifically. it basically shows that we are ofcerned about the rise extreme parties. by large, it's unlikely that they come and power. what people are worried about is they influence the agenda of more moderate politicians. >> absolutely.

i think the populism ways is definitely still with us. francine: hold that thought. we are getting some breaking news. three weeks ago we spoke to the south african finance minister. there were charges of fraud. fraud charges against the minister. they have now been dropped. i will quickly look at a chart. i don't know there's some kind of move on the rant because it has been one of the bellwethers. he was considered the person who actually knew what he was doing. seehe back of that, you can

it. we understand the fraud charges have been withdrawn. tom: let me bring up the five-day chart on south african rand. you can see, it is the deepest or get. -- market. eric nielsen, let me go back to iceland as a proxy for a nation with courage. like ireland, they had to make some tough decisions. they did that for-six years ago. where is the courage for france, for italy? it's not really clear, to be honest. you actually have a hit of the tendency with the smaller countries, being prepared to withmuch tougher action

the crisis. the reason is they were hit by a real crisis. france and italy did not really have a deep crisis partly because of the public sector and other reasons. it often takes a crisis to get the big reaction. tom: bring it up. . euro icelandic krone. that is a testament to courage. here is how you make a long chart in the bloomberg. log.here and go right to you have that beautiful curvature over here. whitman, when i look at iceland, and i want to go back to the elections that you

highlighted. the conservative nature of iceland, france, italy, are they all the same? >> no, they are not. i think tom's point about the ability of some countries to go slow mo is importanthighlighted. the conservative. in small states, we have more intimacy around the political process, there might be much more at stake in terms of the electorate. i think they are good bellwethers for political moves. what we see in france and italy has been the ability pushed back in terms of the reform that the economy needs. francine: i hate to push back, but the same time, italy has had more reform and we have had in the last four years. i know it is slow, but there has not really been a crisis. got isink the problem is , as we have been discussing, inpolitics is now certainly in terms of the traditional parties predictably, in terms of what the governing class is.

now, you have a series of political forces. it was quite difficult to see what they would do when they were in power versus opposition. that is generating a good deal of uncertainty. francine: thank you so much. air nelson sticks around. rand.s the south african the chief prosecutor in south hisca has announced decision that he will not charge the finance minister. was is two days before he expected in court. a bit of relief for the rant. this bloomberg. ♪

francine: this is bloomberg surveillance. europe's worst performing bonds are attempting to defy gravity. portugal is on deck for investors. meanwhile, bonds around the world. 3% bonds this month. that's get more from eric nelson.

these bondok at performances, actually not that bad. mispricings -- everything? >> it is difficult to know the price. beingn't make money short. of noisea little bit but the ecb seems to have been put to rest. francine: there's not enough stuff for them to buy.

one day they will run out. francine: they will run out before it becomes a major problem? that is the number one question we have to figure out. if they were to run out, at a time would you still needed to do something, it is that. they have guts to buy more risky stuff. that is the number one issue. chart.t's bring up this a busy week. we have eric nielsen. help me out here. this is a lollipop chart. i will zoom in here. the idea of the recent move higher, it was made clear this is not a bond rout.

where is the healed migrating to? do you just presume higher yields choco >> i do. not only presume, but we forecast. we think the u.s. economy is in fairly decent shape. not fantastic, but fairly decent shape. behind thea bit curve. assuming we don't get a political earthquake next week. tom: the polling there is changing. help me here with your work on the selection. forecast on hold on until the election is over choco is it that concern for you? we cannot really put the forecasting on hold, if you will. it is less important for people to actually manage money.

the advice to all candidates is try to settle cash into the election. you want to be cautious a lot of people are sitting on cash which means we will get a beautiful rally after tuesday if trump states away. tom: thank you so much. we continue on economics in the next hour. what a week it is. peter hooper from store shipping, we look at this week. fred meeting, bank of england friday. job state on this is bloomberg. ♪

tom: secretary clinton reels from an upstream's letter from the fbi after senator beat calls

comey's head.ames should i stay or should i go? thisterling gyrate, weaker morning. the bank of england's future, a meeting on thursday. trick-or-treat, what could go wrong on the eighth day to the election? lacqua back from a sojourn in italy. you were not near the earthquake, right? francine: i wasn't. in sicily, an island. trick-or-treat, politics involved, and what we can expect on november 8. breaking news, this is significant. consumer prices. the headache for mario draghi. consumer prices rising. the economy in the euro area growing, magic estimates.

tom: we will talk to peter ofper, and steve wyden citigroup. the idea of money for nothing. i can't member who was -- qualcomm. somebody. general electric goes into the oil business with baker hughes. much more on this. the deal widely anticipated and announced this morning. what else do you have? buying andualcomm is xp semi conductors. what is a lot to do with mario draghi can do, the technicalities of what he can buy. tom: let's catch up one story this morning from the night states with first word news. taylor: hillary clinton's allies have ramped up attacks on james comey. he disclosed that the agency is

reviewing a new batch of files that may be related to secretary clinton's e-mails while secretary of state. senator harry reid says that he may have broken the law by breaking the review so close to the election. canada and the european union have signed a free-trade agreement. canada's prime minister was in brussels for the ceremony. the agreement will cut terrorists by more than $500 million per year. the eu has of -- overcome objections. italy has been rocked by a third powerful earthquake in two months. no deaths reported, but it destroyed a cathedral and other buildings in the mountainous region. it was the strongest to hit italy and 36 years. mariano riverano rivera h

rajoy was sworn in. prosecutors and south africa have jobs charges against finance minister gordon. he was under investigation. prosecutors now say that gordon did not intend to act unlawfully. he had called charges politically motivated. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. tom: we will blow up the show right now. it's good to do that with the ge news. we look at to all the news on the election and a bit. right now, joining us for decades of work and analysis, andr hooper of citibank

steve wyden. you are at the forefront of m&a. his janet yellen driving mergers and acquisitions in the united states of america? low levelly, the very of interest rates has been the key driver of asset values. given how slow the ascent will be from here, absolutely. tom: i want to say this right now, you have been doing this for years. economy, on the surveillance, you make your luck. steven wieting, who is arguably the number one person on linking profitability and corporations into the american economy. the would you say about merger frenzy and peter hooper's world of macroeconomics? for little bit easier transactions to build new capacity.

synergy, 1.6re, billion on for years. that is what stephen is talking about. francine: right. let's run through the headlines. ge, 2.5. they are taking their own oil fields, combining with baker hughes. we know that something was in the works. behemoth. industrial what this means, of course, they could compete with the big guys without spending much money. does it go back to mna because washeap money like tom suggesting? or, is this a combined or get killed because of the oil price slump? >> all of the above, francine. certainly, low interest rates, the environment is good. in the oil sector, this has been the horses driving towards

consolidation. at this point, with prices beginning to loop upwards, my expectation is you are going to up,investment activity pick some expansion, not just consolidation going forward. tom: let show this chart from general electric. after the ge financial collapse, up we go. you, catherine mann that low gdpdamant are causing combinations that hearken back to the 1930's. the only way you get growth is buying something. >> it could be the other way around, from the last few down terms, we have left capacity in place. it will not be something that we up. rebuild from the ground downturnot want a

necessarily that liquidates everything and starts from scratch. you do have an environment where new capacity building, politically uncertainty and these kinds of things and cheap credit. the first place we will go is transaction. tom: i would anywhere near the arch criticisms out of paris, france, the idea that government needs to be more watchful of these combinations. it's not one deal here, one deal here, it is a summation. >> the problem we are facing now is it is low, certainly declining in the oil sector and other problems. the overall economy is growing slow enough that you will not see it pick up and investment anytime soon. low growth, this is an environment that says,

consolidation is the way to go near term. down the road, we will have to start to raise investments. productivity growth has been extremely low. we are seeing labor markets tight. eventually, firms will have to invest again to increase productivity of workforces. think about oil in itself, when there was a profit opportunity, financing came very quickly to build productivity. when you think about fracking, money flew in, it was built. with those types of opportunities, you see financing flows too. francine: when you look at analyst notes, this seems like a no-brainer deal because it is creating a larger distribution network.

it does not cost that much. will we see more deals ?tructured similarly c the bust is its own cure, in many respects. we have seen oil exposition and maintenance fall over two years. on: i want to get back script. dr. hooper, when i ad court at court pce coming out today, it is miles from service sector. bring up the chart. this is what janet yellen looks at. service sector inflation, the red circle. the blue line is 2%. week.this all

i'm trick-or-treating as the borough -- bureau of labor statistics this weekend. isthe boot on inflation starting to shift. low.s been to vote -- too 80% of the economy plus. it's the fact that goods prices , holding declining back the overall. that is changing. yellen followt court pce out today or is she wired into 3.2%? 1.7.e is following the core pce, year over year, through the third quarter. 1.7 is the number that the fed is most focused on. they are well aware that could and inflation is running above that. positiveuns into

territory, which we will get because the dollar has been flat for a while. >> flat until it is not. keep in mind that court goods prices have been going down. depending on the aggression of the federal reserve, the rest of the world accommodates with lower prices. you will find out there are downward pressures. tom: a crazy morning. what an interesting press release from general electric this morning. yes, to recap some of the headlines, general electric agreeing to enter the oil and gas business with baker hughes. ge, in terms of the structure book owns 62% of the combined entity. this is the premarket general electric gaining. shortly, we are back with peter widenyden.steve

♪

francine: ge will owns 62.5% of the combined entity, which will have around $32 billion in combined revenue. tom: the most interesting transaction. you will have to read the pr stuff to understand what is going on, including, special dividends to baker hughes. let's speak with marty shanker

in washington about the going ons this weekend. .e should eric holder earlier here is the extremely confident michael mckee see you writing in .he washington journal it goes back to the 12th century when henry the second asked, who will rid me of this troublesome priest? the current justice department will not permit a grand jury to hear evidence in this case. and because only a grand jury can constitutionally bring charges, that means no charges will be brought. >> it just goes to the unprecedented nature of this whole e-mail inquiry and director james comey's approach

to it. latest letter, it is all unprecedented territory. tom: however is the director's job? said, off with his head. how it risk is he? >> he is under immense pressure. the fact is he is an employee of the obama administration. there is just no way they will fire him, obviously, because of how that would look. his job is safe, but his position is not. he is under intense pressure to say more in the days ahead. francine: has this actually be set to trump campaign? or, because voters knew that clinton was flawed, it will not make much difference? >> that is the prevailing wisdom

this morning, it solidifies positions on both sides. it will be a couple of days before the polls start coming out and people absorbed this to see what impact it has. right now, the view is that it will not have a significant impact on an already tight race. francine: do you believe the polls? i don't know how accurate they butin the united states, because 2016 is so different, to we have to take them with a flight of caution? take them you have to with multiple grades of salt. i think people may say one thing and do something else in the voting booth. like exit, you have to be repaired for anything -- like brexit, you have to be prepared for anything. tom: help me here with mr. trump's response. his team wants him to be presidential. that has not happened. what you suggest we will see from mr. trump on his itinerary to date and tomorrow.

>> the people close to him have convinced him to stay on message , let the e-mail investigation to its work for him. as long as he does not say anything truly outrageous, that will probably be the case. it will be interesting to see what kind of discipline he actually has. tom: thank you so much, this .orning, from washington 5:00 tonight, i think they will have a little bit to talk out, and extended six hour version of "with all due respect," i'm kidding. 5:00 tonight. ♪

tom: bloomberg surveillance. an incredibly busy morning. the politics of the moment in the united states. e south here with th african finance minister. what happened there? francine: they dropped the charges. we spoke with him about a month ago. they said they would go on with the investigation. now, we understand charges have been dropped. not all of them, but most of them. good news for grand. -- rand. yden.steven wi

large aborts a prices. reporters have talked about the decline in earnings going on. now, it is not. gains.ear-over-year it is headed higher. you can get an expected attitude about that magnitude overall. tom: is there a lot of wiggle room to cut costs? do you feel like big america is exhausted in cost-cutting? >> it is a refresh of the earnings cycle. the big gains are over with. the fact that we can extend the cycle in all likelihood, have some rotation between industries, energy will recover. you will see some discretionary consumer oriented industries with much smaller gains going

ahead. tom: i want to go to this chart on gdp. this is the underlying statistic that everyone looks like. over in the 80's, a sustained three point plus gdp. the trendline has been pretty soggy. here is a great number, 2.9%. a big debate last hour, do go with this statistic or do you imports?- x out what do you do? reale feeling is the growth in the economy is somewhere in the 1.5%-2% range. we had an extra push, about half of the 2.9 was imports and exports. exit, exports were mostly soybeans because of the drought we heard about in south america affecting coffee but also crop.r important

the underlying growth in demand is somewhere in the 1.5 percent range. francine: when you look at earnings, are you concerned that companies want to give too much back to shareholders. they are cutting costs and focusing on dividends, planting the seeds for growth? >> the labor market is tightening in the u.s., you start to see wage inflation rise. productivity is very low. the question is now, do firms begin to cut back or just a raise prices? tom: we love having both of you on. december rate hike? >> yes. >> yes. 2% rate in gdp is giving us a labor market that continues to tighten. productivity growth has been so

years,r the last five productivity has action conceive of growth. .ou do not need much growth it is already pretty close to full employment. tom: we have seen that without question here. on job report coming up friday. jeff mccracken will help us here. ge press release -- i cannot make heads or tails of it. so over the last few days. this is bloomberg. ♪

tom: that morning everyone. -- good morning, everyone. breaking news. what do we have, te and baker hughes? the press release is absolutely original. let's go to our executive editor

, jeff mccracken. he only takes the upper deck of the george washington bridge, which is why we can talk to him from his car this morning. let's be clear -- this will be a separately traded security, not ge stock, will it? jeff: right, ge will control it, but it is unusual that ge will not own all of it. maybe down the road they will buy the rest of it, but it will be a separate company from ge as of now. taxesas the structure for , or to placate the management of baker hughes? jeff: there is a little of both. ge -- they come up with a strategy, a 10-year or more strategy. they have been wanting to get deeper into the energy space. early this year and last year, they were in negotiations to buy baker hughes assets from baker

hughes, when baker use was trying to merge with halliburton. that deal got blocked by the justice department, so bigger independent.out so ge swooped in and they are going to run a lot or almost all of it. tom: it is a unique press release from general electric and baker hughes. when you look with your team at industrial america, is this a template for many other combinations? jeff: it could be. this is a unique situation. baker hughes showed more than two years ago they were for sale when they were negotiating for halliburton. but the justice department blocked it and said it was too much consolidation in the oilfield services space. ge was desperate to grow in the space. i do not know if we will see other big industrial deals. been, one thatas

is not is the industrial space. if we go back to the ge deal, to tom's point, does this feel like cheap money, or -- they want to compete with some of the providers, like schlumberger. can they compete effectively and have a bigger distribution platform? can take out a lot of costs. jobs to cutlot of into, and ge is efficient at that. the centurylink deal was reported on last week as another consolidation play. the last few months you have seen a lot of number three buying number four, number two buying number five in various spaces, various industries. much for, thanks so

coming to us from the upper deck of the george washington bridge. she is always upper deck with "first word news," here is taylor riggs. latest news on hillary clinton's emails appear to be having impact on her support. a 46-45 lead over donald trump nationwide, according to a "washington post" poll. it was taken after james comey said the bureau had discovered files that may pertain to an investigation of clinton's in emails. in iraq, thousands of people militias inshiite the battle over mosul. they are trying to push islamic state out of the city. about 15,000 shiite militia men are involved in the battle. prosecutors in south africa have dropped fraud charges against ,inance minister pravin gordhan who was under investigation

about the early retirement of a colleague. prosecutors say he did not intend to act unlawfully. he had called the charges politically motivated. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries, i am taylor riggs. this is bloomberg. francine: thank you, taylor. this is the picture that taylor was talking about. , rising out to the strongest for weeks. we had that report saying that some charges were dropped -- againstth african the south african finance minister. let's go to the bank of england report and the u.k., speculation growing over mark carney's future. questions have been raised as to whether he will serve a full eight-year term or leave early. he will make a statement this week. .e're joined by rob hutton we are also still with peter

hooper. rob, when you look at mark carney, first of all, he took the job and said i am staying only until 2018 for personal reasons. . think he had children now everything is put into question, why? because he is the only adult in the room, so there was an idea that international investors wanted -- robin: there is -- there is sort of air war stuff with various conservative mps and others who supported brexit. carney campaigned against brexit. he had a lot of brexit warnings ahead of the referendum, and he said unemployment would rise, and it has fallen, and he has to go. the problem with that is right now, as you may have missed you -- as you may have noticed, the

prime minister sneezes and the pound moves. -- the last thing you want to do is boot out the governor of the bank of england. francine: will this be seen as being booted out, since he said that he is only going to be in until 2018? rob: he said it will be a purely personal decision. a lot of people watching that said he is getting ready to go. he may just have been trying to deal with that point and say, look, this is about my kids, this is about my family, not necessarily about what somebody says about me on the treasury committee. it is all about perception. vote had gone the other way, there is nothing particularly special about 2018. carney could have gotten there and said it is fun, i am going home, and nobody would have

noticed. but because 2018 is potentially the middle of this negotiation joe, it could be a rocky time -- of this negotiating period, it could be a rocky time. so everything is strongly interpreted. tom: we get to the fdr, and we have been quoting, "carney stands ready to serve full term as well." that has been the dynamic from friday to sunday. peter hooper, does any of this surprise you? the total focus is on the janet yellen of the united kingdom. peter: it is a critical juncture for the u.k. brexit, i am told will be a negative for the economy, at a time when inflation is picking up because of the sharp drop in the pound, so the bank of england will have some difficult choices ahead.

it is understandable that the international community is comfortable with carney as a person who can operate well in this environment, but he has personal reasons for going the other way. it is an uncertainty. steven wieting, where is the distinction of the bank of england dynamics versus what we observe every day with the fed? the onlyhis is continuity that they have at the moment, as you just said, peter. what brexit look like that's what brexit looks like will be determined over the course of a couple of years. thisave this fall and then sudden hope that brexit would not actually occur, and now you have a discussion of hard brexit. this is the real story, and it is not a personal human interest story. tom: here is sterling. bring it up again. up having a beverage of my choice with alan ruskin, and deutsche bank is down here. are not know where englund

is at citigroup, steven wieting, but are we prepared for a 1.15 sterling? peter: that will make things more difficult in terms of inflation, making the bank of england's job -- look at what is happening with expectations already in the u.k. n: the u.k. has twin deficits. it is putting a good deal of trade at risk with the european union. there is a way it could come out better than that, but it could come out worse than that. francine: we have seen a lot of luxury companies, but also apple increasing prices in the u.k.. so inflation is coming. tom: rob hutton, i want to get this in. as you and simon kennedy have written about, inflation expectations are up, up, up. where can they go? are we at the dictations for

inflation the signal higher inflation? expectingone is higher inflation. i spent the weekend with my father. he just bought a laptop computer because he thinks it will be more expensive in six-months then he -- than if he buys it now. all of your big-ticket import purchases are going up. -- fuel think anyone is is already up 15%. tom: rob hutton, thank you for driving the conversation. mr. hutton is with bloomberg news in london. we will continue this discussion. sir martin will make an appearance. martin sorrell. we have three hours of martin sorrell. we never run out of things to talk of the look for that in the 8:00 hour. from london and new york, this is bloomberg. ♪

francine: this is "bloomberg surveillance." i am francine lacqua in london. tom keene is in new york. here is taylor riggs. takeoverhere is a big in the intranet services industry. centurylink has agreed to buy -- toevel three at a deal buy level three. it represents a 43% premium to the closing price for speculation began. general electric has agreed to combine its oil and gas business with bigger use, -- with baker hughes. inwill have headquarters london and houston. baker hughes is the third-largest oil services

provider. that is your "bloomberg business flash." francine: coming up shortly is " bloomberg daybreak: americas." merger monday, a big deal with ge and baker hughes. we are going to talk about what it means for jeff immelt at ge, but why they think they can get it passed regulators after the problems they had. beyond that, this is a central-bank extravaganza. we have kit juckes from societe generale talking about what that is likely to mean for bonds and fx. and big news over the weekend from james comey, the fbi director. we will be joined by representatives of both caps. they will take, i suspect, differing views about what this means for the election in the united states. tom: david westin, thank you so much.

alloway.abi is tracy she will discuss a modest drop in oil. tracy, there is so much other news flow, my eyes are off the ball. what is the y from migrating $50 to $40 a barrel, and do i care? tracy: happy halloween to view. there is nothing scarier than the amount of dissent amongst opec ranks right now. oil drift we saw lower on mondays because of the disappointing meeting at opec last week. theas a minor meeting in and i, so the stakes were not as high, but it is not a stretch to say that the point of the meeting was to bolster confidence in the notion that we are going to get some sort of production deal come late november when we have the big meeting in vienna. we did not see that. if anything, we saw a host of reminders of the roadblocks to getting that deal done. tom: you are so good at

aggregating the research. what does the sell side guesstimate on the future of oil? longs i was reading adam and at morgan stanley before i came on, a well-known oil bear. he made the point that the best we can hope for at this point in time is some sort of of ancement on november 30 production cut that does not actually mean very much, that does not get monitored. if you reach back in your history books, the biggest parallels to the situation now is probably the 1980's oil production deal. it got announced to much fanfare. there was lots of talk about the opec talks, lots of discussion, and it did not amount to very much. i know you like to talk about the power of opec in the current market. one of the interesting things about last week's meeting is that we had a bunch of non-opec producers present, but it did not go down the way me -- the way people might have thought it was all brazil paths energy

minister saying they were not interested in cutting oil production. russia is not agreeing to a production cut. they might consider a freeze. so we are not getting the unity the market seems to need at this point. francine: will we ever see -- what has been russia stands at this point? opecssia cuts, does it get to cut? tracy: russia is a big question mark right now. all less week we saw them say no to a production cut. a freeze is potentially still on the table. member,re a non-opec why would you agree to this sort of deal if opec cannot even agree to basic things like who is going to be exempt from the production freeze, what production numbers to use for this deal. do you use self purported number -- self-reported numbers, third-party numbers? there are huge question marks,

and the motivation is not aligning with what opec would like to see. francine: thank you so much. tracy alloway there in abu dhabi. we will be back with peter hooper of deutsche bank in a couple of minutes. .nd steven wieting a lot of energy stock movement. this is the picture for european stocks, down .4%. the pound, 1.25. ♪

tom: "bloomberg surveillance." the mexican peso down at the bottom, a little bit stronger. clearly that has been a weaker peso over the last number of days as mr. trump has gotten a little bit of altitude, eight days to the election. francine lacqua in london. diane tom keene in new york. . busy week -- i am tom keene in new york. a busy week. s,ere are still two americaa

right? peter: absolutely. the manufacturing sector has become more productive, and people are losing their jobs there. so, yes, there are two views about what is going on in the economy. clear that some of these things are not just cyclical. they are not just about this particular downturn. tom: i look at the backdrop of this week, and to me it is extraordinary. the great distortion, peter hooper, is negative interest rates. bring up this chart, which we did, from marketing -- from marvin good friend. willem buiter is front and center on this. peter hooper is front and center on phil about her, steven wieting -- on willem buiter, steven wieting's boss.

academics are suggesting negative rates under duress would be -3%, down in this this entity. several factors per number one, you get to -3%, everybody is taking money out of banks and putting it in their mattress. number two, people are getting ready to retire and are saving more, not less. they realize the return on their assets will be much below what they thought it was going to be originally. number three, just the uncertainty created by moving this far -- about, that what this is uncertainty? justn: no, it is not uncertainty. as peter mentioned, we have productivity growth at its slowest pace since the 1980's. people joining the labor force over the past year has been a bright spot. why that is happening seven

years deep into a recovery suddenly when it had not their bank, that recovery -- when he had not been there, that recovery should have happened earlier. on the chart, the -3% is hypothetical. that is the easing they wish they could deliver, but they cannot with interest rates, not when you see the cash in circulation. francine: currencies are on the move. the euro heading for its biggest monthly decline in the dollar. i remember talking about divergence in davos in 2012. will we get it in the next three months? steven: it is a great question because we are seeing a reemergence of this on the willingness of the federal reserve to go ahead with some mild rate hikes. -- with thefor federal reserve there seems to be this tremendous war going on. the hawks and the doves are coming to a closer place where they think there is a limited

amount of tightening to go with the united states, but that the day is not forever far away that they do that. so they are coming into more agreement that it is a small tightening step for the united states over the course of the coming year. will the fed much and janet yellen worry about dollar strength? peter: that is certainly a factor. they look at broad financial conditions, and the dollar is an important element there. the dollar has been overall pretty flat. jump, 5% a significant or 10%, that becomes an issue affecting their decisions. at this point it is not an issue. certainly they raise rates 25 basis points. even says, they will go slow from there. there is certainly uncertainty when it comes to the u.s. labor market. if labor force are dissipation resumes on a secular downtrend, there will be significant

tightening on the labor market. we have already seen inflation picking up, not just on the u.s. environment that the fed would like to go slow, but they may have to speeded up just a bit. tom: peter hooper, thank you very much with citigroup as well. they will continue with us. is next on bloomberg television. tomorrow on "bloomberg surveillance," we are thrilled to bring you michael darda with an km holding -- with an km holdings. ♪

alix: welcome to "bloomberg daybreak."

happy halloween. i'm alix steel, alongside david westin. jonathan ferro is off today. here is where we are trading at this hour. futures in the u.s. relatively flat. s&p futures off the highs of the session. in the currency market, it is all about monetary policy divergence. boe is, the fed, the seeing weakness in the euro and weakness in the found -- in the pound. you have yields coming down slightly, a little bit of buying at the long end of the curve. but it has been an ugly month from global bonds. crude is up 5%. david: here is what you need to know right now. a mega energy merger. its oil and gas services from baker and use -- from baker and hughes.