♪ francine: it is jobs date in america. how much can meet test can be read into today's numbers? -- how much can we read into today's numbers? the catalonia crisis. banks signaled they may quit the region. quitsa may faces demand to as a next cabinet member since he is building support for a campaign to oust her as the pound we can. good morning. this is "bloomberg surveillance ."

we have a packed show and our brexit show. in the meantime, this is our market check. the dollar definitely left, right, and center focus. number seems to be expanding game. xpending gains. it may be distorted to hurricane figures. european shares bonds seem to be treading water. , it all has to do with prime minister theresa may and whether there is a campaign to oust her. let's get to the bloomberg first word news. >> the spanish prime minister convened his cabinet today as -- movement entitling you movement in catalonia heightens.

president risks isolation as -- if he pushes ahead with plans. donald trump has offered cryptic remarks while posing for photos with military leaders, saying the gathering might represent the calm before the storm. he may be comments head of a state dinner. >> do you know what this represents? the calm before the storm. sebastian: german factories rebounded in a sign that the economy is set to sustain its growth. it is the biggest increase since december. nate, which has

already shut oil and gas platforms in the gulf of mexico is continuing to hadn't north. -- to head north. the forecast path has it becoming hurricane south of the -- south of louisiana. in the u k, theresa may is facing growing demands to quit as prime minister after a call -- after a former cabinet colleague announced he is running a campaign to oust her. after she failed to win a majority of election -- a majority in the recent election. --global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am sebastian salek and this is bloomberg. francine: today's u.s. jobs report may be more useful as a gauge of the impact of hurricane

irma and hurricane irma -- and hurricane maria then trends. later this month, state by state data is released and investors can make. of the data. joining us now is antonio garcia pascual. the only thing people are watching is the jobs report. how much distortion? how do economists do it? do you look at the distortion and can figure out what actually happened? you tend to average the impact of previous hurricanes, give since the 1980's have or take 50,000 from payrolls.

when you look at with the forecast is doing, split the difference and take it somewhere in the middle. we are expecting 75,000. if you get a really one number -- really low number, 30,000, that would be a negative signal. francine: the margin has to be big, 30,000 to 40,000 less. if it is 95 or 65 it doesn't count. antonio: it is not much of a signal. september,said in let's focus on inflation, which is the critical point. francine: we have a great chart. the trade weighted euro and trade weighted u.s.

you really see the full story if you look at the trade weight. antonio: that is right. that is how central banks look at it. at real effective terms. the euro has been a problem for the ecb. the dollar is on the counter side of this. as i was mentioning, what the hero doesn't what that means for prices and inflation -- what the euro does and what that means for prices and inflation will be critical. i think that is one of the key factors to look, what the currency means for prices. rate hikesow many are you expected in the next six months -- are you expecting in

the next six months? antonio: no. a hike inecting december. it is dependent on the next inflation. we expect to more hikes next year. isncine: what change depending on who becomes fed chair? we understand there is quite a lot of names and different policies, but are you worried on how the next fed person will actually use forecasts? not necessarily immediate monetary policy. antonio: that is one of the biggest uncertainties. debate. this political the fomc nominations, the chair, the vice chair. it is not so much the balance sheet.

about the interest rate policy path. is whatthe focus happens with this global weakness and inflation. is inflation comes on a gradual upward trend, we are expecting 1.5% on average for the rent, and that is if it moves up. depending on the nominations, but it seems that the names floating around our leanings -- are leaning on the hawkish side. if that is the case, you should seep -- you should see -- shortlist,he secret would you get rid of the dots? are they useful? antonio: i think so. francine: you are one of the only guests that has said that. antonio: i think so. i think he market expectations

on what the policymakers are thinking is relevant. the discussion gives you information on how complicated the forecast growth and inflation. i believe that is something that is useful. francine: antonio, think is the much feared -- antonio, thank you so much. antonio garcia pascual stays with us. we are live in barcelona next. this is bloomberg. ♪ ♪

francine: this is "bloomberg surveillance." i am francine lacqua. it's get straight to the bloomberg business flash. weighing the sale of aluminum.

the company has been speaking with potential buyers for dunkirk in northern france. regulators in europe and asia the role staffng may had made in transferring billions of dollars and private bank client assets before new trap -- new tax transparency laws were introduced. a spokesperson for standard chartered declined to comment. customers single a declaration it -- of independence may cause them to pull from catalonia. according to a person familiar with the metal, -- with the

matter, -- that is the bloomberg business flash. francine: the spanish prime minister convened his cabinet today as the financial and political squeeze titans. meanwhile, the catalan president ands economic damage isolation if he pushes forward with plans to declare independence. our reporter has been covering the story from the very beginning. what can we expect from the cabinet meeting today? the cabinet meeting is happening right now. we expect a clear message. dropeed to drop this and it now. there is going to be no mediation, nothing to talk about. you need to drop your plans for declaration of independence, and of story. secondly, this is aimed at the corporate world. the government is preparing a

new decree that would make it easier for companies based in catalonia to transfer their headquarters to anywhere else in spain so they can fast-track it if they feel like they have to. know abouthat do we how the separatists are going about this? we understand there are divisions within them. does that mean there won't be any talk of unilateral declaration of independence for some time? reporter: that is right. that is the story we broke yesterday. it had him -- it had an impact on the market. the movement, you have to go back to the basics. it is a platform that is fragile, because it encompasses couple -- upper-middle-class, radicals, and anarchists. the only thing that by them

together politically is independence. what we are hearing is a lot of them, the conservative side is, -- is worried about the impact on the economy. maybe we could reframe it, take a step back and negotiate. the radical side is saying, no, we can't backtrack because we are tearing momentum on the streets. now is the time to do it. this is very difficult to contain because he was parachuted into this job. we are getting breaking news. company that makes sparkling announcing they may move their headquarters. what is the sentiment around this? reporter: it is obvious that the

catalan community is concerned about this. but what framework, happened to the currency? the big difference is that the catalan has not been able to get -- to answer. mentioned the biggest bank , their headquarter is here. the message they want to send to the market is meant to moderate happens, to be scared, we will still be backed by the ecb. francine: we will have plenty more from maria throughout the day. still with us, antonio garcia pascual. he knows economics like no one else.

i don't know what you are worried about the most. this is the spread. looking at the spanish spread with the german bonds, that a lot of these companies saying they may change their legal base. how does this end? it is looking to lee -- to be a clear solution. antonio: it is complicated. on the separatist side, you have the range of abuse and the fact that you haven't yet seen an immediate declaration of unilateral independence, as was expected. it reflects how difficult it is. that is key. if you consider that the separatists go down the path of going further and unilaterally can -- unilaterally declared, it will be difficult. it will be difficult not to respond with an escalation by

figuring article 155. the situation is binary at this point. it is clearly dependent on the next step the separatists take. will be declare independence based on the referendum or not? will they make a declaration, but not precisely that? i think that is the key. francine: monday is certainly an important day for the reasons he just might out, but no matter what the outcome of this is, will spain take a hit in terms of gdp? tensions, -- in these tensions, i imagine it distracts the people working there. antonio: sure. obviously, it depends. if the situation gets worse, escalates, you could see how the couldtion in catalonia

weigh on the gdp. catalonia accounts for 20% of spain's gdp. let's say it disrupts wrote negatively -- growth negatively. it is my fifth of the spanish economy. it is simple math. you could have a slowdown potentially into quarter for of next year. -- q4 of next year. the growth dynamics are very healthy.

the good inputs into the global economy is still there, but it is a chunk of spain's economy. if this goes to a standstill for several weeks or longer, you are going to see the gdp sooner or later, even bank of spain was making that point. they are generally cautious on these issues. francine: you also have the upcoming italian election. backolitical risk is now on in europe. what does that mean for european policy? antonio: it is true. the main risks after the french election was clearly thinking about, what will be election mean in q1 2018? the big risk, but perhaps less of the big issue. will this change?

will this change what the ecb will do? they like to steer clear of politics. iss event in spain essentially structural, first thing to decide. and i think the ecb can do much -- i don't think the ecb can do much. issue. political it is for italy to decide. i don't think the ecb can do a lot. i think the ecb will stay very focused on the medium-term inflation forecast and how this gets revised. inflation is-term 1.5. they have a single mandate, long-term forecast. they have to take it slowly. italy and spain is important, that they cannot disregard it,

especially those financial stability concerns. from that site, they would have to provide liquidity. thank you so much. antonio garcia pascual stays with us. we dive back into the markets ahead of jobs he in the u.s. this is bloomberg. ♪ ♪

>> this is a one-week chart.

caixabank down by 5%. they may abandon the region. this is the spread between germany and france, widening three basis points today. narrowed nine basis points yesterday, the most since july. this week, it widened. , biggeststerling weekly drop since last october. that is when we have the flash crash. that was just after the last conservative party conference. not a good week for prime minister may. francine: up next, a look at that. brexit show. that is what we will look at. this is bloomberg. ♪

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across all your locations. hello, mr. deets. every branch running like headquarters. that's how you outmaneuver. brexit show. let's get straight to the bloomberg first word news with the recap on everything that happened this week. sebastian: the week started with

the u.k. prime minister heading into her conservative party's annual gathering i'm a feeling questions on why she hasn't fired boris johnson after he challenged her brexit strategy. within 24 hours, he was insisting he was behind every syllable behind her approach. that came amid growing concerns that britain could crash at of the e.u. without a trade deal. the bloc's to discuss a ist-brexit trade pact stoking fears that time will run out. u.k.'s international trade secretary painted a positive future of the country's future. he said the e.u. and britain have made progress on splitting wto after brexit. >> as we leave the e.u., we have to agree to methods of dividing up the method we should take.

we agree on methodologies. that is a step forward. it is also assigned we can make progress when both sides tuesday do so. sebastian: the leader of the northern irish parity -- party has vowed to resist any effort to create the border within the u.k. after the >> exit. >>if there were to be a border between northern ireland and the rest of the united kingdom, that would be a redline for us. we cannot have that. the prime minister has been clear about that, that is not going to happen. acceptable toot those of us who live in northern ireland. sebastian: global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am sebastian salek. francine: going into the weekend, three some a is facing -- theresa may is going calls for her to resign.

it comes after her disastrous speech, which was interrupted by a prankster. the cry for a new leader is said to be growing. story,e on the bloomberg's u.k. policy reporter joins us. he has a fabulous book you can pick up. you actually know a lot of these political players inside out. sony kapoor antonio garcia pascual --antonio garcia pascual is still with us. i don't understand how many people are rebelling against theresa may. we have conflicting views and articles. out?any actually want her reporter: time will tell exactly

how much support she has got. what we hear is the former minister has a group of about 30 conservative members of parliament that he says what theresa may to go now. on its own, that is not enough to force her to go up -- go against her will. they need 48 names. there is af leadership challenge, who are the people that may get the job? will be aect there crowded field, because one of the defining features of the conservative party is there is no one clear replacement the rebels have in mind. boris johnson potentially. ember ross is another that was mentioned. the brexit secretary. thatine: is there a danger economists may need to model the possibility of a labor when? tim: the great fear, which is

why some conservative lawmakers are not wanting to push her out now is that this could set off a chain reaction that would result in another general election. there worry is that would see jeremy corbyn get into number 10 and not another conservative. francine: how do you look at this? even domestic politics. it is inside a conservative party conference. -- howferent get difficult is it to model gdp's on the back of it? antonio: at this point, you have to be careful not to necessarily go in -- of reaction, the volatility and weakness of the pound is closely correlated. immediately after the speech where there was no clear

, that was relatively positive news. francine: we have breaking news. this is a construction company based in ireland. we understand that -- growth gets the competing -- that ash grove gets a competing deal. materials, the company offering more than the rh. it's looks like an old-fashioned grove.acquire ash last night, a third-party offered a deal. bit down withe

their share prices. the third-party offered more and are most likely to get ash gro ve. we will bring you breaking news as soon as we get it. let's get back. it seems like at the related race with -- it seems like a three legged race with crh. antonio, what is a question you would like to ask the leaders of the conservative party? antonio: they key question is, what are the penalties, alternatives -- what are the alternatives? it was not clear to me. how that play out? tim: this is one of the big issues for the conservative

members of parliament. if they get rid of theresa may, who comes in and do a better job of negotiating brexit? boris johnson is pretty controversial, not popular. chatting -- werk were chatting. is it a good thing to get more if you are disliked? tim: he was the head of the brexit campaign. he compared the european union saying the e.u.'s aims were similar to out of hitler's -- to hitler's'. the sorthink that is of negotiating strategy that is going to go down well. the moment, the change in tone from theresa may after her speech, which was more conciliar was willing to pay

britain's bills. francine: what do we know about with the premenstrual do this weekend? -- what do we know that the prime minister will do this weekend? the speech was disastrous, but not necessarily her fault. tim: not her fault, but doesn't necessarily matter. across counts more than it might too. i think she is in some difficulty. is it serious enough for her to go voluntarily, or do the rebels have the numbers to get rid of her? francine: what happened to the pound from no one? more weakness -- from now on? more weakness? baselinelet's say the carries on. , if the bank of

england goes in november, and i think it will, you should see some slight appreciation into the year end. it depends on what happens over there. i want to show you a pound chart. you can see it dropping more than 2% this week. it is the worst performance since the flash crash a year ago. this is when we go back to this chaotic speech from the prime minister. guys, thank you so much. we will have plenty more from tim throughout the day. antonio garcia pascual from barclays stays with us. we will look at what the future

may hold for the u.k. this is bloomberg. ♪ ♪

francine: welcome to our weekly brexit show, live from bloomberg's european headquarters in london. let's get to the bloomberg brexit flash. sebastian: that make up in a brexit transition deal must be reached by the end of the year. although theresa may has pledged to secure a two-year transition period, that use position quote is not yet clear. they say costs are declining may

find it difficult to persuade reluctant londoners to move abroad. goldman sachs has agreed to .eave offices the bank has agreed to lease space on the upper floors of a tower. that is the bloomberg business flash. francine: as many conservative lawmakers considered the future of theresa may at their party conference this week, we caught up with the international trade secretary to discuss the future of britain's relationship with the e.u.. >> it is our decision is a right under the lisbon treaty.

it is not as if britain is doing something against the rules. doing some that has been pre-agreed that we have a right to do. that agreement says there be a -- the european union must give due consideration to the future relationship. we think it is time to honor that part. it was interesting some of the comments made today. he was saying perhaps the business needs to do more to persuade members of the cabinet for the need for transition. are you one of those members of the cabinet was not persuaded of the need for a transition or implementation do? -- implementation deal? what you'reu know transiting two, it is hard to say what that will look like. get tory keen that we that second stage. it is the most important part of our negotiation with the e.u.. it is about whether we are introducing pediments to trade and investment in europe. happens, that would be

unfortunate, because it would be disruptive to europe as a whole. i want is to put the prosperity of the citizens of europe, the trade and competitiveness of europe as our priority. reporter: does that have to be first before conversations transition or implementation? >> until we know what we are transitioning to, it is hard to say what the transition will be. i have no problems with the transition. if we want to operate parallel agreements and roles to make sure there is no disruption to our business, that is fine. i have no objection to that. i want to know what the and is going to be. is going to be. francine: antonio garcia pascual is still with us. we were talking before about your thoughts on the pound and

the way the political situation will impact it. i don't know whether if they hike it is just a reversal of the cut from last year and whether they will telegraph that clearly or whether there is a hiking path. antonio: i think that is one of the critical issues. i think there is the weakness of the pound we mentioned before price mechanisms. you see inflation that is running relatively high with the labor market, which is tight. is where the bank of england still seeing households and enterprises in a better is in the name were a couple years ago. all of it signals that if they hike in november as we think they will, this may be the start of the many cycle. analysis, eacht

i understand is the analysis the bank of england is making of the u.k. economy, that would be a statement not of one and done, but do one in november and maybe thinking about a hiking cycle that could go every six months. francine: what is one thing you should worry about more? inflation versus wage growth? is there something that makes you nervous about the future of the u.k. economy? antonio: wages have been having a problem with real wages growing at a negative growth rate. this weakness is wages that the bank of england has been monitoring. perhaps a way to rationalize

that is that some of the friends in the face of uncertainty of to hireay be more keen more labor rather than putting more capital, to continue .erving the demand in delivering the output they have been using my labor, which -- which isible more flexible and easier to unwind. francine: antonio garcia pascual , chief economist at barclays. thank you for joining us. previewgive you a sneak coming up. this is bloomberg. ♪

♪ francine: welcome to our weekly brexit show live from bloomberg's european headquarters in london. the former bank of england governor says he didn't trust politicians at the height of the financial crisis. way the needs to be a level of secrecy's amongst central bankers. here is a preview. >> we did support the bank.

we were the lender of last resort until the point where it ran out of money and it could give us collateral to lend against. people somehow seem to think we didn't went to northern rock. the very first conversation i had with the chairman in august 20's -- august 2007 was one in which i said, if it comes to it, we will bear as a lender -- we will be there as a lender of last resort. northern rock had a business model which ended when the market and mortgage backed and they hadosed, a high leverage at that point, even though they met of the international capital standards. it wasn't as if northern rock was somehow taking big risks with the definition of capital that the international standards that they should halt. it is the structure of the bank, which is basically borrowing short end mortgage lending --

borrowing short and mortgage lending. that is what made them vulnerable. you could draw a timeline and you do with the bank had run out of money, and it did at that point. governorr with the appointed goldman sachs to help them find a way of selling northern rock. when i met goldman sachs would the first time, we agreed within a few minutes that the only rent -- the only end result was nationalization. after the fate of lehman brothers, it was obvious there needed to be according to signal that we would do whatever was essential to keep the world economy functioning, keep the financial system going. i think the move in october 2008 originated in a telephone conversation, and i said i thought it would be a good idea since we were probably already considering cuts in interest rates that we would --

somereed we would speak to and it became a g10 movement. it took a week or so to put together. we changed the time of the normal meeting so we could announce it at the same time. this coordinated interest rate movement. i think the house will want to know that the governors of bank of england will want to know we announced a cut of interest rates, and done so in a coordinated action that is happening around the world in which the u.s. fed has cut interest rates by half a percent, ecb rate half of .ercent all have cut interest rates, showing global problems are best dealt with by global actions. francine: the 10th central bankers knew about this? -- the 10th central bankers knew about this? >> yes. we didn't brief the clinical

world, because that inevitably means a leak. that was one thing that would undermine the operation. francine: is that what makes the difference between central banks and politicians? >> yes. i won't go into detail, but if i had to think the big difference between central banks and politicians and the crisis, i could talk to a natural slot -- another central banker and would be a conversation in confidence and trade with discretion. -- and treated with discretion. politicians seem to end up in the media. francine: you can see the full interview on leaders with lacqua at 3:00 tomorrow afternoon. you can also catch it again at 9:30 p.m. evening london time. be talking towill steven major.

in the meantime, this is what you are looking out -- you are looking at. if you look at why there are such flows on pound, it has to do with the speech from theresa may. the pound dropped more than 2% this week. it is the worst performance since the flash crash. this is bloomberg. ♪

francine: it is job stay in america, but how much can we read in today's numbers?

tory rebellion, theresa may faces events to quit as a cabinet minister says he is building support for campaign to ouster her. the spanish prime minister convenes a cabinet as banks signal they may leave the region if independence is declared. good morning everyone. this is "bloomberg surveillance." i am francine lacqua here in london. tom keene is in new york. we have a package for you. is a lot of talk and rumors surrounding the prime minister. tom: no question about it. job stay here in america. what i love on a friday, a great set of guests to give us conversation really going into an eventful october. francine: let's get to the abf desk to the bloomberg business flash. i'm a: president trump offered

up some cryptic remarks last night. his comments came as the group posed for a picture. >> [indiscernible] m a: when the president was asked what he meant, here provide, you will find out. the president is employing any strategy. he will leave the iran nuclear deal intact for now. the president has called the accord the worst deal ever but u.s. allies say it is a flagship . the u.s. military is trying to use its influence to end a -- with qatar. there's an economic boycott

against qatar. growing.k., there is pressure on theresa may to quit. graham said he is running a campaign to oust her. senior conservative officials do not believe that are enough rebels to push me out. -- push may out. global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. chandra. francine: we do have breaking news. yesterday, tom talked about the literature.and now we have the nobel peace prize. tom, we know it as the international campaign to abolish nuclear weapons. this is a literature. now we have group that is been trying to campaign and lobby people from all over the world to stop this.

it is very timely because of what we are seeing with north korea, what we're seeing with president trump. it is very timely. and a group that people would have heard of. tom: it shows a trend towards an analysis of groups, rather than individual people's we have seen presidents when. interesting to see this. within a very european take, what to do with something after world war ii. let me look at the data. commodities, massive risk on and a subtle date to check in. we could settle this but we are not because of our good guests. futures give applause. the dow closing. weaker euro, stronger dollar. next screen, and extraordinary -- 9.23. we are getting to a lower number and very different.

there is the dow at an extremely level. 12 city nine handle on 1269 handle on gold here an hour ago. is ofne: the group nongovernmental organizations so keep an eye on this especially when we speak to kevin cirilli. this is my data check. i will think it is as subdued. the dollar still extending gains . u.s. stocks yesterday posing and yet another record. let's think about that. there seems to be more confident that the u.s. is building up respecting the latest jobs data. lower.n shares edging bond yields wrapping. euro weakening. we are looking at the catalonia crisis. a lot of questions about theresa may.

tom: let me go to the bloomberg. bill gross will join us in the 8:00 hour. here is inflation adjusted wage growth in america. you will want to get to these peak levels above 3%, real wage growth. this is the atlanta series. it is hard to do and it has been miserable here. here is the united states this morning. we will see the data we get at 8:30 this morning, francine. it is a stark contrast below -- stark contrast across the atlantic. francine: this is my terminal. it is very easy. i didn't very talking -- very tongue-in-cheek. the question is, as you get on the short list of the next fed chair is if they will do away with this and whether they do away with for guidance. ,n today's u.s. jobs report

getting the impact of hurricane irma rather than underlying dish underlying economic -- underlying economic trends. wheny not be into later state-by-state data is released that investors can make sense of the data. , steven major. when you look in the u.s. jobs data, is it only a huge swing? we get a 35,000 print are 120 print that you can read it into fed policy? steven: my colleagues told me that the average earnings is the real data to look at. in terms of the bond market it seems to be more correlated with earnings. francine: wage growth? steven: yeah. it is the wage growth and don't forget we have five months of falling before cpi before last

month. any size this is turning up will map out. it will not scare me if people want to follow the news flow. ultimately i joke -- i doubt treasuries will get above 2.5% in the next few months. ultimately i see any selloff with a buying opportunity. francine: that's because underlying inflation? steven: that chart you have there.- you have .he 275 is the key number if use ago, that was 4.25 back in 2012. if you were to imagine a path along the green line, and so you could use those discount rates and inject them into a 10 year treasury, that would mean you would have a rising rate. guess what the fair value of the 10 year treasury is? 2.56.

there are scenarios whereby. much earlier than 2.75. we could be reversing within five years. evaluation of the 10 year ofasury is a sophisticated all of those just said this skater bridge of all those expectations. i am thinking of any cheapness. tom: stephen, there is always dynamics. dominic of deutsche bank talks about a better real economy. what is your dynamic within that 10-year yield between real change in the outright nominal change? steven: that is a good point. there was a speech in july by stanley fischer which i thought was very powerful. he used this opportunity to talk about how real rates have often been zero in the last 100 years. he pointed out in 1980's and the

1920's were outliers -- and the 1920's were outliers. i am struggling with the idea that they have to be high. your real challenge in forecasting the bond yields is in the inflation rate. clearly there is all kinds of debates about what is happening with wages. we have our view. we think labor struggle to get good pricing here because of the graphics. tom: i am going to rip up the script. i was at a meeting yesterday and i said this is bc for next year. steven major, with impressing power is the idea you cannot raise prices. is this what we are going to see with raises? prices?ility to raise labor: it is the price of that has trouble going up. labor is missing out. this is the key for the core

inflation. we can look at the scenario of japan, and they trickle along with positive, real growth. inple are getting better off terms of real disposable income. yet the patient. this is a -- you have to be patient. everyone thinks it has to be quick fix. it takes decades. .om: absolutely fascinating i love the idea of everybody looking for a quick fix. we will continue with mr. major of hsbc. later today we double barrel to smart voices -- two smart voices. links hurricane analysis into what we see at 8:30. bill gross will join us with janet henderson.

i look forward to speaking to mr. gross. this is bloomberg. ♪

numbers in germany rebounded in august after july. it is a europe's largest economy is set to maintain a strong growth rate. german exporters have benefited from global recovery.

regulators are investigating standard chartered over the transfer of $1.4 trillion and client bank assets. -- and the transfer of assets before new tax transparency rules took effect. -- when lessoday than expected. according to macau's tourism office, tourism was done more than 5%. that is the bloomberg business flash. is wonderful to start this day with steven major. and we go toight sterling dynamics as well. steven major on our central banks. i want to bring up a chart. i showed this to vice chairman fisher.

it is the best chart i know on a path. the massive negative fed funds target rate adjusted for inflation. that is as far as we got from one vice chairman fisher spoke about altra accommodative. is the general rule, draghi, yellen, kuroda, are they still accommodative or altra accommodative? the central banks that are still buying bonds are altra ultraodative -- accommodative. that is why there are all these semantics around the link which. sexy the drug is very keen to use the taping word. that draghi ise very keen to use the tapering word. at a time when they know there is every investment flow coming as well.

if they did 20 billion, it would be a wash. they know they've got 15 billion euro reinvestment coming. distortionea of the is the keel of the sailboat still there? , i've negative fed funds got negative yields in germany and a negative 10 year in switzerland. do we have a keel to our finance system still? are the central bankers flying blind? u.s. you have had three years of tightening. at least you're getting back towards the zero with the real rate. i don't know if we can go much higher than that. it is true that in the eurozone we are much looser but then we have this huge impalement and massive debt overhang. we have countries lagging other

countries and we cannot move to a more normal rate structure. japan -- ramin: why not? steven: there is -- francine: why not? steven: there is no reason to. it is not worth taking. in the eurozone we have had a year of good data. no one thought we would have it a year ago. inflation hasn't come through. the risk is that tightening too soon could throw away all of that. francine: the two arguments which are always about inflation is lagging and it could come back pretty quickly, and the other is don't you want the central bank to have ammunition for the next downturn? steven: questions about frameworks are too big to take on in one go. i would say this, if someone told you what i have been

telling you for the last five years, please be patient. we are waiting for the unemployment rates to impact the wages which will come through in jive inflation higher. and told you -- and drive inflation higher. and told you, what would you think? you may want to start questioning the underlying model . i am not saying it doesn't work but i am not going to take that bet. tom: if we get your thesis of a diminished real rate, doesn't that imply a demand for fiscal stimulus? if we get a chronic since over one or two or three quarters, we got to go back to some form of fiscal stimulus. steven: tom, it is a diminished role rate in the context of what? the last 30 years. chart back 100

years, you would see that banks [no audio] and we have been working that will rate off for the last 30 years. if go back 100 years, it is no longer and zero. policy everyiscal time we have had a loose fiscal policy, we have had a much better base. it is a strike me -- you are solving a debt problem by taking on more debt is not something i think would work. maybe in theory. tom: steven major with us from hsbc. from 9:00, our conversation with gary cohn. look for that on bloomberg daybreak in the 9:00 hour. this is jobs day. this is bloomberg. ♪

francine: this is "bloomberg surveillance." tom, for a look at emerging markets now while the hawkish looking fed has sent most currencies lower this week, the outlook may be more positive. major.th us, steven we went to your claws on treasuries,. yet you differentiate the countries that went through structural reforms. steven: the valuations of what worked in em and in terms of the cash look at how many

central banks are still more on the easing part just easing path. in places like india with a one handle. who would've thought that? you have quite a sweet spot for em here. when you look across the fixed income sectors, it is fair to say that investment credit could be tight for a number of regions, but em local rates not so much the hard currency start to offer value. we are not giving up on this trend. we think investors have underinvested in em local rates and there is more to go. tom: how does the u.s. dollar and just to the em dynamic? this is been an undercurrent this week on surveillance. do you buy the new strong dollar rally? what does it mean for the em trade? steven: that is a good point

because investors will be scared about the strong dollar. bump? dollar move just a is it a liquidity move? japanese ranks -- japanese banks . this happens towards year-end. it is fair to say that dollar could go up for some kind of technical reasons but the longer-term story is really down . as an investors you should be looking at the latter. you should be looking at a weaker dollar trend, not some kind of start of a secular told up to the dollar. as an investor i would say don't worry about any temporary spike in the dollar. francine: what happens -- do you need to think about who becomes fed chair? steven: you said it. it is taking a bet.

you can do that at the bookmakers. if we had a chair that is more headstand than that current one, maybe that means we have a couple of bites soon. does it change the destiny? the 275?hange as a chair come i think behavior is different. the chair has to sit in a different seat and be coordinating and bringing one together. francine: stephan, thank you so much. he stays with us. we talk a little bit about brexit. the pound dropping more than 2%. this is the worst performance since the flash crash a year ago. pick up bloomberg businessweek. it is a great addition. ♪

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see how much you can save. choose by the gig or unlimited. xfinity mobile. a new kind of network designed to save you money. call, visit or go to xfinitymobile.com. tom: from london, "bloomberg surveillance." bill gross with us at the 8:00 hour. your friday briefing.

here is emma chandra. emma: they nobel peace prize has been awarded to the campaign to abolish nuclear weapons. the first treaty that prohibits the use of those weapons. the world's nine nuclear powers were cut at the talks. president trump is employing a new strategy. he believes -- it leaves the multinational agreement intact for now. the president would ask congress to toughen up the law overseeing iran's compliance with the law. u.s. allies say it is effective. is a dramatic turn in the debate -- it is aontrol dramatic turn in the debate over gun control of u.s. the las vegas shooter had a number of weapons they used the device. tropical storm nate is taking

aim at the u.s. south coast and may become an hurricane tomorrow. the storm possibly distract has anywhere frome louisiana to florida. global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. i am ended china -- i am emma chandra. this is bloomberg. francine: theresa may is facing growing calls to quit. chaps sent a list of 30 mps calling for a new leader is growing. it comes after a speech which was interrupted by plextor. -- by a prank's to. some predicting it would hit a post brexit low if the prime minister was forced. turning is now is sony kapoor. kapooring us now is sony

. what we are seeing, sony, is a lot of crises are not due to your fault. it is a stumble affect. sony: this is perhaps unfair on her, but in some ways, i thought it was better that she was sputtering. the attention was governed by that, rather than the content of her speech, because it would probably have been even worse in terms of the prospects for the u.k. if we had actually heard she had to say, because she was trying to reconcile to every consignment thing. on the one hand, acknowledge there is a class that is left behind and throwing money to address some of these problems, but at the same time, pushing for a hard brexit line that is going to hurt exactly the left behind class the most and have far less fiscal room to be able

to do the things to bring these people and give them the welfare state opportunity. i know it is unfair that she was sputtering, that is where the attention is. as a prime minister, on the content of what she is trying to do, she is failing. francine: is she failing? this is an impossible situation, steven. if earlier should gets challenge, is there anyone that would do a better job? steven: stony has put -- sony has put it very well because together ant apostle speech -- it is impossible. who knows what kinds of personality or what kind of policy we are going to get. who knows if there is going to be a change? it is a range of scenarios and some of those might actually include a reduced brexit risk. believe it or not. i get the idea of a knee-jerk

reaction or surprise move and some of the personalities that have been touted might be quite a shock. if we step back and think about this, does the probability of a brexit happening start to shift? on.t is going and possibly if we have to expose the u.k. to another cycle of elections, things might change. tom: sony come i look forward to ask you this with the opening of our headquarters here. how is london doing. very quietly, we took very little about the london financial economy. how is it doing? sony: i think it is watching with bated breath. big decisions that would have an economic impact -- a negative economic impact on london mostly have not been made.

the fact of the matter is london does have a fairly significant future with our without brexit. there is a new dynamic here. there is group of people who are watching the catalan referendum very closely to see if catalonia somehow manages to first leave, and then stay within the eu, because they could set a precedent. it is really far-fetched but just as example of how different london is to the rest of the u.k. there's a constituency the believes that london should leave and become a city state if the rest of britain decides to walk off the cleft -- walk off the cliff. london secedes is becoming a reality if the cattle on case goes ahead. -- if the catalan case goes ahead. tom: steven, i do want to get you in trouble with hsbc. i'm not good ask you about exit dynamics that start -- but part of it is sterling financing's --

sterling dynamics. do they want stronger? steven: i am sorry about the coughing. [laughter] francine: disclaimer. this is not done on purpose. sony: there is a line there somewhere. i have even forgotten they question just forgotten the question. -- forgotten the question. francine: what are the chances that budget doesn't go through? -- that brexit doesn't go through? if you are a remainder, there's a chance you think brexit will not go through.

steven: there is a danger if you ask one person, it is going to be distorted by that personal preference. yes, there is a risk of a cliff edge. and our team has written about this on brexit. there is a risk of us moving towards something that a softer. it is actually appropriate on a proper kind of expectation-based analysis to include all scenarios. it seems to me that the knee-jerk reactions in sterling are only looking at the risk on the best stuff. sony: algoma the record saying i don't think the brexit will happen, because i just still have some faith left in this country's institution, the bureaucracy and the central bank that at some point --

francine: a referendum is a referendum. sony: that sounded like they like a brexit is a brexit. it was narrowly one based on a campaign of misinformation in the economic costs are becoming very clear. the best thing that could happen and the advice i give to the other european government is to make it as hard as possible on us, so we are able to wake up before it is too late and stop this madness. isre is what really matters single access to the market. as long as we weaken it in some be the think we will economic impact. with every passing day, there is more incompetence with the evidence mounting up with even the u.s. on issues of trade making it clear that there will be nobody fighting the uk's corner at some point.

economic reality was make either the people of the politician change their mind and take a second look before jumping off the cliff. -- win? labor when doesn't sony: that answer the question because labor itself is divided on brexit. it doesn't have a consistent policy. there is a big gap between the fairly significant minority leader in the majority that doesn't want to leave the eu and the lack of a proper political representation in the parliament for the constituency. if you are against the brexit, it is hard to see what political choice you would make. therein lies the big problem. stevenief sony here major on what the flows will be in england. what will the capital flows be for england?

steven: the bank of england seems to be offering some kind of support for sterling. -- hask of england is bought a little bit of time indicating they want to hike in the market has priced up two hikes in. that is going to put a floor under sterling. the danger is if that time is used up unproductively and we on negotiations, the bank of england is left holding the baby. .hat is a risk francine: what is the baby looking like? we have talked about inflation. steven: the bank of england is sliding the financial stability factor into the reaction. by looking at the impulse on the debt, they found

a way of linking the whole thing. they can justify an increase in debt, they found arates. francine: is it one and done? is it a reversal of the cut loss? is a because of actual inflation? steven: we think there is potential for two but that is overtime. they are going to hike. tom: steven, thank you so much. greatly appreciate it. mr. major is with hsbc and sony: pork with us from re-define. we are going to get you briefed on bloomberg television. if you happen to migrate over to radio, a great morning briefing coast-to-coast. bloomberg daybreak on our new coast-to-coastnd . sirius xm channel 119. this is bloomberg. this is bloomberg. ♪

emma: this is bloomberg surveillance. i am emma chandra. let's get to the bloomberg business flash. glencore just made a big acquisition. it is agreed to by chevron's assets and south africa. the price, $973 million. -- the third biggest tech ipo and of the year. it began trading today on the

new york stock exchange. consensus. the as been profitable for the last four years. harvey weinstein has taken a leave of absence from his production company because of sexual harassment allegations. weinstein has reached at least eight settlements of women who made allegations against him. ashley judd was amongst them. that is the bloomberg business flash. francine: thank you so much, emma. spain's prime minister conveyances cabinet today and the squeeze on the government in catalonia titans. hasspanish constitution suspended a meeting. catalonia.ve out of us, sony: pork who has just come back -- sony: poor

who has just come back from catalonia. he took a very hard line on catalonia. what does it mean for negotiations going forward. is it up to the separatist to back down and do they have a choice? sony: individual have to come from the european union. the are some signals after the initial robust pro spanish response that there is room for .ialogue angela merkel has come out against the violence. i think the only way this is going to resolve is with eu intervention that will force a mediation and bring the two sides to the table because the case is not clear-cut. be it on the ground of identity or history or even economics. need for ang overdue

re-negotiation of the terms at which catalonia interacts with the rest of spain. for example on fiscal transfers and autonomy. francine: what does that mean for investors? yesterday we were concerned about deposits from these two catalonian banks that were domiciled in the region. it is unlikely that there will be a snap vote of deposits. sony: nobody should panic because nothing is going to happen anytime quickly. even if the catalan parliament was allowed to leave and declared independence, legally it is a meaningless concept. for the for seeable future, remains within the european remains within the european union and those banks --

[no audio] there is no economic reason for short-term panic, but this will play out over the next few months and will most likely result in a peaceful settlement of some kind. tom: within the peaceful settlement of some kind, i must believe that is more autonomy for catalonia. what will be the character of that autonomy? sony: historically, it is not quite as bad as the kurdish situation where the kurdish culture was suppressed. spain is not been very kind to the expression of catalog identity, liquids and culture. just language and culture. that has changed. it will take the form of more cultural identity, more cattle on taught in schools -- more cattle and taught in schools. this is one of the big negotiation points, fiscal contribution. we will end up with a settlement were catalonia pays less into the spanish fiscal pot because one of the gripes is catalonia

has been integrating this has been contributing this proportionally and the money is when used badly partly to curry favor with its constituencies. tom: where does mr. roy fit in politically? -- where does mr. roy fit in politically? does that provide any comfort at all to the people of catalonia. sony: sadly, no. this began back in 2006 when the was the onlyrajoy major party to oppose a resettlement which would've given more power to the region. the pp has a very centralizing instinct that goes against the history of spain and against the very divided culture identity, so france is a very centralized country and spain absolutely is not.

pp wants spain to be more like france and that is completely incompatible with a catalan -- within the current spanish constituency, bp is the furthest right party and of the parties falling in line, that means without external intervention, this is not going to get results. francine: sony, thank you so much. sony kapoor stays with us it will talk more about institutional investors and what they can do. if you have questions for sony kapoor or any of our guests, you can log on to tv . you can look at some of the data screens and fields some of the charts. you can ask tom and i to ask questions to sony. this is bloomberg. ♪

francine: this is "bloomberg surveillance." i am francine lacqua. coming up, my conversation with marine king. look for that at 3:30 p.m. london time. it is quite fun because we really go into that coordinated

action, ben bernanke back in the day. and the reason for the financial crisis. tom: it was wonderful. i really cannot say enough francine could you talk about back in the day. his book is absolutely spectacular. it is one of the single books of the financial crisis. it has been an interesting morning. we have ed hyman and bill gross coming up. before steven major talked about the idea of forever low real rates, this is an important idea to our guest sony kapoor re-define -- sony poor of re-define. it is true, our prison systems are complete failure. sony could yes. is frankly no particular political incentive to be looking at reforming that. the reality is so stark.

if you look at the dutch abp, many of the large pension funds about half to two thirds of their present corpus comes from a queue limit financial returns, rather than new contributions. off that, the substantial majority is capital gains. all of this happened over the last two or three decades in a scenario where there's been a secular the crime -- secular decline in interest rates. of course we have had significant secular decline in corporate tax rates. from where we sit today despite trump's promises of tax cuts, there is not that much room to go at the oec level. there is going to be no further .hina arriving third, we are going to if

anything see a hike in interest rates. interest rates will never fall from 8% to 2% again. the prospects for returns or so poor over the next decade or two that they are likely to be 3%.al -- no more than 2% or tom: clearly one of my themes in on the economy. sony kapoor, thank you so much. coming up, what wonderful set of conversations. edward hyman will join us. william gross after the 8:30 jobs report. this is bloomberg. ♪ is this a phone?

or a little internet machine? it makes you wonder: shouldn't we get our phones and internet from the same company? that's why xfinity mobile comes with your internet. you get up to 5 lines of talk and text at no extra cost. so all you pay for is data.

see how much you can save. choose by the gig or unlimited. xfinity mobile. a new kind of network designed to save you money. call, visit, or go to xfinitymobile.com. tom: this morning come the risk continues. the gold, the new low. the u.s. dollar out.

the dollar ascended. it is jobs day. what will need hurricane adjustment? we do it twice in this hour. this is a book president trump should read. no more game of thrones, not kingsland and, kingsbridge -- not kings landing, kingsbridge. good morning. this is "bloomberg surveillance." we are live from our headquarters in york. i am going keen. -- i am tom keene. francine lacqua. francine: that idea that president trump would try to figure out what he would do next is a wonderful idea. tom: a lot to look about -- a lot to talk about. his optimistic view on american economy. .ere is emma chandra

emma: president trump offered up some remarks last night before dining with semi-near just senior military leaders. his comment came as he posed for a picture. >> [indiscernible] emma: when the president was asked what it meant, he replied, you will find out. the president is considering a new strategy. he will lead -- leave the multinational agreement intact will ask congress to tighten the law overseeing iran's compliance. he was military is trying to use its influence to end the dispute involving qatar. officials tell the associated are rain, theer uae, saudi arabia and egypt imposed a boycott against qatar.

in the u.k., there is pressure on treason made to quit. former conservative party chairman grant shapps says he is trying to oust her. senior conservative officials do not believe there are enough double-shift to push may out. global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. tom: out to set out the data check. futures have one after a future -- after a huge day. stronger dollar, weaker euro. we had a 16 teen handle 20 minutes ago. 9.24 on the vix p it look at the dow -- vix.

dow.ok at the francine? francine: this is what i am looking at. you mainly talked about the main moves. dollar, spending gains. [no audio] let's look at bond yields rising. moves. this is as a catalonia crisis rumbles on. a former cabinet colleague announced he is running a oust the prime minister, theresa may. tom: let's use of the bloomberg to set up our conversation with mr. hyman this morning. here is the united states over oust the prime minister, theresahere with a hit inflation sterling adjustment. here is a negative wage growth in the united kingdom. we just cannot get above the level of optimism needed to get back to the economy ed hyman new years ago. he is ed hyman of isi.

are you having fun? has this thing with altman worked out? edward: i am having a blast for two reasons. one, loving the relationship we evercore and those two gentlemen. the economic backdrop, this is amazing. a lot of fun. evercore and those two tom: it is still the ed hyman note. he handwritten note and put the star and we are going to do the hurricane twice. once briefly. your note is an optimistic note. edward: it is a factual note. i was in houston last week, went to the airport downtown, i didn't see the hurricane once. it has come back completely there. in florida on the west coast, a lot of trees down, but unemployment claims i saw yesterday, they are down. the economy is improving.

our company surveys are up. the economy is coming back from the hurricanes. tom: i believe you learned this is a large the market gets in front of the thinking. is that what we are seeing in this risk on field is a market? edward: is a little bit of front. it sees it is coming back. 18.5 million and bond yields were edging up a little bit, the dollar is edging up a little bit. ander is over three dollars -- over three dollars this morning. francine: when you look at the wage growth in a note this is what people are looking at today , when the wage growth also be skewed by the hurricane? edward: people have studied this thing completely. they have sucked every ounce of air out of it and they are right . look at the past hurricanes, wages were notedward: people has thing affected. unemployment was it affected. jobs were down.

on the wages, we're looking for .3 on the wages. wages are key for all of the stuff p and wages have been stuck at 2.3%. to have inflation pick up to over 2%. francine: we haven't seen really inflation coming through. do you take a bit that some point it filters through? is it just wishful thinking, that we should stop thinking whatever happens that strong employment will bring wage growth eventually? ed: there are hedgehogs and foxes. i view myself as a fox. i'm looking to see if it is coming on. i have been at the stuff for a decade and i am positive that wages and inflation will pick up at some point. i don't know what point, and so i am holding back until we get there.

and one of these numbers is a chance and the economy keeps improving. i think there's a good chance that it 18 it will happen, but if it doesn't, that is probably better than if it does discuss slow and steady has been a pretty nice environment. francine: if you hold back, should the fed holdback? edward: yes. i want to wait like this. you had a great interview with stan fischer questec is fabulous. -- stan fischer who i think is fabulous. i think there's going to be a point where inflation does pick up. tom: i want to go back. mr. hyman, mr. copper, this is inflation adjusted copper. here is the long-term commodity bear market. here's the move up. i suggesting a commodity boom

would better the u.s. growth that finally the commodity bear market is over. edward: i am a fox, i'm just noticing it is happening. i noticed the economy is coming up. tom: are we going to do it without the president? edward: yes. tom: that is why ed hyman is with us. edward: the economy is doing better now. so thence comes in, and economy is doing better. stocks are up, that makes people feel better and the business community feels better because they have a progrowth environment. tom: i want you to speak right now to the couple's sitting in the kitchen and missed the boat on this equity market. they have got to get back in. dowdo you get back into the

, 22,700, if you haven't enjoyed the bull market since february 2009? edward: you go in on tiptoes. thes my job but looks like stock market is going to go up from here. racial stay lower for longer. if they do that -- rates will stay lower for longer. note, edcine, make a likes steven major. francine: what will happen to treasuries from here? if you look at the way that treasuries have behaved, looks like the correlation we're used to. edward: i look at it every day come i think the us economy at this moment is coming out of the hurricanes. we are going to 3% and my guess is treasuries on the verge of making a technical breakout. i love the chart that tom does.

the chart of treasuries, they are on the verge of this level of making an upside breakout. if they do, we will see of they keep moving up to 2.5% and 3%. i will take it a day at a time. if they don't work out, it is a very -- it is a better environment for the couple of the kitchen for buying equities. tom: there is the chart. this is the lollipop chart with the different fed meetings. the idea of a two-year grinding and grinding and grinding. vice chairman fisher made clear that inflation is transitory. is this move up in yields transitory? is very permanence to higher yields? edward: the beginning of a move up. i can change my mind if things change back. i agree with the fed vice chairman that inflation is more likely to pick up then go back down. because itatching it

has been down for so long for good reasons, like globalization, technology. my guess is this cycle is normal. it is just really slow. we are in it for a decade. this time is different. after a financial crisis it takes a decade to get back to normal. where at the decade. people have been right that we go down, and now they are going to say it is taking two decades. let's not double up on a good thing. going to talk twice in the hour about this odd jobs report in hurricanes. maybe you will mention hurricanes as well. bloomberg daybreak will speak with mr. cohen of the white house. worldwide on bloomberg. stay with us. this is bloomberg. ♪

francine: this is -- emma: this is "bloomberg surveillance." let's get to the bloomberg business flash. glencore has jumped china's bid to buy oil assets in southern africa. million for $973 three fourths of chevron's business in south africa and botswana. chevron had agreed to sell to china for $900 million. it agreed to sell to glencore. factory orders in germany fell in july. it is a sign that europe's largest economy is set to make

regulators in europe and asia are investigating standard chartered over the transfer of $1.4 billion in private bank client assets. the probe focuses on the role that stanley chartered status -- standard chartered staff man played. -- may have played. that is the bloomberg business flash. tom: very quickly, your briefing from washington with mr. played. surreally -- mr. kevin cirilli. the secretary of state is not anthony scaramucci. it is just that simple. tillerson, does he get through the weekend? kevin koke this has been a remarkable week. the relationship between trump and tillerson, most notably coming when tillerson speaking

publicly against that nbc report that he called the president and moron." -- this has been unfolding. we should note the development regarding the iran nuclear deal. >> where does the general fit into the politics? kevin: kelly has tried to be a referee of sorts. just serve asice a go between and keep everyone on the same page. there arebe honest, supporters who like the president's element of unpredictability and what you are seeing is a recalibration of several folks trying to get in line with that level of rhetoric.

francine: kevin, talk to us about -- this is the cryptic posedt, the president with photos from the military. he said something like, this is the calm before the storm. any insight? kevin: no one knows. the comment has taken a lot of folks offguard. mean one of many different things but again, the president is saying that next week there will be a decertification of the iran nuclear arms deal. mean one of many different things but again, the that drew sharp criticism from democratic folks last night including elizabeth warren. as well as some military folks within the obama administration who say they have to have -- no one agrees -- everyone agrees that iran should not have an nuclear weapon. kevin, i don't know if it is a rumor but people are

, ising about the military it like a continuous rumor mill? kevin koke it is like the rumors --er stop -- tevin coleman mill has a lotr of people wondering what exactly he met. i can tell you there's a lot of the pump stock. a lot of talk in the inner a telling republicans yesterday look at whether or not that should be legal. there's a lot of talk about that. tom: kevin cirilli, thank you so much. look at the washington follows -- follies. have you ever looked at politics this way? i guess we go to tax reform and any likelihood that we see that give a pop to the american economy?

edward: the business community feels better. the deregulation is helping. trump is an uncertainty from day-to-day. our past few is with the budget passing the house, the odds of tax reform have now gone over 50%. maybe 55%. it is making some progress. that is my best guess that you get some tax reform next year. tom: how is secretary mnuchin doing? adco it is not my what -- edward: it is not my wheelhouse. tom: you understand that tone matters. edward: my impression is based on all the surveys and mrs. confidence -- and business confidence which is elevated. we have two surveys.

one the survey from bloomberg. they are still very elevated. i am shocked they are still elevated. as you know, when i travel around the u.s., city by city, they are doing pretty well. tom: i'm going to dive into that with ed hyman. coming up after the jobs report, hurricane adjusted jobs report, the conversation with william gross. i am thrilled he is with us. bill gross after the report. this is bloomberg. ♪

francine: coming up tomorrow, .eaders of blackrock it is our conversation with the former bank of england governor, mervyn king. he discusses the court nato response to the financial collapse. it has been a decade since the collapse began. ed hyman, we are back with him. where do you see the next crisis coming from? are we ready for it, thinks to regulation? ed: i think the best answer i can give you is at the moment, the next financial crisis is an insight. like you point out, it has been a decade. now for the first time we have a really sick or night global

expansion -- really synchronized global expansion. brazil is improving. japan is looking much better. central banks are really inflate -- really easy. inflation is low. at the moment, i am not seeing a financial crisis. if it happens, it will be something with inflation picking up and central banks tightening. inflation at the moment really isn't picking up. francine: how do you view china? anything seems to be pretty stable. is that the biggest risk to the global economy that we really don't know what is in that the economy? survey 20d no p it we companies every week that do business in china. that survey has picked up significantly. i get it every friday morning. the stock market is going up, up, up. that is a good sign for china.

bank loans are still very strong . i got an els week from a friend who owns companies -- i got emails last week from a friend of mine who owns companies in china. this meeting,st we will see if they put the brakes on. that is after the meeting. right now, think china is fine. tom: we are going to dive into the hurricane analysis. it's got a fabulous -- ed has a fabulous chart. the gentleman who changed historical fiction. ken pollack joins us. a column of fire. this is bloomberg. ♪

♪ tom: good morning, everyone. dutch france in london, tom keene in new york.

right now in new york city, our first word news. emma: the nobel peace prize has been awarded to abolish nuclear weapons, honored for its work on the treaty that prohibits the use of those weapons. powersld's nine nuclear are part of the talks. president trump is considering a new strategy to confront iran's nuclear ambitions. according to administration officials the president would ask congress to toughen up a law overseeing compliance with the accord. president trump the agreement is an embarrassment to the yes -- to the u.s. a dramatic turn in the debate over gun control. the national rifle association says so-called bump stocks that allow some a automatic rifles to function as fully automatic should face more regulations.

the las vegas shooter had a number of weapons that used the device. is takingtorm nate aim at the u.s. gulf coast and may become a hurricane tomorrow. the latest track has it coming onshore anywhere from louisiana to florida's panhandle. oil and gas platforms in the gulf of mexico have shut down. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. tom: very good. this is a real joy, sitting with francine in london and a man who changed the historical novel, ken follett. years ago he did "the eye of the needle," which changed history. edward hyman still with us. can, congratulations about your book. i made a joke, the idea of make tudor england great again.

if president trump was to read "a column of fire," what would be the message you would want him to get? is, itguess the message is always better to have a discussion than a confrontation. tom: within that discussion and within it is the tensions of society, and for you it is the religious balance of the 16th century. it seems awful much like today. are the religious tensions then really no different than today? ken: what attracted me to this story partly was the religious wars of the 16th century have such echoes in the 21st century. we mustn't be pessimistic. things have changed. it is no longer normal for catholics to kill protestants and protestants to kill catholics in the united kingdom,

and that is progress. the dismaying thing is in some parts of the world this still goes on, and we are still fighting the struggle for religious freedom that began in the 16th century. francine: i need about four days off our time because it is a big book to read, a wonderful book. religious tension, this is kind of a battle between the ones who are tolerant and the one to talk to each other versus the ones who want to impose their will. do you believe in historical cycles and why did you choose tudor england? was fascinated to learn queen elizabeth the first set up the first english secret service. i was intrigued by the idea of these guys in doublets and hose doing all the things the cia and mi five and mi six two in the 21st century, and they did.

they put people under surveillance, tailed people in the streets, intercepted messages written on pieces of paper. they used codes. they had people who could decode anything. and they made lists of suspects who might be terrorists. it is very much the same game, just 450 years earlier. francine: when you look at the parallels with any of these queens and kings and people in power have survived social media , i do not know if it is something you think about. we think about it on the program , saying it was easier to conquer then because you were not under the scrutiny of anyone every 24/7. ken: i think wayne is a first would have been fine with social -- queen elizabeth the first would have been fine with social media. she was great with public relations. public relations had to do with appearing before the people in a

fantastic dress studded with pearls and a terrific hairdo. francine: like tom keene, really. ken: even more glamorous. tom: glamorous. this is an important question and it goes with an america we are watching, about the generational shifts of the 1960's. explain to our audience and why they should read "a column of ,ire." the generation of shift it is extraordinary what happened in the 15 50's, right? ken: it is extraordinary, and muchinterests me is not so the conflict between catholics and protestants as the conflict , we haveeople who said to kill all the protestants or we have to kill all the protestants, and the people on the other side who said, why

don't we find a way to live together without killing each other? it was the beginning of the demand for religious freedom, which was the first freedom people started to demand, before freedom of speech, the right to worship asreedom to you think right was the first thing people asked for. getting: i is difficult inspiration but how difficult is it to remain neutral? ken: i feel neutral because i do not really care about the theological arguments between catholics and protestants. it is hard to believe that anyone once cared that much about that stuff, so for me, there is nothing to choose between the catholics and protestants of the 16th century. the catholics killed more people because they were in power, but as soon as the protestants got into power they were just as bad so i do not see any moral difference. i see the moral difference between michael is a bit, queen

catherine of france -- elizabeth , queen catharine of france. she tried to keep the temperature down by saying, let's give the protestants the right to have churches outside the city walls, and that kind of compromise. she worked hard at that, and margaret of palmer. interesting that they were three women who were the three national leaders who pressed for said whate the guys men always say, let's kill them all. tom: we have ken follett with us, reinventing the historic novel and we also have edward hyman with us who some would argue reinvented america economics -- economics. to tudor back not only idea of but also the trade.

one of the major messages of these books is trade and the 16th century really mattered like it does now. are you optimistic on trade is a solver of our societal problems? wto blew up. can we get back to some form of better trade? edward: one of the dominant thing since the berlin wall can down his globalization. that is why inflation is so low so that is what, 30 years ago. after that, china became a major force and as francine was talking about, you now have the major theme right now is the global synchronized growth. i think trade and globalization is here. see,it stays here, we will but right now it is a major force keeping inflation down and right now, synchronized on the upside. tom: i really want to get to this, your book "i of the needle" redefined our view of

world war ii and the tensions there. what do think about the german election and the idea that the far right came back into the bundestag? ken: isn't it strange, tom, that the support for the neofascists in germany is strongest in the east, where they have the fewest immigrants and the fewest refugees? in other words, the people who are not living with immigrants are the people who are most worried about them. i thought that was telling. back,e are going to come particularly with a focus on catalonia as well. edward heiman on jobs day and we will talk about the hurricane adjustment, carl riccadonna joining us. radio,o-coast, bloomberg bloomberg daybreak. it is jobs day. this is bloomberg.

♪

♪ this is bloomberg surveillance with tom and francine from london and new york. a headline from the prime minister in the u.k., she is there to ms. it -- visit business chiefs on monday.

this i imagine ceos and cfos, people she will probably try to put on as allies after the turbulent week she has had. talking about monday, that is also when the prime minister mariano rajoy convenes the cabinet -- he convenes the cabinet today and monday, a few more things on the separatist government in catalonia. the spanish constitutional court has suspended a meeting of catalonia's president in the regional parliament on monday. we are expecting that not to go through, but the fallout has spread to the financial sector. we are back with "a column of and edoffer -- author hyman. you just came back from a dread.

was the 10 -- madrid. was the tension palpable? aboutverybody was talking that, and the curious thing was that some of the people in madrid said to me that the whole thing about the police and the ballot boxes was basically manipulated by the nationalists, to give themselves good propaganda. i do not believe this, by the way, but it is interesting that people in madrid believed and the visiting brits were told, you have been fooled by the television news, this is not the real situation. i think it is the real situation . i suspect they are the ones who might've been fooled. in thelook at this and scope of history, it is about every attempt to unify europe. are you a euro optimist? ken: i think it is the way of the future. i think the future is in all countries coming more and more

integrated. it is the way to peace and prosperity. i am baffled by this resurgence of nationalism. it seems somewhat inappropriate in the 21st century. for catalonia to be independent, it would be as crazy a decision as brexit is. brexit is a crazy decision. we are all going to lose money, opportunities, and our country will be less powerful than otherwise it would have been. the same i think is true of catalonia. i am puzzled where this comes from. tom: in tudor england, they all listened to bob dylan and it was a thrill to hear bob dylan win last year. it is a completely opposite tone in "remains of the day," to what you write. tell us your thoughts of the new nobel prize winner in literature?

ken: i loved the first three novels. they were three very slight novels, but very taking, very charming, and i still remember them very vividly. byave not been as enchanted what he has done since then, and i thought when we were young -- " was ae were young failure, so i am kind of ambivalent. francine: tom is trying to figure out the crossover between politics, economics, and finance . you are one of the masters of political books. how much does economics and how much is just an ugly thirst of power? , andthey are all linked the central family in "a column of fire" is based -- and they have family in calais and

antwerp. globalization started in the 16th century, and what strikes me is that is actually when this country, england as it was then, the united kingdom now, that is when we started to prosper. before we were a poor, impotent country on the edge of europe. whenizabeth's reign trading got serious, we started to make money and became a prosperous country. how come the people who voted for brexit do not know that? much.en, thank you so i am thrilled with your new volume. " is aumn of fire wonderful book on tudor england. we will continue with ed hyman, joined by carl riccadonna. ed hyman and his team have looked at the hurricane dynamics and the view forward of the american economy. tv , if you get your weekend

reading. set up with ken follett and you can steal those charts as well. it is jobs day. ♪

♪ tom: good morning, everyone.

bloomberg surveillance, it is jobs day. francine lacqua in london, tom keene in new york. ,arl riccadonna and ed hyman this is direct theft from heiman. jobless claims way below where we were pre-financial crisis. this is good, good, good coming down. you see the movement off of hurricanes and you would suggest that off of the move here to the left with katrina, it is not katrina like. we are doing much better off these two hurricanes. you are acclaimed for your micro data. what do you see of your micro data of florida and texas that gives you optimism? carl: i do not know about optimism. after katrina it was like three months. i have a friend that has an auto

dealer in houston. on labor day, the week after harvey, best sales ever and then he saw the car sales, so houston is back. florida is coming back. as you get into october, the economy is bouncing back from that. surveysdo these company . home-building is up from the lows, so the u.s. economy is coming back already, much quicker than after the trina. after -- after katrina. after sandy, the city was under water for a few weeks. at 8:30 they come out under 100,000 numbers. you ignore them and go to wage dynamics? carl: we will try to go through the numbers in a normal fashion but we have seen everything from plus 35 -- 30,002 trends to

-200,000 to trend. you bring up an excellent point on the wage dynamics because so many economists are looking to see if the economy has finally arrived at full employment and generating wage pressures. after these types of natural disasters, we tend to see some impact on the wage dynamics from utility workers brought in out-of-state unpaid overtime as well as construction workers. inget an upside surprise average hourly earnings. i would be very cautious into reading too much into that number. francine: a guest earlier said even when it comes to payrolls he does not look at it if it is a 35,000 swing to the downside or upside. is that the kind of range someone from the fed would look at to get an indication of real strength? carl: i think tolerance has to be expanded. it is more like plus or -70,000

on an ordinary payroll friday, and this time around it is a much higher tolerance. to make it completely maybe the -- meaning less, i will say lesser -$150,000 tells you if you see anything between -$50,000 and $150,000 come of that is on trend. you cannot trust the september numbers. we have to go back to the last good data point and august on the initial print is always quirky but tends to be revised significantly after the fact. more than that september number, i will be watching to see what happens to the august revisions. francine: tom needs to leave for radio. good luck. i will be joining him shortly. when you look at the fact that they are looking for not only a fed chair, it may be janet yellen but at this point we have a short list, and also vice

chair, how much do people look at these figures and how much do they want to know about the next fed chair? carl: the outlook for fed funds will be dramatically impacted by who is the next fed chair. if chair yellen is reappointed, it will be a continuation of the same. if we see j powell nominated, that will be a slightly more regulatory rollback friendly version of janet yellen. if we go further down the list es or johnin warsh taylor's, that is a much more hawkish chair of the fed and that will significantly reprice the expectations for how the fed will respond to incoming data. the fed will be more aggressive in the years to come. my own personal view, assuming we get someone like chair yellen or powell, the fed will have to back off of that pace of rate

tightening in the outlying years . i think december happens but as they see the balance sheet unwind is restraining economic conditions, they will have to dial it back in 2018. francine: the dollar extending gains, how much do you care about dollar strength? edward: that would be a game changer. begala -- the dollar coming down is a lift for the economy and if it moves back up that will put pressure on inflation. i think it is way too early to decide whether there has been a big change. francine: ed hyman and carl riccadonna. coming up, we speak with bill gross from janus capital at 8:30 a.m. in new york. ♪

♪ jonathan: a whether impaired payrolls friday, the u.s.

september jobs report will show how much hurricanes hurt hiring. suggests this might be the calm before the storm. alan separatists looking blocked in. the political squeeze on catalonia titans. from new york city for our viewers worldwide, good morning and a warm welcome to bloomberg daybreak. i am jonathan ferro alongside david westin and alix steel. after eight days of gains and another record high at the close, futures go absolutely nowhere. in the fx market, more broadly the dollar strolling strength against the euro. the price action could be found in treasuries. 2.36% is your yield. alix: a lot of happening in spain. patient back