francine: the trump tour arrives in china. wilbur ross amounts $9 million worth of deals, but will this impede progress with north korea? senate republicans delay tax cuts. what they will look like and when we will get them. the brexit breakdown. wall street sounds a warning as theresa may loses another top minister. the morning. this is "bloomberg surveillance" and i'm francine lacqua in london. we are speaking to portugal's finance minister, a candidate to

be the next head of the euro g roup. president trump is in asia. , londonthat 9:40 a.m. time. let's get straight to your assets and this is what we are seeing in the markets. aropean shares are edging little bit higher. next trading overall. the dollar is coming under pressure. there is a concern that tax reform is slower than initially thought. president trump is in china on a state visit. he will have to watch any talk when it comes to trade. , after brexit137 talks deadlocked again. there is concern another minister will have to go in theresa may's cabinet. here is nejra cehic. u.s., democrats look to score a clean sweep in the elections. will be the next governor in virginia, launching

a victory in the state that is viewed as a key barometer of the party elections. bill de blasio is projected to have easily won a second term as new york's mayor. republican tax writers have gutted a proposal to payments related to foreign affiliates. a $74 billiones revenue hold. the house wins and means chairman is searching for new ways to us that detects cuts to avoid the threat of a democratic filibuster in the senate that could kill it. we will be talking taxes with steve mnuchin at 4:40 p.m., london time. underpinned by robust global demand, while imports showed continuing strength of the domestic economy.

rose by 17.2% year on year. that left a trade surplus of $38.3 billion. the u.k. international development separate cut short an official trip to africa after being ordered to return home by theresa may. speculationreased that patel will be fired for meeting she held behind the prime minister's back. this is just one week after michael fallon was forced to quit in a sexual-harassment scandal. boris johnson will fly to washington today to persuade the u.s. not to abandon the iran nuclear deal, as he battles to save his own job. donald trump announced he will not certify iran's compliance. ae trip comes amid political travesty. global news 24 hours a day, powered by 2700 journalists and

analysts in more than 120 countries around the world. i'm nejra cehic. this is bloomberg. francine: thank you. werellion of new deals reached during donald trump's trip to china. wilbur ross announced the figures will step joining us now is tom mackenzie, who is of course, in beijing. first of all, what will be the tone you are watching up for with the president? is a conciliatory, or does he want to talk tough on trade? -- is it conciliatory, or does he want to talk tough on trade? tom: he has been talking about the deficit between the t wo countries for a long time. u.s.,s surplus over the $23 billion u.s. so, they want to see sometimes from the chinese to address that balance in some way. have northurse, you korea. seoulrd from trump in

earlier. they really want china to knuckle them on sanctions. they want to assure that the noose the run north korea continues to tighten. ross addressed the people. we are expecting more big-ticket deals in the next few hours, and tomorrow as well. right now we are seeing this personal relationship between trump and xi being foreged once again after that mar-a-lago trip. they are having a private talk, president trump and melania, and they will be dining with president xi and his wife this evening. francine: what do the actual deals represent, with from the numbers, tom? wantgine a lot of ceo's to talk about things that are more concrete, like access to chinese markets. will the president address that?

yeah, that is going to be addressed and as you say, that has been a long-running problem. u.s. company operators, as well as european, point to this. certainly, the u.s. side will be pushing on that and what we might get from the chinese side are moves to reduce some of the barriers, particularly when it comes to the auto sector and potentially financial services as well. bloomberg has been doing more reporting around that. we could get concrete signals from the chinese if they are ready to make moves to lower those trade barriers. and then, the big ticket deals. ge will be setting a fund around energy finance. goldman sachs, they have set up a deal with the chinese sovereign wealth fund. we are expecting some pretty big deals in the aviation sector, and energy as well.

workingompanies are behind the scenes right now to do a deal on infrastructure projects in texas and the virgin islands as well. there is a lot on the agenda. we do not expect any major conventions from china -- any major concessions from china on trade. they want to give trump some not tubo take home, but there. francine: thank you, tom mackenzie. joining us.th for china, whatk at is the one question that needs to be addressed over the next couple days? are we actually going to get down to business on what it means for trade? >> i think something china has that is underappreciated is the scale of the financial asset markets, and the access to them,

which is something that needs to come on the agenda. if you look at the bond market in china, it is a 10.8 trillion dollars bond market. that is held by overseas investors. compare that with the u.s. market, it is 35% held by non-u.s. investors overseas. iny are deep asset markets china, but they are underdeveloped and more importantly, they are harder to access my non-chinese-based investors. opening that from an asset manager's point of view, is interesting. it will be interesting to see how that plays out. francine: how much do we understand that this is a win-win for the president, that he needs to get away from the troubles back home? >> you know, between january and august, the u.s. moved 16 measures on to china, which is four times what they did the same period last year. so, they have already had an escalation.

john pointed out what is really at stake, the financial protectionism. china really wants to nationalize the renminbi and have an economic zone of its own. should not forget that the chinese market, the consumer market, by 2020 will be number one, basically being bigger than the u.s. the u.s. economy to grow and revive the way trump wanted it to revive. there's a lot more at stake today when it comes to goods and services because i think the financial part will be difficult for them to come to an agreement because the chinese know they can finance most of what they produce. there is a discussion about china, but today we know there is more at stake in the. chinese financial market. win is to makest sure the chinese consumer welcomes the u.s. produce groups.

the second is to look at how they could co-finance. again, the last week has been quite bumpy when it comes to financial services for president trump. he announced a tax on foreign companies in the u.s. thei don't think on financial sector we will see much, but on the goods and services, on the consumer side, we should not forget that trade, half of it comes from china. francine: the million-dollar question, how does this ballet pan out so that the u.s. is friendly enough with china so they get them on board to deal with north korea. >> it is more than simple trade negotiations. it gets into geopolitics. ultimately, the personal relationship that seems to be forming between donald trump and xi jinping is incredibly important in this negotiation. but there and mind, the china-u.s. access will be very much defining for the world

economy over the next 10 to 15 years. china will open up and remain a significant component of the world economy. the fact that we see chinese growth being a good way above u.s. growth on average for the next 10 to 15 years. the immediate geopolitics, we are retaining domestic appreciation for what donald trump is doing. that's unlikely to be backed down. continues to be an issue that will be dealt with, but i think the bigger question will come down to, what happens in the trade talks. idle think the -- i don't think the two should be taken as working with one another. i think there are two separate agendas here. francine: john bilton and ludovic subran stay with us. keep it with us on "surveillance." we will be speaking with the portuguese finance minister,

next. plus, we speak to the wto director general of vietnam ahead of president trump's trip to the county. this is bloomberg. ♪

francine: this is "bloomberg surveillance" and i'm francine lacqua in london. here's nejra cehic. parent company's missed revenue last quarter. the tech firm will redesign its photo and video sharing app to make it easier to use to broaden its audience. sales estimates for snap have been declining since march because of increasing competition from facebook and instagram. credit agricole slumps and third

quarter trading revenue rival that of societe generale. it posted one of the weakest trading quarters of the french bank. a bond trading decline of several magnitude at socgen. cutting the annual profit forecast, falling 6% after announcing a vehicle in japan that went through an inspection process that was deemed faulty by the government. to the country's car dealer's association, that sent dealers down last month. all six factories that produce 1000 vehicles a day for the japanese market restarted output and shipments today. goldman sachs hasn't shaken up the leadership of its fixed income currencies and commodities business after stumbles this year called the strategy into question. created roles.y he gives of his title as global head of credit and mortgage

trading. the other really pushes his role of helping to run fixed income sales, leaving john williams with sole responsibility. u.k. regulators could pull the plug on skky news if they get any way of 11.7 billion pound takeover of 21st century fox. they said they would probably review sky news if the service hindered mergers or other opportunities, dangling the prospect of closing a popular u.k. news channel. the review of the transaction includes an evaluation of the murdoch family's influence over the u.k. news industry. are now: investors more confident about the euroz e health than they have been. what does this mean for portugal?

the s&p says the domestic economy has grown significantly above expectations. the company is struggling with the banking sector and national disasters from fires. what is the outlook now? we are joined by the country's finance minister, mario centeno. he joins us now from the finance ministry. thank you for joining us. it is always a pleasure to speak to you, even if from far away. when you look at growth in portugal -- we understand your forecasts will show that growth fromslow to 2.2% in 2018 2.6% this year. why? mario: good morning and thank you for having me. this is a very prudent forecast for our economy for next year. we are serving very good information from the labor market with a softer reduction in unemployment.

we also have very good for exports with exports growing more than 10% year on year. us as having a dynamic economy. it will be better to project a prudent vision for our economy. ourthe robustness we see in dynamic economy will continue next year. francine: minister, do you believe then that growth will stabilize around 2%? theo: 2% is probably potential growth of the portuguese economy now. after stabilizing the financial

sector, we are very optimistic on the ability of the economy to grow. we in this recovery process, 2%, awe might see over little bit above what we expect for the next couple of years in portugal. francine: minister, in september, portugal was updated to investment grade. has it been easier to attract overseas investments? foro: that was a big event us, being upgraded. it meant a lot for our financial conditions. we are now with our 10 year bonds in the secondary market, trading below 2%. admissions of

bonds, admissions that we will lowesty get th ele rate since we have come back into the market. this is important. it is also quite important in terms of attracting investment to portugal. this is very important for us. francine: are you concerned the ecb tapering will hurt some of that demand? is there a region that wants to put money in portugal at the moment? and are you concerned the ecb will go too fast in tapering? mario: well, the decision that the ecb announced in its last meeting will not have a material impact in portugal next year. this is because, as a matter of

fact, tapering is already going on in portugal, because of the applied rules the ecb when buying bonds. we don't expect a reduction in the speed that this process will occur next year. especially when you contrast to other countries in the euro area. an impact fort next year for portugal. francine: minister, looking at the presidency for bureaeuro group, are you a candidate, and who has the best chance of becoming the group president? mario: we have had a conversation, with my colleagues , it has been quite constructive. we are establishing a platform

for continuing reform for the euro area. we have the confidence of the banking union and the discussion about the fiscal e capacity for capacity for the euro. these are the main subjects. the conversations were quite positive. but more importantly at this the definitionbe of the agenda for the coming semester in europe, which is c of thefor the completion quite important institution, which is the euro. francine: can you confirm you are running for the job, or can you not confirm that yet? mario: well, at this stage i would not like to confirm that

idea. myave been talking with colleagues. these conversations are very much open and frank conversations. we will get to a decision by the end of this month. put toe: minister, the give economy is recovering, but they remain a lot of questions on the banking sector. is there anything that the government is thinking of putting in place? for example, reducing the burden of nonperforming loans quicker than now? compare the if you evolution -- the recent evolution of the financial sector with what we had say one year ago, you will see a big, big improvement across

the board in most institutions. they are now stronger, especially in terms of industrial plans. we think it's important for those e -- those earlier steps were quite important for us to handle the mpl issue. mpl's have fallen quite substantially over the last month in portugal in all institutions in the banking se ctor. up a number of initiatives together with the private sector, so that the r the importantof asset for the portuguese economy an efficienting in way. so, we continue to work with both the supervision authorities

in portugal and europe, and with the private sector institutions. seewe think we will substantial reduction in mpl's in portugal in the next quarters. will certainly reassure the revolution. francine: minister, we are running out of time. believe the, do you brexit negotiations, that seemed to be difficult, but also the events in catalonia, do you think they make portugal a more attractive destination? mario: well, we think it is very important to follow the brexit conversations. still, i'm very positive on that. that's in the crucial stage. to match thea way

opportunity in this process. as for spain and catalonia, it's a problem that we follow globally. we are very much connected with the spanish economy and we think it's very important, the stabilization can be assured in a short period of time. francine: minister, thank you for your time. that is mario centeno joining us from the country's finance ministry. up next, we talked tax cuts in the u.s. and president trump. this is bloomberg. ♪

francine: this is bloomberg "surveillance." good morning. i'm francine lacqua in london. let's get to first word news

with nejra cehic. said kim jong un -- all responsible nations must join forces to deny them any form of support, acceptance. president trump: today i hope i speak not only for our countries but for all civilized nations when i say to the north do not underestimate us. and do not try us. we will defend our common security. our shared prosperity and our sacred liberty. francine: executives from some of the world's biggest banks have warned the u.s. commerce secretary over the impact of the u.k. leading the e.u.

they may be forced to start moving thousands of jobs in the near future. the paper said the meeting on friday included jpmorgan, oldman sachs and hsbc. imports showed the continued trength of a domestic economy. exports increased as imports rose 17.2% year-on-year. the u.k.'s international development secretary is said to have cut short an official trip to africa after being ordered home by theresa may. there is speculation she will be fired over a meeting she held with israeli officials behind may's back. u.k. foreign secretary boris johnson will fly to washington today in an attempt to persuade

the u.s. not to abandon the iran nuclear deal as he battles to save his own job in london. president trump said he will not certify iran's complains with the nuclear deal. global news 24 hours a day powered by more than 2700 journalists and analysts. francine: now let's talk u.s. politics and according to "washington post," senate republican leaders are considering delaying corporate ax cuts for at least a year. let's bring in our guests. thank you so much. if you look at the tax plan, how much of a setback could this actually be? >> good morning, fran. there is short-term and

long-term. one of the senate goals here, there is very acake senate rules in order to pass permanent tax reforms, permanent tax cuts with 50 votes and one of the rules is how much it affects the deficit. so they may be willing to push out the implementation of the tax cuts but with the benefit of being once they are passed they would then be permanent. they would not sunset after 10 years. it is all about -- and politically the senate is much more interested in debts in the u.s. fiscal health than the house is. francine: jim, what does it mean? that is the likelihood of this tax reform being put through before christmas? >> $64,000 question. this administration and congress has not shown us that they are terribly comp at the present time and tax bills are very complicated and getting this

passed quickly would require a tremendous amount of political and legislative skill which again we have every reason to doubt now is operating. francine: how much of the talk outside the tax reform, never mind the tax reform, a lot of people want to know what happened yesterday. the democrats won by a landslide in yesterday's elections. does that mean more republican candidates will decide not to run next time? >> you have seen a lot of republican incumbents resigning and not willing to do what is required to appease the trumpist base, if you will. and you might see more of that. sure. francine: thank you so much. im hertling, our bloomberg editor. when you look at tax reform, this goes back to a year that president trump has been elected to the day. what does this mean for animal

spirits if we don't get this tax cut? is it steady as it goes because nothing has been priced in? >> some of it has been priced in. look at where we were in the summer. we were down and now we have 240. the yield move up to now to 230. what has driven it? bringing the tax cut promise back on to the agenda. that has been more or less priced out over the summer. we have seen the fed following through on beginning to taper down their balance sheets. the tax is one element of that. but the financial markets are focusing on the economy as a whole. i guess what is interesting from your previous guest who raised the point that it is a complicated thing to get through. now clearly if we're seeing the republicans whether they want to perhaps delay implementation, it may have ramifications but while

the tax cut remains on the table and in debate, i think the markets may move around a little bit but what they continue to focus on is the strength over the economy and we are now in a global economy which is moving in a growth fashion for the first time really since the financial crisis and that is really what is driving asset returns than the debates around tax. francine: at the same time, the tax is basically like a linchpin of whether the trump administration can work with businesses. >> we have always had to be because it is all about trying to outsmart the market when it comes to policy inaction. that has been quite a show because for the past year, if you look back to the promises of the campaign, nothing has moved. now the market is focusing on the 1.5 trillion tax reform as if there is no tomorrow. because that is the only thing

it can cling upon to understand whether there will be a -- for the u.s. in 2018. let us remind the audience that it is the second consecutive year that europe is growing faster than the u.s. the u.s. consumer has -- francine: from the lower base. >> from the lower base. yes, we do have to see for example, we're looking very closely at the reconciliation and unified tax bill. that is the complexity. the reform will have an impact in 2018. not 2017. it has an implied consequence in the market that is quite strong. nobody thought it would be that big of a tax cut. that is what the market are pricing in now. the question of the timing is not really a question for now. everybody is worried about the end of the cycle in the u.s. plateaua maximum now in

in growth and rates etc. that could look like they would be -- but there is not a bunch of stimulus. growth in the u.s. could be next year. in the >> you will potentially get an investment boost. whether that gets given back at some later point is a different question. if it is the only thing keeping the u.s. economy growing, data would suggest otherwise. we have a very strong employment market at the moment. trade data is picking up around the globe. we still have unemployment in the u.s. running at 4.1%. the lowest since precrisis. so the reality is you have a reasonably strong economy. yes, it has been growing above trend but to grow above trend for a long period of time, this economy could surprise. probably not at its level of

growth but it could surprise in the duration. francine: you have a lot of -- fomc president is gone. we had a resignation monday. the communication. u have growth there but no fiscal stimulus at a time they need to find a new voice because there are new people in charge to explain the tightening. is this kind of like a cocktail from hell? >> it is exactly a year since trump was elected. think back to where we were 12 months ago. people were worried if we poured fiscal stimulus on a labor market that was tight, we would get an inflationary end game. that has not come to pass. the change that we're seeing at the fed is one of continuation opposed to instability. we have the continuation candidate now coming into the fed wsm we expect to see continued steady as she goes

policy. one thing we have learned from the fed over the last 12 months is they say what they mean and they mean what they say. they have delivered through everything they said. the mash needs stability and needs to have a steady hand at the tiller in terms of monetary policy to keep growth at a moderate pace. francine: do you think the biggest risk is from -- i don't know if it is a monetary policy mistake or the markets misinterpreting the monetary policy? >> i think the biggest risk is that the cycle in the u.s., the max it will get before we stop increasing rates, we have to decrease them again to make sure we don't overheat. it is very different. it goes back to if you look at the normal cycle. this one will be very different because it has been so long and the recovery has been so weird that in a way what we need to

keep in mind is before the fed has to start loosening again, the max fed rates will be much lower than the previous cycle. that means that the market these adjust to this because we will reach a point where the liquidity in the market will reach the growth over the u.s. economy. this country has challenges including on the monetary side. they are not being addressed now. the u.s. could go very well within the next two to three years. what do we do for -- i think we will havean a wake-up call at the time that will be very difficult for the economy because central banks will be tightened everywhere and we will have more and more travel trying to see how the u.s. can continue --lead the world in a lot of francine: our guests will stay with us. keep it here on bloomberg tv. we'll be talking tax with the

u.s. treasury secretary at 4:30 p.m. london time and talk europe next on "surveillance." this is bloomberg. ♪

francine: this is bloomberg "surveillance". i'm francine lacqua in london. let's check on your markets. mark barton has been following all of the action. mark? mark: there you are. there is gold, francine. wonderful chart. a year ago today, you know what happened. president trump, donald trump became president. november 8 a year ago. this is gold. little changed over the year. we've had our lows. we've had our highs but a year ago many suggested if trump won,

gold would go to 1.395. the price never got that far. high rates, risk on sentiment could weigh on prices. geopolitical tensions are a wild card that could lift gold. this is bloomberg dollar spots index versus trump's approval rating. the approval rating is the white line. the trend is clearly a downward one. the dollar spot index is down 1.5% in the last 12 months since trump was elected. january 3 it rose to a record high and then embarked on an 11% slide through september before rebounding 4% to today's levels which is at a four-month high.

the red bars are the percentage of companies with an r.s.i., relative strength index. green line are percentage of companies with r.s.i. under 30. ighest since 1992. 25,000 by march 2019. a strategist says 26,000 in the medium term. there is a very good chance of 30,000 in two years. the nikkei is up by 19% since september 9 benefiting from strong earnings and the weakening yen. really, really quickly, our hold oday, 5.5% higher. plans to buy back 2 billion euros in shares after third quarter earnings beat analysis. francine: we'll be speaking the

director of the w.t.o. in vietnam. the president will go to vietnam and we understand through kremlin forces there is a high chance of trump meeting with putin at that summit in vietnam. definitely something to keep an eye on, especially because of all of the controversy surrounding business ties with russia. not only under investigation but some of the other news we had on the commerce secretary. back to europe and three of the european central bank's top policy makers have reported to change the bank's commitment to keep buying bonds until inflation improves. it signals challenges ahead for ario draghi. our guests are still with us. when you look at european central bank policy, half of the people are saying well, he

should have been actually much more hawkish, plt draghi when announcing q.e. by giving an end date to the program. he hasn't. is it that they are actually tapering without conviction? >> i think they shall. -- they are. he is very mindful over the potential consequences of tapering too fast. we have seen that in other monetary zones of the world that we should be very cautious about the cycle. i think he did the right thing and markets reacted on it. there are good news on the european cycle. there are countries that are doing quite well. my own country, france, actually surprising but we need to make sure there is sustainable growth here when it comes to investment cycle by households and companies and also the consumption. there is a lot of confidence. in france, g.d.p. at record highs.

we have this type of growth. we have a growth rate that is the high since 2011 but it is a disappointing year when it comes to the household. i think the idea for the e.c.b. is to be exiting monetary policy in a very slow way, especially because none of the other building blocks have been enacted so far. the banking unit still has a big chunk of work to do. the financing union. he talks about how we can recuperate some of the financial sector. that is on draghi's desk when it comes to making sure the signature of the euro is trong. i think he made the right move. francine: john, do you agree with that or could he have been harder? >> no, i don't think he should have been.

you look at the data. we have growth going on in europe. above trend growth. more people employed within the eurozone than we have seen on record even though because of a high participation rate, the unemployment rate is actually higher than it otherwise might be. at the same time inflation is missing in action. what is not to like? high growth, lower inflation. that is a great outcome given where the eurozone was a few years ago. bear in mind that for a central banker, more experience dealing with inflation than you have dealing with deflation. so running the risk to inflation picks up is probably a good place to be. francine: there is no deflationary pressures. at a what point does too much stimulus hurt the economy more than it does it good? >> i think we're still recovering from what was a deep seeded crisis. as you mentioned the banking you

and some of the steps that have been put in place have not been fully formed. we have seen major steps in forms of institutional strength. in europe, equity has gone from 24 times to 18 times. it is a much healthier banking sector but europe needs a runway of sustained global growth and continued support in monetary policy so it can gradually reinforce the forward curve of growth. we think europe is moving in the right direction. we got graded on a 10-year basis. 1.5% real growth from 1.25. we believe things are working. it will take some time. francine: as we close in on the enjoying he economy grothse. with some countries dealing with aging populations, and passing brexit negotiations and an

unstable middle east, what can we expect going ahead in the next year? you were mentioning some of the figures you put out. you're pretty confident about 2018. what is the canary in the coal mine? is there a benchmark or a region? something you're looking out for? >> i think there is a number of things that we would at. -- look at. policy needs to be supported. we're in a lower speed economy than we have had prior to the financial crisis. that justifies easier financial conditions and lower equilibrium and terminal rates. also corporate and investor confidence. it is good to be confident. it is bad to get to the point where you're exuberant. we don't think we're there yet. they are cautious and optimistic. that is a good thing. we need to watch for that. there was one data point that is

always going to come back to u.s. unemployment. if unemployment picks up, really for a consumer-led economy that starts to spell problems ahead. francine: anything that you're watching? we have had a lot of warnings. >> when will it connect with the markets? i don't know that we can see that the market has been complacent. we have a level of uncertainty everywhere. people try to turn a blind eye on it. growth is there but we see it is on the confidence that households and companies put into the global recovery. i think the hard numbers are good. but we are not necessarily for example -- francine: is the concern that markets -- they see the geopolitical concern. what is a haven now? is it dollar? is it gold? what do you deal with the possibility of nuclear war with korea? >> i think the problem is we look at the world and we are very happy that the three -- of

the world are growing but we're not in sync anymore. we are all at a very sweet spot in our economic cycle but not at the same spot when it comes to the financial cycle and the real economy cycle. the question is is different for each region. for asia, the north korea strength -- on the financial markets but on the rest of the world we didn't see much. the rest of the world, brexit has an impact on the way we look at the markets but it doesn't seem the permeate the way the u.s. economy or the financial markets are handling these situations. the solution is to be more granular. i think in 2018 we will need to be more -- because of the fact that we could have growing regions with focus of instability in this region, reasons to worry. in europe, for example, my biggest concern is the job market. because even though the rate is low like in the u.s., there are

some people that are still unemployed. we have to find a way to put them back to work. we don't have really the solutions. francine: in 30 seconds, what's your biggest concern about brexit? we have a great little chart looking at the ftse 250 and the ftse 100. the 250 more domestic. more vulnerable to negotiations and politics has definitely been underperforming. >> the uncertainty. the reality is it is a highly complex negotiation. whichever side of the political spectrum you fall down on to. this creates an unknown future. that's why we are seeing a degree of nervousness coming through on the corporate sectors. more clarity in terms of where the negotiations are likely to go. to ensure that business confidence doesn't begin to suffer. francine: thank you.

bloomberg's "surveillance" continues in the next hour. tom keene joins me out of new york. later we'll be tax with the u.s. treasury secretary. not only tax but also a little bit of politics. what happened overnight. we're also speaking to the w.t.o. director. that interview coming from vietnam where we understand according to the kremlin that president trump may meet president putin. that is at 4:30 p.m. london time. i think the markets are moving a little bit sideways. a little bit of concerns about bank earnings. the dollar declining. markets want to know how u.s. tax reform is progressing. this is bloomberg. ♪ is this a phone?

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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. francine: the trump tour arrives in china. wilbur ross announces $9 billion

worth of deals, but will we see progress with north korea? tax time jitters. senate republicans could delay tax cuts for a year. what will be final draft look like and when will we get it? and brexit breakdown. she willay looks like lose another top minister. good morning. this is "bloomberg surveillance" and i'm francine lacqua in london. tom keene is in new york. we have to follow president trump in china, talk about trade and north korea, and in the u.k., one of the minister's future is in doubt regarding questions over a private israeli trip. tom: you mentioned secretary ross in china, but also secretary ross in "forbes magazine." it was absolutely extraordinary. i will also point out the election results, which we will

dive into over the next five hours, stunning election results in america. francine: i vaguely start at those election results. taylor: yes, democrats got election results to cheer about. in virginia, democratic lieutenant governor ralph northam has been elected governor. swing staten in the before the congressional election. murphy was elected in new jersey and bill de blasio was easily reelected. on capitol hill, house republicans need to find another $74 billion in revenue. that is how big a hole was punched in their tax reform plan after the tax committee gutted a an offshore tax revision. they have to make sure the budget stays in line with the budget resolution. in argentina, the president

wants job growth to come from the private sector, not the government. he sat down with bloomberg's president and chief. growthof the future should create jobs in the private sector. we should freebie jobs in the public sector. it is one of the basic commitments that we are going to achieve with the government. taylor: breaking news. he plans to stay in presidency beyond 2019. global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. tom: equities, bonds, currencies, commodities. there's one story here. we have a great set up of guests to talk about the second one. flatness.sive curve

really getting interesting is to yield curve, now down 67.42. the next screen, if you would. 9.80 on the vix. and i would also notice the the yieldther out curve. francine: european equities were high lowher earlier. they are actually down because of banks hares. third quarter earnings season is continuing. is coming under a little bit of pressure because of concerns about the progress of the u.s. tax reform and of course, as president trump arrived in china on the state visit. talking about the state visit, the u.s. president has touched down. we will talk about trade, and he

will look for wins on everything from america's massive deficit in northg korea. on this trip, he has an incentive. we are now joined from beijing. we heard about the deals. secretary ross was talking about the deal. what a lot of american businesses one is access to the financial markets. will they get it? >> that is anybody's guess, really. china has been opening up over the last 18 months. we've seen various conduits, investors based in hong kong. easing in been some terms of letting foreign nonfinancial institutions be active here in beijing. ,rancine: what are we expecting in terms of language from the president? as i was told, you speak to the

chinese leadership differently because they want maybe more respect than other countries. and president trump needs them to deal with korea. emma: this is president xi's chance to get president trump on his own. obviously, they had that meeting in florida. this is a chance for him to break down some of the mtysmyths and secrets trump might have surrounding china. obviously, they will be expected some of the demands and some of the rhetoric trump is known for, particularly on the trade deficit. ministere commerce coming out this week, trying to mute that. he was talking about boosting china's imports to $10 trillion over the next five years. he talks about holding china's first-ever import fair as part of addressing that. tom: this is 45 years out of nixon visiting. it was mao at the time.

how is this leadership different than the leadership of 1972? emma: well, the two leaders are in pretty different positions. we've seen trump is in a weakened position. xi a couple ofg weeks after he has been able to cement his power and become what many say is the most powerful chinese leader since mao. so, they could be a bit of a power imbalance there. what trump lacks he will make up with in bluster. tom: what body language are you looking for when you see the videos of the dinners, the videos of the get-togethers -- they will wander out in the square and kiss babies and all of that. what body language is emma o'brien looking for? be a very will

controlled event -- i am not sure we will see much baby kissing. idle do think the press event will last very long -- there will be maybe one or two or three questions. we will see what the handshake is like, how xi interacts with him during the press conference, whether they banter, whether trump banters with him and how strong his rhetoric is on north korea. we saw him fire a lot of salvos this morning before he left for beijing. francine: emma o'brien there. i'm not sure about baby kissing, but just to prove me wrong, i injure the president will. good morning. does the renminbi move on baby kissing? if the language and tone is friendly, does it help with currencies? >> i think if you go back -- today is quite an auspicious

day. it's one year to date since president trump was elected as the president. twitterial status of tweets are adjusting to this. heading into the year anniversary, it does seem the domestic political agenda and the domestic tax agenda seems to be a far more pertinent driver for currency markets at the moment, rather than being diplomatic. we have seen slightly more conciliatory words out of korea coming out of this particular trip. whilst he is away he does not really need to act for his domestic audience. tom: the great reality is china has appreciated their o appearance massively. this is the trade weighted renminbi. the red circle is when they changed the game, deciding to float the renminbi.

it is remarkable how there has been persistent strength there. the currency is up 33% trade weighted. is that enough? terms of the overall moves, it is moving in the right direction. if you look at valuations, the renminbi still needs to appreciate further, but certainly the direction has traveled. the treasury will have been reassured by this. particularly because they did not single out china as the currency manipulator. given the fact that we are also seeing these controls that have come in place, which has stemmed the outflow for the renminbi as well. they were some conjectures in the market that the renminbi is becoming be safe haven currency of choice, given the asymmetries around the g10 currencies. that could be helping as the

chinese is running against the dollar as well. on: kamal sharma with us bloomberg television, on bloomberg radio today, an exceptionally important interview, the treasury secretary of the united states, steve mnuchin at 11:00. stay with us. this is bloomberg. ♪

francine: this is "bloomberg surveillance" with tom and francine from london and new york. let's go straight to talk trade. president trump continues on his 13 day trek through asia. he wants to step up efforts to put pressure on north korea. in return, asian leaders will

want to talk trade. on friday the president will be in vietnam, where we now go live. we are with the director general of the world trade organization. haslinda: well, francine, trump's america first policy has derailed several agreements in this part of the world, especially here, which is struggling to get to the finish line. apec leaders are looking for some sign as to how trump wants to engage with asia. from the perspective director general. since donald trump took office, have even more or less encouraged? >> we are still trying to understand many of the u.s.'s co ncerns. i think they have expressed some of them quite clearly. i think the challenge now is less about concern and more

about understanding what the solutions are for those concerns. so, we need to shift the conversation between one of expressing concerns to another which is, let's find solutions to these concerns. i think that is a major challenge for everybody at this point. haslinda: is trump the biggest risk to global trade? multi-lal out of the teral trade agreement, is that a concern for you? roberto: i think president trump is not coming about anything extra. he is the result of sentiments in the electorate in the u.s. you see that happening in europe as well. there's a strong force in the population that feels left out. they feel they have been pushed aside and are not benefiting from the economic progress you see pretty much everywhere. that sentiment is the problem

because that is what is driving leaders across the world to think more introspectively, looking more at the domestic situation, instead of looking at the cooperative approach. it could become a better environment for growth. instead, they have more narrowly focused conversations on, how do i solve the problem in my country? sometimes by doing that, they create ripples, which affect others in a negative way. and everybody else as a whole. haslinda: having said that, what the prospects for trade? the last time we spoke with you, you talk about how protectionism is manageable. do you feel that is still the case? roberto: the numbers show that after 2008, you're talking nine or 10 years, we have seen

protectionism of a moderate pace. so, we have about 5% of global trade that has been affected by restrictive measures introduced since the financial crisis. the numbers are not that bad. my concern is more about the mood. instead of the mood of trying to do business, trying to liber alize more -- because trade is the oxygen of the economy. if you take that oxygen away, the economy will be crippled in a way that will affect everyone, rich and poor alike. i think that's what we have to keep in mind. that's the key. haslinda: not bad, but not good enough. roberto: that's pretty much it. we could be losing trade to leverage groups to get out of the situation faster.

the numbers show protectionism so far has not been the major problem. haslinda: given what we saw a recently, with brexit, brexit negotiations have not made any progress a year on. what's your take on it? haslinda: -- roberto: it is not surprising. i remember just before the vote i was several times interviewed by the president. the decision of the u.k., of course, and it's a soverign decision, but don't be misled by the decision. trade deals are going to be complicated. they are complicated, in general. it depends on a case by case bas is. i've never seen a trade negotiation of this scope that could happen in a blink of an eye. this is going to take time.

it's not surprising that this is where we are at this point. haslinda: before we let you go, the transpacific partnership, will we see a deal? 11 iso: i think the tpp the second-best. tpp 12 is the best. they help to create a good environment for liberalization, for more trade and cooperation among nations. the multilateral system, the wto, benefits from that, sometimes directly and sometimes indirectly. so, those negotiations could reinforce each other. liberalization is contagious. if you see that happening with a group of countries, there's a tendency that other countries will follow. so, the tpp 11, i hope it will come to fruition because it's better than tpp-0. roberto: --

haslinda: trade is becoming very complicated. it is becoming more difficult to find a common ground. francine: haslinda, thank you for that great interview there from the wto. he said protectionism has not been the main problem. he is also trying to understand u.s. trade concerns. we will be back with kamal sharma. we will also speak with ma tthias. that's 11:30 a.m. in london. this is bloomberg. ♪

tom: good morning, everyone. "bloomberg surveillance" from london and new york. extraordinary events coast to coast in america with the election. with us, stephanie baker. i want to bring up the dana milbank quote in a moment. but your first thought on the message to the president last night? it was not a good night for donald trump. i think it is dangerous to read too much into these election results and think that this is going to mean there is going to be a democratic sweep in 2018. having said that, i think the margin of victory is for the democrats in virginia and new jersey is encouraging and could do a lot to energize the democratic base. and i think it does show a path to victory going forward, which

is a combination of higher turnouts, particularly amongst women and african-americans. that if the democrats can not descend into infighting between progressive and moderate wings of the party, they could win. tom: here is dana milbank in the "washington post." our is mr. gillespie to republican audience. he rented republican party for a wild. he turned the virginia .ace into a cultural war this time, the cultural warrior lost. bless the's campaign shows even more clearly than the trump victory did that among trump supporters, racial animus and cultural grievances are a greater factor than conventional issues such as economic well-being. was this a push back against bernie sanders and the far left

of the democratic party? roberto: i think they've run a candidate in virginia that was winnable. i think they felt that would not have had this result. i don't think it was a wholesale rejection. think we need to look at it state by state. this was very much a strategy that worked in virginia. it might not work in other states. francine: are other republicans not going to run because of what happened yesterday? stephanie: the other thing that has come out of this was the whole steve bannon path to victory -- he said, trumpism without trump. we see that did not work this time. gillespie tried a very conservative part of the conservative traditional wing of the republican party, that he deployed a lot of the rhetoric trump has used. that combination did not go down well. in virginia trump is very unpopular. the slogans were rejected. , there was atax

big article in "the washington post" saying it could be delayed for over a year. when do we find out if this is true? stephanie: we have seen huge goals between where the house is on tax and where the senate is. there are many differences, for instance, when to introduce this corporate tax rate cut, as well as whether or not the bill will include measures to deduct state and local taxes. so, to reconcile those two will take an awfully long time, and given the indicia schedule they want to adhere to, it will be hard. tom: later this morning on low interest rates, steven major of hsbc. stay with us. ♪

tom: good morning, everyone tom keene new york and francine lacqua in london. lots of news coming up.

don't forget an important conversation with steven mnuchin . maybe the donald will come up. what is your call on the dollar? was that a tough call. ? let me go to first word news. let's go to taylor riggs and first word news. taylor: president trump has begun the most important part of his five nation tour of asia. the president has arrived in beijing and he hopes that jingping willxi help reduce the massive deficit . itsp urged china to abandon support for kim jong-un's regime. on the elections, it was a big night for democrats. rob northam was elected governor and he beat republican ed galati. still, the president tweeted that gillespie did not embrace

me or what i stand for. murphy one new jersey's governor race and bill de blasio was reelected new york mayor. the president of the philadelphia fed is suggesting he will support another interest .ate increase next month he wants to see signs of inflation is moving higher before backing any rate hikes. parker says he has penciled in three increases for next year . prime minister theresa may may lose her second cabinet minister in less than a week. secretaryely to fire patel over unauthorized meetings with israeli officials. last week, may's secretary of resigned over a sexual scandal. global news 20 for hours a day powered by 2700 analysts and

journalists in more than 120 countries, i am taylor riggs. this is bluebird. bloomberg. tom: it was amazing cut everyone got the dollar strength call wrong. the think the failure of trump trade has been the major driver of dollar weakness this year. had ag into a q4, we number of signpost that we were looking for with directional moves at the end of the year. decision, the trump tax announcements, and obviously the fed rate decision. we have had all four of those events in the dollar is effectively flatlining into the end of this year month to if you look at the data, u.s. data has been incredibly strong. has been approved by the relief yet the dollar is not responding to that and the reason for that is the market remains reluctant to any for the rate hikes until we get

clarity around the tax announcement. it is once bitten twice shy as far as the market is concerned on the dollar and they are reluctant to really pull the trigger on any further dollar gains until we get some stances progress on tax. recentk given the "washington post" story that the dollar may not strengthen as much as forecast. tom: lets him to the chart here and this is like a promo here. is a chart that you just explained with a flat line of the dollar over here, but this is an elegant chart of strong dollar. how to use a technical analysis into your fundamental work? kamal: i think at the moment if you ask me what is dominating markets, it certainly technicals. our strategy team has been consistent in its views that the dollar, particularly the euro-dollar, is that the target

of 113 on the technical basis. we have got to be cognizant that there are a lot of moving parts, notably progress on tax reform. if you are looking for a fundamental driver on the dollar at the moment, you will be disappointed given there is correlation breakdowns with the u.s. data surprises. tom: within that and with the dollar and the tax reform debate , does washington play into dollar dynamics now? forgetting about china and trade flows, does actual fiscal washington play into dollar dynamics? kamal: ultimately what the market is looking for is whether we are close to 1.5 trillion dollars over 10 years or to break that deficit. for longer-term currency players, the debt dynamics are going to be important, but as ethan harrison pointed out, the u.s. economy is doing quite well by itself. it doesn't need a huge amount of fiscal stimulus. in hiso get some, an

view, it's likely to be relatively moderate. greater has become a driver of currencies not only in the u.s. and the character he cannot -- and the u.k.. exclude washington or brussels from the currency markets. francine: thank you. while the u.s. president is visiting asia, the argentinian president says now is not the time for trump to neglect latin america. the president discusses trade with the u.s. and his outlook for argentina. trying to find if it's a bad deal or not after a longer wait. now on the table we have to subjects. i expect to solve this quite soon. biodiesel is something we should

and it should come from the private sector's. both sectors should sit down and find a way because in the end, the state still needs to import biodiesel. it's a question of which conditions the american private sector will accept to continue importing biodiesel from argentina. the need is there. we are not replacing production. still with the help of secretary rose, i'm still optimistic that we will find a solution. >> do you see donald trump as a free trader? >> he is finding a way to protect local jobs. we may not have the same view that he has because i think

the challenges or the threats are outside or in the case of the united states inside. it's destroying dropped and creating new jobs. we have to be open and we have to giveough intelligent new capabilities to our citizens to be ready and be part of the digital area. it's creating new jobs in different places. things you want to export, particularly the agribusiness, does america look more protectionist of the european union and china? >> they are all similar. traders and when you sit down at the table, they cards.aking out the

we have to keep talking, keep negotiating step-by-step. it takes a lot of time, but what's clear when you analyze the last 20 to 30 years, which are the 20 countries that achieved more growth, reduced more poverty at home, are the ones that have trade more. it is clear that we have to go in that direction. francine: that was the argentine president with our editor in chief john mickelthwait. we will have more on trade throughout the day as the president continues his tour in asia. here in the u.k., the secretary has cut short an official trip after being ordered to come home by prime minister theresa may. speculation that he will be fired by theresa may.

that's after may lost michael fallon after he resigned after a sexual-harassment scandal. joining us now is the author of , the est of times worst of times." michael, quite a spiffy book cover. his theresa may having a tough time right now? michael: definitely compared to those people. whatover of the ball for you have the three presidents .nd everything is of work she's on the top and then there's putin and donald trump with the tv makeup. and in the title, quoting charles dickens in the first

sentence of "a tale of two refers to theso fact that we are undergoing a massive technical logical revolution. -- technological revolution. francine: where's the u.k. and all this? do we read too much into brexit? michael: i think the u.k. as the londong "new york times" correspondent said that the uk's undergoing a breakdown and the government is really from one scandal to the next. there's a minister flying back from uganda to be sacked tonight. francine: which is what we were talking about. if you look at theresa may's positioning, does she need to xi, poser to presen president utin, or president trump? recent opinion poll shows that president trump is disliked by about 75% of the british people.

it would probably at the minimum positiondopt a ce and thatant will happen with the eu as well. you do that now with your new book. what i noticed with your book is that you note the united states is the noisy nation. is your united kingdom becoming too noisy? is it becoming american like in its discourse and media? michael: i think that's a really excellent point. one of the things that disturbed me greatly with what is going on at the moment with the sex scandals and the stuff with force johnson is that it's becoming noisy in the sense that there's democracy on the loose as i wa would call it.

that's especially with a president who keeps tweeting all the time. he would not do it in china, but each tweeting all the time. tom: this is so important. can the noise in us of the discourse -- how can it work in a parliamentary system like the united kingdom? it's a totally different dynamic than what we saw in virginia and washington state in new jersey last night. happens when everything or given that this is a pretty divided society at the moment because of the brexit referendum last year, first of all the press is highly partisan here. haveof the newspapers given up a pretense of objective reporting. secondly we have this online dynamic and as such as people tweeting. it's dedicated websites which every day adds to the scandal. they pile up with new detail. i don't think it's really

healthy for our democracy. francine: the concern on the markets if you're an investor is how do you press anything in? it's difficult to put these nuances and to marketplaces. kamal: for the markets, they have been trying to top and tail sterling on a good brexit outcome. basically they have lost their patients. breath of our indicators suggest that sterling positions are relatively neutral. this could go either way. this political volatility international political volatility in the form of brexit. we could bring up k points -- key points for the landmark of the pound and rv. -- in our view. if you ask objectively which ways these discussions are going to go, there's a wide range. it's relatively uncertain outcome. our view is consistent that we

want to be long volatility. we think it makes sense. if we have to be pressed on the view in terms of sterling, it would be lower sterling. francine: just getting breaking news from the luxury world. this is according to bloomberg reporting. sidney toland and will step down as the head of christian dior. this would end in almost 20 year tenure at the top of one of the most recognizable fashion houses. we understand the current ceo of cindy could replace him. this is certainly big news in the fashion world. this is bloomberg. ♪

francine: this is "bloomberg surveillance." it's tom and francine from london and new york. let's go to asia where president trump is. the u.s. president has arrived in beijing for high-stakes state visit. while trump bashed china on the campaign trail come on this trip, he has an incentive to cut deals. ford has made an announcement that they will build a plant in beijing to make under new brand. we are joined by the for president -- ford president from beijing. president trump is in town. what deals do you think he will do with carmakers? is it significant that amongst executives traveling with him that there are no auto car ceos? >> well, thank you.

thanks for the opportunity. the news that we are making today is that we are announcing our third joint venture for ford motor company here in china. very exciting day for us. this new joint venture is going to be exclusively about a new range of all electric vehicles in china. we are really excited to partner with a wonderful company here in china. it's to build this new business for ford. that is what we are celebrating here today. francine: this is why we have you on and we thank you for that. will you be able to comply with all the requirements for the fuel economic requirements and how much will that cost? there is indeed very strong encouragement from government in china as that is all around the world to move

forward with electric vehicles as part of the mission to improve the environment. ford is right at the front of that. yes, we have regulatory incentives in china, but we also have customer demand. we believe that by 2025 4 million vehicles a year will go on the road every year in china that are all electric. it's an enormous opportunity. yes, there are those incentives that you talked about and ford motor company will find a way to comply with those requirements. e and not why pick zoty stick with your current partners in china? peter: we have two wonderful joint ventures already in china. between them, they help us to sell about a million vehicles a year in china.

those are very successful and they are exclusively associated with turning ford products and services in china. remember this new range of vehicles we are going to be selling is under a new indigenous brand. think of it as a little more youthful and highly connected vehicles offering some need smart mobility services, smaller electric vehicles, selling to city dwelling customers, a new generation of china customers. it's different from our existing and highly successful ford businesses in china. francine: talk to me a little bit about how you are lobbying china to lower that 25% tariff on imported cars. forhat top of the agenda the trump administration and is there any headway changes in site? to be verygoing privileged, i believe, to get the opportunity tomorrow in

beijing to meet with president xi and president trump. we are not exactly sure of the format of that meeting it. auto salivating this joint venture and the business in china that we also will be confirming the export from the united states to china of goods worth a little under $10 billion over the next three years. i cannot comment the on that of what the conversations are going to be, but suffice to say, i'm delighted to be joining that event tomorrow. really excited to be a part of that on behalf of ford. tom: peter fleet, thank you so much. ,e is with ford asia-pacific their president. he joins us from china. isour set in london, michael the author of "the best of times, the worst of times." kamal is with us from bank of

america merrill lynch. this is within the mercantilism of the new american president and the idea of a zero-sum society. an auto manufacturer to get up and say all the right pr moments and all the right things about what to do with trade, but the answer is president trump is of is zero-sum trade president. how does that relate to the history of our trade from world war ii? michael: i think the key thing that's going on at the moment is itrump's visit to china daresay there will be significant trade deals on the back of it. here we have the american president for the first time as the supplicant coming along to beijing to try to sort out the nuclear problem of north korea. ironically the one solution to it, which would seem to many people would be the sensible want come is a replication of the 2015 deal with iran. it's precisely the one that he

has ruled out because he's trying to subvert it. will happen the next few days in beijing is that trump will try to cover all the profit ceremony -- pop and ceremony by the chinese. what will he get out of it in terms of dealing with north korea? i suspect not very much. tom: you mentioned earlier your colleague, ethan harrison, in new york with bank of america merrill lynch. how does a zero-sum trade analysis of the trump administration fold into economic growth that only in asia but within the u.s. where we are struggling to get to a 3% run right? kamal: you can look at growth outside of the u.s. growth has been very strong and the u.s. has been the relative lack oggard. the whole trade story is the dominant theme in the currency markets in asia. that thents administration has pulled back on free trade has been d

damaging. channels as wede discussed are very important drivers for global growth. if there's any dent to that, that's a vol moment for the markets. francine: let's talk about the banks and john cryan has hinted at thousands of job losses. bloomberg news financing managing editor for the middle east and africa joins us with the very latest. i'm hearing conflicting reports on deutsche bank. banks may be offering 30% more to attract clients and talents of the u.s., but now they are laying off. give us a picture of the trials and tribulation of which o deute bank. >> yeah the longer push a five to 10 years and you had a few executives say that they are shrinking the businesses. you have the ceo of ubs 22 of potential 30% fewer staff driven

by that technology shift which is what john cryan is .2. this is not company specific. you are replacing humans with machines effectively. what you are seeing in the u.s. is that this is a market particularly on the trading side where the european firms have struggled to retain or grow their market share. what is that? that has forced them to attract more talent, which they have lost. it's basically affecting their home markets that the need to fight globally and the having to pay a lot more to do that. francine: do we know john cryan's days are numbered? we have been saying that for 18 months, but is there an endpoint where investors say it's time? elisa: on the back of their third-quarter numbers which were somewhat disappointing, it did not really push the narrative and much of a different direction. up until that point, the sense was that he has a few more

forces and investors were waiting to stick it out to see if that growth does come back. francine: thank you so much. a, kamal, andelis michael. coming up, we speak with cumberland advisors. i'm looking forward to michael mckee talking to steve mnuchin. he will talk about what happened in virginia overnight, tax cuts, and they will talk about the president's trip to asia. what a day to speak to the treasury secretary on the day that trump is in china. this is bloomberg. ♪

gillespie and the president lose in virginia.

democrats turn out as they did not one year ago. in new jersey. in washington state, senate democrats may take the legislature. one race too close to call. of the yieldss curve, when does it signal recession? the president is in beijing. twitter does not work in china. this is "bloomberg surveillance." i am tom keene. with me, francine lacqua. in the u k, there is this scandal and this scandal. is anyone going to the tower of london? be a brutalat would dismissal. there are probably negotiations taking place. minister and battle because

of a trip she took has been called daca theresa may. her future is up -- has been called back by theresa may. her future is up in the air. our first word news, here is taylor riggs. taylor: democrats got election results to cheer up out -- cheer about. ralph northam has been elected governor in virginia. democrat phil murphy was elected governor of new jersey and the mayor of new york was reelected. china, where he hopes to make progress on the trade deficit to north korea. he will meet with china's president. on china and russia to cut ties with north korea.

in the u.s., house republicans need $174 billion in revenue. how big a whole was punched in their tax reform plan. washat is how big a hole punched in their tax reform plan. in argentina, the president wants drop growth -- wants job growth to come from the private sector, not the government. it would be a more efficient public sector. should createwth jobs in the private sector. we should freeze the job than the public sector. this is one of the basic commitments we are going to achieve with the governors. he also said he plans to

stay in presidency beyond 2019. twice news, 20 hours -- four hours a day, powered by more than 2700 journalists and analysts in more than 120 countries, this is bloomberg. tom: the curve flattening. the difference in yield between the 10 and the two is the vanilla spread. 67 basis points is a huge deal. the difference in yield is .67% between the 10 year and the two-year. euro with a bid, 1.1605. francine: sterling is falling. we are talking about the minister being called back from a trip in africa.

european equities are falling down. at third-quarter earnings, out of the banks, they don't look so good. it is all about tax reform, concern over that. is inichael mckee washington. he will have a conversation with the secretary of treasury. could not be a better time. how does mr. mnuchin's job change after the election results last night? does the tax reform debate change? it does. the only conversation in washington will be about the republicans' lose. in virginia, you have the first transgender delegate ever elected. the party is led by a person who may be the most unpopular

president of all time. they pushed a health care plan voters rejected. what does that mean for taxes? do they have the support to do more controversial items? that will be a question. for two election thousand 18 began last night. did you see a good analysis of how many congress people demo rats are away from taking the -- how many congress people democrats are away from taking the control of the house? house is in play. a lot of republican incumbents are retiring. many in safe seats. retire rather than take a chance on a tough race? that is something the administration has to take into account. will people take stands in their favor if they are afraid it will

rebound against them? francine: how does this change the tax debate? michael: republicans will have to drop the idea of repealing the individual mandate. it is something senator cruz was pushing. in states where there might be vulnerable republicans, california and new york, they will have a hard time with the state and local tax deduction. their mortgage deduction. the senate is going to keep that and not make the changes the house is talking about. francine: could it be delayed by a year? in the senateis bill, that they will delay the corporate tax cut for a year. that is a budget-savings move. we don't know if it is actually the proposal they are going to come out with, but it would be difficult to do with the

president's opposition. the administration is signaling they do not want that. tom: i will be taking the surveillance map when you speak to mr. mnuchin. what will make can squirm? what is the thing you are focusing on with the treasury secretary? bring thee have to election into what it means for them. one interesting question is with to raiseontinuing rates and other central banks not, you mentioned the yield curve flattening and now it is getting stronger. policye strong dollar the u.s. follows make it harder for them because it hurts the trade agenda? tom: michael mckee, wonderful from washington. .avid is with us we are thrilled to pair with him jerome schneider.

if you were up in maine this morning, you look at these election results, i have to go to florida. is trump losing florida? he could. we have a new play in florida because we have thousands of people from puerto rico moving to florida, developing in the communities, especially the orlando area. they are already being integrated into the democratic party, registered, and so forth. florida could be in play. and this is any underperforming american economy. we are at 1.4% potential gdp. do you believe in a lower terminal rates if we have this

dampened and sluggish gdp? jerome: a main focal point we have to think about is except lower-- is accepting a growth rate than normal. ultimately, recalibrating that to what the terminal rate could be. it is about 2.75%. about 2.7 5%, but it could overshoot. to could see something up 3%, 3.25%. see it in market conditions historically, all the time. the markets should be thinking about a slight overshoot in that over the next two years. francine: do you worry about 2018 being the year we don't get tax reform as expected, at a time when you have a new fed chair and communication could

get wobbly. jerome: the mission statement will remain continual. jerome powell is going to continue carrying that baton forward. you will see change in that policy and messaging. investors should prepare for one thing, that is recognizing the fact increasing interest rates is something that will have been in december -- that will happen in december and two or three times next year. it is something we will see over the next 12 to 18 months as we respond to an economy running in the realm of 2% to 3%. that should be expected. for us, we think investors should preserve optionality and prepare for higher rates ahead. what is your killer

question for secretary mnuchin? you have to understand how the politics play. ultimately, it is one of reaction function. up for a are setting wave election next year for the democrats. it throws turmoil into everything. -- in thehis tweets stock accounts in the u.s., 20%, 25%. tom: you are killing me. schneider just fell off his seat. jerome: that is music to my ears. tom: all david says is cash. jerome says preserving optionality. withe going to come back them. our question of the day, particularly after election

results. mr. mnuchin, the 11:00 hour with michael mckee. and with us, from london new york, this is bloomberg. ♪

taylor: this is "bloomberg surveillance." the ceo of christian dior is stepping down. and almost 20 year run. tell a donna will be -- toledoa no will be replaced.

wilbur ross has been inflating his net worth in conversations. he is worth about $700 million. this down from the $2.5 billion last march. bloomberg estimates ross is worth $3 billion. that is your business flash. donald trump has arrived in beijing. wins in the for trade deficit to reining in north korea. china on thehed campaign trail, on this trip, he has incentive to cut deals. , when you look at the tone, it does seem he is trying to broker a deal.

we are having some technical issues. this is what happens when you londonansatlantic from to new york to beijing. sometimes satellites don't work the way you want them to. what is extremely important is to see the tone and language of what president trump does with his counterparts when it comes to dealing with north korea. got a satellite link -- i guess we got back our link to china. why don't you go back to tom mackenzie? francine: when you look at what trump is there to do, how far will he be dos out when it comes to trade and currencies, to make sure he gets china on-site to deal with north korea? that is the question.

on currencies, that is off the table. is expected to post its first annual rise since 2013. that is not an issue. on trade, the deficit is a major buzz bear for trump. in the first 10 months of the year, the trade surplus china has with the year it -- with the u.s. came in at --. they are going to want two-seamers see moves from the chinese to reduce that or rebalance. trump has a close personal relationship with xi, he says, but the trade balance is unfair. officials we have spoken to want to see moves by china to continue to an act sanctions in place, to make sure they are being prosecuted on the ground,

to continue to tighten the noose around north korea. from theust heard asia-pacific head of ford, those deals are happening behind the arees as trump and xi dining in the forbidden city, as we speak. francine: what is president xi trying to get out of this relationship? he is coming into this summit stronger than he has been through his presidency. he is the strongest chinese leader we have been talking about. there is a level of confidence with president xi and his team. they are concerned about this ip probe happening in washington. the intellectual property violations and tariffs that

could incur. they're looking to get clarity on that. there is an investigation around steel and aluminum exports. there is also concern from the are beingde that they closed out of deals when it comes to high tech operations and high-tech businesses. they are looking for more clarity along those lines. we are expecting them to want to give trump something to deliver to his audience and constituents, but we don't see fundamental changes from the chinese, and a huge concessions, at this stage. tom: thank you. with us, jerome schneider and david kotok. i remember the initiatives. is anybody listening to us on beijing? no.d: china is emerging. they are going to do things their way as a world power. the united states should not

pick the fights with them. we should get along with them. critically at the imf, the question about depth in the market. is there depth in the asian market, the china market? that is a key question. we have seen an effort to create that depth and legitimate markets. tom: are they there yet? jerome: they are growing. they are yet to get over initial hurdles. the question is -- how much depth do they ultimately get to. if we are on the right path. on thursday, join us for an hour-long special on the hase of shale and how it i changed the u.s. this is bloomberg.

♪

francine: this is "bloomberg surveillance." there have been conflicting reports on deutsche bank. -- plans to turn to tech to bring costs into line. fromn arons joins us

frankfurt with the latest. thank you for joining us. they are adding a couple of .taff there are reports they may cut a lot of jobs. they raised a billion euros in capital. they need to deploy it at some point. they are trying to hire a few people. at the same time, they embark on programntial job cuts in 2015, trying to shut about 9000 positions that is roughly 10% of the workforce. they are trying to balance those goals. automation will be a big part of that. francine: what does it mean for jon? he did not have the best results. they were disappointing. is his job on the line? were: the results

he did makeg, but progress on cost cuts, which he is known for. on revenue andus investors are demanding he grows the bank and not just cut costs. they have been critical voices. they have given him a few more quarters. they are waiting and seeing. he needs to deliver now. francine: thank you. next, we speak with the ceo of axel springer. this is bloomberg. ♪

♪ good morning, everyone, francine lacqua in london, tom keene in new york. thrilled you are with us for our conversation on politics, economics, and snapchat. it is breaking news, tencent are out buying snapchat. it is an interesting thing. earnings butchered last night, stop plunged. let me bring up the chart on snapchat. i do not think i have ever looked at it before, but let's do that now. these guys are going to win, win, win. a massive move on the ipo. they tank down to 12, up they go, they tank yesterday. i do not use snapchat. and i the only one? francine: a lot of people do not

use snapchat and that is reflected in the share price. shares have dropped some 38% since march. if you look at the landscape of stock and tech earnings, most were good but snap was not. tencent is buying 10% of that company, according to some of the sec filings. a pretty big deal because you can kind of change the strategy that is what they wanted to do. get on snap. tom: my to do is to take that cap down onto the desktop down the phone. down onto china, president trump some sightseeing before getting down to business. he toured the forgiving -- for been city. he is helping to make some

progress on a variety of issues ranging from north korea to trade. u.s. and chinese companies announced they have signed a number of agreements valued at $9 billion. it was a big night for democrats. in virginia, ralph northam has been elected governor. he beat at gillespie who ran on trump like issues. gillespiedent tweeted " did not embrace me or what i stand for." new york's democratic mayor bill de blasio was reelected. the president of the philadelphia fed suggests he will support another interest rate increase next month, but patrick harker wants to see signs inflation is moving higher before backing more rate hikes. he says he has penciled in three rate increases for next year. in the u k, theresa may may lose her second cabinet minister in a week.

she is likely to fire international development el overry pat unauthorized meetings with israeli officials. last week, her defense secretary quit in a sexual-harassment scandal. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. riggs.ylor this is bloomberg. tom: thank you so much. jerome, david potok and schneider of pimco. i want to put the single best chart up here in a moment, but let's framed the yield curve. why do pros look at not only the two 10 spread but others spread differences of the yield curve? simply identifying where growth trends are heading, where inflation trends are heading, and articulate those at specific points so as to preserve capital. it is one thing to simply know

where interest rates are going, higher or lower, and another thing where on the yield curve you take those positions. we have seen over the past few days, months, and year, a flattening of the yield curve demonstrating strength in the u.s. economy but tightening monetary policy. tom: here is the long-term trend. we have showed the trump election chart back here 20 years, recession slowdown, and down we go. this is critical. when do you click in on recession? bill gross told us he is tipping at a 45 basis point area. david: we have this unusual circumstance. we have $2 trillion excess liquidity in europe and $1.5 trillion here. we are only starting to shrink that. they are not. tom: this is the central bank balance sheet. david: yes, that has changed the

rules. i do not think yield curve shapes work. do you remember all the studies that said when we do all this kiwi, -- qe, this is the equivalent rate drops, rate cuts . if we withdraw all this qe, isn't this the inverse? if you begin to shrink excess liquidity, you are changing the outlook and dynamic, and if you change the duration in the marketplace when you do it, which is happening, you are going to get outcomes that are unexpected. jerome: david makes a good point -- sorry, francine. francine: to david's point, does it mean a lot of asset classes are distorted and if so, which ones? that would give an idea of how the market changes and corrects itself when the qe goes away.

jerome: it is not just a question of distortion. as we pivot from a period of quantitative easing to tightening, you have a bit of recalibration going on that will take some time. central bankers around the world, starting with the fed, are trying to lend -- land a giant plane on a long landing strip. it is slow, it numbers, adjusts to the market slowly, but they have extended the long runway. as such, while risk assets were ones that really benefited over the past five to seven years for quantitative easing, the unwind will be slow and methodical. assetssult, the risk will slowly replace to this new normalization of balance sheet and the normalization of rates to higher levels over this point in time. it is worth highlighting it is not a short-term phenomenon that

the balance sheet will unwind but a longer-term phenomenon so we have time to adjust but we have to be sensitive to the fact that these prices, things like corporate credit spreads have gone to potentially fundamentally tight levels and we have to make critical assessments as investors over the medium-term, how to adapt to those changes and be more specific. the warm blankets that covered us the past few years may be a little bit shorter and thinner, and we have to be specific on how we allocate risk going forward. francine: that warm blanket that jerome was talking about gets uncomfortable. keeping too much qe for too long , does it hurt more than taking it away? jerome: we do not know. we have never been in a place like this, francine. if you are under 40 and you are in the financial services industry, you have not worked professionally in an environment

other than a zero interest rate type of structure. you have read about it in the history books but have not experienced it, so the changes in yield curve and this massive change in central bank balance sheets is a new experiment in monetary history, in my opinion. jerome: i just want to add, many of those folks who have not seen an upward rate environment will be focused on the change in liquidity dynamics. they do not have intuition about how liquidity will change in the marketplace. it will create opportunities for some investors that defensive responses for others, which could lead to a variety of circumstances. that is something for us to be watching. conversation.s we will continue with mr. kotok and schneider. breaking news, humana -- this is a trend i have seen over the

last six months, a number of bodies to go out the door. banner upting that now, i believe it is 2000. the idea of companies adjusting in the year, and there is a lot of that going on, 2700 at humana if they right size. snapchat, let a bring up the chart. i am snapping a snap of snapchat snapping, down they go, 15 for the handle, down we go. we stay low at a 12, huge plunge, and come back up with at tencent purchase of about 10% of snap. to do like that? i was snapping? i snapped a snap. this is bloomberg where i am snapping a snap. with a bowtie. snapping. ♪

♪ everyone,morning, bloomberg "surveillance." i am tom keene in new york, francine lacqua in london right now. i need to bring up a chart. we have been looking at snapchat, snapping snapchat. maybe the draghi affect and one example of it, it is not just in america where we talk about the yellen a fact. axel springer, this is axel springer with maybe the draghi effect. it is a moonshot off the lehman low and this is a good excuse to bring in matthew miller in berlin. with i am standing here the ceo of axel springer. the publisher that publishes the build sites on the most widely read paper in europe. thank you so much for your time.

one of the reasons we see this moonshot in your stock as you just keep publishing better and better earnings. you have done so again today, driven by digital sales and the classifieds business. one analyst said it is time to take profits now. why should investors continue to buy the stock? matt: ceos should never comment on valuation but we are just about to take off, that is our mindset. company is now generating two thirds of its revenues with digital businesses, more than two thirds of its profit. it is forming fasttrack into a purely digital publisher based on digital content and digital classifieds. digital classifieds is a proven growth and high-margin business where we have one of the top positions in the world, two top positions in the world. journalism is something which

has tremendous growth potential for the future. the best is yet to come, i personally think. it is a good moment to invest. matt: one of the reasons you could have tremendous growth is that massive search engines like google, social media sites like facebook, have had an attitude change where they are no longer fighting paid journalistic content but rather looking to form partnerships. this a talk to us, is sea change or a turning point? mathias: we have been fighting for a paid culture in the digital world for many years. at the beginning, nobody wanted to really change something and people have now realized in the days of fake news and the impact that has on democracies and systems that are going more into the autocratic way, that independent branded contact, quality journalism has

tremendous importance in society. that is why it should be a sustainable business model. we are very happy that both platforms, google and facebook, have changed their attitude and are preparing a paid mechanism that would help publishers to transform readers and to subscribers in a very easy manner, and if it is done in a fair way we have access to the -- and can establish direct customer relationships -- that would be a game changer for publishing. it would be to the benefit of platforms and societies, but obviously publishers would be big beneficiaries because our revenue streams are changing. we would have access to two important revenue streams and that is what we need to achieve. matt: i recently saw on interview with henry blodgett. you bought his new site.

he said, the developed world has been saturated. internet has been saturated by media and it is difficult for new players. you are not at all in a player, but even for a really established brand, is it hard to gain market share in the saturated internet? mathias: i think we are still at the early days of digital content, and what we will see very few legacy publishers are going to be successful players in the digital world, but there's a whole new generation of digital publishers that are entering the scene. brands that nobody knows from vice media to buzzfeed to business insider. look at business insider, it is doing tremendously well. when we made the investment, a lot of our shareholders were very happy. business insider is growing now over the first nine months of this year, top line more than 50%.

that is exceeding all expectations. their reach is growing. the customer loyalty is getting better and better. that is really, today already reach wise the biggest business platform worldwide but the monetization of it is now really working. that is encouraging. i see a lot of room for new players and brands, and we definitely want to be a leader in the process to establish new brands to transform the two remaining legacy brands we have built. matt: so you have had tremendous success with that acquisition. i think it was about half a billion dollars and you see others with potential. who wells are you looking at as a possible candidate for your next growth acquisition? mathias: we paid for business insider a little less than $400 million, but from today's

perspective it was a very reasonable price, the valuation potential given its global reach and given his performance is much higher. we want to groove concept and that means profitability. we are getting close to that point. once we have shown that such a brand can be a profitable theness, then we will start next phase of investment with business insider and then with new digital content brands, but so far given the 13 smaller investments we made in the u.s. and europe, we have enough to manage for the moment. year year, we will -- next we will stick to the guidance that we gave. matt: i have to ask you about the german political situation. you are in the unit position as not only -- unique position as not only an opinion maker but worldwide, there is nothing like held in germany. the criticism is that the german

media covered the afd too much and maybe gave them momentum to get into the bundestag. what do you think? mathias: we see the global trend that most of the centrist democracies are weekend and their leaders are not in the best shape, while a lot of countries are going into the populist direction, into the autocrat to correction -- direction. that is also an indication that something similar in germany is happening, and undercurrent. media has to stick to their principles of fairness and let's say, there is no objectivity but there should be for all parties whether we like them or not, their treatment -- fair treatment, the possibility to get exposure, not more or less than other parties. there are a lot of stories to tell, but overall we should not

blame the media for a phenomenon like afd. matt: thank you so much. there is so much news surrounding media properties, it is great to hear from the publisher of build and develop. tom: we have news out of china, the president of the united states eating with leaders in china -- meeting with leaders in china. $250 billion in deals announced, that is what the president is looking for. i am tom keene, francine lacqua on assignment in london. this is bloomberg. ♪

♪ this is bloomberg "surveillance." i am taylor riggs. uber is taking the friendly skies, teaming up with nasa to rollout a network of flying cars. bloomberg spoke with the chief product officer at an exclusive interview. >> aeronautics and space administration, they focused a ton of their energy on aviation and so the developer of this technology, they are very

connected and engaged with regulatory bodies around it as well. ton ofaboration makes a sense to bring it to market as fast as possible. taylor: the plan is for uber air to start in dallas and dubai in 2020. that is your bloomberg business flash. tom: i want to show our global audience the cheat book. this is the cheat book, the american almanac of politics just published, and it is a little thick. as marty schenker knows, it is already out of date as of last night. it is gone, gone, gone. what is your number one observation? you have to guard against -- tendency to make too much but i think the interesting thing to look at is turnout. the virginia race especially,

there was lots of speculation the turnout would be low because the candidate is so low-key. that was not the case. there were large turnouts in manchester, new hampshire, the largest turnout in 30 years elected the first democrat in 16 years. there are interesting dynamics. , and theington state latest i saw from the associated press was the legislator and senate of the state, there is a one-vote difference between republicans and democrats, and these are shifts at the state level. marty: you have to look local if you want to understand the trends. in virginia, the house of delegates, there will probably be recounts but that could switch from republicans. majority --4 seat that could switch to democrats. tom: recently from florida, what is the mood in sarasota except ringling brothers circus is not

there anymore? >> you have a test coming up for buchanan, which is republican but he is very entrenched. a personal friend of mine in new jersey, we know each other for decades, announced yesterday he will retire. that seat is up for grabs so this is a changing dynamic. tom: we are out of time, but this debate will continue throughout the day. an important interview at the 11:00 hour with mr. mnuchin, the treasury secretary. schenker, jerome schneider, and mr. kotok. this is bloomberg. ♪ retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store

near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. ♪ jonathan: president trump

touches down in china, looking for concessions on everything from north korea to reining in the trade deficit. in the househanges leave a revenue hole that needs filling. prime minister may losing her grip on her team and brexit strategy. wall street banks may be running out of patience. good morning, this is "bloomberg daybreak." i am jonathan ferro alongside david westin and alix steel. record highs and then we pulled back at the close, snapping a five winning streak on the s&p 500, futures softer about 1/10 of 1%. market, yields lower by one basis point on the 10 year but that spread, twos versus tens now just 67 basis points. alix: it is like 20 basis points in a matter of weeks. portugal again having a killer bond