♪ francine: syria in the crosshairs. president trump weighs options as western powers rally against bashar al-assad. some officials want to foster rate hikes, despite the threat of a potential trade war. u.k. prime minister theresa may could now be angry -- to stay in the europeans custom union after brexit. how will hardliners, like boris johnson, respond? ♪ good morning, everyone and welcome to "bloomberg surveillance." this is what your markets are doing. you can see the european stoxx

600 pretty much flat. we saw a little bit of jerking. i think investors are trying to digest the latest signals from the federal reserve on the monetary policy outlook. they are also looking at renewed tensions in the middle east, a fractious political landscape come and what that means for their investment. i am looking at euro-dollar. it seems like a lot of the oil --s planned out on playing out on oil. we will get the price shortly, it is around 65 at the moment. markets ande talk investment in the u.k. with noted british investor. the u.k. liberal democrats leader discusses a customs union and the chances of a second referendum in our brexit show. coming up later, we break down political risk in the u.s. let's get straight to the

bloomberg first word news in new york. >> donald trump is still weighing options against a military action against syria. this is as western powers rally against bashar al-assad over eight chemical attack in damascus. members of the trumps national security team met yesterday. that comes after president trump russia saying "you should not be partners with an animal." the latest attack, which are blamed on a rainy and -- iranian backed yemen rebels show military capability --. there is a slightly more hawkish fomc. several members noted a stronger

outlook for the economy thing that the appropriate path over the next few years will likely be slightly steeper than. previously expected. . officials were concerned about financial imbalances, and the possibility of the economy overheating. hasu.s. treasury secretary signaled that america may impose a very strong sanctions on iran. steve mnuchin testified before a house appropriations committee. it comes as president trump looks to renegotiate the multinational -- with a run -- iran. >> i think to the extent that the president decides not to sign the waiver and we do impose those ancients, there will not only be primary sanctions, but secondary sanctions. i believe they will have a very strong impact on the economy in iran. >> u.s. congressional publicans have -- republicans have moved on any attempt to fire special counsel robert mueller. democratsans and 2

have consolidated their separate bills to protect robert mueller into a single piece of legislation to ensure that he could all be fired for "good cause." global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. francine? francine: thank you so much, taylor. let's get back to our top story. president trump is wink military action at -- weighing military action against syria. prime minister theresa may has called an emergency cabinet meeting while markets remain on edge. europe is trading broadly flat this morning. as political risk back? what is trump actually considering? joining mouth is one of the most recognized names amongst british

is one of-- us now the most recognized names amongst british investors. what isare inches about happening with syria, and they are also anxious about what is happening in washington. it is about sessions, changes at the top. update us on that? where are we? >> with the robert mueller investigation, obviously the raid on trump's lawyer has raised the stakes, and raise concerns certainly within the white house about what the fbi whether or notd the southern district of new york what sure the information -- would share that information. i think that has angered trump and raised the risk of him either trying to fire directly robert mueller, which most experts think he cannot do, or

firing ron rosenstein. -- rod rosenstein. francine: can you fire them -- he fire them? >> according to the law, only the department of justice attorney general can fire the special counsel. because jeff sessions has recused himself, that will fall to rod rosenstein. he could do something more intermediate, fire rod rosenstein come up with someone in there that could just curtail the scope of the special investigation. francine: have the options changed in any way from yesterday? it seems like the allies are actually rally behind president trump. >> they are around behind, but i did note that jim mattis seemed to dial back a bit of the rhetoric from trump. we have a tweet yesterday, which was very bombastic, from trump,

saying that the missiles are coming. jim mattis says that all options are on the table. they are still assessing the intelligence. i think again, white house spokesman sarah huckabee sanders also said that all options are on the table. it is really wait and see. incredibly fragile situation, given that you have a mix of russian and iranian forces on the ground. the risk that this could go wrong or escalate is quite high. francine: the markets are nervous, but do you think they are not nervous enough? we seem to be an a crossroads. we don't know exactly what comes up next. volatility is there in part, not as much as it would have been 5 years ago. >> still far too much complacency in my view. i think trump is almost certain to use missiles in syria, and he has good reason to do so. what the outcome is, i don't know. you have this other tomorrow --

tumult, including the facebook issue, and so forth. markets remain rather complacent. i think they will see some serious downside particularly to the u.s. market. such as the price of oil rising to recent highs representing a real toll on gdp are just not factored in yet. you have the fed tightening in a fairly aggressive way. you have the u.s. budget deficit about two balloon out to 5% of gdp. all of those factors make me very worried about the u.s. market, which has potential 20%-20 5% downside from here -- here.% downside from francine: that would be an extremely violent in a short space of time correction. does that mean you're going after havens at the moment to

kind of hedge? >> yes. if you believe like i do, inflation is insidious, and it is coming back in a big way. i think gold is your number one haven. again is fairly divided -- the yen is fairly divided at the moment. you also have the russian issue, which is serious. the russian market could go down a little. all of these potential points of political conflict, plus sanctions bank imposed imposedre -- being everywhere, all that leads me to be super bearish at the moment. francine: you were saying that ghing the trump is wei options against a military action against syria -- for military action against syria. do we have any idea of the timeframe? could they also be looking at

sanctions? >> trump canceled a planned trip to south america. it was his first trip to latin america. he did this in order to focus on the syria crisis. jim mattis also canceled travel plans to focus on the syria crisis. i think there will be ongoing meetings on this. everybody is trying to figure out the timeframe. when do they move? obviously they are turned to gordon it with other countries, u.k., france, possibly also -- --y are trying to coordinating with other countries, u.k. france, possibly also saudi arabia. francine: remember that bloomberg users can interact with the charts shown. we have a very cool chart looking at russian stocks. we're talking to you about the ruble yesterday. this has to do with what is

happening in syria. you can use them and keep them for future reference. leading our officials towards a quicker pace of tightening? we will ask how a potential trade work affect their thinking -- war could affect their thinking. this is bloomberg. ♪

♪ francine: economics, finance, politics, this is "bloomberg surveillance." i am francine lacqua here in london. central banks and the markets, the latest fed minutes show a slightly more hawkish fomc, leading to a faster pace of tightening. several members noted a stronger

outlook for the economy, saying that the appropriate at over the next few years maybe steeper than expected. what does a hawkish fed meat for -- mean for investors and markets? me.ve two guests joining let me kick it off with you. what did you hear the fed say? a little bit more hawkish, treasuries moved on the back of it, but of course there also -- they are also focused on geopolitics. >> the interesting takeaway away from yesterday is that the fed has moved away from the 2016-2017 narrative where they were concerned about potentially low inflation persisting for a long time. moving away from that and now moving towards really the risk that potentially the economy could overheat in the next couple of years. they are going to have to be willing to raise rates gradually

still, but gradually in order to potentially prevent the economy overheating. i think that is really the big shift in that narrative that i heard yesterday. francine: do you worry about the u.s. economy overheating? >> so right now we are not worried. i think that if we were to see the impact of fiscal stimulus really start to accelerate growth, particularly once -- is out, there is a risk over the next enumerators -- next few years. there still are structural ways that are present down on longer and inflation -- end inflation. we think that inflation is likely to continue to gradually move higher. we think there are still structural down pressures that are pushing down, particularly demographics, and some of the technological disruption.

>> i think inflation is going to be higher than most people think. partly because the people who work for uber, walmart, and so forth are now able to grab a bigger share of gdp, simply because there are not enough of them around. there is very low unemployment. also, i think that this tariff imposition by donald trump will have inflationary pressure. you have also got the rise in oil. you could see inflation quite easily at 2.5%, 3%, maybe even the .5% -- 3.5%. there is the issuance of huge amount of bonds to fund what is an enormous deficit by anyone standards. i would be negative on the u.s. endg and an markets --

on markets. francine: i have a short -- chart looking at the flattening yield curve. seem less concerned about inflation and where that is going to go, because that is looking to be stabilizing, and maybe even picking up over the next few years. also, there is the sense that the fact that they mentioned the trade tensions also tells you what they are looking at in terms of downside risks to growth. is whaty does seem that they are looking at right now, both in terms of risk overheating, but also in terms of this risk of trade tensions hurting growth. francine: how do you position yourself in this kind of environment? jim mellon thinks there will be a correction and u.s. equities 20%-25% in the next few

years. >> with actually continue to believe that the global cyclical story is still quite supportive for equities. we are not concerned right now about a very large correction. certainly we have seen the equity markets consolidate somewhat, and we do think that the market is in a bit of a consolidation phase still. we think that the back half of 2018 looks much brighter. we think that the corporate earnings recovery story is still very much intact to support an upward bias toward equity markets throughout the duration of the year. that said, certainly we are in an environment with higher volatility. we think that the higher volatility is likely to persist. that puts downward pressure on equity multiples. we have seen that happen over the last couple of months. that is not something that we think is going away. the way to position this would think is to be appropriately hedged. being longer --

blanche --e yen -- long the japanese yen. still, the stock bond correlation is still in negative territory. i think that is likely to continue to remain in place, at least for the next year or two. as a result of that, i think that being long bonds versus the long equities still offers an appropriate way to be hedge in a multi-asset portfolio. francine: is there a hedge with yen? is it the wrong currency to buy the moment? do you hedge buying volatility? bywe like being hedged end.g ng long

we do think that it is a really good hedge. with respect to the dollar, we still think that the dollar is an eight weakening mode throughout. it is still structurally overweighted. we think the dollar will continue to weaken. what is interesting is that if you look at past parallels in terms of trade wars, civic although the short-term impact to the dollar could be seen as dollar by us higher -- bias higher when the u.s. engages in trade war. over the medium term, longer-term picture, the dollar actually weakens. the long-term implications for growth are quite negative. if a trade war really were to escalate, the dollar would actually we can in that aken inment -- we that environment. francine: you mentioned the

curve collapse. i brought up to you the yield spread between five-year and 30 or treasuries in the u.s. -- 30 year treasuries in the u.s. we could expect a correction. could the correction happen elsewhere? >> i think it could happen really anywhere. i have no idea where it is going to happen. that's concentrate on the u.s. market, which is the most expensive in the world in terms of cyclically adjusted -- and other measures. it is also highly concentrated in terms of which stocks have been well in the last five years. just 14 stocks have accounted for the s&p 500 performance -- % 's the s&p 500; performance. other markets look reasonably

cheap. the u.k. market looks inexpensive to me. the japanese market looks inexpensive as well. we know that the the good will go down with the bad if the u.s. has a fall. i would be long the nikkei against the u.s. francine: you mentioned some of the tech stocks. we will get to that next. thank you for joining us from davos. jim, of course stays with us. we will be talking more about tech. facebook, mark zuckerberg has emerged mostly unruffled after 2 grueling days of hearings. here are the highlights. >> you are collecting personal information on people who do not even have facebook accounts. isn't that right? zuckerberg: congresswoman, i do

not think that is what we are tracking. >> you have already acknowledged that you are doing that for security purposes, and commercial purposes. >> you entered into a consent decree with the ftc which carries no financial penalty for facebook. is that correct? zuckerberg: i don't remember if we have -- had a financial penalty. i remember the consent decree. it is extremely important to how we operate the company. >> when are you going to take down these posts that are done with illegal digital pharmacies. when are you going to take them down? zuckerberg: right now when people report that post we will take them down. >> you know that they are up there. --re is your requirement where is your accountability to allow this to be a caring -- our current -- occurring?

you have demonstrated repeatedly that you are willing to go past your own internal policies and your own policies when it suits you. zuckerberg: i disagree with that characterization. francine: that was mark zuckerberg, the founder of facebook. are we going to have a lot more privacy? his facebook going to be used differently? >> they are definitely going to be regulated and punished. these are the new banks. those cash piles are very tempting to governments around the world. of superre, the days growth are behind them. in the presence of regulation they will have to hire very expensive people to monitor what is on the site. i noted yesterday that the questioning was not particularly effective against zuckerberg.

he is super bright and has been well trained by his pr people. francine: you can argue that lawmakers do not really understand the world of internet. >> that is true. one of the congressman asked if he would reveal which hotel will he was at -- hotel he was at. i thought that said it all. sooner or later even though facebook can hire the best lawyers, best lobbyists, the process of chipping away at their edifice will become apparent. selling at 20 or 25 times forecast earnings is not justifiable at the moment. francine: they have instagram. will they not become something else? >> they probably will become something else. i would say that the share price of facebook will harp over the next few years. it is not a place to have your money. it is very concentrated in institutional portfolios.

the stocks in the u.s. are very concentrated in terms of their performance, applies to facebook. these are super over owned, and they are going down. francine: jim, thank you very much. up next, our weekly brexit show. it cannot come at a better time. we are hearing that the u.k. is looking for a customs union agreement with the eu. ella of the hardliners probably thought that this was not possible -- a lot of the hardliners probably thought that this was not possible. we will try to dissect that. this is bloomberg. ♪ welcome to the xfinity store.

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with xfinity mobile. plus ask how to keep your current phone. visit your local xfinity store today. francine: welcome to our weekly brexit show. i am francine lacqua here in london. we have some breaking news. david davis is saying that the u.k. is looking for a customs agreement with the eu. we will get to the and a second,

but first update us on what we know so far. >> the dutch finance minister said that brexit is a tragedy. he made the comments in an exclusive interview with bloomberg. >> to me the brexit is a tragedy. it is clearly not and interest of the netherlands, of my country. neither is it in the interest of the european -- europe. it is not in the best interest of britain either. if there was any way to avoid it, i would love to, but the british are determined. now we need to make sure that we make this brexit as easy as possible. >> the u.k. government wants an alternative backstopped solution to the irish border. that is according to people familiar with the talks. avoid custom to checks at the irish border is one of the biggest issues that they disagree over.

saysk's prime minister that britain would look at the issue of european migration as part of negotiations on a post-brexit trade deal with the european union. theresa may restated her aim for a comprehensive traded with the eu. it is seen as an indication that she may be willing to consider special treatment for the bloc. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. francine? francine: thank you so much. let's go back to the headlines. the u.k., mr. david davis says -- the first headline that grabbed my attention, i think we have a chart that we could bring up. he says the u.k. is looking for a customs agreement with the eu, and also saying that there is no precedent for a customs deal that the u.k. is currently seeking.

what does this mean for the u.k. economy? what does this mean for brexit? with us is jim mellon, an investor. david, first of all, what does it mean? they are out of the customs union, actually now they are not. >> the words are really important here. we are in a customs union at the moment. labor of course said they want a customs union, not the customs union. we have used the word arrangement. what does that actually mean? does it mean that britain is locked into eu rules and regulations? for has been a big red line theresa may. does this mean some sort of agreement whereby you can for theresacontinue trade, but stile trade deals around the world?

this is also the key to solving the question of the irish border, which is still the main thing that is the devil in talks. there is still no solution on this issue. perhaps there is a solution coming into focus that might solve the problem. francine: this seems a little bit like drip feed. we have a brilliant brexit bulletin that asks, when will the fog clear? when will we have the details? >> that is the big question. ed has gone slightly you're really quiet over the -- it has quiet.ightly eerily talks onto the future trade agreement is another. we had the transition agreement a few weeks ago. now we need that detail. the reason that we are not getting it is because the sides are very far apart.

francine: what a customs agreement negotiation the accepted by the brexit hardliners? >> that is the question. whether what sort of agreement their proposing, does it type or into europe's rules, or does it let britain negotiate its new free trade deals around the world? francine: what does it mean for investment? you speak to boris johnson, he says one thing, theresa may says another. who do you believe? >> there will be not much difference to what we had today in the end. francine: the brexit hardliners would say, that is fine? jim: they will probably have to accept it, otherwise there will be a second referendum, which they do not want. my general view is that this is going to be eight fudge -- a fudge. we can look at the british pound as a good indicator of that. the british pound has done very

well against the u.s. dollar. it is back to more or less pre-referendum levels. the euro has been marching up recently. the british economy is in reasonably ok shape. it is actually probably going to outperform the european economy next year, because the eurozone growth has peaked, and is beginning to fall. i'm not really concerned about brexit. everything will end up as a fudge. differencenot be any to the citizens of the u.k., or the citizens of the european union post-brexit. i don't know if there is a new metric, or a new index looking at baby formula. [laughter] when you look at the health of an economy, and what brexit means. does brexit impact the economy?

or does the economy impact the weight brexit gets negotiated -- way brexit gets negotiated? >> if this customs deal comes to thation, we would argue that would be pretty positive, certainly for long-term growth. in the near-term you would not see much. you have seen this uncertainty impact a little bit in business investment. you have not seen the big fall off that everyone expected. my initial reaction to this customs union news is that long-term prospects in the u.k. would be marginally better. plus think it i don't think -- thing i don't think is going to happen. francine: off the record many are worried about what they would do next. has been pretty

clear that a customs union, or customs arrangement of some court -- sort that keeps is pretty close to where we are now is what they prefer. on our own with these trade deals around the world are not going to compensate for the added friction of a doing business with our trading partner. there are a few outliers or going against that, but most people say the same. the labour party has been clear on this point as well. the conservatives so far still keep it as a redline. it is still it -- it is interesting to hear that. francine: would michel barnier a say yes to this? >> it is good for the economy. it is good for the harmonization of regulations. it is good for ireland as well. certainly this would be embraced and everyone else across the rest of the eu. francine: are you long pound or

long some of the equities? g long poundein is certainly a good strategy. the u.k. does represent much better value than the u.s. market. there are stocks out there that are cheaper and i think our world beaters, and could do really well in the context of a brexit agreement. i think that the u.k. actually will be once again a strong economic performer within the next couple of years. this temporary hiatus that we have seen is only that, temporary. francine: what does it mean for rate hikes? what happens next year? does it depend on the customs agreement? >> we think that the trade agreement is a big part of the bank of england's thinking. deal.ave got a transition we think they will hike twice this year, in may and in

november, and to again next year -- 2 of again next year. that is a reflection of how strong the market has been. it looks like the unemployment rate is going to remain low. wage growth is picking up, and those are all the things that the bank looks for to put forward its case for tightening. francine: thank you all. up next on the brexit show, we talk the customs union, and of course we talk brexit with the deputy leader of the liberal democrats. this is bloomberg. ♪

♪ francine: welcome back to our weekly brexit show. the uk's brexit secretary has

said that his country wants a unique customs deal with the european union. speaking in the last few minutes, david davis said that britain should have the ability to strike free trade deals anywhere. now we have the deputy leader of the liberal democrats. thank you for joining us once again. if we do get a deal, a kind of unique deal, with that be enough to not call a second referendum? >> whatever the deal is, the public deserves to have a vote. this process started with democracy, and it should continue with democracy. this is ultimately a huge decision that should be in the hands of the people, not just the politicians. francine: isn't the problem a timeline? when do you need this referendum? there is a hard out march 29, so when do they vote on it?

we still don't have the details. >> there is june, and we are being told that we will have a lot more inflation in terms of negotiations by then. it is actually pretty quick to pass a piece of emergency legislation to have a vote. is entirely feasible that we have those negotiations, and then we have the opportunity for a vote on the deal. it still works in terms of timing. what the public actually demand this -- will the public actually demand this? i would urge anyone who is concerned about the direction that brexit is going, to think very carefully about how they are expressing that to their elected representatives. these are the opportunities people have to make their voices heard. >> i'm curious about the logistics of this. have you actually get this

approved considering that both the labour party and conservatives are against it? what are the mechanics. >> it is actually what the public wants. there is a growing appetite within the public for having a boat on the deal -- vote on the deal. they recognize it is a major decision. that has an impact on how politicians respond. if enough people want it and demand it, then it could happen. as liberal democrats we just launched our biggest ever campaign ever outside of election time to build the momentum for having a public vote on the deal. it is crucial if we are to move forward as a country together on this. francine: david davis is delivering a speech now talking about ireland. i think he's just talking about people -- i guess the europeans that currently live in the u.k. not leaving. he says that the aim for ireland

is an invisible border, not know border. what does that mean? >> your guess is as good as mine, frankly. the government is contorting itself with language. there is nowhere in the world where there is an invisible border. even if you think about norway and sweden. one is in the single market, but only one is in the customs union, and yet there are still border infrastructures between norway and sweden. the issue is that we have a 20 year anniversary of the good friday agreement that we have just commemorated. that just shows how sensitive and important this issue is. there is still no solution for it. the government seems to think that there will be a magical way of doing it. there is nowhere in the world that you can point to where you are not in the customs union and you do not have border infrastructure. >> would you view this as a key

to guaranteeing that britain stays in the customs union? >> the government is relying on votes. i would certainly be arguing that if northern ireland stays in the customs union, scotland would very much like to do so as well. i literally do not see how the government solve this problem without being in the customs union. >> do you expect this to be a red line that gets rubbed out? >> there will be a vote on parliament in this -- on this. i do not think there are necessarily the amount of votes for the government to win on their existing position. they know that. they will have to face up to this vote on the eu withdraw bill within the next couple of months. it is very possible that they could lose it. what i don't understand is why they have put themselves into

this ridiculous position in the first place. >> do you think theresa may will back down on this when she has made such a strong red light? -- redline? >> i don't understand what she has boxed herself into this position. of the timeof 2/3 through from when we had the brexit vote. we are no further forward with the issue of the border between northern ireland and ireland. the idea that there is going to be some rabbit pulled out of the hat is --. i do not see that there is any straightforward route out of it. francine: would you form an alliance with the labour party on this? >> there will be mps of lots of different parties who will vote to say there ought to be a customs union. francine: absolutely. >> the government does not have

a majority. partiese people in all who i am working very closely with. i am a liberal democrat, but if i were agree with a conservative, of course we will work together. francine: who do you send to brussels? we talk a lot about what theresa may is doing, but we forget sometimes that there is a counterparty. look at the u.k. give the eu to try and get a better deal? >> i think that the u.k. has not even giving clarity about objectives to the eu. francine: they must have done it to them. >> when we have had the all , wey group on eu relations had politicians from other parties, and they have said that the u.k. is all over the place. they are not giving that clarity. ministers have met for dinner and not even raised the issue of brexit. it is baffling, frankly.

francine: is that because they were waiting for things to settle in germany? >> no, it is because they have been divided, even within their own party. we have been wasting time where we should have -- have had a clear negotiating time. the prime minister should have taken a different approach rather than pursuing the most extreme type of brexit possible, which and it was -- when it was such a close vote. it is divisive for the country and divisive for our own party as well. >> what would you put on the about paper for the second referendum? >> do you accept this deal as negotiated in terms of leaving the european union, or do you wish to remain in the european union? >> the option to remain what the in there -- would be in there.

>> absolutely. if that is the line that the british people take, in the words of our irish counterpart, there will be exceptional generosity from the european union. >> do you think you can convince the british public to change their mind. >> yes, i absolutely think that we can. i think that there are people who have already change their mind. 2 years ago there were all sorts of highfalutin promises. now people can actually see that when they go on holiday, things are more expensive, because the pound has already taken a hit. they can see the impact on jobs. our polls say that it would still be 50%-50%. when you speak to a lot of people here in the u.k. they say

that they are tempted to vote with --. they say it would be a lost about. -- lost vote. arielre is more minister -- ministerial experience. we are the only party that is --ering the public a boat on vote on the brexit deal. people have got there opportunity in just a few weeks time. lots of places have a local elections in a few weeks time. they should not be surprised if they end up getting an extreme brexit. if people are concerned about brexit, they have a very straightforward choice that they can make. francine: what would you do about military strikes in syria? >> i am pretty horrified that the prime minister seems to be making a decision on this

without consulting parliament. a convention has been set that parliament should be consulted on these matters, and have a vote on it. chemical weapon use is illegal, it is a work crime, and i do ar crime,t week -- w and i do think that we should be doing everything we can to deter the use of the chemical weapons. the devil is therefore in the details. that is why a proper set of objectives needs to be laid out if the u.k. is to be considering this. a proper to make them parliament -- debate in parliament should be held. there is obviously already significant export sanctions on individuals. not to say that of course we should be looking at those diplomatic efforts as well. i am open-minded to see what comes back, but i think that it

needs to be viewed very test ifly against the it will actually deter use of chemical weapons. >> when it comes to russia, some hard biting sanctions from the u.s. should britain be doing more on that economic front as well? >> absolutely. we have been arguing on that. we have been arguing that the government recognizes the need for further amendments so that these further sanctions are possible. i think that we do need to do more and use more of the existing powers that we have, and be bolder about that. clearly these issues are wrapping up. it is one of the tools that we have at our disposal. francine: you wrote a book. we touched on it last time on air. have you seen any progress in the last 5-6 months?

>> i think there is progress. i think there is an energy around this movement. just a couple of weeks ago we saw the deadline for companies having to report the gender pay gap. i think that there is greater transparency. the more that people are questioning their employers, companies they are buying from, and actually indeed the more that business executives are having to look at their own figures, they maybe have not run that analysis before, and suddenly become quite shocked. i think that kind of transparency and that kind of public pressure can be a very good catalyst for the kind of action that we need to create a more gender equal world. francine: what would you do more now? >> i think there is further transparency that can happen. there are some examples in other european countries where there are further rights to the

information about that. also, i think that companies should have to publish action plans about what they are doing about these figures. it will be more interesting for next year when we start to have trends. you can probably spent -- use -- spend one years set of figures. i think that this increased transparency is here to stay, not just on gender, i think other things like ethnicity and disability. we know that these pay gaps cross other sections of society. if business is savvy they will recognize that is coming down the track, and the head of the game. francine: thank you so much. she is the deputy leader of the lavrov democrats. this is what it -- liberal democrats. this is what is coming up next. asian shares were down. investors basically trying to digest what these escalating tensions in the middle east

mean. they're also trying to figure out what the latest signals out of the fed on its interest rates mean for outlook. treasuries, the dollar is steady. don't miss a great conversation coming up in 20 minutes. we will be speaking exclusively to the opec secretary-general. we will be talking to him about extra opec production, and syria. will that continue? should that continue? that is the main question. that is coming up at 10:30 a.m. u.k. time. this is bloomberg. ♪

warnsne: president trump

action in the middle east. markets are on edge. fosterficials want to wage hikes despite the threat of a trade war. what is the feeling across opec? we speak with the secretary-general from new delhi. this is "bloomberg surveillance." londonancine lacqua in with tom keene in new york. it a lot of focus is on the russian ruble, turkish lira, and oil.we are trying to figure out what will happen next in the middle east, especially syria. tom: i noticed mr. davis' comments, and it had the weight and see sen -- wait and see sense we have had since the president said things were in. things are still imminent. taylor: president trump is

considering ways to retaliate against syria for an apparent attack. weapons even though the president warned russia on twitter to expect a missile attack on its ally, the white house says it hasn't decided how to strike back yet. an emergency cabinet meeting today to discuss the u.k. u.k. response. president trump's allies are asking him to step up to thwart of investigation into election-meddling.. president has grown more combative since the fbi agents raided the home of his personal lawyer on monday. leaningral reserve is towards faster interest-rate hikes. minutes of last month's meeting shows that official's growth outlook and confidence in hitting the inflation target have gotten stronger. >> you can let inflation run above target, above 2%, then

pull back. that is one thing we will watch. they will be predictable from here, three times, maybe four if the data allows. it will be the only as opposed to the speed that will be important. time, aat the same majority of fed policymakers see the prospect of a trade war as a threat. china warns it has a detailed plan to hear back at the u.s. if president trump imposes tariffss. ministry says the government has not conducted trade talks with u.s. recently. a spokesperson denies that china requires a foreign companies to share technology has a cost of doing business in the country. global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. tom: thanks. equities, bonds, currencies, commodities. not much going on except monitoring the syria-sensitive

currencies. 46oticed curve flattening, .42, gets your attention. inh michael amey we will mix discussion about central banks and their optionality. francine? francine: european stocks are drifting. asian shares were down. i want to show you the turkish lira. heard, is at what we having a little bit of pressure because of the proxy war in syria could implicate turkey. we know president trump spoke with president erdogan. we did have some industrial production data. this inaven't shown ages. we do this with the euro-centric view with michael amey this morning. 10 from thes and advent of the financial crisis in august of 2007.

let me blow up, you can do this on the bloomberg and get this at is the two-year and 10-year german yield. it is striking house the yellow line hasn't gone up. wanted to show you pound. this is for the reason we heard from david davis, the brexit secretary, talking about immigration policy. he is looking for some customs unit with the eu. it means we need to wait for the details. it means we are nowhere near a resolution on ireland. there is a lot that they need to answer. that claims into what david davis says we need to keep an eye on. from or in how geopolitics are causing jitters, we are with

michael amey and leslie vinjamuri. thank you for joining us. there is a lot going on in the , and externally with the strikes against syria. does president trump have any other options than to strike syria militarily it? leslie: president trump with like to have a considerate and hard response to the alleged use of chemical weapons by syria. uperestingly, we didn't wake to news of the strikes, so that indicates there are some conversation. there is some desire to have a collective response with the british and the french. told there are talks between the americans and russians on the nature of the response. there is some deliberation. clearly, the strikes last year didn'twork on april -- work in april 2017.

they did not deter assad. for strikes to have some that do notfects bring america in direct conflict with russia. what those did not have last responsesome strategic and have a broader impact on the crisis in syria. there is someone in the white house or the administration, perhaps secretary mattis, who is exercising a degree of restraint on the president. i think we will see some sort of response sooner rather than later. francine: should the market be more nervous? if you strike and you hit a russian compound it could be the start of something very ugly? mike: that is why you see things like stocks have gone down and stayed down. where bond yields are, they have points.20-odd basis

a lot of that relates to what syria in the trade discussions with china. you have a tricky situation where five the global growth looks pretty good. everything looks like it is going in the right direction. we have these risks, which have been through various rounds of and it hasn't destabilize the global economy, but we have to accept that the risk is out there. 4, 1982.4 a.m. on may mr. trump will go off and get ready with tweets and all that. that was a moment where a missile hit the hms sheffield. everything forever changed in missile humility and understanding at sea. what is the pentagon telling the president about the realities of defense as we taliban off against syria? -- as we gallivant off against

syria? leslie: we would all like to know the advice the president is getting. the advice the president is getting on how to actually launch an attack, what weapons to use and the implications. the second important question is what will the president listen to? everyone wants to know, when does trump take the advice and when does he not? the indication is that he is taking advice and has moved more slowly than he indicated he would. if you go back to the tweet a couple of days ago, which i think surprised even those around him -- but there is the question of one does not want to bring america into direct conflict with russia. russia said they would shoot down any missiles that america launches. -- therees a year ago is the question over whether or

not there will be stronger measures taken. this is not linked to a broader concern, there is the -- there is the concern that this is not linked to a broader strategy. trump cannot fail twice and he crisis want to make the in syria worse than it already is and bring america deeper into a conflict that he never wanted to get involved in in the first place with the noted exception of defeating isis. now he is facing a situation where he risks bringing america much more heavily involved, or ofply lobbing a number missiles and having little impact. tom: the president loves to tweet, god forbid that the military officials be silent. kingdomut the united having submarines in the eastern mediterranean? what are they doing there?

leslie: the key thing is that there was an effort to work through the security council, which has failed. when it comes to upholding the norm, you don't use chemical weapons -- remember, syria signed the chemical weapons 2013.tion in it is important to have legitimacy around the response, and you get legitimacy by working with partners. working with the british is critical. that suggests that theresa may will have the cabinet meeting and will be working with america to respond forcefully to the alleged use of chemical weapons. effort tothere is an get as much verification as possible. francine: i am no expert, but people on the ground -- if you strike and what happened is not true, and i do not know how you can verify it, there are a lot

of opinion pieces on why the use of chemical weapons would happen now when president assad is winning, it raises questions that we need to be sure, the week? we?e sure, don't leslie: the feel is that this is the use of chemical weapons by the assad regime. the longer that the responses delayed, the more credibility there will be attached, the more that willmerged, allow for a credible, confirmed claim these were chemical weapons used by the assad regime. the assad regime has used chemical weapons throughout the war, so this is consistent with that behavior. they are trying to clear the ground and further their control over territory. tom: geopolitical tensions to say the least. amy.e vinjamuri and mike

guesstimates of price change worldwide. in the next hour we will drive for the discussion, the former ambassador will join us from the council on foreign relations. ♪

taylor: this is "bloomberg surveillance." . am taylor riggs asia's largest retailer has raised its profit forecast.

was helpedglo by strong demand for winter clothing. multiplebidders have offered more than a billion dollars for the toys "r" us asia business. it is for the 85% that toys "r" us owns of the unit. they are in the middle of winding down their u.s. operations after an attempt to restructure the business failed. zuckerberg has emerged unruffled after 2 days of hearings. some lawmakers are still calling for new regulations of social media. that is your bloomberg business flash. thank you. u.s. inflation rose to a ties the fed's year and

leading towards a slightly faster pace of tightening after its march meeting. let's get back two mike amey and leslie vinjamuri. let's look at what we heard yesterday. is it clear that they prefer growth over inflation concerns? mike: we heard yesterday that they have a path that they intend to stick to unless they get a material event that changes the growth dynamics. the thingslatility, you're were talking about earlier with the china trade spat and syria. the message is that we have a plan of 2-3 hikes this year that we think will get us towards neutral, we would argue pretty close to neutral, actually. we will see how things progress from there. the message is they are , soty much at full capacity moderate, slow and steady.

that meanwhat does for inflation, the u.s. is overheating? mike: if the u.s. was over heating there would be a growth in earnings. the fed believes in that you wages.t a pickup in at the moment, what they're saying is that the economy is going pretty well, growing above trend, we are close to full capacity, inflation is below target and we think it will get there. we have low volatility around the sides but we need something material to shift us off of the game plan. tom: would you be advantaged if you had a fed with draghi-like discussion where they had a press conference at every meeting? i find absurd the idea of a meeting.nd un-real

ofon't get the idea of sort kind of like press conferences. mike: there is a challenge from the powell said that they move in that direction, because we do have this hiatus with every other meeting. it creates challenges. any central bank wants to be in a situation whereby any time that they moved they can be perceived as changing policy. unfortunately, you have a situation whereby the fed with every other meeting that you need something surprising to happen to get them to move in a meeting where there is not a press conference. there are various ways to do that. you could surprise the market, but i do not think they are in the game of surprising the markets at the moment. i am expecting in the powell said there is a live discussion going on on if they set a press conference for every meeting. tom: what is the reality of chronic negative interest rates

in germany? this is something you look at month after month. what does it mean that we have negative rates? mike: the challenge for germany is having negative rates, they do not like having negative rates. the german economy has done extremely well out of easy policy and the euro being relatively low. the germans have had significant benefits out of very low interest rates. we would all agree we would like to see rates go back to flat. where the market pricing is on the european curve, where it tends to go is draghi, before he leaves in october of 2019, whether he can get to the point where he can get the deposit rate back to zero on your chart. that is what he wants to do.

if you look at where the markets price when you have a good , the marketkground pricing gets back to the level at the moment -- back to the level. at the moment you have more volatility and the market dips down and doesn't have us out of negative interest rates until 2020. draghi's aim is to get to zero by the time he leaves. a chat on the dynamics of the federal reserve and the dynamics of the central bank. he will drive for the conversation on oil. an important conversation with the secretary-general of opec. this will be a different conversation than usual. stay with us. this is bloomberg. ♪

tom: "bloomberg surveillance." francine lacqua in london. tom keene in new york. vinjamuri. you know american politics, what last 24 hours. will republicans be the minority in the house? is that where we are headed in november? question we is a all want to know. it is a long time in politics before the midterms come up, but

the trends suggest they will not have the strong result they would like to see. we will have to wait and see. there is a lot of money being put into those campaigns. i would guess that they will lose a number of seats in those elections. tom: fall back into a reaction on mr. mueller and the deputy attorney general. if the president acts against the deputy attorney general, it is a watergate equivalent, isn't it? leslie: he is getting strong advice from even within the republican party not to fire .ueller, but even rosenstein the optics would be terrible. that is what a number of republicans are recognizing. it wouldn't be good for the republican party, the president, or american democracy. public opinion -- there is

always going to be a certain percentage of public opinion that stays with this president, that the broader american public response would not be positive if there was the firing of mueller and even rosenstein. the last couple of days have suggested that the president is becoming more unhinged by the fact that his personal attorney's offices have been inspected. this is significant and not playing out well for this president. speakne: later today we to a republic representative and talk syria and dollar. this is bloomberg. ♪

tom: good morning. "bloomberg surveillance." francine lacqua in london. i am tom keene in new york. we are looking at various international relations. richard haass will join us.

we start with syria. here is taylor riggs. trump and topent u.s. allies are deciding how to retaliate for the apparent chemical weapons attack in syria. the white house says the president will coordinate his decision with france. english prime minister theresa may meets with her cabinet to discuss the u.k. response. a russian newspaper says that moscow expects a warning from the u.s. to avoid any russian losses. cia director mike pompeo will appear for a confirmation hearing today before the senate foreign relations committee. he will try to convince lawmakers that president trump plans to get tough on vladimir putin. the fed made a second proposal regulationsprices on banks. it frees up tens of billions of

dollars for lending and other activities and would scrap an existing method for measuring east bank's borrowing limit. in the u.k. cover the housing market has been hit by weak demand. the royal institution of and --s, charters and surveyors say falling prices in london and the south east were offset by gains in midland, ireland, and wales. global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. i am taylor riggs. francine: the u.k. has announced a review of 700 fils is granted russians. the country is under pressure domestically and from abroad to tighten controls and shed its reputation as a place to launder corrupt money. the u.s. will go after a handful of russian oligarchs with the latest sanctions.

the ruble plunged on the news and we are looking at credits. here is rush's economic government senior reporter. you. great to speak with how much impact has it had on russian stocks and will it continue to do so? obviously, there was a tremendous reaction to the sanctions announced on friday. this was because for the first time they actually targeted a company, a major aluminum exporter. regarding the oligarchs, they targeted a few of those. the fear is who will be next? this goes into what is happening in the u.k.. a lot of oligarchs have invested money in the u.k.. standoff this is a bad this time around. are we expecting the bank of russia to intervene? so far the central bank has

stayed out of the markets. henry: no. what we are expecting -- the last time around they hiked rates tremendously and i did not succeed in halting the decline of the ruble. what is more likely is that there will not be any e asing. francine: i'm looking at some of the russian stocks. do youu look at russia, stay away from that market because of what we have seen or do you think there is a level of that that you would like to buy? mike: we look at the currency. you can trade. the currency is down 10% so far, which is less than last time that we had russia under pressure. we had eight weak -- we had a weak oil price and a move on the

ruble. it has gotten our attention. you have a big move in the currency, a big move in the stock market, yet the russians have been draper attractive p -- the russians have been through a proactive period. i think that the russians would be relatively happy with a slightly weaker currency, that is why they are not intervening. you will probably get volatility. that is why people are nervous, but it is certainly one that we will look at. tom: switching gears back to the moment at hand and our international relations, there have been any number of reports in america of a fragile russia and fragile russian economy that is overreaching with high defense spending to gdp and with a more progressive stance pushing out towards syria. is it reality or bluster? is russia defensively said in

syria from all of your reading in moscow? absolutely. this is a hugely important issue for putin. you will not back down. he has defended boscher al-assad and rescued him from overthrow. he will not give him up now. concern inhuge russia about the concern with -- concern of a direct clash with the u.s. this is what they are keen to avoid. tom: if we saw that mr. putin was a shoo-in, bordering on dictatorship, what is the pushback to mr. putin's desires on the syrian matters? domestically or from other countries? tom: domestically. let's do that. domestically, there will

be a consolidation of society. even liberal people in russia are looking at how the west is in this increasing standoff with russia and are rallying around the flag. i think that will have the opposite effect. the same thing goes for the sanctions against the oligarchs. i do not think that will push them away from the kremlin's embrace, quite the reverse. francine: thank you, very much. mike, you are saying that if you look at russia you are playing it through the currency. is there anything else you are liking or disliking at the moment? are you expecting the russian central bank to intervene? mike: at the moment they have been recycling the currency account, so they may stop doing that. that would be an indirect way of intervening, but we would not expect major action from the central bank. you have seen a

little bit of pressure on turkey. turkey has been under pressure for a while. which we a world in have relatively low interest ises that we would are you somewhat of a basket of emerging market positions. if you look at the market and try to identify areas where we have not been through a continual rally for seven to 10 years, obviously a basket of the em currencies has that characteristic. as long as you are not to expose inany one of them, we think a broad-based portfolio that there is a place for that in the portfolio. francine: overall, what do you like most at the moment? mike: in terms of currencies? francine: anything. asset classes.

mike: when we look at the market as a whole, we have been through a time in which you have central banks trying to move away from super easy monetary policy. you have a lot of asset classes close to the highest. even the s&p is within some extent of the highs. we have a slightly more in backdrop. we think that the fed will be successful in spurring the economy without a trend and that the ecb will get rates positive, but we have to acknowledge that when you have been through a multiyear time of asset class appreciation that you don't want to be too far down the risk spectrum, to aggressive on risk. we take a basket position so we and a little bit of credit a little bit of everything, which we think will give us flexibility if we get a pop in volatility like we saw in february. you have a reasonably stable portfolio with moderate positions and give yourself the opportunity to take it vantage of those. your morning briefing

coast-to-coast, particularly with the news flow out of daybreakn, "bloomberg ." important andn timely interview with what we are seeing. mr. barkindon with of opec. this is bloomberg. ♪

tom: "bloomberg surveillance." lacqua in london, i am tom keene in new york. it is a different conversation than usual when you speak oil with anyone with what we see in the middle east.

particularly with opec. secretary-general, good morning. >> good morning. i am in new delhi. it is interesting, because usually there is the exporters and producers, but india is the third biggest consumer in the world. i'm joined by the opec secretary-general, mohammad barkindo. the markets are reacting this morning about the imminent strike on syria from the u.s. as well as the missile over saudi from yemen. have prices gone too high? >> i thank you very much for having me. we have used the opportunity of compare new delhi to

with other agencies and have been cutting out our own in-house review. the opec monthly will be released in vienna and a couple of hours. we have an interesting development in the region, and elsewhere. we have noticed a geopolitical premium reimagined into the price of formation. process ofws is the aiding the market to restore balance, which we had embarked upon, is continuing with a renewed momentum. the numbers are looking more and more positive in terms of sharing cage from the unprecedented highs we have seen. >> it looks like trump will

reimpose sanctions on iran. how does opec respond? some analystsn have 500,000 barrels a day coming out of the market if iran has new sanctions. , policy continues to work towards stability not only in oil prices but the industry in order to continue growth and worldpment that the requires and looks to the industry to provide, which unfortunately we lost in the as a result of the severe downturn. to getting the rebalancing of the market behind us to focus on the medium to long-term issues. >> does this maybe mean an end to the cuts? beyond should continue

the rebalancing of the market. i think we have had at the conference most producers and consumers are fully aligned on that. we are working to put the architecture of this continued framework beyond the rebalancing of the market. >> will other members of opec has to the fill if iran leave the market because of sanctions? >> stability is the keyword. we are working tirelessly, not only among ourselves. ofis not in the interest producers or consumers to see shocks up or down. >> do you think that the geopolitical risks now are a price shock? >> they emerge from time to

time. i think it has contributed to last onelity in the year or so, but the reimagines of this premium in the market, particularly in the last couple of days, it is not only to opec but to consumers. the traders in new york and london, you can ask them what their perception is, but we remain cautiously optimistic it will not disrupt the process of rebalancing, which we worked extremely well. all the participating companies have done extremely well with a high level of conformity. anything that will disrupt this forbss, got for -- god id, will not be in the interest of anyone. >> do think that we could have

an extension in 2019? >> there is a growing consensus that the declaration of cooperation should continue beyond the immediate target for the market to come back to balance. we are working with our partners in the russian federation to and enshis partnership thists longevity beyound period. >> secretary-general of opec mohammad barkindo speaking to me in new delhi. this is a global energy conference for exporters and consumers. tom: thank you. greatly appreciate it. in london, michael amey is looking at some of the turmoil we see here.

we bounce back on the united kingdom. to me, it seems so quiet, the domestic politics of the united kingdom right now. andou see a new stability, can that allow you to invest in the brexit to come in the united kingdom? first, they just finished the second round of negotiations period are in a quieter because they have to continue negotiations into what future trading relationships will be like post-brexit. i think that it is reasonable we are in a quieter period. we still get these headlines roundabout what the u.k.'s trading arrangements will look like post-brexit. comment around the customs unit is where a lot of the debate will be.

so much relates to northern and southern island. ireland.rn the idea of market reaction, are you focused on the full faith and credit bond market of the united kingdom or more on sterling dynamics? that there think will be a co-opted deal. that is the first point to make. think about and ask yourself what does the market price in, we would argue the market has quite a bit of material risk premium, especially in the bond market, for a bad outcome. you can look at what is priced for a broadly end speaking may rate hike and one for next year, which is pretty tame in the context of the u.k. rate cycle. a lot of that is because if you get a exit outcome -- a brexit talks fall of the

apart. if you think there will be a favorable outcome, that suggest you will get higher rates. we think that the deal market -- gil market is a clean way to play this. francine: one hike this year and what happens in 2019? mike: we think they would like to do more than one rate hike this year. they would like, and this relates to what the fed told us yesterday. they have an economy that looks like it is going ok, and they risks whichail could destabilize the economy, but they don't necessarily think they will happen. they have to guide that central path. we think there's a good chance that they go may and again in november. 2 this year. we think there is scope for a

couple of rate hikes this year. francine: interesting. pimco.ey of bloomberg users can interact with the charts using gtb go. -- d tv . this is bloomberg. ♪

francine: good morning. this is "bloomberg surveillance." i am francine lacqua in london. tom keene in new york. the owner of british airways has bought a stake in norwegian airways and is considering a full offer, sending shares in norwegian soaring. our aviation and aircraft expert joins us now. why doing it now? >> with the market reaction, the stock is up sharply in norwegian. there is a squeeze going on. it was more heavily in the summer and has come down, but it is still heavily shorted. ? 4.6% stake

there are a couple of interesting questions. he is looking at the business that is struggling financially and looking at the model they have tried to put into place. a big part is the low cost, long-haul model. norwegian is struggling. really struggling. they are finding life incredibly tough. francine: why? are not part of an alliance. financials are difficult for an airline of this type trying to do things that haven't been done before, so they are struggling financially. why a 4.6% stake? he could think there could be a bidding war so he has bought a stake and gone directly to shareholders. norwegian is definitely finding life tough at the moment. francine: what does it mean for the competition? a it could potentially change lot of its major competitors. i wonder whether this means that

people don't think that orion air will beat norwegian. there had been speculation. that might be the part and parcel of this story that he will not make a bid for new region, i don't know -- for norwegian, i don't know. erases the question for other scandinavian carriers as well -- it raises the question for other scandinavian carriers as well. thiswe will continue discussion in our next hour on our international relations, the moment are washington and the president. richard haass. this is bloomberg. ♪

tom: this morning, get ready for what as the president walks back

the presidential bluster with nice, new, smart options on the pentagon's table. it is uncertain if get ready is imminent. get ready for a more trump-like gop. the house speaker will imminently exit. speaker b of house the minority? good morning, this is "bloomberg surveillance." from new york. tom keene in new york, francine lacqua -- what is prime minister may doing on this london thursday on syria and on the president in the united states? francine: it is occupying a lot of press coverage in the u.k. because we understand that the prime minister would be willing to support president trump in military airstrikes without asking parliament. we have spoken to not only the

deputy leader of one of the main parties, but also other parliamentarians who say that would be an outrage. that parliament needs to have a vote on this. tom: let's get an update. taylor: president trump is considering ways to retaliate against syria for an apparent chemical weapons attack. even though that the president arned russia to expect military attack on its ally, they haven't decided how to strike back yet. theresa may called an emergency cabinet meeting today to discuss the u.k.'s response. president trump's allies are urging him to step up attempts to thwart the attempt of russian election meddling. the president discussed firing deputy attorney general rob rosenstein with his aides. he supervises special counsel robert mueller. the president has grown more combative since fbi agents raided the home of his personal lawyer on monday. the federal reserve is leaning

towards faster interest-rate hikes. the growth outlook and confidence in hitting the inflation target have gotten stronger. inflation run above target. you can let inflation run above 2%, then pull it back. they will be very predictable from here, three times, maybe four if the data allows it. when inflation moves up too much, they will pull it back. it will be the link rot -- the length rather than the speed that will be important. warns that it has a detailed plan to hit back at the u.s. if president trump imposes -- imposes tariffs. chinaesman denied that requires foreign companies to share technology as a cost of doing business in the country. global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg.

tom: thank you. let's look at one board from ian. the futures turn, the curve is flattening, that is of note. oil stable after the move yesterday. francine: european stocks did not really have direction. they are kind of following declines in asia, but it is clear that traders are awaiting america's next move over syria. if you look at bonds they are pretty much study. bonds, they are pretty much steady. tom: kevin cirilli joins us this morning. what is the dialogue between the white house and the pentagon? kevin: there is a lot of dialogue with president trump the pentagon and the intelligence community.

mike pence had a meeting yesterday with various intelligence community and military officials regarding syria. on capitol hill, mike pompeo's first confirmation hearing before the senate will convene. that withintion is the next 24-hours there will be some formal announcement regarding syria. a lot of quickly moving pieces. mike rogers was on capitol hill yesterday meeting with folks as well. a lot of moving pieces as the situation evolves quickly. tom: how does the newest piece fit in? mr. bolton of the mustache? kevin: he is very aligned with senators john mccain and lindsey graham. i interviewed senator lindsey graham, the republican from south carolina, and he described this moment in president trump's presidency is a defining one

with regards to syria. he says if it is a one-time strike that it will be a missed opportunity. that there needs to be cohesive strategy coupled with additional sanctions to russia. i would note that the president is getting the backing not only of republicans, but several top democrats who are supporting some type of military strike should he ultimately decide on that, including senators warner of virginia and senator blumenthal of connecticut. ts, ithe president twee seem you haven't seen this. it is short and brief, two minutes ago. fire robertto mueller in december as reported by the failing new york times, i would have fired him. more fake news from a biased newspaper. i find this extraordinary. it links into mr. rosenstein. which lawyers is the president

listening to? kevin: it depends on the day. i would aggressively note that senator chuck grassley, the chairman of the senate judiciary , is going to be bringing up a piece of bipartisan legislation before his committee that would make it very difficult for the president to fire bob mueller. senator grassley is going to be at the white house today as part of a bipartisan mix of lawmakers meeting on trade. it is interesting that that was reported by the wall street aide tolast night as an senator grassley tells me he will be at the white house later today. francine: our sources are saying that the president may or has discussed firing the deputy attorney general. who is he allowed to fire? kevin: right now, it depends on who you ask.

the administration argues he could fire anyone. scholars other legal who disagree with that. this type of legislation before the senate judiciary committee would make it even more difficult for him to do that. to your point, there is a general school of thinking inside the beltway in the zeitgeist that should the president ultimately decide to fire rob rosenstein or bob mueller that it would be at his own risk, because lawmakers can appoint someone in place of either of those folks who would be even more aggressive than either of them. tom: thank you, so much. no doubt, a more interesting day in washington. we are pleased to bring you the president of the council on foreign relations, richard haass. his ratings on our domestic economy have been noted and he has been very visible.

on here. lot going a world in disarray. what kind of disarray do you perceive in the middle east? what is the key distinction? theard: the american era in middle east is over. after the cold war the u.s. had position.ate the high point was saddam invading kuwait. now you have an imperial iran, saudi arabia, israel, you have the reentry of russia, the strengthening of the government in syria, the united states has dialed down under obama and trump what we are prepared to do. the middle east has more faultlines than any other part of the world you can think of. tom: when i saw the president's tweet "get ready" all lichens -- all i can think of is american civil war

when we went to picnic. we have lost reality of a response. what could happen if we "attack them." richard: what could we accomplish with that attack? it isn't obvious how much. you take out some airfields, some of airplanes, this building, does it fundamentally shake of the regime? no. does it stop the fact that they could use chemicals the day after? no. having the question of some involvement with russian forces, what that could lead to. the biggest question is what is the long-term u.s. policy in syria. anytimet unseat assad soon. will we keep troops there to work with the kurds? the biggest question is if mr. trump is willing to rethink his desire to bring the troops back

home and stay. that might be more important than any pinprick strike that he undertakes. francine: it is very significant for the u.s., but on the global stage if you believe that the attacks would be limited, what other option does the president have? richard: he doesn't have very good options in syria. the balance of power dramatically shifted with the russian and iranian intervention. we won't send thousands of american troops there. we are in the in between space. if we continue to fight terrorism and provide humanitarian aid and conceivably onn work with the russians local cease-fires and stabilization. if you ask me in three weeks or three months none of the fundamentals of syria -- francine: let me ask, the president tweeted and warned saying watch out for us.

the allies of america are getting ready to support an airstrike. what are the chances of there not being a military intervention, and what happens if they strike hits a russian compound? richard: there has to be an airstrike. the syrians used chemical weapons and you cannot let them flout those international norms. the president has tripled down on his rhetoric. this would be the equivalent of barack obama asserting the red line and not acting. he is more likely to use cruise missiles. if you bring aircraft you put american pilots at risk. there is a chance that the russians could try to shoot down the missile and may succeed. will this lead to a u.s.-russia war, highly unlikely. there is a risk of a limited u.s.-russian involvement. francine: who is the president listening to now in the administration? richard: the military has the

upper hand because they control the options. civilians can tweet, talk, and make decisions, but the military says these are the options you've got. the military has the most experience. they don't change with the administration. secretary mattis has been here since day one. we don't have a secretary of state. bolton has been in the saddle for all of four days. the military has the upper hand. the president shifts gears the comment on the governor of california. here is the president on the idea that governor brown will move 400 national guard to the border. jerry brown doing the right thing in sending the national guard to the border. thank you, jerry. our move for the safety of country. i wandered over to john myers of the los angeles times.

the idea thatis governor brown will go to various and sundry locations around the state. the national guard on rodeo drive. there are your mixed messages this morning. stay with us. and new york, later today a timely conversation with a republican from texas a&m. this is bloomberg. ♪

taylor: this is "bloomberg surveillance." the bloomberg business flash. asia's largest retailer raises its profit forecast. was helped by an overseas

sales push and a demand at home for winter clothing. they are spending heavily to expand through china and southeast asia. offering more than $1 billion for the toys "r" us asia business. the offers are for the 85% stake that toys "r" us owns of the unit. they are in the middle of winding down u.s. operations after an attempt to restructure failed.uptcy mark zuckerberg emerged mostly unruffled from two days of congressional hearings. the cofounder of facebook stock closely to his claims that the social network did not do enough to keep tools from being misused. still, some lawmakers are calling for new regulations of social media. boosts itsways market share in intensifying competition from low-cost carriers. that is your bloomberg business

flash. blackrock,ews out of share price hit a record high in january. first quarter revenues in line with estimates, a little better than expected with earnings per share also better than expected. but market is unchanged, the numbers overall seem to be better than expected. the net inflows that are coming is $34.6e i shares billion. toperspective, it compares $54 billion a quarter ago. less than the previous quarter. the president is on a tweet storm. first on mr. mueller, then the governor of california, now on syria. we are advantage to have richard haass from the council on relations.

never said when an attack on syria could take place. it could be soon or not soon at all! statesevent, the united under my administration, has the a great job of ridding region of isis. where is our "thank you america?" it is a mobile phone looking at the tweet. the capital as administration. hoc?is ad is ad hoc and improvisational. the president's tweets are not treated with the seriousness they should be. they ought to be vetted, and they are not. you have the president trying to reintroduce some uncertainty, which is smart.

he has signaled way too much about what it is we are going to do or not going to do in syria. what he said at the end is inconsistent with his own policy. tom: nick burns is not in the state department, and many others that you know that i don't know, if mr. pompeo calls you, will you serve at the state department with empty offices? richard: i do not think there is enough of a match between people like me and this president. i worked in an administration where there was a mismatch and it is a good week as you can't represent the administration the way you should. i will give mr. matus and pompeo mr. pompeo and general mattis my opinion, but i do not think that i am the right person for this administration. who has the final say? it is the president if there is an attack? absolutely.

this is within the range of legitimate foreign policy if we were to launch cruise missiles or send in aircraft. this is totally legitimate stuff. this is what the president will have to decide. he will get a menu of options. in the last tweet, the president talked about the progress we made towards isis. fair enough, but the argument that flows from that is we should keep u.s. forces there. isis will reconstitute itself if the president makes good on his threat to take american troops out and bring them back home. that is part of the contradiction of his foreign policy. he has a protectionist and isolationist bias but the world is going the other way. we need american involvement and leadership, and he hasn't figured out how to deal with the disconnect. francine: what is the president's mindset at the moment? you could argue that when you look at what he has done in korea and with trade in china that he is winning, or he thinks

that he is winning, by talking tough. richard: he has a confrontational style. the explosive style. all of the threats against korea then the call for the summit. the sanctions against china, then maybe we have quiet talks. the tough talk in syria, now, we are not so sure what we are going to do or when we are going to do it. that is his style. his initial bluff people take seriously, then there is a disconnect between what he says he will do and what he does. either way, it is a problem. are oftenl comments not considered and he raises the bar on himself. there is an inconsistency with his rhetoric and policy. francine: is it working? richard: it is too soon. in china, in korea, with iran? it is too soon. we are 16 months into the

presidency. the area where it is not working is this area of strategic uncertainty has unnerved america's allies. they don't know where they can depend on the united states. reliability is a valuable coin of the realm to be a great power. willie keith our adversaries off balance? to some extent. our adversaries off-balance, to some extent. the transpacific partnership, who is the great beneficiary? china. still where it is, russia is doing what it is doing in ukraine, rv benefiting? it is too soon. i don't see it. francine: if the allies rally behind president trump for the strike on syria, will the invincible?el if you does, what does that mean

for foreign policy? words like invincible make me feel uneasy. i do not see them getting seriously involved. what can we accomplish with military force? 60, 70,afely shoot off 125 cruise missiles. what will be the lasting impact? it is not obvious for me. tom: bring this up if you will, this is the council on foreign relations on syria's war, the dissent into horror. ofis a terrific briefing off the website on richard haass' council on foreign relations. what did you learn from your experts? you have exquisite information on ireland, but when you sit down with cfr experts, what do you learn from them about the nuances of these many minorities in syria? between that the gap

the map and reality of the middle east is enormous. i will simply say that the middle east has moved beyond what we think of it. it is humpty dumpty time.we will not bring back the old middle east fore old syria, libya, yemen. the middle east is broken and it will be generations, if ever, that the middle east looks like the middle east that we know. we will bring in gina martin adams who has been more than patient and listening as we have a spirited conversation. for those joining us, the president tweeted this morning on mr. mueller, governor brown guard. national the l.a. times has a different take than the president of the united states. he just tweeted on syria as well

. what do you do? help?ollar cost averaging do you stop investing, stay in cash? generally take a step back and look at the broader economic landscape and it is supportive of risk assets. the market is confused with respect to the tweets. it is interesting to look where we were last year. last year we could ignore every tweet because we had tax reform dangling on the sidelines. when we got tax reform, we have nothing else coming from the administration that suggests upsides for stocks. they're paying attention the policy, but there hasn't been anything done that is an investable theme. if you look at the broader economic landscape, it is generally supportive.

cyclical earnings estimates are still outpacing. by market is still supported the economic picture, there is simply elevated risk on the geopolitical landscape. are you spooked by the protectionist dangers? gina: absolutely. that is a material risk going forward. .om: we will reset thank you. richard haass with us from the council on foreign relations. more coming up. worldwide, this is bloomberg. ♪

francine: good morning. this is "bloomberg surveillance." tom and new york. the moreoking at oil,

immediate market impact when you look at the proxy war. now, let's get straight to the bloomberg first word news. topor: president trump and u.s. allies are deciding how to retaliate for the chemical weapons attack in syria. the president would coordinate his decision with france. theresa may meets with her cabinet to discuss the u.k. response. the president's nominee for secretary of state would say that modern policy with russia is over. he will try to convince lawmakers that president trump plans to get tough on rush's vladimir putin.

falling prices were offset by gains in midland and ireland. i am taylor riggs, this is bloomberg. thank you. china warns that it has detailed plans to hit back at the u.s. if president trump imposes tariffs.

richard, let me go to you first. if you look at how the trade tensions have played out, what -- would trump and his administration be satisfied with china promising to accelerate reforms and not offer anything new? richard: i hope not. i would like to see real progress in terms of china dropping pressures on the transfer of technology. me is a question to -- iry with china so that would hope privately that the only thing that worried me about where you begin is that we have a lot of rhetoric. you need the private talks and trade talks.

list weeding and more diplomacy. francine: if you look at the industry groups, does the cosmetics satisfy the trump administration? what does it mean for the various industry groups that could lose or benefit? interesting the broader impacts on the s&p 500. almost like no single industry escapes. the three sectors that are the most exposed are the technology, industry, and consumer. are coming in both directions. not only are net exporters under stress if the tariffs are impact -- are enacted,. the dollar is not rallying as you would expect in an environment and risk off.

it would offset some of the cost increase of the export is experiencing. areinteresting thing we seeing are the multinational companies are outperforming their domestic counterparts. market is you the suggesting tax reform is not enough to elevate performance of domestic companies in an environment for the cost might be accelerating rapidly. resolution on this before the market can move forward. there is concern that we will see rising prices, pressure on margins, and we need resolution, but talk isaction, creating uncertainty that is keeping investors on the sideline. francine: what is pressing at the moment when you look at u.s. equities? gina: we are dazed and confused by the tweetstorm that has come out by the trade policy rhetoric

and geopoliticss. when you look for road we are moving into an earning season which might be a welcome distraction. we look into the earnings season, it looks positive. where expecting to see 15% growth over a year-over-year basis. what investors want to see is .eyond tax reform tom:it's another maritime silk . five years from now, it a larger u.s. navy.

says we are on the platform, and with the chinese trade expansion, the two new .ilk road mr. haass: the era of large has ended. i don't see any fundamental changes there. the future will be the asia-pacific and that will be the most decisive part of the world. president xi attending a military parade and believe in the south china sea. the fact is part of their trade discussion is a new china and a new military expansion. mr. haass: using the consolidation of political power at home and we are seeing china much more assertive in on

policy. we are seeing the time of economic aid with political and strategic institutions and china militarizing the south the of the islands in the south china sea and seeing china more assertive across the board. the question is how do we respond to this china and keep this relationship more or less on keel at the same time we pushed back. tom: for the council on foreign relationships research, i'm taking the first week of february. beyond the expansion south china sea. richard haass with us, we will come back with important conversation on russia as well. adams helping us this morning as well. stay with us. this is bloomberg. ♪

taylor: this is "bloomberg surveillance," i'm taylor riggs. it a first order to the world's largest money manager. blackrock reported earnings to be the highest estimate and revenue is better than expected. black rock hit $6.3 trillion in assets under management. the home pod it hasn't turned out to be the next big thing for apple. speaker went on sale in january and joined a market dominant by amazon's echo amazon alexa. they reduced orders for the subcontractor that built it. shares of bed bath & beyond are falling in premarket trading.

they delivered a disappointing forecast for the full year, renewing fears of the company is having problems adapting to the era of amazon.com. and that's your bloomberg business flash. tom: taylor, thank you. our most important conversation president, our considers attacking in some form , syria. gina adams and richard haass. it's forever persia to the many other nations around us, give us an update on the tension between the ayatollah and the leadership of ache quasi-government in iran. saw in thewhat we streets of iran a few months ago showed for the first time broad-based opposition to elements of the regime.

there is still a reform pressure there and frustration with the stagnation of the economy, frustration with the degree to which resources are being diverted to a foreign policy and not a lot of iranians buy into it. the revolution is not in danger or anything like that, but it's a crack. and it shows that they have to deliver. the revolutionaries have become the establishment. contemporary populism in some way pushes back against the ayatollah. to their work by proxy allies around the world and lebanon's those great tension went right up against a mask is. what is the tension or relationship now between iranian lebanon, mr. assad and mr. payton -- mr. putin. mr. haass: i thought you were going to say mr. then yahoo! -- netanyahu.

ins is another flashpoint the middle east and i would be surprised if we didn't see some kind of recurring military action between israel and both as law and serial -- has ollah.ed -- hezbio francine: two sanctions work? if there were sanctions on american businesses, with a work as we saw sanctions on russia? sanctions never work if the goals are short-term and ambitious. it's led to certain penalty on iran's economy, sure, but will it be enough to get iran to fundamentally change its policy in lebanon, syria, or anywhere else, the short answer is no. ofple ask too much sanctions, that the history of them as a national security foreign-policy tool and arnold that that's going to change anytime soon. there is often a

counterproductive elements. if we want to see reform pressures grow in iran, we have to be really smart. sanctions can smother the economy, they can help the government and hurt private sector environments. we really want that if our goal is to encourage ultimately the opening up of the society? francine: if we take the example of the russian sanctions, they really shut out dollar funding, bondholders, if you have targeted sanctions and you are a bondholder and equity holder, you could actually be taken to town. ms. adams: absolutely. there are material investments, particularly financial markets with the russian sanctions. when you look at the broad landscape, i think those targeted country impacts are not necessarily spread worldwide. one big impact we have seen this week is escalation in oil prices to a new three-year high.

that is a consequence of both the geopolitics as well as the sanctions and also suggesting that inflation could break out to much bigger numbers in the near term and we are set for some kind of spring break out inflation in my opinion. there are consequences of these things. the keyword is targeted. it's against a certain individuals and others. these are people of extraordinary concentrated wealth. that's a rare situation where you have narrow sanctions against people who actually are significant economic actors because of what mr. putin is allowed to develop. tom: is big oil part of this? is it part of the discussion of the geopolitics of the middle east? ms. adams: absolutely. anytime you have disruptions, the supply is disrupted. tom: it affects exxon mobil. ms. adams: higher prices

resulting traffic for these organizations. small oilo is a company. down in texas. gina martin adams runs all of our coverage here at bloomberg intelligence. will continue with ambassador haass. at there to speak of events in washington and an important conversation from john lipsky. on the international monetary fund in multilateral world. stay with us. this is bloomberg. ♪

♪ "bloomberg surveillance," francine lacqua in london and tom keene in new york. we have to look an uneventful hour for the president of the united states, this is a new proxy, not from president nixon, not from president lincoln, but from president trump. for tweets. , one on mr.ts mueller, not all the deputy

attorney general, one on governor brown with a little bit of question about where those 400 national guards will go, syriaan important week on , i'm uncertain what to do, we heard that from richard haass as well. there's a tweet, good luck to mr. pompeo as he wanders the capital today. they don't do this in the united kingdom, do they, francine lacqua. francine: they don't. the marketsear that are trying to figure out what the fomc meant and they are trying to figure out what an airstrike would mean, what would it, what it would mean for geopolitics erie this gives a little bit more of a framework of what the president is trying to do. ifwould be pretty jarring you were on a trading desk trying to figure out your next move. tom: it was a spectacular life from nebraska to park avenue for the late great be peterson. -- pete peterson.

he chronically said we have a problem and helping him with that was richard haass from the council of foreign relations. the chart of the day goes to your world in disarray, your america in disarray, which is gdp, simply our debt to the green circle reagan, the red circle, paul ryan. this is a major constraint. the most significant publication of the last week or so might've have been the cbo report. tom: i totally agree. mr. haass: it's as we are growing the debt it more than $1 trillion a year which will have consequences to our economy and our ability to act in the world area it's almost like climate , it's a slow-motion crisis. the american political establishment is unable to deal with slow-motion crises, its principal, it's coming and we can't deal with it so we can't

hit it off. tom: social security is a 13 year window. why can't the adults in washington at least begin the debate of what everyone agrees is a solvable challenge? mr. haass: there's powerful constituencies a raid on one side of the issue and at the way american politics work, whether it's trade or guns or what have you, powerful constituencies in the intensity of these groups bring to the political process can overwhelm all else. does president trump or the trump presidency actually change the fabric of american politics forever? mr. haass: that's the biggest question i hear when i travel. to what extent is this an aberration and to what extent is this a time-limited phenomenon and i think it's going to last. i think trumpism to some extent continues, maybe not in its tweeting form, but i think some of the forces that have propelled donald trump we see

around the world, the populism, nationalism, the opposition to immigration and concern about trade. the kind of things that propelled the brexit vote. i think the idea that after this we go back to the old world, i don't think that happens. published thiswe week at the council, you have new technologies and work is going to disappear. the mismatch between workers and the new jobs is going to be large. all of this is going to propel populism. i actually think societies are in a churn and trumpism populism is a real phenomenon. francine: who is a trump like candidate? does it mean that president trump gets a second term? rule it out.can't if the democrats regain the house represented as telephone could run against an obstructionist to do nothing democratic congress, which is a cois it becoming more anglo american, or is it the same old same old and they're going to be frustrated?

mr. haass: the most interesting element in europe is a guy in paris called macron. if they can transform that country, in some ways it used to be germany was the driver of europe but for the time being, that has shifted to france. the critical space to watch as what's going on there. mr. macron is going to be in the united states and the couple of days. francine: what is happening in france? he has a lot of popularity outside and i'm trying to go to paris and maybe bring tom along with me for a short holiday like every two weeks. general he'sn trying to do domestically are providing so much pushback, will this popularity wane? to thess: a way beginning and it has come back. he's got time. if he doesn't succeed, then what really scares me is the revival national and the

populism in france. whatever respite in europe and what goes on in france i think will have a tremendous impact on the future of the continent. tom: the respite is a president who has not tweeted for 18 minutes. mr. haass: we thankful for small mercies. tom: richard, thank you. joining us the other day as well. haass will join us on the radio, "bloomberg surveillance," on the radio. remarks on tax reform we will see in the 1:00 hour. from new york and worldwide, the president will speak. stay with us through the morning. mr. pompeo up on capitol hill. this is bloomberg. ♪

the commodities surge, oil prices breaking 7003 year high on bubbling risk in the middle east and confidently hawkish, the fed sees no downside risks to inflation and the ecb account is now on deck. actually true the first day of spring, is getting warm today. "bloomberg daybreak," welcome to "bloomberg daybreak," and we are finally getting more mother. alix: -- warm weather. alix: i'm not buying it. the markets not buying into movement here other -- either. the euro is weaker as the dollar is stronger against most g10 currencies. eurozone ip is rolling over in the conversation data has pizza the eurozone now, where do we go.

very key that ecb account