stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. >> deal. u.s. stocks surged to record highs as the u.s. and mexico make progress on a nafta replacement. anotherets on uber, half $1 billion investment as it looks to catch up in the autonomous vehicles market. prime minister theresa may says a no deal brexit can still be a success. the nasdaq above 8004 the first time ever. welcome to "surveillance."

i'm nejra cehic. the s&p 500 just short of 29 hundred. the equity rally is continuing in europe. we saw it in asia, as well. the stoxx 600 up some 200 -- .2%. -- .02%. trade dominating traders minds today. pesow the mexican strengthened yesterday. we are seeing weakness in this session. still some questions over those talks and what we get with replacement of nafta. also, the yuan of interest today because we saw a stronger fixing from the pboc. we are seeing more yuan weakness in the offshore, off by 1/10 of a percent. overall, a bit of dollar strengthen the session after the weakness yesterday. on bloomberg, we will bring the afteriew with the ceo 4:00 p.m. u.k. time but for now,

the first word news with taylor riggs in new york. still make u.k. can a success of brexit if it tumbles out of the european union without a deal. that is the message from theresa may as she heads to south africa on a five-day visit to the continent. speaking to reporters, she cited said last week trade was not going to stop if britain and the eu failed to strike a deal. contingencyeparing plans in the event of a no deal brexit. present ament will draft bill in the coming weeks to prepare measures such as facilitating the presence of british citizens living in france and ensure fluid frontier controls after the u.k. exits the eu. rising concerns britain may leave with no deal ready on time. adele u.s., wide receiver beckham, jr. has agreed to a five-year contract extension with the new york giants.

the deal is worth as much as -- guarantee $65 million in guaranteed money. it would make him the highest-paid wide receiver. toyota is expanding its alliance half a billiongh dollars in investment and off on his vehicles. it values uber at about $72 billion and will see toyota making minivans equipped with bloomberg's self driving technology -- uber's technology. the white house returned its flag to half mast yesterday afternoon following criticism of donald for ending the tribute to the late john mccain one day after he died. the president said in a statement "despite our differences on policy and politics, i respect senator john mccain's service to our country." he added that he ordered them flown at half staff until

mccain's funeral. global news 24 hours a day, on-air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. taylor: thanks so much. let's talk trade. the u.s. and mexico are pursuing a new accord. president trump has called on candida to get on board or risk being left behind. terminate the existing deal. when that happens, i can't quite tell you. it depends on the timetable, but i will be terminating the existing deal and going into this deal. we will start negotiating with canada relatively soon. they want to negotiate very badly, but one way or the other, we have a deal with canada. it will be a tariff on cars were a negotiated deal. nejra: joining us from hong

kong, jodi schneider. great to have you with us. walk us through the terms of what has been agreed so far in this replacement for nafta. among the terms is something they were having trouble negotiating, but it is looking at the content -- regional content of cars. they would have up to 70 pratt -- 75 percent regional content, which is something mexico and the u.s. want. this would not be a bilateral deal -- this would be a bilateral deal and not a regional agreement unless candidate agrees to join. at this point, it looks like some of the replacements for nafta, but only two countries. large does have some disagreements with what the u.s. has wanted on trade, so we will have to see what happens now, whether canada joins or doesn't.

if it is a bilateral agreement, it will need to go back to u.s. congress and that could be tricky and election year. nejra: right, so a lot of questions over the possible replacement for nafta but what this means between the u.s. and china. what did we learn on that front? seemsyes, on one hand it the takeaway is that president trump can make trade deals. he did say in discussing the deal with mexico that he was not ready to negotiate more with china. for a deal the time with china and frankly, making a deal with china would be much more complicated on the trade front. so it doesn't look like that will happen right now, but again, a takeaway is that he was able to come up with a trade agreement with mexico. -- negotiators had been in the u.s. talking about trade last week but left without any visible kinds of

progress and they have continued to up the ante on the tariffs. $15 billion in tariffs on each country's products went into effect last week even as they were trying to talk about trade. senior national editor jodi schneider, joining us from hong kong. theing us for the hour, global market strategist at jpmorgan asset management. thank you for joining us. we just heard the latest in terms of u.s. and mexico. what does this mean for a chip -- deal with china? is goodbroad sense, it news there are conciliatory efforts and commitment from the trump administration and even trump in the way some communication has been done, they want something done with mexico and possibly canada. that is good news on a broad basis. i would separate the relationships with mexico, canada, and the u.s. and china because there is more at stake with global dominance, rising

chinese superpower, all of that baked into the discussions. intellectual property is an issue versus mexico. many different issues at play. it is not over yet for the china-u.s.. nejra: if you see progress on the nafta front, does it make you wary trump could take a harder stance on china? nandini: it is difficult to say how the negotiation may be affected one way or another but in a broad sense, if markets were worried about trade talks escalating into full-blown wars, this is one sign there is a cooling off period and one part of the trade space will still be another good example of that was the european discussions this summer which came down to a conciliatory almost non-issue. nejra: on that note about markets, i have a chart showing

speculators new record shorts on risk protection on the safe haven assets. gold, 10-year u.s. treasuries, the vix. does this tell you markets are underpricing trade risks or fairly priced? trade pricing is difficult to pinpoint and if you separate that from macro fundamentals, earnings season very strong across the summer european companies and for the macro picture, that may be warming up in europe. some hitting the mark pmi's and other economic data. there isn't a big reason for markets to be completely risk off or anti-risk at the moment and white people are getting more confident about potential growth for the second half of this year into 2019. i wouldn't say there is something necessarily wrong. safe havens are another topic of conversation that will take a while. were the safe havens going to be safe in the future?

gold is not a safe haven assets all the time. it has gone down 40% in the matter of a few decades. thinking for our clients is alternative asset classes rather than the traditional safe havens as you show on the chart. taylor: --nejra: on china, it has had to put deleveraging on hold because of trade concerns. nandini: there is more behind the scenes in china to shore up system, so banking not a lot of reliable data for us to externally track nonperforming loan reduction or how the state owned enterprises are getting better balance sheets, it seems like the authorities there do have many levers to play with and are playing with some to stabilize china in this trade talks discussion but do have other tools to deleverage appropriately and make the banking system stronger there. from: nandini ramakrishnan j.p. morgan asset management

stays with us. let's listen to theresa may speaking at the moment. >> as his election not as a victory of party, but of people. of the power of democracy, and the necessity of unity, equality, of universal rights. he spoke of the need to transform not just the culture and politics of south africa, but its economy too. of his desire to change south africa from a country in which the majority lived with little hope to one in which they can live and work with dignity, with a sense of self-esteem and confidence in the future, building a better life of opportunity, freedom, and prosperity. it was a bold vision. by shared and not just millions of south africans, but hundreds of millions of people across the world. -- his unlikely

journey took a different route than nelson mandela, yet like your former president, his impact, influence, and values spread well beyond the borders of his beloved homeland and like nelson mandela, the world is a poorer place for his passing but all the richer for his legacy. the life stories of these two great men encapsulate the ebbs and flows of history. they demonstrate how much can be achieved over a lifetime, but also the fight to secure our gains is confident. mandela was born in 1980 with the world on the brink of peace with a war that was meant to end all wars. the dreams of a lasting peace were about to be shattered

once again, claiming millions of lives, including many from this continent. thiss in the aftermath of that the united nations, the annan would goat on to lead was founded. global cooperations established in this period have delivered great gains for developments. it was at the same time that independence movements of a generation of new nations took on a renewed urgency. ,eople across the world constitutions were written, and countries were born, and the embrace of free markets and free trade, which accelerated further has the end of the cold war acted as the greatest agent of collective human progress the world has ever seen. in those countries that have successfully embraced, properly regulated market economies, life

expectancy has increased and infant mortality has fallen. absolute poverty has shrunk and disposable income grown. access to education has risen and illiteracy has plummeted. technology has transformed the lives. progress we have made over the past century is remarkable. the opportunities for the next generation, even more so. promise,liver on that we need to recognize new challenges. as war and state-based conflicts have declined, it is being replaced by new threats. in the past five years, -- u.k. prime minister speaking in cape town, making a tour of the african continent. you can follow the rest of that speech on live go on the terminal.

for now, let's get the bloomberg business flash with taylor riggs. taylor: we'll start paying back investors in its frozen bond funds next month. returned 87% of the assets in luxembourg. it will pay 60% to 60 6% of the 66% of holdings in the cayman in australia's fund. this comes after winning approvals to start liquidating the strategies that were run by suspended bond fund manager tim heywood. week go private drama may have overshadowed signs of progress on the crucial model three. bloomberg's tesla tracker suggested production of the sudan may have exceeded the target of 5000 per week for much of the month. tool can vary the from week to week, but indicate tesla topped its 6000 cars goal for late august.

boeing is said to be in a delivery bottleneck with dreamliner. the blog says supplier problems are affecting at least six planes and production of two more are being paused. airlines concerned include , and shanghai airlines. the blog says hainan airlines has requested a delay in dreamliner -- and a dreamliner for air china is sitting in storage for unknown reasons. that is your bloomberg business flash. rose: u.s. stocks yesterday, driving the nasdaq above 8000 for the first time ever. indices reached record highs. still with us is nandini from j.p. morgan asset management. we saw the s&p 500 closed shy of the 2900 mark. is this the time to be paying up for protection against downside risk in u.s. stocks? nandini: that would be slightly premature.

toare thinking of how position portfolios for a changing environment for a u.s. growth story that is no longer positive, but right now, are we pulling off all our risk off the table? that is not yet the case. economic leading indicator in the u.s., the unemployment numbers coming out still showing the u.s. is in good stead. there was a lot of growth still coming. quitement intentions strong. these are very late cycle, but not and of cycle yet. somewhere in 2019 when the u.s. federal reserve raises interest rates to levels companies perhaps can't handle is when we think of recession risk being more probable than not. nejra: and interest rates that may be difficult for companies and u.s. equities. is that the 10 year yield at 3.5, four? ofdini: nearer to the level 3.5. i look on the shorter end of the care of to think of what companies can't handle and that is around three .5%.

doing the math in terms of how many interest-rate hikes are expected, we get to the end of 2019 where we are at the pinch point for companies were leverage may be too high. that service ratios will not be favorable for companies to handle. nejra: from here, do we see a slow grind higher or do we see sharp moves higher? seeini: i think we could sharp moves higher. historically, if you take the last six or 12 months of an equity bull market, there are nice juicy gains that often do come through. play, whichssue at we touched on already is there is exogenous risk like trade tension that could scoffer the nice economic growth and end what companies are providing in the u.s.. positive gains should be accepted with a pinch of salt. looks atis chart buybacks and compares the nasdaq buyback achievers index, companies purchased 5% of their chairs in the last 12 months with -- compared with the s&p 500.

have dropped 14% from a record set in april 2015. is the by backstory a little done and going to provide less support for markets from here? nandini: the chart would suggest so. taking a step back, what companies prove his they have extra capital to use. yes, those are good signs for companies and you would expect stocks rally on a technical basis, but also the fact the company has got that capital to use, but the broader picture is where the companies are delivering earnings and where the companies that are giving us the strong fundamentals, margin expansion, rather than just focusing on the buyback strategy, which is specific for some of the investors we speak to. nejra: nandini ramakrishnan from j.p. morgan stays with us. next, toyota raises its bet on autonomous technology. a further half billion dollars in rail -- uber.

will it be enough to catch up in the race for autonomous cars? this is bloomberg. ♪

nejra: economic x, finance, politics. this is "bloomberg markets: the european open." ." toyota is investing a further half billion dollars in uber. it values the company at $72 billion and underscores efforts to catch up on self driving technology. for more, bloomberg's asian auto sector reporter. great for -- great to see you.

tell us what we know about the pact? to start atcheduled around 2021. a little bit further on the horizon. what is going to happen is toyota is going to build minivans, which incorporate uber's autonomous driving technology. that service is

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japanese automaker to catch up on self driving technology. on bloomberg.com, india may become the fourth nation to mission, man space with a three person crew, following in the footsteps of the u.s., russia, and china. theresa may signals a no deal brexit is not the end of the world. a second beneficial questions at the time is different for the yield curve. trump says a mexico trade deal will replace nafta. let's get the bloomberg first word news. trump. president donald said america is pursuing a new trade accord to replace nafta, and called on canada to join the deal soon or be left out. he announced the agreement with president. mexican

the next can president said he is hopeful canada will be incorporated in the revised agreement. trump commented on the trade war with china. wants to trump: china talk. it is not the right time to talk. tooas been one-sided for many decades. it is not the right time to talk. eventually, we will work out a deal with china. returned itshouse flag to half mast. the president said in a statement, quote, despite our differences on policy and politics, i respect john mccain's service to our country. flags to be at half mast until mccain's burial in annapolis, maryland. francis preparing contingency

for a nopreparation deal brexit. i draft bill will be prepared including measures for citizens living in france, it underlines rising concerns that brexit may have no deal on time. receiver odellde beckham has agreed to a deal with the new york giants, worth $95 million, and includes $65 million in guaranteed money. that will make him the nfl's highest-paid receiver. global news, 24 hours a day on air and at tic-toc on twitter, powered by 2700 journalists and analysts in more than 120 countries. this is bloomberg. nejra: thank you. prime minister theresa may has struck an upbeat town about

leaving the eu without an agreement. she told reporters at can make a success of a no deal brexit. last week it was said that a failure to secure deal would cut projected economic output and an 80 billion pounds by 2033. is a may write to remain optimistic? bloomberg.now is and nandini lalita ramakrishnan, global market strategist, jp morgan asset management. is theresa may being too optimistic? >> if you look at the policy of her government, it is to stay close to the european union, and that is what the deal set out has upset so many people in her party. that is presumably she believes the analysis she set out earlier in the year when she said

staying close to the european union was essential to britain's economic prosperity. she cannot say that all the time because she has to keep her party onside. , it is ant today relative use of upbeat when you say, not the end of the world. there are more upbeat things you can say. as a back fromt the holidays, has to say something to keep the brexiteers . they love that. it has gone well with that wing of the party. nejra: we heard france is preparing for a no deal brexit. are those contingencies happening in the u.k.? >> yes. this is the other thing. hammond'shilip comments, and i deal brexit would hit the gdp. the brexit secretary was more

upbeat. he was in his speech more upbeat chancellor. he referred to comments of the documents he was publishing alongside that speech. it set out all of the ways a no deal brexit was bad. reading through this document, you cannot come into paragraphs that say the eu will do something, because we cannot do anything about it. that covered in financial transactions all sorts of things that people take for granted. fromlthough the rhetoric may is upbeat, if you look at what the government is doing, it does not look good for no deal. that, jpeaking of morgan in its outlook a says a brexit deal is likely why the end of the year. is this in goods and services? nandini: in general, we think there will be workaround

solutions. we start with the goods as a base case, and some kind of working for services will come to fruition. our base case is if there is a soft brexit, the sentiments over ae past week, whether it is relative positivity or not the end of the world statement around no deal, it is part of the negotiations. you cannot have an extreme statement about the eu and a conciliatory deal is the only thing the u.k. can survive, if you are going to negotiate, you have to have cards you can play on the table. our general sense is we will get something through, and in the course of negotiation, the u.k. economy is included in our clients'portfolios. nejra: you do expect more hikes from the bank of england. nandini: the u.s. growth picture is stronger than the rest of the world which makes us lean to the u.s. and the emerging markets.

and a long-term play for china and southeast asian economies. neutral in the u.k.. sectorst want to take on small-cap because of the two sides of the markets. when sterling is highly valued, mid-and small cap outperform the ftse 100 which is a large cap. and sterling has proved itself, we want to take a more neutral sensitive tore pound pricing. nejra: theresa may in south africa at the moment speaking. a couple headlines coming through, saying the u.k. remains committed to spending part of gdp on aid. what is theresa may trying to achieve? one of the other things you can do around brexit is you can say we are interested in the rest of the world.

that is the other article of faith. if you want to go out and be a global trading nation, the u.k. does trade with africa via rules already, and there are eu deals in place with africa. minister, theyme go to africa periodically, and it is probably just that. she is hoping to create the impression that britain is open and out there, and there is a world the on our borders. written does a huge amount of trade with the european union, and a small amount with africa. if it were to double it next year, it would do a small amount of trade with africa are relative to the amount of trade with the european union. geography really matters. your inside knowledge of u.k. politics, are we going to see it brexit deal

by the end of the year? [laughter] >> i do not know. upyou were trying to set doing a deal, you would have september, the point where everyone is not know what will happen, and then they sit down. i think both sides want a deal, but there are lots of ways the deal could go wrong. i would recommend everyone play out an excellent brexit game available on the website. you can see how things can fall apart in parliament. nejra: absolutely. that is a fun one. thank you to robert hutton, bloomberg political reporter. and nandini lalita ramakrishnan, global market strategist, jp morgan asset management stays with us. >> will we see a fourth month of slowing growth in china? this is bloomberg.

♪

nejra: this is bloomberg surveillance. i am nejra cehic in london. china'sdicators show economy we can for a fourth month as demand from trade partners lost steam. limitary indicators on market sentiment, it highlights the pressure on the government to push through its progrowth policy. still with us is nandini lalita ramakrishnan, global market strategist, jp morgan asset management. we have agricultural bank of

china talking income at -- earlier, when we mentioned it, you were not over concerned about deleveraging. you like china at the moment. why? nandini: amongst the em complex, china has that are positioning in terms of vulnerability and current accounts, less external debt to pay to the rest of the world. it is the demographic change that is the long-term picture. a middle-class that wants to spend and is buying goods and services within china's borders and outside china's borders, sharing their wealth across the world. china does stand out as a country with companies that cater to the demand forces rather than using the export led and driven areas of growth had in the past. nejra: i have a chart that shows softer data ahead. that declining china credit impulse is signaling that emerging-markets will be less

impressive. are you more concerned about a slowdown in china? nandini: the slowdown from china is to be expected broadly, although they have taken a pause during trade talks. they are reducing the open buffet of credit, and pumping money into the economy as they have in the past. you expect credit to shrink in that sense. if it shrinks to an a drastic degree, you be concerned. you are seeing that across the board. i am less concerned about the rebalancing from investment led to consumption led in the gdp numbers and the data in china, that was the plan anyway. that is not a concern to us as much. contagion risks like turkey and em's that are in the doldrums struggling with political risk and external vulnerabilities, for their own nations the contagion risk is slower.

especially the large capital markets, the small part of the msci or broader indices to the likes of china. china doing well is more important to the broader complex than specific countries. nejra: is this the right time to buy em? depends, if you are looking for the next 15 years of strong capital market appreciation, e.m. is at the top of our rankings for euro and sterling-based returns. emerging markets and equities are at the top. if you are looking for a long-term play, it is the way forward. nejra: is that em as a basket or would you be more selective and look at asia em or those -- nandini: asia em does stand out. em equities stands alone, but within that, the area with

stronger demographic play, not just china but parts of southeast asia that have underdeveloped and newer capital markets that over the next 15 years might have companies listed and will grow in the global presence. nejra: we have seen weakness in today's session despite the stronger fixing in more than a year. do investors overreact when we see weakness in the yuan? nandini: it is the frame of reference to are looking at, if you are looking to boost her exports, a weaker currency would not be valuable in that sense. think it is understanding that authorities in china have a close eye on what is going on. they will use the tools they have to fix the pricing of the yuan. every time it happens, it is sometimes an overreaction by the market. china is still growing well, authorities have their finger on the various pulses they need to be doing.

that stands out to us in emerging markets. in the long-term, it should deliver. nejra: nandini lalita ramakrishnan, global market strategist, jp morgan asset management stays with us. iphone is set to stick with its iphone x screens. we will talk about what it means for the tech giant strategy next. this is bloomberg. ♪

nejra: economics, finance, politics. this is "bloomberg surveillance ." just wrapping up her speech in cape town, south africa before she goes to nigeria and kenya later this week. may is to discuss south african land reform plans, and may be supporting transparent, legal south african land reform. here is taylor riggs in new york. >> toyota is expanding its line with uber with $500,000 of new vehicles. $72 billion, toyota will make minivans equipped with uber self driving technology.

frozen bond funds, initial returns 74% of assets in luxembourg in irish domicile funds. inwill pay 60% to 66% australian funds. this comes after approval to liquidate the strategies run by suspended manager. havemusk, the drama may overshadowed progress. all-importantthe sedan may have exceeded the target of 5000 a week for much of this month. estimates vary from week to week, but indicate tesla may have topped its 6000 cars a week goal for august. boeing is said to be in a delivery bottleneck with his dreamliner.

the 787 supplier, problems are affecting six planes as production is being paused. airlines concerned include united, and shanghai airlines. one airline has requested a delay. is your bloomberg business flash. nejra: thank you so much. apple is sticking with the design for future devices. bloomberg sources say the company is working on three new iphones that keep the edge to edge screen. them will be new designs with more significant changes planned for next year instead. nandini lalita ramakrishnan, global market strategist, jp morgan asset management is still with us to talk through the tech sector. now, nasdaq above 8000 for the first time, are you positive on tech? not to use the

emerging-market framework, in tech there is dispersion in terms of valuation. propositionvalue and growth projection, it will be a case-by-case basis if we like certain tech buddies versus others. in terms of the broader thematic discussions, can specific tech companies capture broader audiences and revenue streams, getting into emerging markets, can they rights, access various parts of the market, not just the u.s. and europe and develop markets? and can products be lived up to in terms of new products. do consumers continue to be as excited going forward? it is keeping things fresh for the tech sector that we like. in terms of the u.s., there are expensive tech companies, and those of the ones we try to stay away from because we prefer to

stick to those stocks that offer good value. overall, there are exciting stories you mentioned already. nejra: i am glad you brought up valuations. if you look globally, what part of the tech sector provides any value? is stayingthink it away from the headline names so companies we are familiar with our supported by upstream parts suppliers, people making the chips and specific technology, and ideas about programming, as with ai and machine learning, that is why we think looking at the coverage research, and of where these producers are that are feeding into the broader tech story, and those are in emerging markets, not just the u.s. and developing world. your chip producers in southeast asia may be the next term. nejra: we were talking about

toyota and uber, are you interested in the autonomous driving space? nandini: from abroad multi-asset point of view, it is not a sector or segment big enough to run a lot of analysis on, but in terms of the future, it combines big ideas with long-term and long-standing industries of automakers. the technology, as the population -- combining those could be -- and there are various companies that are programming and doing the research. that might be of interest as well. from a personal business, certainly something to get excited about since i cannot drive. nejra: me neither, we have something in common. what are you excited about? nandini: possibly the european recovery, the second half of the year could deliver. also excited about the emerging-market complex and countries that can survive to the end of the year and prove to

us and emerging-market are in a better position than 2013. nejra: thank you very much, nandini lalita ramakrishnan, global market strategist, jp morgan asset management. another headline from the bank of china, first-half net income billion yat 109.1 uan. guy johnson will be in the seat, and we will be talking from the u.k. this is bloomberg. ♪

tom: this morning, the dow jones industrial average again at

26,000. it is a bull market. you need courage to participate. the president of mexico, he has outlined to the president. the prime minister of canada on hold. president trump does reality show trade deal. half-staff,. , and back to half-staff -- and backf, full-staff, to half-staff. guy johnson, francine lacqua is off today. someone dies in the u.k., and they do the half-staff, right? period whenas a this was a huge controversy over whether the queen would fly the flag's over buckingham palace or

at some -- windsor half-staff. tom: interesting. justin trudeau agreed to continue what were called productive conversations entree. the two spoke after the president announced a new trade deal with mexico that would replace nafta. the president called on canada to join the deal soon or risk being left out. north korea has warned the u.s. that denuclearization talks are at stake again and may fall apart. mike pompeo abruptly canceled his trip to north korea. theresa may is signaling that a no deal brexit is not the end of the world. she told reporters on a plane heading to africa that the u.k. can still make a success of

brexit it leaves the european union without a deal. lastly, the chancellor of the exchequer said a no deal brexit would add to government borrowing. house reversed itself and lowered its flag to half-staff following criticism one day after john mccain died. trump ordered flags in the u.s. to be found at half-staff until john mccain's burial sunday. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. tom: thanks so much. equities, bonds, currencies, commodities. hello. futures are flat today with a little lift. the curve is unchanged. on to the next.

screen with oil on the left. -- a lift. only turkishnot lira, but very quietly the german two-year yield is less negative. that green should be read on the screen. two-year is a little less negative than it has been. gap we still have a massive between it and the u.s. two-year. that continues to suck money out of europe and into the u.s.. we had some negative consumer confidence and business confidence data out of italy. it speaks to a problem we have in italy. undy yielu the b -- bund yield to highlight what

is going on. the ftse is trading up 0.3%. up dax absolutely flat, 0.1%. know on ao people trend where they are going? let's take a gander at turkish lira. very weak turkey. here is the churn. how do you get a target? here are two moving averages. these are famous moving averages. this is two standard deviations. it is 6.85. that is my target on lira with room to move to come back to this point, weaker turkish lira is one way this could go. guy: absolutely. that has been a trend of late. diversification is something that is essential on it comes to

a portfolio. you need to diversify. you don't know what is going to do over the long run. this kind of disproves this theory. this is the blue line, the s&p 500, and the white line is the rest of the world. to be honest, diversification has not worked very well over the last few years. you probably should have said japanese equities, folio. would have told you. tom: that's a great chart. guy: not so much. by the u.s. has worked very well. let's talk trade. it fits into the story. president donald trump said it is not the right time for trade negotiations with china, denting expectations for a deal after an agreement between the u.s. and mexico. our international and miranda carr, i

and jamesrnational, bevan. the president does not think now treetopsme to resume with china. -- trade talks with china. >> no one had any great expectations for the trade talks . it has been pushed by both sides back to some movement may be by november is possible. the next issue will be what happens in september when the att $200 billion gets pushed 25%. you could expect reaction from china, and the whole thing becomes the nasty. guy: what does this mean for me if i am investing money? >> we should continue to focus on the u.s., not because of

politics but because of corporate earnings. corporate earnings remain immensely powerful supported by president trump's tax cuts and deregulation and because u.s. companies are some of the best in the world. terrific, you have a essay on china. what blows me away is the chart you have on demographics, baby dynamics and such. if i look at arbitrage between the u.s., mexico, and china, within your reporting, this is a different china in 10 years. how will it be different? s great natural resource has been its people. it still is. 1.4 billion people. there was this massive gain to be had for productivity just by moving people off the land into the cities and more productive work. that urbanization is coming to

an end. size ofame time, the the workforce is already starting to decline. the workforce is aging. the population is aging. according to you in estimates -- u.n. estimates, by 2023, the absolute population will start to decline. arbitrage that morgan stanley made famous, where do we stand right now with the labor arbitrage between asia/china and mexico? who is winning that battle? >> so far you have to say it is china. one of the interesting things to recall as we think about donald trump began this trade war in part because he was concerned that china was being helped to eat the lunch of the u.s.

one thing to recall is that china in gdp per capita terms, mexicans are still a little richer than the chinese. guy: if we think about what happens next with the trade war. china has aspirations to be a superpower. in mark'sointed out piece about the 1940's and 1950's, having global power. are we judging china and looking at it through the prism of donald trump and the trade war's incorrectly? what we should be focusing on is projection of power, and that is not going to be done through aircraft carriers or trade, but it is going to be done through ai and technology. we are at a point where we are trying to judge china based on past metrics, but we need to look forward and understand where it is going. >> exactly.

there are key areas where china wants to take the lead. having relied on u.s. and european technology for many years -- you think of the ev p ush, the ai push, there are still crucial sectors like semiconductors where they rely on western technologies. you need to learn to run before you can walk because you need to build up technological background experience and trying anything out before you can take the lead. this is where the trade has just thrown into sharp focus the limitations of both china's global reach plus its reliance on the u.s. tom: what does china want out of this fractured nafta process? we observed yesterday and through surveillance today some andhe sharp comments

criticisms of what the president has done. bring up the morning must-read. essay of mathin ess, way too much math for this early in the morning. it should not be that surprising that this deal is more limited than at first appears. mexico is scarcely going to agree to devastate its domestic industry to please president trump. if washington can sell tweaks to existing tweety's as historic victories that merit a ratcheting that of global tensions, that's good news for the other seemingly intractable trade disputes rumbling around the world. this goes straight to china. what has china observed after the last 24 hours with nafta? >> there are a lot of similarities. initially, china hoped you could move somewhat on the trade deficit or opening up, but in

terms of what the u.s. is pushing for, it seems to be much more aggressive and a bigger picture, trying to remove chinese dominance or potential dominance in key sectors. interesting response from china announceds they have they will open up the financial sector. that is one of the key commands. morgannted to get jp into china as quickly as possible. they will also hold up the currency. dismiss thetrump and said we don't want to do anything in the next few months, china is taking steps to keep these talks going and not completely breakdown. tom: this has been a wonderful discussion. it is what surveillance is about. bevan withr, james us as well. bevan sinceto james

i have been in cash since may. thursday, an important conversation with mr. buffett of berkshire hathaway. important questions for warren buffett as he faces 2019. stay with us. this is bloomberg. ♪ ♪

tom: -- taylor: this is "bloomberg surveillance." private equity firm apollo global management has agreed to buy aspen insurance. the price represents a 7% premium to ask is closing -- aspen's closing price yesterday.

china's restaurant review and delivery giant is now gauging investor demand for an ipo in hong kong. bloomberg has learned a stock offering could raise more than $4 billion, evaluation of up to $55 billion. toyota is betting that a partnership with uber will help you catch up in the race to develop self driving cars. the japanese automaker is investing $500 million more in the ride hailing service. as part of the deal, toyota will build minivans loaded with self driving technology. tom: thank you so much. it is time to pause at the end of august and look at an article that will stop you dead in your tracks. whoever you are, economist, someone on global wall street, thank you for watching surveillance, we need to do is read this on the pacific rim

today on the inventories of technology across asia. it is a brilliant article. this is the fine print now. this is what the pros like tim kopin look at. this is called the cash conversion cycle. it is ugly in asia. simply inventories have blown out. stockpiles are huge. the cash conversion cycle, our backup point of crisis, translate. tim: basically, i was looking at foxconn numbers a few weeks ago, and their inventories grew. comparing year on year, not quarter on quarter. i am thinking, what is going on here? i looked at apple, their major client.

i look at other companies, lenovo, intel. across the board, inventories are on the rise. cash conversion cycle is one way to look at it. you look at, we are seeing rising levels of stockpiles, and we know that the tech hardware industry is not growing like it used to. we are seeing a slowdown in revenue, but stockpiles are rising. tom: is it interesting history, or is it about asia gdp, u.s. gdp, etc.? >> it is global. apple is a global company. foxconn is a global company. intel, global chipmaker. samsung is among the companies i have analyzed. they make components and final device. it is everywhere. guy: who is not buying the devices? i look at u.s. consumer spending, and u.s. consumer

spending is pretty high right now. i assume it is someone else. my right -- am i right? >> we are seeing a slowdown in the smartphone business. the pc market has been slow for a while now. themselves,anies apple and samsung and everyone else over buying? are they stockpiling and hoping they can sell it next order? have, this concern i mismatch between revenue growth and stockpile growth. guy: where does the value lie in any given device? where is the value? the way i look at it is gross margins. it is the cost of goods sold less taken away from the sale.

apple is putting a lot of value in with r&d and market. the chip industry does so as well. arm, qualcomm, that is where your value is. tom: thank you. really original work, spectacular charts as well. we will continue with the dow at 26,000. james bevan with us as well. an important conversation on nafta. stay with us. this is bloomberg. ♪

guy: let's continue the conversation about global inventories. james bevan of ccla is with us. james: i would observe rising industry in diverse areas such anduxury and cosmetics global trade has been confused. the value of global trade continues to come up. if you take out the inflation component of global trade, the volume trend has been flattered. i think manufacturers anticipated a stronger cycle of demand growth that has actually occurred. that does not mean we are heading toward recession. it just means a climate of lower but sustainable growth. guy: where is it priced in? james: there are exceptional pockets of value, european car manufacturers, bmw will

positively surprised in years to come. banks are the sector that investors love to hate. ofook at the value santander, global bank franchise in latin america, and i see a company that is too cheap. tom: i think david herro would agree with you as well. in the next half hour, can you acquire shares today, or are you reticent about being in the markets? james: i remain unequivocally bullish because i believe global growth will continue unabated. i don't think we are headed toward recession. i think bond yields will stay low. the fed will tighten slowly. earnings are everything for the s&p 500. i'm looking for $162 of earnings this year, $172 of earnings next year.

we will dive into this in the next half hour. purves is looking for a lift in his forecast of the s&p 500. this is your habit for september. you can come in here as a bloomberg user and pick charts and port them over to your terminal to look smarter through september. this is a great function, years in development. we are thrilled to bring it to our terminal users. gtv . guy johnson, stay with us. this is bloomberg. ♪ ♪ xfinity mobile is a new wireless network

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included with your internet. plus, get $300 back when you buy a new smartphone. xfinity mobile. it's simple. easy. awesome. click, call or visit a store today. tom: "bloomberg surveillance." i am tom keene in new york. we will get to equity markets in a moment. guy johnson is trending on trending.

what do you have? guy: let's trend further into the bloomberg universe. bloomberg, toyota is investing $590 further in uber. in uber.illion further the world's second most populous nation plans to send a mission to space. theresa may signals no deal brexit is not the end of the world. she has made these claims down in south africa. whether this time is different for the yield curve and the inversion, and trump says a mexico trade deal to replace nafta and cause canada to join or risk being left out. you can find all of those on bloomberg.

let's get a first word news update. taylor: president trump has called on candidate to join the trade deal that just agreed to with mexico or risk being left out. the white house says the president and canada's prime minister justin trudeau have agreed to continue what were called productive discussions on trade. there is a report that paul manafort was hoping for a deal before his second trial next month. the wall street journal says manafort's lawyers have talked with prosecutors but could not settle the charges. manafort was convicted of bank fraud last week. courth carolina supreme -- court of appeals has ruled map iscongressional unconstitutional. the decision is likely to be appealed to the supreme court.

france wants to be ready if the u.k. leaves the european union without an agreement. the french government is preparing contingency plans for a no deal brexit. he would deal with issues such as border controls and the presence of british citizens living in france. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. guy: thank you. the u.k. can still make a success of brexit even if it tumbles out of the eu without a deal. that is the message from prime minister theresa may. she was speaking to reporters on her way to south africa. angela merkel will embark on a similar trip later in the week. brexit increasingly the middle of the distribution of outcomes? james: it feels like it is

getting more likely at the moment. there is a lot of rhetoric about no deal brexit as opposed to hard deal brexit. you should start by saying that what theresa may is going for now will be regarded as hard brexit two or three years ago. guy: expectations are being reset. >> absolutely. before the referendum, you could say brexit would leave the , thats and single market would be regarded as a hard brexit. this is now being regarded as a soft brexit. guy: that is hugely significant in terms of where we go next. anything softer than that will feel like soft brexit. i'm wondering how this process is taking place. -- that is this route is not the word. there is this war going on within the conservative party. overnight on the plane to south

africa, the prime minister said no deal brexit would not be the end of the world it this morning, someone joked to me on another journalist, that this would go from not the end of the world in september 2 people voted for the end of the if -- to ifober two we don't and the world, we will have betrayed the british people. stay in the customs union, which was quite a lot of the stories were quite open to on the 23rd 2016, is now something they will leave the party over. partly, this is a recognition that the reality of leaving the eu is if you stay in the customs union, you remain subject to a bunch of rules. vassal state stuff. that is the argument theresa may

has made ahead of the referendum. the interesting thing is dawning reality. those across the russian, it all comes back to boris johnson. will you explain to our global audience help mr. johnson fits into conservative thought within the united kingdom? guy: good luck. tom: i am waiting. james bevan, would you like to step into this minefield? >> i would like to. >> you try. >> mr. johnson is clearly a man of immense ambition and would love to be prime minister. i think he will roll the dice and have one crack at getting the top job. in terms of his strategy, he will certainly contest the leadership, offer an alternative to mrs. may, because this is his last chance. >> i think that is probably

true. a lot of this is about boris johnson and his weird they always been about boris johnson, who probably swung the eu referendum by advocating for brexit, and then nearly ran for leadership but did not run for leadership and spent two years as foreign secretary chattering away about how unhappy he was with way things were going. government so he could chatter more loudly from the sidelines. referendum, it was advocating what would now be a very soft brexit, and now he is advocating leaving without any relationship at all. that is about his own ambitions to position himself as a potential successor to theresa may. the caveat with boris johnson is he was favorite in 2016, and he did not run.

the idea that he will run this time, i always just say to people, if he did not run, it's not that he did not win, he did not run because his campaign manager morning the boris johnson was supposed to run decided he was running against him, you should not discount the possibility that boris johnson's campaign would again implode. abouthat do we know current membership of the conservative party? >> it is a closely guarded secret. it has been falling for two years. at the start of the year, it was estimated to be 128,000. that might be slightly out, much less than the labour party, which has several hundred thousand. members, hundred 28,000. i'm not be lowballing. be lowballing.

there is this idea of the blue wave, that we could see something similar within the labour party, former ukip voters rejoining the tories to maybe him as someone like boris johnson -- maybe get some like boris johnson. for are is a push leadership contest. i think there is a strong chance the conservative party as it is would vote for a hard brexit prime minister. some people say it would not. the membership of the conservative party is pretty brexity. it has always been pretty brexity. when we were constructing our brexit game, which i was have to plug when i appear, is that if there was a leadership contest, it will not go to the membership. it is supposed to go to the

membership, but this person who was not an insignificant figure in the conservative party said they were lucky time. it will just be sorted out among tory mps. the appeal of that is probably a timeline and partly tory mps not trusting their own party. don't rule that out. guy: given all this, is the u.k. investable at the moment? >> i think the u.k. has been a poor place. i would observe two areas of value. global companies space. it is a u.k. listed company. that means it is a u.k. company. in terms of domestic companies, i would be wary of utilities because the corporate agenda is still out there and really would be destructive to utilities. i see a company that is certainly capable of properly in a press -- property in a

post-brexit environment. tom: this has been a constructive discussion on mr. johnson and the conservative party. we will drive forward that conversation coming up on "bloomberg surveillance." herro, he isid long eu banks. the president this morning, he tweeted. ♪

tom: "bloomberg surveillance." the president on one of his

favorite themes, which is looking at -- this is a two-part week. -- tweet. google search results for trump trumpis have it best -- news have it rigged. fake seamen is prominent. fair mediator should have. illegal?l? -- they are controlling what we can and cannot see. this is a very serious situation. will be addressed. i am going to be direct. there are millions of americans that agree with the president on this. whether it is right or wrong, he has a substantial body of americans who feel as going back

to the beginning of the nation, it is about the urban east coast and maybe three zip codes of l.a. and san francisco, and there is everybody else not getting their fair share of news flow. guy: i have been trying to see the market reaction on this, whether the market believes that google will be affected by this. nothing so far. tom: i would not think so. guy: this is unlikely to be market moving. tom: i look at it as a culture war statement, something to be addressed with nafta. right with us is james bevan of ccla. market too be in the participate. ,ow do you find the courage james bevan, to be in the market at dow 26,000? james: i don't think it's courageous to be in a market

where free cash flow is in excess of the dividend yield. i am being rewarded to having exposure to long time growth in current cash flow. if it were the other way around and i was taking low yield and gambling on the future, that might be considered to be brave, but right now. tom: how do you dovetail optimistic view on the market with the set of policies we have right now? james: i think central bank policies are deeply important. the risk of aggression as opposed to a bear market, there is a real chance of us heading to october where we will see the federal reserve and treasury drawing cash out of markets. policy, of central-bank i expect steady as she goes, gradual limited tightening by global central banks sustaining

long-term growth. still arecession is long way off. guy: this is an incredibly u.s. centric conversation. if i am a u.s. investor in the dax this year. glasses on.o my i have done -5%. guy, bring up that great chart you had at the top of the hour. guy: it's there. tom: it's all about the u.s.. it's the only game in the town at the moment. this is all about corporate earnings growth. this is not about geography. it is which companies are growing earnings. there is a strong correlation between earnings surprise and stock price the room. we have to find companies that consistently deliver. in the u.s., we have had material advantages that have been conferred by the

administration, the tax cuts and jobs act, fiscal expansion, and the deregulation ever since the election. that has provided an environment that has been plain for all to see. other markets will get there. guy: when? the european economic cycle, with our 10 years on in one week from lehman brothers. they feel like they have never recovered. james: you have to be very selective. in the european banking sector, i look at santander. guy: that's not europe. james: it is not the european play. you have to have exposure to latin america at a depressed price. i will be buying bmw at current prices. they will deliver long-term sustainable value growth. have aose companies discount have to them because they are european? james: absolutely. i don't think that discount will

remain. ing have to pay to lost money at central banks because of the central bank lending system. germany plans nearly one trillion euros in target to, taken to italy and spain, and the commercial banks have to lost money with the bundesbank and pay money at -0.5%. everyone is saying the banking sector has no upside. if you are selective, i think it has considerable upside. guy: do we get to the point where the economic cycle in europe is strong enough that the ecb is going to be able to raise rates? the gap between the u.s. to have been year and the german to you and german two

-year is massive. james: is the dispersion of growth within the economy -- guy: what is the answer? james: i think it is ok. is the growth dispersion still huge? it is. it is not dealt adequately by a single monetary policy. we have unit labor costs in germany going down. we have continuing competitive advantages accruing to germany. tom, you will know that there are only three ways to deal with this, differential monetary policy, currency fluctuations, or fiscal policy. the fiscal policy problem is removed by treaty. bundesbank is part of the ecb, so we have single monetary policy. the currency is fixed. the only way to do with this is to and up with a single federalist european agenda.

tom: we are waiting for. ccla will come back with a spirited conversation on equity markets. your morning conversation, coast-to-coast, bachmann and karen moskow. radio london, good morning. bloomberg daybreak. terrific morning read. stay with us. this is bloomberg. ♪

taylor: this is "bloomberg surveillance." i am taylor riggs. a union has come out against t-mobile's proposed takeover of sprint. the communications workers of america says the deal would cost jobs, threaten competition, and may not speed up the arrival of advanced five g networks. both the department of justice and federal communications commission are scrutinizing the deal. global growth in the first half of the year because of investment gains and financial services at a time when some of the biggest players are selling

down to pay down debt. and $11 billion takeover of belgian insurer agea. sayswiss money manager gam it will start paying back investors next month. they stunned investors last month by suspending a bond manager over alleged lapses of due diligence. that forced them to freeze some funds. tom: thank you. let me bring up a deutsche bank chart for james bevan. we will look at santander in a minute. this is deutsche bank with the malaise of may this year. i assume that this does not include deutsche bank. does it? james: i would not want to hold deutsche bank. i think the bank has continued challenges in terms of having to provide nine to the bundesbank to support the system.

it is very hard to make series returns for its shareholders. how does europe, how does the european economy achieve a higher growth rate or a better growth rate than it has now with its banking system in the shape it is in? the u.s. economy does not need a banking system the way your does, yet -- europe does, yet they had tarp, they recovered. where do we get that? james: if we think about what the u.s. did after the global financial crisis to forge ahead, they did three things. they cut interest rates and dealt with the banks. europe has done that. they had expansive fiscal policy, and europe has been shot of being prepared to expand fiscal deficits. everyone has spending limits. as we know from the italian is is a of the system, it is --

criticism of the system, it is bad for short-term growth. withn came to the election a clear agenda of deregulation. tohas had a limited capacity college anything. tom: thank you so much. james bevan, we will see you at down 27,000. coming up, mary lovely will join us. martin schenker as well with what we observed in nafta yesterday. much more going on. we are watching turkish lira and the argentinian peso. stay with us. this is bloomberg. ♪

tom: the dow jones industrial average is 26,000.

it's a bull market. you are being urged to participate. the prime minister of canada is on hold. president trump does reality show nafta. less trade will be the outcome. the hotel room speaks of a nation's fractured grace. i am tom keene in new york. guy johnson is in london. i love what you said about the hour, the royal family of another time and place. this is something the world is watching right now in washington. this happened around the death of princess diana and the queen offers assistance to having the flags of half-mast. it ended up in half-mast because

the royal family realized the and groundswell of opinion grief. in many ways, at times like this is called upon to reflect on that. what he does and says is very important. tom: the message was conveyed yesterday afternoon. we've got presidential tweets up. you want to get those to you. they become messaging for the president of the united states. we had tweets on a fake news. we went over this before. i'm not going to go through it. do we have the latest tweet out? do we have that up yet? we will get to it. right now, let's get our first word news. taylor: president trump and justin trudeau will continue

productive conversations on a trade. they spoke after the president announced a new trade treatment with mexico. they called on canada to join the deal soon or risk being left out. north korea has warned of the u.s. that the denuclearization talks are at risk again. tot warning came in a letter mike pompeo. this was hours after he left for pyongyang. pompeo canceled a trip. theresa may is signaling a no deal breakfast -- brexit is not the end of the world. the u.k. can still make a successful brexit if it leaves the eu without a deal. philip hammond said it would cut economic output and add to government borrowing. theou were mentioning,

white house lowered his flight to half-staff after criticism. president trump issued a statement on the flag, noting our differences on policy and politics. he ordered flights to be flown at half staff until mccain's burial next sunday. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries, this is bloomberg. tom: thank you so much. i will try to do this with grace. we have a bull market, we will show the dow in a moment. a number of analysts are coming up with 3000 and above. tony dwyer reset about nine days ago. we have a stronger euro over the last two days. there is the dow. the german two-year is lesser a

negative yield. let's talk about what we've got on the side of the atlantic. you got an italian 10 year, we have yields coming down. the redre going down as and green arrows. it's the gap that the finance minister believes will cause this. the dax is a little flatter. that is pointing to a flat start of trade later on. tom: i want to show a chart here. this is trying to figure out where currency is going. this is the turkish lira with the blowout last week. trend,come back and this look at the two standard deviations, this is what professionals are looking at. we're not there yet.

this gives you a way to frame where it is. i love your chart today. guy: it's diversification. we are taught that it's something you need to build into your portfolio. if you take a look at what happens with the united states against the rest of the world, the blue line is the s&p 500, that's quite a gap. and if you have been long the united states, you've suffered in your portfolio. tom: yesterday, we try to get through the emotion of john mccain. thank you for the many notes. flags,e will go tweets, nafta. that sounds like a song from time and place. you have never seen anything

like this. the president tweets on search engines on google. i wonder how google will respond. casen: i assume that's the . i went to google and put in trump news. a foxrst thing i saw was news video report. news isgoogle displays controversy all not just for donald trump, but for all media companies. tom: ken prewitt i used to love talking about this. george washington walks into betsy ross and she's trying to figure out what the color of the flag will be. she has run out of fabric. with what we witnessed yesterday. if we can show the video of the flag coming down. guy: silently.

martin: it was a striking moment. donald trump doesn't usually back down from his positions. tom: this is the washington monument with the controversy all flight. they have been a great symbol of the monument. they have been it half mast. thank you john allen for bringing this to our attention yesterday. i'm going to go on to my morning must-read. guests,ions one of our from the peterson institute, the president can't kill nafta. the president of mexico said no fewer than four times in the called he still expected canada to be part of any final agreement. i am worried the main outcome is

changing the rules to allow us to trade less with mexico. the president needs to get back to work. that is the key word. this is got to move fast. martin: it's not going to go fast. there are a lot of complicated issues. mexico is more complicated than candidate, but the issue of dairy subsidies have been intractable for decades. trying to come to an agreement on that is not going to be easy. that they gorilla in the room is china. trump said yesterday that he didn't think even now was the time to start talking about that. this is not going to get resolved anytime soon. guy: the present tweeted again. he highlighted that the nasdaq has gone back to 1000. he is talking about google this morning.

how thehink about president sees the world this morning, he doesn't deal with mexico. markets rally. is that enough for him? martin: it seems to be something he likes to get, that feedback loop from the markets. he does deserve a certain amount of credit for the investing environment. that's a large part of his support among wealthier individuals. he loves that feedback loop. this is his market. he believes that's the case. and i look at all of this one of the key players on nafta, you and i know him from journalism. from your reading overnight, what needs to be the response of stronglyter mexico supported canada being in the

discussion? martin: they think canada would like to be included in the deal and be able to come out with a press conference and announced a breakthrough and call this the canadian u.s. trade agreement and just take nafta off the table. invented,hrase i've trump lateral. did we witnessed that yesterday? martin: i think we did. he cut his deal with mexico. the next day, canada is coming down to d.c. i think they hope to strike a quick deal. whether they will be able to do it is another question. as a deal between the united states and mexico bad for china? the president is taking the box. he is going through the list of things he wanted to do. time on notise more

doing a deal with china. martin: i think you're right. it should be alarming to china. and closes deals with our allies, you can hold off on china and basically keep them at arms length. he said that yesterday. he can put pressure on china to change their positions, which they don't have an appetite to do. tom: thank you so much. be company of insight with warren buffett. david westin in conversation with mr. buffett. that's on thursday in the 11:00 hour. stay with us worldwide. this is bloomberg. ♪

: let's get to the business flash. a private equity firm has agreed this represents a 7% premium. the closing price yesterday. private equity firm gain access to the premium income. they are betting they can generate higher returns. giants restaurant review is now gauging an ipo in hong kong. the stock offering could raise with aan $4 billion valuation at $55 billion. is betting that a partnership with uber will help develop self driving cars. the japanese automaker is

investing $500 million more in the ride-hailing service. there will be minivans with the self driving technology. that's your bloomberg business flash. tom: this is something we haven't looked at recently with all the emerging markets and the distractions of the global economy. will be talking about the dollar. we have a lot of fun at strategy as well. let's bring up the chart. gt inl get this out on just a minute. this is generally a stronger dollar. a lot of people don't know the room to move the dollar has. how strong is the dollar right now? speaking. relatively what we see is the tug and pull

between the fundamentals. interest rate differential, relative growth differential, investment flows, what people don't understand is with u.s. growth significantly outpacing the rest of the developed world and the u.s. with a lot more room to tighten, there's room for the dollar to go up without crisis. dollar,it's what the it's about speed and volatility. it's obviously much more likely to drop in. foreign exchange is a marketing can really surprise. you are looking at 10% moves within several weeks. that gets disruptive for companies reliant on larger international supply chains. good morning. stick a look at the spec data. the market is incredibly long dollars right now.

normally, the data matches the bloomberg dollar index. the dollar is going sideways and the market is incredibly long of dollars. how does that one and? this has been a conundrum for all of 2017. we saw interest rate differences, all of the things that typically support the dollar. it's not giving the dollar the benefit from the past. we saw a huge move in the opposite as the federal banks held interest rates steady at low rates. the u.s. gained more traction gaining rates. we did not see the dollar respond. there is some sort of global trepidation about the dollar. we have to respect that is not following demand.

this is the evening standard newspaper. this is all over the twitter sphere. we are working on the veracity. we have not confirmed this. it is out there with the bank of england and mr. carney remaining governor until 2020. is that a surprise as we await confirmation? guy: it's a little bit of an extension of what he would be doing. to wait untiling brexit gets done. he is not a favorite of the arch brexit people. , this is the softer brexit spectrum. maybe this is. tom: we are waiting for confirmation on this. it shows the shots that can come

in on the certitude of the we have right now. what is the shock you were worried about? lara: there could be anything from a trade surprises or emerging markets. we have had pressure in emerging markets from a wide range. in a moreat happens classic tightening cycle, even though the fed has been so cautious. we are still in a tightening cycle. that comes with inherent risks for emerging markets. is 6.21 turkish lira stable over the last 24 hours. we've got lots more to talk about. we are going to look at the nafta news through the morning. right now, these headlines are coming up. carneyk of england's asked to remain governor until

2020. you might see a little bit of weakness on sterling in the last few minutes. worldwide, stay with us. this is bloomberg. ♪

guy: guy johnson in london, francine has the day off. the u.k. could make a successful

brexit even if it tumbles out of the eu without a deal. theresahe message from may. she is heading to south africa. merkel will be to the region later. the language is changing. increasingly, hard brexit seems to be ok with a number of british politicians. as the moon changing in brussels? is the expectation that a hard brexit is the central case? ian: not the slightest, not in brussels. the european union and the european commission look on this with a combination of anguish and despair. they think a lot of this is politics. they think where the actual

agotiating goes on there is deal. theyblic, the statement is want a deal, everything they are doing is toward a deal. there are difficult things to get agreement on. at the moment, despite everything we hear in london, that is still the most likely option. that's not to say they are discounting the fact that everything might collapse. if you step away the politics, they think a deal is the most likely outcome. guy: has that deal that they imagine getting done become harder, or is it the same as it was six months ago, 12 months ago? shifting in the u.k.. has it shifted in europe? is it harder than it would've been before?

ian: time is running out. that makes the deal harder. as they told you half an hour ago, no deal is ok with a lot of brexiteers. that wasn't the case two weeks ago. we need to get agreement on what we always thought, that is mainly on the border with northern ireland. a deal looks more likely. tom: thank you so much. we greatly appreciate it from brussels. this is bloomberg. stay with us worldwide. ♪

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head to xfinity.com/stream to start watching. simple to rent, easy to buy, awesome to go. retail. under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. is dry and boring. we are trying to canvass the best thinking we can on the many different types of trade.

it's good to see chad. he has an essay in the washington post. there is wisdom here on trade and on nafta. i love what you say in your latest note, that you are surprised the president is against nafta. that's a good starting point. why does that surprise you? it has done great things for north america. now, the president is a big supporter of a revised nafta. this is basically nafta with some additional trade restrictions. this tries to incorporate some water down version of the transpacific partnership. he is recycling material and embracing policies he criticized

in the past. he is adding more trade protection. tom: what would you look forward with the talks with canada today? i thought it was interesting, the president of mexico four times in the conversation brought in canada. what would be the dynamic you would watch for between them? mary: if we don't hear anything, they are getting down to negotiating the remaining changes. if we have announcements early on, they will be announcements that they are having trouble reaching an agreement. the timetable here is extremely short. they want to have an announcement by friday. a lot needs to be ironed out. guy: it's a zero-sum game. if we get deals done in north america, are we further away

from a deal with china? mary: one of the big things is not just china, but the national security case on auto restrictions. changes beingthe made under the agreement with mexico last night, they complicate business operations for automobile makers in the united states. there would always be the option to say where not going to do that, we will pay a tariff. if that's all it's facing you if you don't conform to the rules, they don't really have teeth. let this deal is signaling is the administration will go forward with a 25% tariff on autos. we have some very important trading partners. it's the beginning of a whole

new can of forms. just to backtrack a second, a 25%more likely we see tariff on european cars being imported into the united states. mary: yes. it only stands to reason, jumping through all of these hooves will only be worth it if you are avoiding a large tariff. tom: i've got this phrase trump trump lateralrd yesterday. bilateral or ay trilateral discussion? lara: it's been a bilateral discussion over the last few weeks. the question is does trump have the authority to goal -- go ahead with the bilateral. to avoidoid having that question of canada signs on

before the and of the week. tom: you listen to marry on the ?rades, what does that do it's got to put an impulse to dampen gdp. lara: to me, the biggest concern is consumer sentiment. inflationary impact, it's hard to crystallize a number. v%, what the impact could be significant. i feel like at the beginning of the year we were going to put tariffs on everybody. that's been walked back. i'm interested in mary's perspective. down in theto back face of business. is at a greater certitude right now?

know what the endgame is here. this is the administration that enjoys tariffs. we have the second largest exporter in the world, i don't think american businesses need that. there are going to be losses here to the u.s. economy. there will be winners and losers within the american economy itself. we saw yesterday increases in stock prices for some of the auto manufacturers. manufacturerso who can't meet the $16 per hour wage requirement, the business complexity goes way up. none of that is good for business. it's not a zero sum, it's a net loss for the u.s. economy. do i buy or sell the dollar? if i believe what mary is

saying, is that a positive or negative? people by the dollar when things are going well and they buy the dollar when things are going badly. i don't see a clear dollar impact from this. there is no doubt that on the gdp side, the trade restrictions do put gdp at risk. there is a problem in calculating the number. elections,erm tariffs are a place where trump can act unilaterally. agreements require congress. tom: mary, thank you so much. we look forward to your next essay as nafta unfolds. in new york city, here is taylor riggs. taylor: france to be ready if the u.k. leaves the eu without an agreement. the french government is

preparing contingency plans for a no deal breakfast. -- brexit. there are reports of paul manafort was hoping for a deal before the trump campaign chairman next month. manafort's lawyers of held talks with prosecutors, but could not settle the charges. he was convicted of bank fraud last week. election mapa's was gerrymandered to on fairy -- and fairly help republicans. that could have implications for the control of congress. democrats could win more seats in north carolina. that decision will likely be appealed to the supreme court. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries, this is bloomberg. i am taylor riggs. thank you so much.

it's tuesday, there are primaries. they have always been interesting. one stark opposition between the florida and the diverse economy. greg joins us right now in washington. let's start with florida. it's much bigger. give us the focus on that senate primary. ratify ay should matchup between bill nelson, who is seeking a fourth term in florida, and his opponent will be the outgoing governor rick scott who is raised $30 million. that's going to be a top 10 race that will determine the control of the senate. tom: is scott going to run to the edge of trump? does he run more mainstream.

greg: it is a highly competitive state. trump won florida by 1.2%. he can't run full trump there. he has his own independent identity. he will try to run his own race rather than hitched his wagon to close to trump. tom: flight exits in arizona. we will have a replacement for john mccain as well. normal, is there a primary? greg: you have two seats the play. you have vc for john mccain it, the governor there will appoint a republican replacement next week. that person would serve until a special election in 2020. then you have the other senate seat. you have a normal republican primary between a congressman from tucson who is the likely

winner. she faces to opponents. joe arpaio is the controversy all sheriff who want to pardon from trump. likely democrat will be a congresswoman from tempe. they are both well-funded. it should be a top 10 senate race like florida. tom: on a number of years basis, is arizona like nevada, a less western republican tone? is it becoming a more democratic state? greg: it's becoming more competitive. you see explosive population growth. arizona leads more republican than nevada. has a larger hispanic population, the unions are stronger in las vegas. that helps nevada have a

democratic edge. arizona is more competitive as the population increases and it becomes more ethnically diverse. tom: let's leave it there. thank you for the briefing. it's a terrific briefing on these two important primaries. stay with bloomberg as we get those results in. tiffany has a metaphor for retail, is either really good or it's not. the stock is moving 3%. what you need to know is double-digit field. sales increased 13%. there is the news. guy also noted in england, johnson darkened the door in london this year. they boost the forecast. they think guy johnson. this is bloomberg.

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tom: guy johnson is in london. tiffany is always a global bellwether with their focus on the japanese economy. is tiffany's big in the u.k.? guy: not as big as the united states. one.nk there's it's not as big as it is in the united states. tom: it's not as big a platform. let's go to single best chart. i want to look at the economy. economy, i guess it's pretty good. this is a chart we've shown many times. this is real gdp.

it's out at 4%. maybe this is where the president wants to be. so many are bringing it down. this year, probably around 2.7%. next year, probably a little slower than that. we are going to start getting all that's on a lot of different sectors. that may become true. you already see it in construction and transportation, health care. tom: is that because of the boom economy? lara: we still have this underlying constraint on potential growth. that's the speed limit. the pace we are driving can be faster, but the speed limit has fallen. we are racing ahead. the economy gains momentum, but there are so many bodies we have to throw at this economy.

we are constrained on labor growth. everybody,estion for do we finally see wage growth question the tone from jackson hole said no. lara: with the increased size of jobs, i dond the think we see modest wage growth, i don't think it's enough to get the fed to sharply accelerate rate hikes. i think the cycle could go longer. forets only think we are in two rate hikes next year. that is far in the future to have a certainty forecast. i don't see the unemployment rate falling. ads, wee pace of job either have an exceptionally low unemployment rate or we see the

pace slow. guy: the san francisco fed thinks we should look at the inverted yield curve. is this time different? are they right? lara: i think the note is important. we've seen an interesting diversions among fed regional governors. something field curve inversion is the reason to stop the rate hike cycle. you've had new york and washington say let's not put one number at the top ahead of all of our other policy discussions. the fed keeps going it, even a field curve inverts. that could impact markets and it could it cause businesses and investors to start trying to micromanage when and if we are going to slow. guy: one does the inversion

come? we could have a very flat yield curve for a long time. i don't think we invert until the middle of next year. to me, i've been very bullish on the long run interest rates, particularly treasuries. i've been cautious in my outlook for long-term yields. i think they will remain low. the market is already pricing that in. i think the fed rate moves at the end of the year. up -- thewill show at yield. tom: we have mixed signals on housing. at has been pretty tepid. what is the prediction of the american consumption? lara: consumer expectations coming out later this week. consumer sentiment is something,

it's the other spread. it's critical. it's that divergence between the present situation, which is euphoric, and expectations, which is come down. the average is the headline. to me, it speaks of an inherent caution on the part of the consumer. we have the right ingredients to keep consumption going. when you look at what puts us into a more morning -- meaningful situation, it's the future. intodoes that feed supporting this economy? is this removed? lara: the consumer feels the supercharged economy. wefeel the growth because are getting it from so many different angles. we are getting it from jobs, the tax cuts, the spending on top of it.

the spending is to me less of an impact than the tax cuts and the wealth we see. tom: you are seeing that right now. coming up on bloomberg surveillance, i will migrate over to radio. we will get an update on eu taking. he will talk about investment in japan and not investing in the united states. stay with us, this is bloomberg. ♪

guy: guy johnson in london, you are stuck with me. comment team has gone off to join the radio crew. i get to talk about what i want. i will talk about with going on surrounding the bank of england. the report in the evening markard came out saying carney has been asked to remain in the position until 2020, a little bit longer than was originally anticipated. joining us is a bloomberg report.

this is coming out of the evening standard, this is not confirmed yet. >> you've got to remember that mark carney was asked to be in the position for eight years. that's a statutory requirement. he extended it to six years after the brexit vote. a surprise, given how the negotiations are going and the uncertainty politically around the economy, it's not huge surprise. guy: what he say yes? >> it's hard to know what he's thinking. he originally said he didn't want the job at all. he is a man of mystery. the treasury is led by the chancellor, who is only soft and the spectrum when it comes to brexit. we saw the shenanigans over the last few days about a letter he posted.

?an i put it into that context this is the chancellor trying to put somebody out there who has been warning of the risk of a hard brexit? >> if you wanted to read into , there is sons much uncertainty around the economy and the future of brexit. we don't know if theresa may is going to be in power this time next year. the chancellor doesn't know he will still the there. keeping carney on for another stability,ome someone at the helm. guy: does the chancellor believe the governor -- government has been a good steward? >> carney his face a lot of .riticism from brexiteers people say it will be bad for the economy. i guess this shows him being on the side of carney.

guy: thank you for joining us. i want to flag something. warned buffett is going to be joining bloomberg. david westin will be speaking with them on thursday at 11:30 a.m. in new york. you don't want to miss it. he is somebody who always has a stellar track record. we will be listening to everything he has to say. that conversation is coming up on thursday. coming up, it is daybreak americas. we are looking for to that conversation as well. this is bloomberg. ♪ retail.

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

near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. designed to save you money. wireless network even when you've got serious binging to do. wherever your phone takes you, your wireless bill is about to cost a whole lot less. use less data with a network that has the most wifi hotspots where you need them and the best 4g lte everywhere else. saving you hundreds of dollars a year. and ask how you get xfinity mobile included with your internet. plus, get $300 back when you buy a new smartphone. xfinity mobile. it's simple. easy. awesome. click, call or visit a store today. alix: your turn, canada. mexico and the u.s. come to a

new trade deal. president trump's message to canada, sign it or you're out. the rest of the world gets left behind. this time is not different. a new paper by the san francisco fed says an inverted yield curve signals recession risk regardless of the reason. david: i'm david westin along with alix steel. i'm looking at best buy. best buy having adjusted earnings per share from $.79, the estimate $.81, lower than expected. mp store sales is up, exceeding what expected. alix: third-quarter adjusted earnings is lower than the estimate, but the final guidance for 2019, they boosted.