>> chinese stocks drop as aesident trump is set to still new tariffs. under brexit pressure, theresa may is ready for a fight. a vote on the final brexit deal. ♪ good morning, everyone. markets. your

a little bit of pressure here on the european stoxx 600. overall, concern about the trade talk tensions increasing. i'm looking at the chinese composite index, down .1%. this is on the back of trade tensions. it is overall the dollar holding some of the gains we saw on friday. bonds actually rallied. h&m rose 9% in the third quarter, leading the highest estimates. shares gaining the most since 2008, up almost 10%. fromg up, exclusive achieving objective at -- a chief executive at ubs. definite: -- daphne: republicans

have joined democrats in demanding further investigation of a woman's allegations that brett kavanaugh sexually assaulted her decades ago in high school. committee votes to remove the nomination forward. the accuser must be heard before the vote to nominate the nomination. donald trump will not withdraw the nomination. in hong kong, in southern china, the cleanup is underway after the storm left two dead. damage to buildings and. disruption throughout the region. it caused more than 21.1 u.s. -- $21.1n damage million in damage.

they are waiting for what is to cede. firstlantic season's hurricane killed 15 people. franklin templeton investment says emerging markets may be nearing a bottom. uncertainty, the money manager is keeping a net neutral dollar position while shorting the philippine peso as well as betting the aussie will climb against the new zealand dollar. the uk's prime minister has left no doubt she was prepared to defend her brexit plans amidst growing signs that a deal with the european union.

wasesa may said she irritated at the top of leadership contest. important.really i am not one of those advocate for a beer -- a revote. what i am saying, for the first time ever, the british public should have a say on the outcome of the negotiations, plus the option of staying in the eu. daphne: global news 24 hours a day, on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪ much.ne: thank you so taking on trade, shares in shanghai closed at lows after president trump instructed aides implement tariffs on 200

alien dollars -- 200 l.a. and 200 billion- dollars of chinese exports. what exactly is the latest that we know? a standoff that will quiet down or escalate? enda: mixed messages at the very least. talks were back on the table. the u.s. was willing to open a new channel with china. then our colleagues reported that, even as those talks would proceed, so, too, would the tariffs. china may not even take part in talks. it illustrates how difficult it will be to make any meaningful progress in these negotiations. china has been burned before. they sent top delegates to washington a couple of times

this year. they have been promised a breakthrough. it has not materialized. tweeted.ated -- setting.ery fragile the indication is that tariffs are going ahead. as long as that is the case, china will not be in the mid to come to the table to reach a near-term breakthrough. francine: what happens if the talks do not go ahead? enda: the feeling will be that people look for the midterm elections, toward the potential for president xi and trump having a meeting at the yuan general assembly. assembly.un general --se are the mouse storm these are the milestones that people look for. the bigger picture is that, as you can see, even with the u.s. offering hosted china, they are

talking about pushing ahead of these tariffs. even if a deal can be done on , the chances for a meaningful deal on the u.s. concerns on the structural aside best structural side -- on the structural side seam amount. looks like these trade tensions will stay with us for some time and run into 2019. francine: thank you so much. of course, looking at what -- how trades will develop, we see pictures of emmanuel macron with the austrian chancellor. he is the youngest head of state in the european union. mr. macron has received the chancellor. they will talk brexit and trade. france has a big chunk of its gdp related to exports.

germany would be affected if these tariffs were implemented. how are the trade. tensions i into markets? thank you for joining us as always. trevor, let me start off with you. when you look at these trade tensions, to you of assume the market is in a binary position, almost looking every day and determining risk on or risk off? >> there is a lot of noise. generally, the situation is pretty grim in terms of the ladies tariffs are likely to go ahead and the retaliatory mood. the way i would look at it is step back and say tariffs are stagflationary. they increase prices.

if you intervene in markets and increase tariffs, you will increase the cost of imports to america. at the same time, they mess up supply arrangements. they disturb growth as well. negative growth, raised inflation, markets don't like that. it is hard to split a particular tariff event that will cause a recession or anything like that. increases.e francine: what does that mean for currencies? in the context of the political dynamics, there is the midterm election in the u.s. that frames the debate regarding the tariff process. there is the idea that the u.s. and the white house wants to be seen a stuff in the negotiations until the midterm elections. in the context of the currency markets, you have to look at the

broader perspective and say, clearly, there are those that are deemed to be net losers in slow global growth. we have seen that reflected in the developing markets. the presumption of the dollar being a winner out of this trait process is perhaps worth debating and questioning. we have seen the u.s. holding up better than elsewhere. but that is due to the tax impacts. the dollar will start to lose momentum as well. francine: overall, do you assume that the rhetoric will be ratcheted up until the midterm elections? >> i think that is definitely the risk. francine: that's 60 days. >> the headline risks inevitably will be toward increasingly aggressive language occasionally coming up from the white house.

that has to be the danger threshold. that does underline the threats to both volatility and also in terms of market sentiment. those pressure point in terms of business sentiment, in terms of an concerns, they will both be heightened in the course of the next few weeks until we get to the midterms. francine: you agree with that? >> i do, but i am not convinced that we can breathe a sigh of relief. i think trump really means this and follow through. he will want to touch his base heading into the midterms. it's not like the day after the midterm elections he will decide to remove all tariffs. they will go ahead. francine: thank you both. up next, we will bring you are exclusive interview with the ubs executive. we will hear what he has to say about brexit. we will talk about emerging markets. i want to get back to what the dollar does next. this is bloomberg. ♪

♪ francine: this is bloomberg surveillance. let's get straight to the bloomberg business flash. is pushingu dhabi ahead with an initial public offering for the spanish oil company in what could be the largest such deal in a decade. it will offer a stake of at least 25% in the fourth quarter.

shares have jumped this morning after sales beat the highest analyst estimates as the swedish fashion retailer offered discounts to clear out inventory and received a boost from the week krona -- the weak krona. chrysler,r -- fiat kkr offered less than the 6 billion euro valuation which ended the x facility of the talks. the italian carmaker can evaluate other offers it received while it prepares to separate the milan-based company and distribute shares. david -- jamie dimon says he is done with politics.

that he has no intention of making a run for the white house, saying the current administration is handling the economy well. last week, he boasted he could beat the president in an election before rapidly backing away from that claim. >> i shouldn't have said it. more out of frustration and my on mckee's not, but i should not have said it -- my own much ease know, that i should not have said it. much.ne: thank you so frankfurt as its post-brexit hub. is assuming there will not be a deal between the u.k. and the eu. >> we are preparing ourselves. is fact, whatever solution

coming out, de facto no longer relevant for us. a few weeks ago, we had to make a decision to go and execute for a worst-case scenario. de facto, the financial system isn't really operating under the assumption that there is no agreement. whatever will happen from now on , words will not make the exercise less expensive. it will not make the feeling about the disconnect and there , and the end result issues not very high. we started the beginning. it is a complication that willingness to make investments. if you don't know what is going to happen, how can you start to invest? i would say, in the u.k., hasrally in europe that

been something that has prevented people to take actions and invest for the future. haslinda: frankfurt will be the choice for you? >> yes, confirmed. we are an existing operation in frankfurt. is a multilocation strategy. frankfurt will be the base. we will have some people that will be located in madrid and paris and milan and a good chunk will go to frankfurt to haslinda: the expectation is that a hard runs it could lead to the next cranking crisis. what is your take on that? i don't -- i think the system is well-prepared. first of all, i don't believe the next crisis will be a banking crisis. the banking system is very resilient.

of course, you may have some banks here and there, like in the past, the insurance sector was part of the problem. i understand the financial system is much more resilient and ready to absorb any shock. i don't believe brexit can be a triggering for a financial crisis or a banking crisis. but it could undermine investments and trigger a slowdown in the economy. that is clear. ubs chiefthat was the executive, sergio ermotti. theresa may has left no doubt she was prepared to defend her brexit plant amid growing signs that the deal with the growing -- with the european union is within reach. she was irritated at the talk of a leadership contest. -- theden mayor has has voiced his

stand. >> for the first time ever, the british public should have a say on the outcome of negotiations, plus the option of staying in the eu. francine: what is next and what does it mean for markets? i know grexit is something we need to talk about every day, even though there doesn't seem to be that much going on. i don't know if it is a carrot dangling. >> you are right. we could get nearer. we are beholden to headline risk. that is the real problem for investors looking at sterling. we get a headline across the bloomberg terminal anytime day or night on some of the key actors in the process. there are a number of different component parts. that can change the parameters.

music of the week is appearing slightly more encouraging. that would imply that we should see a reduction in terms of the sterling short positions. that would encourage sterling appreciation. the question is how long is this likely to play out? we could get it thursday or before thursday and find at that the european union has changed. or it just underlines the resilience of certain volatility. francine: how do you look at this perception? do you read every boris johnson headline and think he could go for a leadership contest? it is very difficult to cut the noise from what is real. >> it is very difficult to cut the noise. we have to remember some of that the the aimed at domestic electorate or the constituency in terms of the conservative party, if you're thinking about boris johnson

getting himself elected as leader. you have to think about the dynamics that are pertinent to the brexit process and those that are pertinent to the macro economic averment. we shouldn't forget -- macroeconomic environment. we shouldn't forget that. u.k. consumers may be more reticent. you have to filter the language and see which is relevant to the market and witches relevant to the political park -- and which is relevant to the political process. francine: how do you invest in the u.k.? you don't? the level of sterling is massive uncertainty. on the outcome, the pound could go a lot from here, go up a lot from here. it will affect the bank of england policy. that is what everyone is interested in.

the bank of england has to put out these charts. someone said there are seven plausible scenarios left for brexit. blind brexit is coming up fast. francine: what is your range? does that mean your range in the pound is -- what is it? is it the biggest range we have ever seen? >> it is a huge uncertainty. i would agree with jeremy, traders don't know which way to jump. there has been this unnatural, very narrow range for the last year or so. >> it has been remarkably resilient in that context. you have to remember there are both sides of that are affected. francine: that is my chart. >> the u.s. is less dynamically

affected. but both sides have a constituent factor in terms of the process. wouldhe euro and sterling get a lift, but sterling would go down because it would get a slightly better or reduced risk premium in terms of selling sterling-based assets. what about the euro-dollar? >> in the context of this chart, we have to see some degree of harder assumptions in terms of the direction. i think trevor has outlined the potential options very well. we need to see a resolution which provides a degree of certainty that we are going towards one of those scenarios. that will be the range rate. the question is which of those parameters are we likely to see? at the moment, is seemingly that pragmatism will win out and we could see some resolution that will avert the worst case

scenario. that will probably encourage risk to drift lower and move toward the lower end of the range. provide a better circumstance for the u.k. environment. >> i worry that the cliff edge becomes another cliff edge. if we end up fudging things and leave the european union with no destination, the so-called line brexit, political words, everyone backtracks from, this will be going on. we will have this conversation of the trump and grexit show for the next five years. francine: if you look at the worst-case areas, let's say we crash out and the bank of england would have to hike rates, as we heard mark carney say. what does it mean for spending power? do we go into a deep recession? >> inevitably, if you go into the crash at scenario, inevitably, you are left marking

down assumptions on u.k. growth, in terms of u.k. spending. as a consequence of that, the valuation of sterling would diminish. prior to the brexit the, we thought sterling would move 20%. it did. would it fall 20% on a crash at scenario? probably not, but we are probably talking about another 10% move. francine: all right, thank you. both stay with us. up next, the u.s. supreme court battle. two republicans call for an investigation into an assault charge against a nominee. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." i'm francine lacqua here in london. the typhoonfrom

began in hong kong and southern china today. dead and left 2 disrupted flights throughout the region. brexit talks have try to jumpstart, and are now sounding upbeat. ubs has confirmed frankfurt will be it's eu hub. oned messages from the u.s. trade talks. head out to the bloomberg terminal to find out more. two key republicans have joined democrats amending a further investigation of a woman's allegation that pratt cavanaugh -- brett cavanaugh sexually assaulted her several years ago. a white house official said

yesterday donald trump won't withdraw the nomination. joining us now for more is our senior writer, stephanie baker. is her story credible? stephanie: it is. she told her husband about it during a therapy session six years ago. there are contemporaneous notes from that time. the notes have come out. she has also passed a lie detector test on it. she didn't tell anyone at the time, but from all we can see, this does it ring true. her name came out against her will. it does look credible. francine: is there a real chance that actually derails the confirmation? stephanie: i think it will delay it. we already have two senators saying they think her story should be heard.

all it takes is one senator on the senate judiciary committee to delay. whether or not it will mean public hearings of her story is another question. francine: we are 50 days away from midterms, does this impact the midterm election outcome in any way? stephanie: i think it will. how much depends on how much of this story plays out. i think it could have a big impact. if he is confirmed, despite the into, i think it will play this backlash that republicans are facing among women voters in suburban districts. trump's approval ratings among women are terrible. i think something like 54% of women would prefer a democratic candidate over a republican. i think it will play into that. 1991 whenack to the anita hill, her charges of sexual assault by clarence

thomas led to this flood of women being elected to congress. we have a similar situation this shareware a record number of women are running. i think it plays into that especially given we have this movement in that context. i think it has much more room to go. francine: thank you so much. let's get straight to the bloomberg first word news. stocks have started the week under pressure after the latest u.s. move to place a further charge of tariffs on chinese goods. that is after president donald trump has instructed to proceed on tariffs on $200 billion more in chinese tariffs. the dollar maintains gains. china, kong and southern

the cleanup from a typhoon is underway after the storm left at least two dead. a damaged buildings and disrupted flights throughout the region. it killed more than 50 people when it earlier hit the philippines. companies and environmental groups are waiting for record floods to recede. the national weather service that rivers throughout north and south carolina are still days from cresting as the storm moves northeast. killed andave been more than 700 homes are still without power. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 jouranlists and analysts in more than 120 countries. francine: thank you so much. is the worst over 4 p.m.? -- for

em? is the route nearing an end and how should investors be positioned? ande still with jeremy trevor. i want to get back to your dollar call. you are asking if trade tensions escalate, whether that is dollar positive or negative? i think until now, it has been received of the dollar. positive -- dollar positive. i think in the context of the u.s., we need to look at the underlying dynamics. i think that is an important constituent in the dollar's performance. if we are going to see a general

deceleration in terms of u.s. activity at the end of this year and throughout 2019, we're looking for growth to drop to 2019, that has an impact on the pace of tightening. i think it is more about the path of the trajectory into 2019. i think that is going to be much slower than we have been accustomed to our been anticipating. i think that provides a rationale for the dollar to stop and lose ground, which is beneficial for the making america great trade story. trevor: in terms of emerging markets, you have a combination of a strong dollar rising, which increases the cost of finance and money emerging-market economies. at the same time china is slowing down, emerging markets are rising.

there are many companies caught in that crosswind. there is lots of bad news for emerging-market. my own view is that i would only really want to move into them. i'm underweight and emerging markets at the moment on a period of volatility. if you had a big correction in stock markets and the fed said it would hold now, you would find the dollar weaken, i think then emerging markets would get a balance. if you're talking about a fed still gradually bracketing rates higher, i think i would still stay underweight. thisine: how bad will china slowdown be? askome point, china has to do i disperse domestically? that would hurt emerging markets because they are not so outward looking. trevor: we have seen

interest rate cuts, bond yields have come down, the currency has devalued a bit as a way to try and show the export sector for tariffs. what we don't know is are these from theg reactions damage coming away from a tariff increase, or are they doing more than enough? to begin with, they don't do enough in the markets start to worry. we get market panic in the chinese and that doing too much. i wouldn't be surprised if we have to go by a period of volatility in emerging-market weakness, but there may find that the world economy picks up again into next year because the chinese have done more than enough to offset the tariffs increases. jeremy: i certainly have sympathy with that. ofhave taken the view

relative circumspect in terms of negativity when it comes to questioning the china growth story. inevitably, there are pressure points built-in. we are seeing some degree of structure easing. of thestill confident growth trajectory holding up relatively well. in that context, i think it does provide some resilience to concerns about the trade tensions and trade tariffs. i think we should recognize that the reorientation of the chinese away from that low-cost manufactured based has been going out of pace. i think that does provide a degree of insulation for regional growth, and i think probably for the em nations apart from those who have structural problems. those em nations with structural places with obvious problems, turkey, russia, south africa, the usual suspects, those with political risks and sanction concerns, those are the

ones that are still probably going to be far more susceptible going forward. francine: thank you both. stay with surveillance, 20 coming up. -- plenty coming up. ther on, we discuss why time a cofounder is getting into the media business. this is bloomberg. ♪

francine: you are watching "bloomberg surveillance." let's focus in on commodities.

the opec secretary-general says oil demand is robust despite headwinds. impact lowerat investment may have on the cartel's ability to meet requirements. >> it's no secret that as a consequence of this downturn, we have seen the sharpest construction and investments across the supply chain. 20% each in cumulative terms in the region of over one trillion u.s. dollars of investments have been canceled or frozen. this has impacted not only our ability as an industry to me currency demands, which at the moment is robust, despite some

of the headwind, but in the medium to long-term, demand face somebeginning to headwind as a result of extraneous factors. we are looking forward to continuing to work together with non-opec partners notably to strive to maintain balance between supply and demand and ensure this equation remains favorable, not only for producers but also for consumers. our ultimate objective as a producer is to see that despite the urge for

diversification of the sources of energy of which are member countries also play their role, we would like to see oil continue to be the energy source of choice for the foreseeable future. >> do you expect a continuation of that agreement at the meeting later this year? >> there is no viable otherative on the table than to institutionalize a negative corporation between ourselves and our good partners from the non-opec. the world needs it the industry needs it. . we are beginning to see this stability returning. francine: that was the opec secretary-general. here to talk about the commodity markets is jarrett.

jeremy andus is trevor. thank you for sticking around. stewart, thank you for coming to the program. are we expecting any real change in direction? stewart: i think it is going to be very hard to say. they haven't got much in the way of spec and the increased barrels are coming from some destinations.us hard,as been hit very down about one third on their experts -- exports. demand is strong, they are looking very tight. francine: talk to me about hurricane florence. what is the latest on how much damage an impact it has had? it is certainly true

that the wind speed is not what could have been, but the problem is coming from the flooding which is absolutely atrocious. we will not know how that the damages until the floodwaters recede. it is not looking great. francine: we also have a chart looking at oil levels. this is related to trade tensions. stuart: it is. it is really just uncertainty about whether the two sides will talk to each other. at some time, they will have to it.lve it is true the trump administration has more firepower because of the yen balance of trade, but they will have to sort it out because you cannot have two of the biggest economies not trading with each other. exposure toave an commodities. we are slightly under benchmark wait at the moment. i think what is driving

commodities is mainly the energy side because you have the same issues for the base metals as you have for emerging markets with the china slowdown. gold tends to do well if you have a fall in u.s. interest rate. oil is driving everything. the world economy might be slowing, but it is still growing quite rapidly. still potential for upside moves in oil. thenot terribly excited by broad outlook for commodities right now. francine: the impact on some of the currencies are exposed to commodities, is a more dollar related? thaty: there is always inherent back to the dollar situation. there are a number dollar related commodities which have suffered damaged. the us trillion dollars one of

the significant underperformers because of the presumption of the commodity orientation may be perhaps not quite as attractive as it would have been 10 years ago. it is still ultimately the real driving force, is the dollar underpinning the whole process. .rancine: thank you next, we will discuss why the tech titan is purchasing time magazine. we will look at the applications. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." i am francine lacqua here in london. busese the beautiful red out here. the billionaire cofounder of salesforce agreed to pay $190

million in cash to buy time magazine. this follows jeff bezos' aqu isisition -- acquisition of the washington post a couple of years ago. do we know the reason behind this, was is expected or does it come out of the blue? >> i think it came out of the blue. we have known that time has been up for sale for a long time. seen -- we have long seen wealthy business people buying big media businesses. you think about in the u.k., buying up the evening standard and independent. this could be a project to boost political influence. ennyoff hast b criticized trump.

francine: does he have political ambitions? rebecca: he is known to be a civic leader in san francisco. salesforce.com is certainly well known in california. when you think about jeff bezos. he has certainly been outspoken against trump was at the washington post and done tons of investigative journalism. time has featured trump on its cover dozens of times. in this case, with benioff, he is going to take a hands-off approach. francine: how can he make money? how can he? when we have seen people with tech expertise get into the media business, they have taken a different approach. with of the washington post, bezos hired hundreds of journalists, really focused on

national scope media and digital projects. look at the evening standard and independent, and he took the u.k. fully digital. an increased focus on digital here with the purchase of time. francine: thank you so much for joining us. "bloomberg surveillance. continues in the next hour. tom keene joins me out of new york. we bring kumar with our interview from the chief executive of ubs. we look at emerging markets. stocks are pretty much mixed. fearsare fears the traded could return to the markets. investors tried to figure out what the latest american threats to expand tariffs on chinese goods actually mean for their investment. dollar is falling after friday's

gains. the other story we are watching out for is the storm damage of hong kong added to the gloomy outlook. this is as we continue figuring out exactly what the storm means. we're looking at the clinic of hurricane florence -- cleanup of hurricane florence in the typhoon over in the philippines and china. tens of thousands of people have evacuated their homes in the philippines. there was also a landslide in this part of the philippines. we will discuss that next. this is bloomberg. ♪

trade.e: taking on chinese it stocks drop as

president trump is set to trigger fresh tariffs. is the worse over 4 a.m. currency selloff? -- em currency selloff? pressure, theresa may says if she is irritated by talk of the leadership contest. good morning, everyone. this is "bloomberg surveillance." i'm francine lacqua in london, tom keene in new york. whatever else we talk about, it is definitely trade and the impact it has on metals, tensions possibly escalating that will permeate throughout the market. tom: there's a confusion story on trade. copper with a real ebbing away. did.was london copper we i take such pride in our team. points on emcimal

currency -- on em currency there with turkish lira lower. you are right. our team always does a great job. let's get straight to the bloomberg first word news here in london with sebastian salek. in north and south carolina, it could be days before we know how much damage hurricane florence caused. rivers throughout the two states are days from cresting. the storm has killed at least 17 people. the city of wilmington, north carolina has been virtually cut off by flooding. food and water may have to be airlifted in. hong kong is kate's the brunt of the typhoon -- escapes the brunt of a typhoon. in the philippines, the typhoon killed 65 people and more than

40 others are missing. the storm destroyed tens of millions of dollars of crops. mixed messages coming from the u.s. and the trade war with china could hurt talks of a resolution. beijing is considering whether to decline a new round of negotiations. the head of opec says the cartel needs to keep the historic oil supply deal between saudi arabia, russia and other producers. demand, which at the moment is robust, despite some of the headwinds. ,ut in the medium, to long-term demand itself, is beginning to face some of the headwinds as a result of extraneous factors that we have little or no control of.

jpmorgan ceo says he is done with politics and rules out running for president in 2020. dimon spoke to abc news. >> i shouldn't have said it. more out of frustration, but i shouldn't have said it. it also proves i wouldn't be a good politician. sebastian: global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 jouranlists and analysts in more than 120 countries. i'm sebastian salek. this is bloomberg. can.right to it if we market.in the futures curve going nowhere in the last week. euro-dollar churning again under 117. we will talk a little bit more about commodities today. equity markets resilient.

30 year bond, this is a huge story in the fed meeting. the 10-year and 30 year bond, two-year gets all the press, but 313.0 year, rounded up to francine: first of all, there is an ims report that this came out on the u.k.. this is significant because the irs is adding its voice to calls for the u.k. prime minister to strike a deal with the european union. what i'm looking at when it comes to some of these european equities. they were a little bit, now they are back up. investors trying to understand what the latest american threats to expand tariffs on chinese goods means for their market. dollar falling after you friday's gain. tom: let's go to these imf

headlines. let's bring them up right now. we are at them for the first time as you right now. the idea of the brexit, negative for u.k. u.k. growth set to remain moderate at 1.45%. here's the chancellor speaking on these matters. brexit will continue to weigh on investment. we see that with the deutsche bank news. what i really notice, and i will let you translate, no deal brexit would involve substantial pause. translate. francine: i spoke to a big market participant. that problem with brexit is that there are seven scenarios at the moment. we think they are closer to a deal, but there could be an extension.

it could be a norway plus, a swiss plus, this is article for. the imf comes to london at the same time every year to give an annual health check on the u.k. economy. was very badly received a couple of months before the brexit vote. -- said forget the ims. it was politicized. i don't know whether it is now. against we will have to wait and see. what we know now is that they are warning that substantial -- pause. asian markets took a hit. shares in the shanghai composite closing at lows.

when you look at the concerns surrounding these trade tensions, does this just escalate until we get the midterm elections? does it do permanent damage? our expectation is that it probably continues through the midterms. i think there is some possibility and hope for some kind of deal before the midterms. when you look at the china issue, a really is much more deep-seated in the u.s. across party lines things very unlikely that you end up with some kind of comprehensive deal this quickly. that said, i think there is also reasonable expectation that after you have the first-round of tariffs, you probably see both sides said down and undergo another round of negotiations. the first point to judge is how much is the u.s. going to put on the table the first time around? do they put tariffs on $200 billion in goods or some subset of that?

do they do the entire thing at 25% or do they offer 10% tariffs? that could be seen as conciliatory. francine: what does that mean for dollar? is this dollar positive if there is a trade war escalation or negative? i think the markets it revealed preference so far is better. dollar trades at the moment, the market trades better. what i would say for this week is that there should be some expectation pricing already that we get an announcement on either billionon of the $200 or the 25%. to the extent that markets do move, i think for the moment, it

is playing on a dollar positive story. tom: when you see the call on dollar, the one that gets my attention is the one expressed through yen. is it still weaker? adam: it is and it is driven the fed. through we expect to do nothing for the next 18 months or more. so long as the fed keeps pushing dollarp, we will see the -- we have always seen dollar-yen as the most leveraged play two u.s. short rates. if you have our view that the fed break rises next year then

this year, you see dollar-yen playing into that. tom: in the commodity complex in america has to do with chairman powell, higher rates and an interesting president on trade. what will dollar do and what does it mean for commodities? i would agree with a lot of what adam said with the added nuance that as the fed is tightening, policy the yield curve is flattening which is telling you that the fed is getting mature in that process. there is a certain amount of thatas to how long -- is a mitigating factor in terms of the positive news to the dollar. i also think that we are seeing in the cycle differences in the relationship between the dollar and certain commodity prices,

particularly agricultural prices. itt of it is trade, part of is a function of this is a weird dollar cycle. it is not a cycle where people are convinced of the sustainability of the u.s. growth outperformance. that is what we were seeing in 2017 before we came in 22018 and all these trade frictions arose and growth expectations in the u.k. -- u.s. and europe fell off a cliff. think that what happens in china is increasingly important for the metals complex. francine: we will talk about that a little bit later. as we head into break, the ims managing director is at the u.k. treasury to present the preliminary conclusions of the. annual review of the u.k. economy brexit --re u.k. no

we will discuss that next. this is bloomberg. ♪ >> compared with today's smooth single markets, although likely brexit scenarios will have costs for the you care economy and with the eu -- u.k. economy and with the eu. ♪ >>

sebastian: this is "bloomberg surveillance." quarterly sales that boosted estimates.

faced increasing competition from online stores. the fund iswhile pushing ahead with what could be the largest ipo in decades. raise $3.5 could billion. bloomberg has learned that the entire an american automaker will evaluate other potential buyers. much.ne: thank you so let's get back to emerging markets. still counting on central bank decisions and some of the hardest hit emerging markets this week for an extended reprieve.

gene and adam are still with us. you look at the emerging markets and it is a dollar call. you have to find the ones that have structural problems and the ones that don't. after that, what does dollar do? gene: after dollar call, you have to find out how economies are doing. no one can keep up with the joneses. basically, everyone else slowed down dramatically. we think that now you are going into a phase where there is negative surprise. you can see europe starting to accelerate again. you're getting policy responses in china that should put a floor under growth. the other story has been on the idiosyncratic stories. elections, sanctions, you name

it. then you impose the trade frictions on top of it. you almost have to distinguish between dollar em and dollars thewhere em is really under cosh. losing some of the window, that is the concern. by the time they get to 2019, the window was closed. francine: adam, what do you make? does the rest of the emerging-market kind of make or break depending on what china does? factor,think the key and we think this is no we have from policymakers most recently in china is that they are a little more sensitive to the exchange rate then perhaps we imagined. to keep thee likely exchange rate relatively stable.

their tolerance of further falls are quite limiting, particularly if you look at them on a broader basis. i do think it is a critical factor, but i think going forward, it is likely to be a relatively stabilizing type of emerging-market. the keyerally, i agree, question is whether we continue to see emerging markets trade on what we have seen so far which is a series of idiosyncratic stories. or whether we are in an environment where eu starts to treat emerging markets indiscriminately. we don't think we are yet at that point were dollar strength is significant enough and u.s. policy is tight enough for emerging markets. quickly, this is dollar peso. the horrific 1997 depreciation of peso.

here is the miracle of the philippines in the last decade. i am thunderstruck by the idiosyncratic giveaway here of philippines peso within philippine and eight other countries, what is the ramification if they go through the record weakness of 2004? what does it actually mean for the nation and for the pacific rim? adam: i think within reasonable bounds, it is not a major development as far as the stanza policy. we come back to the region as a whole, you see a very clear trend. timing, thefed market is playing deficits externally in emerging markets. i think asia is a region where

that comes through most clearly, the outperformance of the surface currencies like korea and the under performance of other currencies. i think that is a theme we keep coming back to. tom: let's continue this. .eutsche bank headlines i don't even know how to translate it. we will talk about this later. deutsche bank plans to operate as a branch in the united kingdom post-brexit. maybe they will be giving out toasters. who knows? that is amazing. stay with us. this is bloomberg. ♪

tom: good morning. "bloomberg surveillance." ticket your monday started. a focus this morning on london and the u.k. sunday,: every everybody reads what boris johnson's latest comments as. we hear theresa may saying she is fed up with the leadership contest. we also have article four, the annual health check on the u.k. gene.get back to

this is as expected. it is basically, the ims shows up and says we need a deal, but what does it depend on? is it the eu that needs to allow the u.k. to cherry pick? gene: i think this comes down to the maximum that all politics is local. within the government, basically deciding between the options. we kind of half joke that theresa may has adopted the strategy which is to run straight down the field. everybody thinks she is going to zigzag, but when she gets to the goal, she will most likely do it most politicians do and kick the can down the road rather than kick it in the goal. francine: what does it mean for your investments? gene: we see value in sterling. i think we probably play sterling moore as a primary brexit trade. we think that yields in the u.k.

are too low regardless of whether it is a hard brexit or soft brexit. i think the point is that we expected some kind of conclusion in q4 and early q1. it seems like we are headed more toward ambiguity. we may get a transition deal clear translation on what it is. francine: thank you very much. this is bloomberg. ♪ to actually substitute what will disappear at the time of -- this isn't just any moving day.

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simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers. "activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. , offturkish lira weakening of friday. francine: we are following

deutsche bank, brexit, and the impact on banks. we heard earlier on deutsche and, commenting on a report the group says it intends to operate as a branch in the u.k. we were going backwards imports about what that meant. we had it from a source it is just a legal and requirements are not as stringent if you are a branch. we will dig into it deeper but that is their response. let's talk more about brexit. sergio ermotti says the financial system is operating under the assumption that will let be a deal. he spoke exclusively with bloomberg. >> we are preparing ourselves. outever solution is coming that may make us after -- it softer, we had to make a

decision to execute for worst-case scenario. i would say the financial system is operating under the assumption there is no agreement and whatever is going to happen from now is not going to make the exercise less expensive, is not going to make the feeling andt the disconnect resolving those kinds of issues. we go back to what we started at the beginning. a complication that undermines the willingness to make investments. if you do not know what is going to happen, how can you invest? and it hase u.k. been something that has prevented people to take actions for the future.

we have an existing operation in frankfurt. havehoice is to multilocation strategies where frankfurt is going to be the base, with branching out. going to beare located in madrid, in paris, in milan. there is expectation that a hard brexit could lead to the next brexit crisis -- next banking crisis. what is your take? >> i think the system is prepared. i do believe the next crisis will be a banking crisis. the banking system is resilient. you may have some banks here and there. in the past, the insurance

sector was part of the problem. understand that they financial system is more resilient and ready to absorb shock. i do believe brexit can be a triggering for a banking crisis. investmentsermine and trigger a slowdown in the economy. that is clear. francine: that was the ubs chief executive speaking with bloomberg. let us check in with what is trending across the universe. the cleanup from typhoon mangkhut began today. left two dead and damage buildings throughout the region. european leaders gathered in salzburg to jumpstart brexit talks which have stalled. both sides are sending more upbeat. our most read stories, and third place, ubs has confirmed

frankfurt will be its hub as it prepares for no deal. mixed messages from the u.s. from the risk of sinking trade talks. templeton says emerging markets are approaching a turning point. here is sebastian salek. rising floodwaters from hurricane florence have cut out of the city of wilmington, north carolina. emergency officials plan to airlift food and water. florence is blamed for killing 17 people. rivers are days from cresting and it may take some days before regulators can assess damage. in the philippines, typhoon mangkhut killed separately -- 65 people. the northwest farming region, destroying millions of dollars in crops. hong kong escapes the brunt of the typhoon and in southern china where the storm killed two people. senate republicans are calling for a confirmation vote on brett

kavanaugh to be delayed because of allegations of sexual assault. a woman told the washington post brett kavanaugh assaulted her decades ago. a senate committee should not vote until they hear from the woman. british prime minister theresa may is making a clear she will not waver in support of her plan. she is irritated at talks that the deal with keeping close -- close trading ties could trigger a leadership crisis. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. ms. sebastian. -- i am sebastian salek. this is "bloomberg." turkey, aing news on continue story of the management of the administration a government of mr. erdogan. the central bank pushed against him with higher interest rates.

this is subtle. turkey is said to plan measures to support banks on bad loans. governmention by the , we see in every single crisis. ahy do not bring in mr. friede -- wide-open you bring in mr. -- why don't you bring in mr. frieda? francine: when you look at turkey, it goes back to a structural problem rather than a broad-based emerging markets selloff. gene: turkey was always considered one of the weakest links in the chain in emerging markets. allowing the currency to weaken so much undermined the capital of the banking system as well as allowed the corporate's.

they have jacked up interest rates. you got the weak currency and high interest rates. we are going into a week where there is a hope they will announce plans to deal with these problems. goes,e will see how that all of the centered around what the federal reserve will guide. in the united states, leslie vinjamuri joins us from chatham house. greg valliere is heated about the outcome of a trump trade policy. we have in the indication of how china will react to washington domestic politics? leslie: if your question is about the tariffs and how they will react if there is a move forward with that, what we anticipate is retaliation.

it seems like an intelligent strategy from china. tom: i do not mean to interrupt but it is profound. they are doing that 50 days before a midterm election. it has got domestic ramifications. leslie: absolutely. china knows there are american consumers and american manufacturers of that stand to lose if trump pursues the tariff policy. the chinese are thinking strategically, as the europeans have, about how to retaliate in way that will affect trump's impact in the midterm elections. francine: does he follow through? thing that many people have been saying is that trump has been consistent with his views on trade and with his views on america's relationship

with china. he has had backing on that. the policies of the tariffs make that more complicated. will he continue to push that? it is possible. francine: i want to get your thoughts on the supreme court. what do extra tariffs on carmakers mean for the german economy? gene: two things. we hear a discussion going on about the u.s. tried to create a coalition of the willing against china. from that perspective, there is from beingeurope left out of the tariffs on autos. --thing we can shine anything that weakens your weakens germany. francine: let me get your thoughts on the supreme court , two key senate

republicans have said there should be an investigation into these allegations. does it mean it could derail his confirmation or will it be postponed? the fact that her identity is in the public domain changes things. context of many months of the me too movement. the optics of not taking an investigation seriously will be difficult or republicans. -- for republicans. it is an opportunity for republicans not aligned with trump to ask for an investigation. anybody thinking about their political future is going to be reluctant not to say we need to take this seriously. it does seem like it is a game

changer in terms of timing, difficult to know what the result is. to republicans would like see this before october, before the midterm elections change the distribution of the house and senate. it does seem significant. and the experts at chatham house, do you look for a change the first wednesday of november? what happens if we get the outcome everybody is talking about? leslie: people are talking about different outcomes. most people think the house will go to the democrats. nobody is certain what will happen to the senate. aboutis a question whether the elections will be decided immediately. some people think this might drag out. we cannot make any assumptions about that wednesday.

there is a question about whether democrats in the house would move forward with impeachment. a lot would have to do with what comes out from the investigation and the southern district of new york. , withs not a president the exception of tax cuts, who has moved much forward through the legislative branch. to the extent that congress has to the extent that congress has not been active, it is not clear how much will change. francine: thank you so much. coming up, michael phelps, the olympic gold medalist will be joining us to raise awareness about water waste at 6:30 a.m. new york. this is "bloomberg." ♪

tom: let us look at a chart. it is elegant of the realities , acommodities, not soybeans real thing, like metals. this is an interesting chart, with a kiss there and a kiss there. this is copper and this is a lot of mathematics. you wonder, where it is going to go. stewart wallace joins us right now, executive editor with bloomberg. that is an elegant trend. what does it signal? >> it signals uncertainty over demand.

everyone can see the picture in supply versus demand is tight. short-term,the uncertainty about what is going to happen with the trade between china and the u.s. based on the reports, it is not looking great and that is why you saw them hemorrhaging. they have bounced back since then but that trend is not broken. this is the blended index adjusted for inflation. and this isopper the china commodity movement and down we go and we roll over. we have an ability to test new weakness and new deflationary trend in commodities, don't we? ? stuart: we do but it can turn around. we were sitting there friday

thinking, who are the biggest funds left? they used to have billions and that has come out. that has been redeployed elsewhere. that can be redeployed back into commodities. these are multiyear lows for many commodities. that is an opportunity if themselves up. francine: there is opec meeting on production. today, oilterms of is one of the most interesting because you have this conference call between the members, the people monitoring the agreement. you have got the meeting in december. this market is looking tight. are there going to be enough barrels to supply demand? francine: we have been covering hurricane florence. when will we be able to measure

the extent of the damage? stuart: it is going to come in slowly and it is an issue of, in some areas you've got feet of water. you're not going to know how bad it is until you've tested the water and the water has come down. pollution is what is foremost in our minds. tom: you mentioned the demand function but there is a supply function as well in china. what is the confidence of supply? could we get oversupply? stuart: there is that danger. in the global economy appears to be weakening but i would say there have been no major new projects in the commodity space for a long time. journal talking about $1 trillion worth of projects that did not happen. there has to be reckoning or the world stops using commodities. tom: thank you so much.

gene frieda with us and much to talk about. on commodities, does pimco believe in a commodity deflation ? gene: i do not think -- we have a neutral view. our view on china on to commodity prices, particularly metals, we see downside risk. the chinese have continued deleveraging and the easing they're are doing in response to trade frictions is marginal. our tea on commodities -- our team on commodities linked. dr. o'leary and, in the 9:00 hour. this is bloomberg. ♪

tom: good morning.

lots of breaking news on turkey, the united kingdom, and the imf. francine lacqua in london and i am tom keene in new york. nine days away from a fed meeting. how much is chairman powell, central bankers of the world -- central banker to the world, central banker to the philippines, central banker to india? gene: it is an on popular view to say this but what the fed does matters for every other central bank, particularly emerging markets but not as much as many seem to believe now. the first half of the year was about the rest of the world not being able to keep up with the u.s. the fed continues to plod towards neutrality around 3%. they have been good in their

communication and we think that is what continues. what would change the game is acceleration in inflation and that is the nervousness you have seen. tom: this goes to the pimm: meetings where you get together with outside advisors and think about the world forward. how much conviction is there in the path of the fed? two rate increases this year or fill it is a mystery come january? gene: we are open-minded about where this goes. inhave seen three rate hikes 2019. we recognize that this notion of where neutral rates are is only known once it is tested in if the economy does not flow, you may have to go further.

we do not see any of that priced in now. either in nominal rates or inflation. from that perspective, it makes as cautious on owning bonds. francine: do you worry about the yields being ¿ gene: i do not worry about it so much as a signal of imminent recession. we do think there is a chance of a recession over the next three to five years. the back end of the curve is being suppressed by the boj and ecb. there is no inflation risk premium been priced in. that worries us more. tom: greatly appreciated. i want to do -- greatly appreciate it. i want to do an update on the markets. lira bouncing around, philippine peso weakening, off the typhoon.

some of: i think it is the chinese equities of that led the declines in asia on the back of news that president trump instructed aides to proceed with tariffs. that was a risk sentiment. kudlow will have a conversation at the economic .lub of new york looking forward to listening to lawrence kudlow today on trump administration economics. we drive for this conversation, litmus paper of the global system. a special guest will dive into the surveillance pull. -- pool.

tom: this morning, amid quiet markets, a super typhoon touches

the florence -- touches the philippines. the president of turkey considers a weaker -- the president of the philippines considers a weaker peso. his newow returns to york city. good morning. this is tariffs -- this is "bloomberg surveillance." i'm tom keene. with me, francine lacqua. am i correct to say madame lagarde lecturing the chancellor of the exchequer? francine: that would be what the brexit people are saying. you would probably receive it differently. heree lagarde is coming trying to find a solution and it will be taken as a lecture on

being told what to do by certain people within the conservative party. i'm not sure how it will play out. tom: over the weekend, two major storms. i thought the coverage in the united states was good. taylor riggs is 133 miles from the coast and joins us this morning. , it isabout the wind more about power outages and water damage. >> it is all about the flooding. for people who do not know where north carolina is, you have three major rivers coming in from the coast. they were talking about hurricane matthew two years ago and that was the worst flooding in 100 years. this is worse because of those rivers and that is expected to get worse. we spoke with david fountain, the north carolina president of

duke energy. listen to what he had to tell me. i believe most of the material is on-site. there is no impact at this time. our team is managing that. once the waters recede, we will be able to get in and repair there. we are confident in the public and the environment. about 25% of their customers lost power. they have restored power to more than one million people. 400,000 remained without power. to be a category 5 even though it only hit as a category one. flooding presents a problem. tom: you go down south and it is the cape fear river splitting

fayetteville. what will be the agricultural outcome? that is something they are working on. hog futures have risen. because of the flooding, you cannot get to these places. agriculture is a sector that is going to get hit. the downtown businesses, i asked them, what do you do when people want to get back to ? their prey door to rising -- they are prioritizing hospitals and schools. they were having flash flood warnings. we have been fortunate. it is not raining. francine: some places have seven feet of water. to assessoes it take

damage? >> we are hearing weeks. such a slow-moving storm, at one point it was at three miles per hour. david fountain, the north carolina president of duke seen a said he had not storm that was so slow moving. even now, that river tom was mentioning could get worse. that is part of the problem. spill and acoal ash sewage containment area. the head of duke energy had reassured us it was not hazardous and he was confident the public and the pa would find that water was safe. would find that water was safe. they're trying to take steps to

make sure the spills do not happen again, trying to make sure they have capacity to hold that water. they cannot get in there into waters recede and that could be weeks. tom: thank you so much. appreciate it. right now, in london, with a busy morning briefing, here is sebastian salek. >> hong kong escaped the brunt of typhoon mangkhut and in southern china, the storm killed two people. philippines, the typhoon killed 65 and 40 are missing. the storm hit the farming region destroying millions of dollars , of crops. the head of opec says the cartel needs to keep that historical oil supply deal between producers. it has to do with demand. >> cut into demand which is

robust despite some of the headwinds, but in the immediate to long-term, demand is beginning to face headwinds as a result of extraneous factors that we have little or no control over. sebastian: global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. salek.bastian this is "bloomberg." thank you. a data check. a churn to the market but after the port they, subtle. -- but after the fourth day, subtle. equities, 12.70. there is a pullback on the vix, 54 andll out over turkish lira, even with the

announcement there is help by the government, the turkish lira weakening. francine: this is what i am looking at. these stocks are falling, investors trying to figure out what the latest american threat to expand tariffs on chinese goods. i'm looking at china and turkey. tom: china with weakness as well. briefing,orward our shahab jalinoos joins us. with the background is the fed meeting and moving on to november 8 and december 19 and january 30. where is the dollar january 30 of next year? shahab: the action is on the other side. the u.s. is on autopilot. is more likely to be a

function of what other central banks are doing. in a broadin a broad sense, it t going to be far from where it is now. tom: there are two markets now. there is this train wreck. do they blend over? are they the same? shahab: some of these emerging-market currencies are big enough now to contribute to the index where you have to look at them as all the same. the turkish lira does not have enough impact on the dollar index. when you look at the mix at this point, there are some currencies, like the mexican peso, that have a tailwind and others like the chinese that are facing serious problems. there off setting each other. remnimbi doat does

from here and does the fate of emerging markets a depend on whether china focuses domestically? difficult to see a conclusive end to the weakness until the markets are convinced of the worst is over in terms of the trade war threats coming out of the u.s. there is optimism around the that this latest round of tariff threats may be part of a negotiation strategy. we have felt that through the year and that did not stop tariffs. it is likely to stay under pressure for the next two to three months ended terms of what it means for other countries, -- and in terms of what it means , currenciesuntries like the australian dollar, are suffering. are there any markets

or currencies in the emerging markets space that would be a good idea to get into? it is difficult to find cases at this point. the mexican peso because of high-yield rates and a positive story around the deal the u.s. has made. it can gain further. currencies have difficulties. has managed to hike rates. the central bank slide is not getting the support it needs. get throughto political gyrations before there is a clear case. francine: thank you.

tomorrow, from the capital markets room in milan, david haro at 5:00 a.m. new york. we will ask him about the value in european banking. also tomorrow, a challenger bank in italy. this is "bloomberg." ♪

sebastian: let's get the

bloomberg business flash. h&m posted quarterly sales that the estimates. the swedish fashion retailer offer discounts to clear out inventory and received a boost from the weak krona. elon musk says he is gone from one hell to another. he has been trying to fix assembly-line issues and he aboutized to a woman that prevented her from getting her new tesla. pay $190off will million to time magazine. he has been a frequent critic of president trump. he said he will not be involved in decisions. -- editorial decisions. tom: he moves on to tariffs.

tariffs have put the united states and a strong bargaining position with billions of dollars in jobs but cost increases have been unnoticeable. if countries will not make fair ,eals, they will be tariffed which kevin cirilli knows means of they will be taxed. -- knows means they will be taxed. writes the seventh district of texas is a classic party. the 15thgoes on to most urban states, democrats have three safe states, california, new york, and illinois. how many purple districts are out there? kevin: it is not overplayed.

at least 100 and especially when you look at suburban areas of cities. eye on texas as the polls have tightened around senator ted cruz and the democratic challenger. pointis only a 4 difference. that is within the margin of error. motivatedatic base is to get to the polls and the second part is those purple districts, independent voters. to look at this as the political withdoscope, what we saw regards to trade, there are conservatives in texas who are frustrated with how senator ted cruz has backed the president on trade. they do not view steel and aluminum made to build a toyota as a security problem. tom: another tweet, not on kevin

cirilli. west virginia, with the steel industry. a short tweet. what i think is important about this is the polarity in the democratic party between progressives and people in the trenches trying to beat republicans coast to coast. are those groups speaking to each other? kevin: they are not. i was in philadelphia for a discrepancythe the elite party establishment of the democratic party and the base of what conversations are being had, there is such similarities with an open republican primary field in which we saw donald trump and what is taking place on the left. francine: when you look at the

allegations surrounding brett kavanaugh, does it change the way women will vote in midterms? look, i think it is too early to say whether or not this , which judge kavanaugh denies, will impact midterm elections. it is another data point. with regards to the next 24 hours, it is going to be crucial to see how republicans in the senate act on this. will there be another hearing? what does this mean for swing votes like senator susan collins? what does this mean for the bow? the majority once a vote on friday. -- wants a vote on friday. we should note the white house still backing judge kavanaugh. tom: great update.

elections, his father served 21 years as mayor of chicago and it is interesting to see, mr. daily come in here to run for mayor. a conversation with william today.f chicago an important conversation, ever more important. . -- this is "bloomberg." ♪

francine: this is "bloomberg surveillance." speakingdame lagarde with philip hammond about the consequences of a difficult brexit. she has called for the u.k. prime minister to strike a deal with the european union. let's get back to shahab jalinoos. there is a multitude of outcomes in these negotiations. my previous guest said there are seven or eight. what does that mean for the pound? shahab: what we are seeing is an attempt by the government and the commission to bully the market into believing they do have a plan and that there will be a deal. planned in that are

the months ahead are a testament to that. given that the market came into this phase short pounds is creating upside pressure for the pound. the question is what will happen in terms of confidence that whatever deal is agreed is something that can pass through the parliament? we still have our suspicions and we think this phase of sterling strength is an opportunity to get short again without longer-term view in mind. francine: longer-term, what is your forecast? shahab: the credit suisse house feel is that a deal -- house view is that a deal will be done. day today currency trading, that is not worth that much now. you have to go through pain first. the pain has to come around the time when the political story is discussed.

going into that, we think the pound will go down. view, have a long-term that may represent an option to buy back into the pound. there are so many different configurations. there is euro-sterling and there is sterling-dollar, is there a dollar dynamic for the midterms that is an opportunity for sterling? i know your idea of a long trade is three weeks. midterms could offer an opportunity for the dollar to turn around. that is because you do have a sense that the political establishment has backed the agenda because of the nature of the house and the senate.

the moment the house shifts to democrat hands, that creates a sense that policy gets clogged andnd the growth positive it would be seen as a judgment on the broader sense of what the administration has done. that is not good. tom: what a special treat. phelps, talking about clean water. 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." right now, here's sebastian salek. rising floodwaters

from hurricane florence have cut off the city of wilmington, north carolina. emergency officials have had to fly in food and water. florence is blamed for killing 17 people. soers are days from cresting it may take time before companies and environmental groups can assess damage. in the philippines, super .yphoon may cut --mangkhut it hit the farming region, destroying crops. hong kong and escaped the brunt. the cleanup has begun and in southern china where the storm killed two people. the imf has joined those urging prime minister theresa may to e.u.h a deal with the anystine lagarde says -- >> dealor scenario of any

lead to alikely weaker economy than the economy now. mixed messages from the u.s. on the trade war with china could hurt chances of a resolution. president trump has told aides to proceed with additional tariffs. that has beijing considering whether to declined the offer of a new round of negotiations. senate republicans are calling for a confirmation vote on brett kavanaugh to be delayed because of allegations of sexual assault. woman told the washington post that he assaulted her decades ago in high school. jeff flake and bob corker say a senate committee should not vote until they hear from the woman. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm sebastian salek. this is "bloomberg." tom: thanks. our single best chart, let us do

that. i picked out philippine pesos which happens to be moving. here, 1997, the weakness and the miracle of philippine peso strength and we are back to the record weakness of 2004-2005. some of the stories are near tipping points. record weakness in asian currencies, it would not be alone. there is a wider theme affecting asian currencies. you do have high inflation at this point. is going to be exacerbated by food prices going up in the aftermath of the typhoon. the central bank is expected to hike by 50 basis points. hiking inhat they are a difficult economic environment is chairman powell --

is the central banker to the world? shahab: i believe that is the case. what that does at a time when the u.s. is hiking rates is impose a higher bar on emerging markets like the philippines to deliver on inflationary policies, structural reforms. what we are seeing is that is not happening. that is the problem facing the emerging-market space. one of the reasons why i worry when people say these currencies have fallen, they cannot do anything but rally. the world is different because when they would rally quickly, we're seeing lower u.s. interest rates, lower developed market interest rates unfolding. tom: thank you so much. jalinoos with us.

do not forget, your morning briefing on radio, coast to coast. coming up, we discussed water with michael phelps. this is "bloomberg." ♪

tom: good morning. "bloomberg surveillance." francine lacqua, who has a perfect cross tro and tom keene new york, who does not. keene instroke and tom new york, who does not. normal.phelps was not he breathes oxygen differently.

the ratio of his arms to his earlobes is different. you know who he is. he won 28 olympic gold medals. us on anhelps join important topic, clean water. honor to have you here in support of colgate. is this about scarcity, water in africa or california or is it about how i wastewater? michael: it is about how much we can do to make a difference. after the first year, three out of every four americans who know what we are doing in our water campaign, we can say that about 50 billion gallons of water are being saved every year from the people who have seen what we are doing. what we're doing is making a

difference but we all need to remember to make sure we are using as little as possible. it is something that is so easy. tom: how do you respond to what , what about a say ,tate like maine or montana where drought is not an issue? michael: it is a matter of time before we run out of resources. coming together and being able to help, to hold each other's hand and save something, it is so needed. we can all do together to make a difference, worldwide as well. francine: good morning. a difference, as people are more aware, do you see people using less water and how do you measure that? survey: colgate did a

and three out of every four americans who understand what we're doing with the campaign, you take those people, you are saving 50 billion gallons of water over one year. if we can have more people on board and have more people turning off the water when brushing their teeth because it a few gallants. if you think about these numbers -- a few gallons. if you think about these numbers, there are so many things you can do that and that making a difference. end up making a difference. francine: where is the most water wastage? are you targeting markets to make sure people do turn the tap off? michael: it is all over the

world that we're trying to get everybody spread the message. we need another colgate -- we haveerson another colgate sponsored person running 100 marathons in 100 days to raise awareness. people are willing to try to do everything we can to save as much as possible. tom: we have got to make some news. i am retired, no more. i wanted to be done was swimming. when are you coming back? it is an age thing and oxygen intake? michael: it is me not wanting to do it anymore. i believe i could make a team today if i prepared. i have no desire to put myself through that. tom: let us lincoln water.

-- link in water. think enough is talked about swimming mom and dad's. what is your device -- your advice? michael: the biggest thing i found is my mom was so supportive of everything. she was not pushy. that was the reason i was able to have the longevity i had. my mom was the strongest woman i saw and was incredible and a huge impact. tom: swimming is so much more scientific than when you were doing it. they have got new toys to get you better. would you have been faster with the toys? michael: everything we have i

kind of use. tom: did you use of the snorkel thing? michael: i used it. the floaty's. they are for water safety and that is it. tom: do you have a clock in the bathtub? michael: no way. it is tough to keep them out. i will never put pressure on him to be ace will. -- to be a swimmer. francine: you are allowed to put pressure on tom to swim better. do you miss competing and what do you miss? michael: competing was the one thing i loved. it is tough not having that every day. thate, i can channel

elsewhere. it is the stuff i'm doing every day, whether it is continuing to raise awareness for our campaign or talk about my foundation and teach the importance of a healthy, active lifestyle. that are so many things are exciting and i can save at least one life. francine: i know you are involved in teaching kids how to swim. is that making a difference? child drowning is one of the worst nightmares. are people on board to teach kids how to swim from a young age? michael: i started a foundation 10 years ago. kidsve taught over 20,000 to be water safe. i want more. we need to teach as many more as

we can. we do lose kids and adults in drowning. tom: let us bring you back to colgate and your efforts on water scarcity. advantage and one of them is to have the classic 14 acres. lawnso we do about the out there from hitters like you? i live in arizona and i play golf. ae golf course, they built man-made lake, and every drop of water is reused through the golf course. there are people doing things to make a difference and a change. we need more people to be doing stuff like that to make a difference. francine: thank you so much.

it was a pleasure. michael phelps, the olympic gold medalist. tom, the other gold winner needs to head off to radio. users can steal our charts, use them, go to gtv . you can browse charts and catch up on analyses. you can reformat them to dazzle your boss. this is "bloomberg." ♪

francine: this is "bloomberg surveillance." i'm francine lacqua in london. shahab jalinoos still with us. we talked about china, emerging markets. we have not talked about the euro. it is a trade question. where do you see it? shahab: the problems we have their, the trade story is not going away. it has shifted in focus from nafta back to china and at times, euro as well.

since the visit to d.c., the dimension has been off the charts. we are dealt for love that. we do believe -- we are doubtful of that. we do believe it could come back and that would not be helpful. they do have a budget story in october. that is not a hot topic given the noises coming out of the italian government. stays now?iven it c - sell.is a francine: do have a favorite play? play?you have a favorite shahab: we are focused on scandinavian currencies, the norwegian krone which is due to

have a rate hike this week is interesting because it has fallen in line with the swedish krona amidst political issues in sweden. also, a sense of banking strife in europe. that has left it weaker than what the central bank was expecting to trade up. country that is willing to hike rates. that could lead to more strength in that currency. if you wanted to play against the swedish krona as well, once you break the 110 level, there's offside. the noise does seem out of line with where it should be. it should be stronger. if you look at the upcoming hike, is it a turning ro-krona? the eu

here is a central bank willing to hike after many years. that is important because it is the kronapoint and should benefit from that against the euro. francine: do you think the market is underestimating the pace of central-bank hiking and is this an oil story? the market is still cautious in terms of how many hikes the central bank can bring given that high level of leverage it perceives in norway's economic system. that can apply all around the world, especially in developed markets. the extent to which that holds the currency back once the hiking cycle begins, maybe where

making too much of that. -- maybe we are making too much of that. francine: thank you. now to sebastian salak. abu dhabi is pushing ahead with what could be the largest oil ipo in a decade. the company will offer a stake of 25% in the spanish oil company and the offering could raise $3.5 billion. it wants an ipo rather than the sale after potential bidders were narrow down. cofounder ofre salesforce has agreed to buy time magazine. they will pay $190 million in cash for the publication. he has been critical of president trump but will let be involved in editorial decisions. ubs is prepared, if the u.k. ends up leaving without a deal. >> whatever solution is coming

, the factor is no longer relevant. decision toke a execute for worst-case scenario. thattian: he also said they have picked frankford to be there post-brexit hub. francine: let us stick with the brexit and banks. it does notk says plan to set up a subsidiary. the lender intends to carry on operating as a branch of the u.k. along with guidance from the regulatory arm. we are joined by bloomberg intelligence. they were going to stay a branch, people freaked out. , this is aabout

legal entity. you can either be a subsidiary or a branch. the u.k. is looking to go along the lines of equivalence. we want to keep as much business as we can. the branch approach will require less capital which is a good reason to do it. you rely on cooperation with the home regulator. it makes sense. we would like not to scare banks away. under 80something like branches registered in the u.k. thinking, do we want to set up a unit or can we continue states -- continue to stick with a branch? hub --e bank once the

wants the hub to come through frankfurt. the booking of that is not a surprise and that makes sense. billion to set up their business. it requires capital. i do not think this is a surprise and the only surprise is they were looking to be the ring fenced entity. francine: are you getting a sense of the bankers are planning for the worst? jonathan: they have always been. if we do not get some form of a october, thend of transitional format falls to pieces. you are going to get an acceleration over the next month

or two. francine: is there a clear winner of capital? jonathan: frankfurt would be the main one. new york, let us not forget. you'll get yours banks sending the business back to new york. up, mohamedming el-erian. emerging markets is coming up. that is 9:30 in new york. this is "bloomberg." ♪

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trade talks with the u.s. as president trump threatens to levy tariffs on chinese goods within days. surviving the storms from u.s. to asia, deadly storms pummeling infrastructure and leaving many homeless. we will talk energy with one of the largest manufacturers of generators. franklin templeton says em near the bottom and the route could be the latest. david: welcome to "bloomberg daybreak." the weather was so nice here, feeling guilty. alix: in terms of florence, we were talking about this this morning, we will not know the real economic impact for a long time because it is still pouring rain. david: the river does not crest for another two days. alix: we will be following that throughout the next couple hours. in the markets, yes, we have trade