francine: treasuries take flight, the tenure yield most-watched, while two-year yield hits a high. a selloff could be a game changer. the blame game, the eu leaders warn time is running out with no signs the deadlock will be broken. we will be live in salzburg. the first private equity firm exclusively makes billionaires. we will talk big business with marijuana inc.

welcome to "bloomberg: surveillance." we are not getting much traction, the stoxx 600 gaining, it has a lot to do with the trade war. as investors decide to position themselves, the two-year yield unchanged at 2.8. the dollar not getting much traction. deutsche bank raised benchmark points to percentage 0.75%. norges bank raised benchmark rates 0.25 percentage point to 0.75%. we are joined at 9:30 u.k. time

with the possibility of a brexit resolution on the island border. let's get to the first word news in new york city. european and u.k. leaders have arrived for the meeting in salzburg amid warnings time is running out to seal an agreement on brexit. neither side has offered an indication they can break the deadlock less than two months before the deal is due to be completed. jean-claude juncker said a brexit deal is far away. u.k. prime minister says she stands by her plans. charges on imports from trading partners do the next month, occluding -- according to bloomberg sources. they are trying to stimulate domestic consumption to support a slowing economy,. china are engaged

in a tit-for-tat trade fight with both sides increasing the levees imposed on some goods imported from the other. saysing of trade, canada talks with washington are cordial and constructive but there is no sign a deal will be struck this week. the canadian foreign minister will meet with the u.s. later after two rounds of talks yesterday. she says both sides are committed to striking a deal. >> another constructive detailed meeting with ms are like heiser and his team -- ambassador lighthizer. we are working hard. our officials have more work to do, and will continue working this evening. the ambassador and i agreed to meet again tomorrow. >> the japanese prime minister one his third straight term of

the democratic party. defeat his rival. longest premier and he will carry on with a loose monetary policy that has strongestan in its growth since the 1990's. president trump will nominate nelly lang to one of the vacant seats on the federal reserve board of governors. fellow at theor brookings institution and specializes in credit markets. earlier in her career, she spent three decades at the fed, and help strengthen the banking sector after the financial crisis. the first private equity firm exclusively on the cannabis billionaires.hree the seattle-based was formed in 2010, and it investigated -- it

invested in a top of $21 billion yesterday after surging 1200% in the past two months. 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. francine: we are getting news out of russia. we have been talking about russia a lot, it has an output itord with oil, and is in agreement with saudi arabia. they care so much about the price of oil. that is how they balance the books. the russian economy is dependent on oil as much as 20 years ago. -- that is the latest from russia. government officials said they have posted an output record.

treasuriesselloff in that has taken the 10 year yield above 3%. recent moves have reversed a small part of this year's flattening, pushing gaps to the widest levels in months. surge is not getting enough attention, yields are on the march. , 3.25% and he says it is a game changer. is he right? is it not enough attention? joining us is alison martin -- joining us is john bilton, head global multi-asset strategy, jpmorgan chase. what do you think it means? john: it means a couple of things. there was a subtle shift in the tax rolls. some pension fund buying we have seen during the year potentially

hitting a bump in the road. three and change on the tenure is giving you a great for folio hedge. stocks surged in the u.s.. you made the risk parts of your portfolio. that is giving you a 10-year 90 percentage points. all of a sudden we have a technical breakthrough of 3% and surge upwards. i do not see that, because global growth remains above trend but muted. inflation is reasonably contained. the fed are very clear in terms of where they are going with rate hiking, so there is reason to be overweight if you are in a balanced portfolio. francine: should the fed see themselves and emerging markets and look at dollar levels?

it is a catch 22. let's be clear, the dollar seems to be stabilizing and trade weighted terms. it has risen backup and is hovering around 94. it may be 10% undervalued relative to long-term fair value. currencies can jump around a fair amount. the fed takes seriously their role as central bankers to the world and look at financial conditions, but right now with stock markets reasonably supported in aggregate especially in the u.s.,'s credit spreads reasonably tight, and borrowing rates around the world, if we look at some of the u.s. is close to zero. it would be hard to argue financial conditions are constrained on the fed today. it does not mean they will not tighten. right now, they are looking at

the domestic economy, tight labor market, and thinking they are doing the right thing, moving a quarter of a point every quarter him of that is probably the right trajectory. francine: they need to worry about having enough tools or the economy? john: one thing we learned from the last downturn is do not underestimate the inventiveness of central bankers. and have a use tools steady methodology approach. you are paid to bring calm calm to the market. hits aworld economy speed bump, i do not think the fed are going to be slow in thinking about the possible tools they could use, whether it be the balance sheet, interest rate markets, etc., so i would not consider the said are out of options by any measure. see the: where do you most value? what is a good thing to buy?

globale continue to see expansion going on lead by the u.s. -- it deliver strongly in terms of earnings. i think if you look elsewhere, treasuries markets, that is starting to look attractive in real yield terms. things like the euro which is undervalued is an area where we could see the ecb turn more hawkish as the quarter moves on. we could see the euro catching a bit of a bed. -- a bit of a bid. francine: john bilton, head global multi-asset strategy, jpmorgan chase stays with us. we will talk about where stocks are headed. this is bloomberg. ♪

francine: economics, finance, politics, this is "bloomberg: surveillance." let's get to the business flash in new york city. >> alibaba co-founder has promised to create one million jobs in america. fillys it is impossible to because of the u.s.-china trade fight. it was said that donald trump is no longer feasible because of the trade situation. businessesdium u.s. -- aston martin has called for

an ipo for luxury sports cars. the james bond carmaker will sell 25% stake. on the londonegin stock exchange next month. trading -- thef food delivery services giant turned to an ipo to fund its increasingly for customers in china where it is up against alibaba in food delivery. that is your bloomberg business flash. let's talk climate change and global risk from flooding from hurricane florence that is continuing to plague the carolinas. topping $2.5ses billion which caused record flooding with water levels continue to rise.

withoutpeople are power, and president trump visited the carolinas yesterday. we just trump:pr left north carolina and they are hit hard. that water is coming your way. a lot of people do not know that, and they assume you see beautiful weather, but over the next couple of days it will get rough in south carolina. the federal government is behind you. francine: let's keep the conversation on floods. , head global multi-asset strategy, jpmorgan chase is still with us. chief riskin, alison: officer, zurich insurance group . alison: how do you actually combine natural catastrophe models is what we used to assess the one your property risk with a climate change model which is decades. the impacts of climate change,

the impact and when you're pricing is difficult to merge those modeling techniques. the impacts of models this year is more likely ocean temperature , that is what we have seen with storm activity. what are the factors that will be more short-term? the models we use, a key thing we are try to do is blended those risk models together to give a better estimate of the impact climate change will have on people today. francine: how difficult is it to foresee? we have a a lot of hurricanes and floods, are they more unpredictable than 10 years ago? alison: there are a lot of disagreements on climate change. the impact of climate change on weoding, while we cannot say will see more frequency of storm activity, we can say we will see more intensity, higher storm

surge, something we saw with florence and higher rainfall. what is important is that people spend more time on mitigation and prevention. the research we have done says if you spend one dollar on prevention it saves you five dollars in recovery. those economics makes sense, but more than 80% of the funds is around recovery. how does it change your business model and what you decide to ensure? -- insure? alison: climate change is more of a long-term risk. we use risk selection, we work with our partners and customers to decide which of the best risks to take, and how can we help our customers mitigate the risk. if you are commercially property owner, what you have on your risk? how well are your windows? what standard did you build your building to?

customers to reduce the impact the flood might have on them, and thinking about support afterward. it is important that is what we are spending time was on florence now. francine: is there any relation to geopolitics? or because it is unpredictable you do not touch it? inson: we do those risks some cases, a number of our commercial customers are interested in. if you are a global organization and you have customers in the supply chain in different this theurisdictions, one of important things about being an insurer is we provide risk coverage to customers. that is only done with our investigation, the things you identify and how you can mitigate it and what the residual risks are that you will accept. francine: alison martin, chief risk officer, zurich insurance group, thank you for joining us. john bilton, head global multi-asset strategy, jpmorgan chase stays with us.

amazon is considering opening 3000 stores in the next three years. this is bloomberg. ♪

francine: this is "bloomberg: surveillance." i am francine lacqua in london. amazon is considering expanding stores by up to 3000 locations in the next three years. bloomberg has learned the world's largest online retailer is looking to reinvent the brick-and-mortar shopping experience. a spokeswoman declined to

comment. it sent shares of retail rivals such as walmart and kroger lower. in seattlen opened in 2016, and $1 million worth of hardware had to be in old. us aboutalk with retail is john bilton, head global multi-asset strategy, jpmorgan chase. amazon is said to be opening 3000 cashierless stores. >> they have been working on this for a while. 3000 is ambitious, but it is not just amazon. also in china, companies are looking, so it is not a surprise they are pushing on with it. francine: how does it work? is it a branded amazon store? >> it is a branded amazon store. shelf,e something off a

and it figures out what you have, and as you leave, it is billed to your amazon account. francine: should rivals be worried? : anything amazon does, rivals should be worried. the affect not what you initially think, whole foods has not changed a lot. it is taking a while to get going. this concept has been more direct. francine: can amazon do any wrong? if you look at the retail space, that end-allit is be-all? john: i cannot specifically speak for amazon, but if you look at it from macro perspective, there is a cyclical and structural reason to want to access the consumer, and to think about that innovatively. we sell retail sales last week in the u.s. coming in a reasonably well ahead of expectations.

but more importantly, the core numbers were good. upward revisions prior to a couple of months. you have this cyclical issue coming through where consumers are strong, and structurally, if you think about a developed economy, roughly two thirds of its footprint is consumption. somewhere like china and the developing world, as we are seeing in those economies, the consumer becomes a more important piece. retailers are going to want to access that structural growth trend as well is that cyclical growth trend we are seeing at the moment. francine: we see so many retailers under pressure. is this an answer to their troubles? or will it be hard for retailers to do cashierless stores? havea: the retailers products consumers want at prices they are willing to pay. if you have not got the right

product, you have not got the answer. francine: thank you both for joining us. john bilton, head global multi-asset strategy, jpmorgan chase. in the meantime we are getting breaking news out of turkey. turkish unemployment is rising .o 12.1% in 2019 let me figure out what that means, there must be a presentation which is why we have a bloomberg/sang the finance minister is basically putting out this story, and looking at the slides, turkish unemployment is rising to 12.1%. this is bloomberg. ♪

francine: economics, finance, and politics. this is "bloomberg: surveillance ." i am francine lacqua.

let's check on what is trending. on bloomberg.com, you could leaders exchange warnings that time is running out to seal brexit deal. at a summit in salzburg, jean-claude juncker set of brexit deal was far away. here on the bloomberg terminal, amazon is set to find up to 3000 cashierless stores. tax asa, a broad import soon as october. we are getting breaking news out of the u.k. this is in the shape of form of data. the august retail sales for the u.k. gained 0.3%, and was forecast to drop by 0.2%, so that is better than expected. now it is time for our weekly brexit show. let's get to the brexit

bulletin. >> the u.k. prime minister left no doubt she will expand her exit plans amid growing signs that a deal with the european union is within reach. theresa may made clear she does not intend to wait, telling the bbc she is irritated. she is ready for a fight. the london mayor added his voice to calls for british voters to have a say on the final deal. yesterday, the european union was signaling their readiness to break the deadlock in brexit talks as britain's prime minister prepared a crucial summit ending to persuade eu leaders to black -- to back her plans. theresa may rejected the plan as unacceptable because it involves keeping northern ireland in the eu customs territory. to approve this

proposal. clarifying which goods are arriving in northern ireland. the rest of europe would need to be aware of when and by whom these checks could be performed. place away can take from the border. , they haveand rover made a decision to reduce amid difficult conditions in the automotive industry. the announcement came hours after the carmaker was accused of scaremongering about brexit. bmw brought scheduled with --nce to coincide

instead of taking place as usual during the summer, the shutdown will start on april 1. among the reasons given for the dates which are worries about brexit. 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. i am taylor riggs. this is bloomberg. francine: european and u.k. leaders arrived for today's meeting in salzburg, austria the warning that time is running out for an agreement on brexit. neither side has offered an indication they can break the deadlock less than two months before the deal can be completed. the irish government, we have clear principles regarding the

integrity of the market, and regarding the irish border. by 27 members. proposalo find a u.k. preserving this. francine: our reporter is on the ground in salzburg with the latest. are we disappointed that we did not hear more on brexit? we were hoping there would be something in november, a brexit summit. have things not gone as planned? >> things have not gone to plan here. theresa may is expected to speak , but it tells you so much about the u.k. position going into the summit. theresa may said it is time for you to do the same, and she made it clear she does not accept anything that is seen as a

the sovereignty of u.k., and this is in reference to the irish border. what is becoming increasingly clear, this is a matter of perspective, and very different position. for the u.k. it a political problem. for the european union it is a technical issue. if you do not have the backstop, you do not have a deal. it is not up to the european union to give theresa may a deal . she has to work the extra mile and that you did your goal is to preserve that market. on that nothing has changed, and the tone has gotten tougher. francine: what are the chances of a second referendum in the u.k.? you,: i have to tell european perspective, they do not want to get into this debate. they think it will make them look bad. ,hey will tell you theresa may we may not like brexit, but we

can work with her. we can get to a final deal. european leaders do think theresa may will have to make concessions, and she will budge. the second referendum, for the european union which calls into question the entire process, and from the u.k. perspective, we heard from theresa may, under a make government there will be no referendum. deal or no deal the u.k. will leave the european union in march. francine: what is the likelihood of a second referendum, and what does that mean for the markets? joining me now is up political , he ran the government policy unit before being elevated to the house of lords. more recently he's been a vocal opponent of a second referendum. andrew adonis, former secretary of state, transport, united take a, it feels like we

step forward in the step back. andrew: when she was meeting the eu leaders, the view in london is different, the current government is fragile. i have been an observer for 30 years, i have not seen a weaker british government than the one we have at the moment. it does not have a majority in the house of commons, but the conservative party is split three ways in the house of commons. her own cabinet is split down the middle. on the issue of the irish backstop, this sounds technical, this could destroy her government because the fundamental issue is it -- there will be no change in respect to northern ireland, and if there is no change in northern ireland, then you get into a deep political problem if you try to have a different regime. the big news that came out of talks last night, you heard president marcon say it, the european union is not going to

budge on the issue of the backstop, because the vital national interest of the republic of ireland is at stake. , she cannot get it to parliament, and after that is the big question. -- i think she will get a deal of some kind. is it a fudge? does that mean she will no longer be prime minister? andrew: not immediately, she will come back with an agreement from brussels that might be an unsatisfactory agreement. the critical question is what happens after that because she does not have a parliamentary majority. at the moment, almost any deal she brings back from brussels will be rejected i the house of commons. the only issue is what happens when that takes place. she would try to get a deal she can get to parliament.

andrew: the problem is her party is irreconcilable. they want no participation in the customs union in the signal market, and about 30 of her mps plus my side of politics who want to stay in the customs union and increase the single market, it is pressure from ireland. these are irreconcilable elements. it looks as of now as though the big question is what happens if it is defeated. there could be an election. i would be surprised if in six months theresa may is prime minister. francine: if there is a second referendum what will be the position of jeremy corbyn? mostw: this will be the important labour party conference in my time in politics. the constituencies have put down resolutions of the conference for the second referendum. jeremy corbyn will have to make

a move to that. at least he would do is say it is on the table which he has not said before. it is possible he might have to say in the event of no other option, an election, which he prefers, if that is not credible, he would support a people to vote. that would be a breakthrough and what we need to watch for in the next four or five days. francine: do you think he will become prime minister? has some controversial issues such as anti-semitism. do not think a moderate mp should quit the party because of that. andrew: hardly any labor mps will leave the market. there is -- brexit will be decided one way or another. think it is possible we get an extension for a matter of months for things to be completed, or

allow a people's vote. it is extremely unlikely there will be a general election before then, as the self interested conservative party had an election last year. she lost a majority. the idea to have another election, i do not think it is likely at all. the most likely thing is a treaty which she cannot get to parliament that leads to a crisis. it is conceivable that could lead to further negotiations. it is more likely to lead to a people's vote. then thatthe concern the u.k. crashes out his heightened. andrew: parliament will not allow the u.k. to crash out. al -- people stockpiling food, there is no way the british parliament will allow that to happen. it could be there is a crisis

and she cannot conclude a negotiation which precipitates a crisis, but in that extreme situation my view is the most likely course will be a referendum where the option on the table -- francine: will result be different, and are people going to say you cannot have a referendum because you do not like the result? the secondhink referendum will be a big majority to stay. i have been meeting in the country, and the big new factor is that they are mobilized like never before. voting,e been bad at and they did not vote in the last referendum. they are motivated by this because they see their future at stake. they want to work and live and travel across europe. i expect the people's vote, the turnout under 35 will be as high as people in their 60's which

has never happened in a referendum in the past. if that happens, there will be a big majority tuesday. francine: andrew adonis, former secretary of state, transport, united kingdon thank you for joining us. next, how much faith do investors have increase? -- how much faith do investors have in greece? this is bloomberg.

francine: this is "bloomberg: surveillance." i am francine lacqua in london. we have news coming out of meaning a lot of

the stock we do not usually look .t are on the move norway's central bank raising interest rates for the first time in seven years. aussie makers in scandinavia's richest economy unwinding that stimulus to fend off the worst oil crisis in a generation. we look at the rate path unexpectedly being cut amid concern of domestic growth. there is a balance play between interest rates and growth. the pound 1.3193. there was disappointment in what happened in salzburg, vienna. let's go to the business with taylor riggs. alibaba co-founder to create one million jobs in america is impossible to fulfill because of the u.s.-china trade fight. remarks were made in an pledge to saying the

donald trump is not feasible because of the unstable trade situation. they met in february. alibaba's platform would boost employment. after martin filed for an ipo. point one billion pounds. the james bond carmaker will sell a 25% stake between 17.5 and 22.5 pounds per share. london will begin on the stock exchange next month. on the first day of trading, the delivery services giant turned to an ipo to fund its increasingly costly battle for customers in china where it is up against alibaba in food delivery. that is your bloomberg business flash. inncine: back to business greece. the company exited from eight

years of a bailout program that has conflicted investors. the nation's economy no longer holds fears for europe, but there are still uncertainties around fiscal and budgetary discipline. worked? what does greece have to do to convince investors? socrates lazaridis, ceo, hellenic exchanges, thank you for joining us. what has to happen in order for greece to attract investors? ,ocrates: as you probably know we are here for the 10th year in london. we give investors the opportunity to speak on the stock exchange. it is the first time we have done this after 2008 for such a

figure and a high figure. i believe the nonfinancial is having good results. francine: what are the prerequisites for the hellenic exchange to revive? are the things you need to do for people to say it is time for me to invest in greece? socrates: over the seven years seen differentve waves of interest from investors. i believe the good performance of corporate is the most important issue for investors. , thate seen an increase

is attracting investors at this time. francine: do you worry that the meansection period investors will shy away? is it a burden or will investors forget the political situation in greece? the investors are always sensitive to the political situation. years, we are not seeing any abandonment of the market before elections. francine: is the government's intention to not have pension cuts cause a problem to investors? socrates: what i am understanding of what i can say all the discussions and planning that we see at this point is business pro. francine: what do investors ask of you here in london?

what do you ask about the political system in greece and implementation of political reforms? socrates: these are questions we are facing two or three years, now they are focusing on projects of the companies, the become aironment has second part of the discussion, not the first. francine: what is the first part? socrates: looking at the specific situations, what are the potentials for growth, what are the business plans, how are they going to perform in the next two years. francine: how many new ipo's do you have in the pipeline? we do not have a pipeline of ipos, we have one ipo every year. moreis because we need than bank six months of stability without assessments.

francine: do you think another six months of stability next year, do you have to wait for elections to get the ipo pipeline through? socrates: we believe that now it has opened the door for six months of stability that can attract ipos in the market. francine: thank you for joining us, socrates lazaridis, ceo, hellenic exchanges, first, there was that dot-com boom, then last year the bitcoin crisis. now we have weed incorporated. investors were taken on a wild trip. marijuana market was only beginning to bloom, and investors to those comments seriously. reporters now is our in frank for. walk us through what happened

yesterday in the space? >> what a crazy story. bankng it is better than smoking . they are looking into new opportunities where they can sell and distribute their weed medicine with companies in international markets. the market is already an incredible story, but later that out that broke research said they are betting against it which caused the shares to rise another 50%. the story did not stop there. the next news to hit the wire was private equity firms are holding more than 60% in the company causing the shares to raise another 25% within 15 minutes bringing the total to

94% for the day. again, the story did not stop there. gains they hadhe seen for the day. they ended up where they started. the bulls came into the market and then the market closed. an amazing wild ride. , orcine: is this a bubble is it difficult to say? >> it looks a little bit like it. the company has a market of $20 billion, nearly the same size as deutsche bank and frank for, while only have $20 million in revenues last year. people are putting hope and fantasy into that stock price, and it looks a bit like a bubble to me. francine: what does this mean longer-term? the move, as you pointed out, is extraordinary. story similar to

bitcoin. .eople are interested there is potential with many of the companies that are moving into the weeds space in terms of legal medicine, but this always has to be within reasonable share price or market value development. what happened yesterday does not look like it. francine: thank you so much. in the meantime, there is a little volatility when it comes to equities, but a lot of the moves are on the currency markets. banker from norway after norway raised rates for the first time in seven years, nor just bank -- norges bank. we are getting breaking news on takeover,se of the

some of the mergers concerns we had their. u.k. takeover panel announces the auction for sky 2 begins on september 21. this has been delayed and we should find out in the next couple days what happened with this company. "bloomberg: surveillance continues in the next hour and tom keene will join me. this is bloomberg. ♪

francine: treasuries take flight, 10 year yields surge

above the watch 3%. two year yields hit a decade high. the brexit blame game, u.k. leaders warn their is no sign the deadlock will be broken. norway's central bank raises rates for the first time in seven years. we will speak to the norges bank governor this hour. this is "bloomberg: surveillance ," i am francine lacqua and tom keene is in new york. amazon with a possible 3000 u.s. stores with years. that will give us a glimpse into the retail sector, and we look at china, set to plan broad import tax cuts in october. tom: china many putting trade numbers as well. the norwegian central bank move, that will be good to speed to them. they are they are right now discussing it. week, in six this

days, it is a big deal. francine: it is a big deal and we will talk about normalization in norway among other things. that is norway's central bank governor who will join us shortly. this get to the first word news. here is taylor riggs. taylor: china taking steps to lower cost for consumers as the trade fight with the u.s. athletes. beijing plans to cut tariff rates on imports from the majority of its trading partners as soon as next month. china is raising duties on american goods to retaliate for new u.s. terrorists. iffs.s. tar european efforts are undercut to keep the 2015 nuclear deal alive. is then, shinzo abe

longest-serving prime minister. term. won his third that will clear the way for him to continue with loose monetary policy that helped japan see its sinceest period of growth 1990. european and british leaders are warning each other that time is running out on an agreement on brexit. the british prime minister theresa may says the u.k. will not extend talks to give negotiators more time. jean-claude juncker says the deal is far away. remains stumbling block the irish border. 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. i am taylor riggs. this is bloomberg. tom: equities and currency commodities, a return to a quiet market, not much to see here but

curves steepening over the last few days. the vix comes in on a good bull market 11.81. the dow is creeping up. 30 year bond comes up. yields are higher. onncine: stocks higher thursday, trying to figure out the treasury yields approaching their highest levels this year. i would go back, the dollar remaining under a little pressure. some of the yield on 10 year treasuries now steady. maybe a little disappointment from eu leaders in salzburg. tom: the bloomberg is on

twitter. i would have shown the 30 year but we welcome all of you this ise on twitter, the live feed of bloomberg surveillance on twitter. twitter with a growing international audience, it is great to have bloomberg surveillance and the new york times from the 4:00 p.m. to the six what hours, just thrilled about this. francine, do you have real bloomberg or are you going to flog this beast is much as i am? i put on at jamaica today. francine: i know -- tom: i put on extra makeup today. francine: i wish i would have thought about doing something on twitter. you are the millennial in a couple here. back to what was said yesterday.

this could be a game changer. we need to follow him on twitter. in markets, the selloff treasuries have taken the 10 year yield above 3%. these recent moves have reversed a small part of the relentless curve flattening this year, pushing some yield gaps to the widest level in months. this recent surge is not getting enough attention, it was treated. -- it was tweted. what's next? joining us is yianos kontopoulos , global head of macro strategy, ubs limited. make you for coming on to us smarter. what is your take on treasuries? this is thetake is source of potential additional volatility in the market. i think it is emanating from the

fact we are entering a risk, and however it lasts, it tells me it was not truly about the u.s.-china trade war but more importantly on china taking a bit more action here to protect its gdp growth for this year, and that gave us -- that has allowed the u.s. to express higher growth rate projections on their side on the fixed income side. i would not call it a game changer. francine: talk us through what china is focusing on and what that means for the rest of the world. the startingnk point might be simpler in the sense that the main fear of the markets right into the middle of september was whether china's deleveraging would be the game changer.

we see the signaling is there. they said we will be cutting -- basically saying we are taking a hit on the left-hand side and we are looking at the right hand side. the rest of emerging markets, we will see. tom: on higher rates, there was a big read on private equities. they talk about, are we ready for higher rate? from where you sit and your academic background, have we become addicted to low rates that we are unprepared across all of our businesses for a high

rate, nominal rate, real rate regime? is there isreality definitely an adjustment to be made. i think the types of moves that we are envisioning and have experienced so far are relatively marginal. if anything, u.s. growth has skipped to a higher rate in the course of the last two years. the market is coming closer to that realization and that implies a level shift in higher yields maybe above 3% as we go into 2019. if that happens quickly in the next two weeks, the market will take a hit. we saw that at the beginning of this year where this was the ,ost risk episode we have had not because of china or any other factor, or emerging markets. it was because 10 year yields fast.too

this has its own seeds of reversal. if it moves too fast, the stock market will take a hit and we will adjust to a slightly lower level. again, not a game changer in my mind. tom: will it destabilize emerging markets? the mainhat has been issue for emerging markets this year, the rise of the risk-free rate. this is a classical case. we have seen many episodes in the last 30 years. , ther, given the level shape of the balance sheet of emerging markets with some exceptions, i do not think we have the basis of talk about generalized contagion. the weaker hands are being exposed, and those were the weaker hands, the turkeys, argen tinas, and south africas of the world. francine: do you worry about geopolitics? we are looking at live pictures of north korea, kim jong-un

talking with mr. men. -- talking with mr. moon. for those of you listening to us on the radio, the leaders are with theff the plane leader of south korea's saying hello to him. we are expecting more news on that. geopolitics, if you look at the way markets are behaving, do they move on the back of geopolitics or because they are difficult to predict, you stay away from them? yianos: i think until they are hit, they stay away and rightly so. geopolitics is harder to predict. it underlies an important point. scare, wheret a are we going to go? there is only one place to go, u.s. treasuries. you cannot buy japanese debt to protect yourself.

is 10 yearsurance yields, another factor why we will not move aggressively here peer-reviewed tom: very good. on we from korea, later will look at whether democrats and republicans can come together. isi really focused on policy, and just as important nonpolicy of washington as well. america's themes, with the new careers. -- the new koreas. stay with us, this is bloomberg. ♪

francine

>> the abbreviated auction for sky begins tomorrow and in saturday. disney has beat now comcast to secure most of fox $471 billion, that includes 39% stake in sky. disney would get control of sky if fox wins the auction. the company made famous by james bond movies seeks an evaluation of about $6.7 billion. trading on the london stock exchange in october. chinese food delivery services giant rose on its first day of trading in hong kong. the company raise up $4.2 billion in its ipo and turns to a public offering for market

share. that is your bloomberg business flash. you.ine: thank now to salzburg were eu leaders are meeting to discuss a host of issues including brexit and migration. the president of france expressed his concerns over a brexit deal. we have very clear principles regarding the integrity of the single market, and regarding cicely the irish border. it was decided in march and endorsed by 27 members. we need a u.k. proposal to preserve this. that was emmanuel macron, the president of france in salzburg. hoping of some

kind of announcement of a brexit summit, a specialized brexit summit in november. are people on the ground disappointed we have not made more progress between the u.k. and the eu? we have made no progress whatsoever, and you heard it from macron there. the european union will tell you we will not give theresa may a brexit deal if the single market is compromised. we are instacle, and deadlock, no side will give concessions at this point. it is difficult to see how we go forward. the big obstacle is the irish border, and it is a matter of perception and becoming increasingly clear they do not see eye to eye. when you treat northern ireland differently than the rest of the u.k.

they will tell you there is no deal and we will not give you a deal whatsoever, and it is a technical issue. .ou need to tone down the drama for theresa may to sell this back home is difficult. tom: what is the advantage of the eu if they delay, if they walk away and continue to delay, what are the ramifications? maria: when you speak to european officials, they tell you theresa may will budge and it is only a matter of time. she knows u.k. cannot crash out of the european union. everyone has made it clear it for be an economic disaster both the european union and also the u.k. they will tell you she will budge we just need to keep the pressure going. when we could do it is throu northern ireland. and mariow election

draghi will be leaving the european central bank. they want this done before christmas, and we think we will see more concessions from the u.k., it is just a question of when. thecine: joining us now director of intelligence at ubs. when you look at the concerns surrounding brexit it seems that one week we are a step forward in the next week a step backwards. are we going to have fresh elections to get out of this muddle. >> i think this will continue for a while, this confusion. in the eu these always get done at the last moment, so i do not believe in a november agreement. this will go into the new year. it could go into the new year. unchanged,ation is there would not be a majority for a deal, so even if as your

correspondent would say, if theresa may were to budge to what that eu is demanding, it would be impossible for her to win a majority in the house of commons. my guess is we will not have a second referendum right away but the most likely outcome would be a general election. francine: that has a lot of possibilities. is there a 50-50 chance that it crashes out, and or mark carney to toe the line when there is a rainbow of possibilities how this ends. yianos: i think the central bank annalee be passive, and they will have to wait and see what the politicians deliver. whether it is 50-50, i do not know. pricing depending on whether you look at it from the options market at the order of 10%.

somethingk at polls, in the order of 25%. both are significant numbers which tells you the market has priced some of it in its estimate as it is looking ahead. we have time. i think it will play out through the whole play, we will not get the resolution at the first part of the play here. francine: yianos kontopoulos, global head of macro strategy, ubs limited and wolfgang munchau stays with us. we will have more on geopolitics. ♪

francine: this is "bloomberg: surveillance." brexit are talking about and the fact that eu leaders only spoke for 10 minutes with theresa may yesterday. there is another angle to this, the boe economist not buying bank of england mark carney's difficult sonority of a housing scenario officult the housing crash. we are back with yianos kontopoulos, global head of macro strategy, ubs limited. we're talking about what mark carney can do next. you say it is more likely we have fresh elections than a second referendum. if we have fresh elections, who

would be the next prime minister? yianos: i think prime minister theresa may will get a deal, but on the basis of a failure of the vote, she will have great troubles. francine: you think theresa may can get a deal. parliament has to say yes. wolfgang: i think it is the most likely outcome, there is a lot of posturing. scenarios we can think of, that is the one i believe is most likely because in the end, if they vote out this deal, they will trigger elections. they may endanger brexit and deny that possibility now. francine: we did a survey of economists on that mark carney nario, there could be a

crashing out. no one believes that, do you? we think the scenarios around brexit, one of the surprising results from our real estate analyst is even in the , between noscenario brexit, soft brexit and hard brexit, the real estate market is together and in better shape than before the global crisis. francine: thank you yianos kontopoulos, global head of macro strategy, ubs limited. coming up, stocks plunging higher. this is bloomberg. ♪

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-- in moves reminiscent of the bitcoin craze, the value doubled before nearly wiping up the entire game. exchanged. leaders warnings that time is running out to seal a brexit deal. the european commission president -- president said a brexit deal was quote, far away. our most read stories on the bloomberg terminals, amazon is cashier-lesso 300 stores. let's draw forward on the amazon story. -- it is an extraordinary one-hour interview. andrea felt that knows that.

she does retail for us out in europe and she knows that cashiers at the end of the counter are very important. once toin, mr. bezos the -- oflly shake up the consumer. does he want to get rid of cashiers? >> probably not altogether. it is unlikely we're going to see a totally cashier-less future for retail. tom: is there any indication that he can drive the expense of that labor through to lower prices for consumers? >> it is possible. if you can get rid of that labor, you would be able to put that into your price, but let's not forget that implement in this technology is expensive in the first place. francine: 3000 shops is quite a lot. does it mean that rivals should also be quivering in their boots?

>> anything that amazon does tends to ring alarm bells for brick-and-mortar retailers but let's not forget it has owned whole foods for more than a year and that is not really changed. inroadsot made huge into selling groceries online and up until now, this cashier-less store trial has been fairly limited. francine: i don't know how much help in the stores costs a company but is it a good deal for the holding company if they have cashier-less stores? >> across the world, retailers are trying to take out the paying points in stores. the theory is if there is less paying when you pay, when you drive your shopping cart around the store, that is going to

encourage more shoppers to come and you can also put through shoppers, shoppers can get through the store much more quickly so your volumes of sales should go up. francine: that you much, andrea felt stead of bloomberg opinion -- thank you so much, andrea felsted of bloomberg opinion. taylor: u.s. trade representative robert lighthizer and canada educate foreign minister met twice yesterday and plan another meeting today. a trade deal was probably needed within days to meet a deadline that would allow it to be signed by mexico's outgoing president. said his plan to build one million jobs in the u.s. is a victim of the u.s.-china trade war. he said his plan is no longer feasible because of the unstable trade situation. ma met with the president last

year to discuss adding u.s. businesses to alibaba's platform. a lawyer for the woman who accuses supreme court nominee brad brett kavanaugh of sexual assault says senate republicans are acting unfairly. judiciary committee chair chuck grassley says -- plans to hold a hearing on monday. oil production in russia has set a new record for the post-soviet era. output is about 11.3 million barrels a day. that beats the previous record that just about two years ago -- oil producers meet this weekend to discuss plans for more cooperation. in june, the agreed-upon more oil to offset losses from other countries. agreed on more oil to offset losses from other countries. global news, 24 hours a day, on air and at tick toc on twitter, powered by over 2700 journalists

and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. francine: thank you so much. let's talk about europe. we have to talk about italian politics and eu politics and the european banking union. writes it ishau hard to -- there is a lot of latency in the system. the more evident the failure, the easier it will be for them to re-nationalize immigration policy. wolfgang munchau of eurointelligence and yianos kontopoulos from ubs are still with us. immigration in the -- is the biggest issue in european policy right now. in many countries of the eurozone, the crisis has much in

coming in -- inequality and the oncoming immigration on top of that is what broke it. immigration on itself would not have done it, the euro crisis on its own would not have done it but these things together. nerves are frayed. the old political parties have almost dissolved from the system. politicalhere is a dispute, it is most about immigration, the same in the eu. francine: what does it all mean for the markets, yianos? they are bad at seeing these political subtleties you can see in the country. yianos: these are slow-moving

dynamics for the markets. you need to get to a turning point before the market will start reassessing probabilities of repricing, maybe more aggressive scenarios. the market has also learned in the sense that we have gone through some surprising political and policy results in the last few years and not much changed. in some cases, we had different directions and policy but nothing dramatic. that is part of the reason why we have had sequentially lower volatility priced in because the market is learning from what it is seeing in a difficult period and the threshold for something to happen is still pretty high. tom: wolfgang, i am thrilled you are with us today. 20 years ago, you were out with the end of the social market economy. germanic talk about thought given the immigration issue and given the buttressing of populism all around

traditional germany. all germany react in traditional manner can there be a new germany that will find a newthe, a new road -- a ath question -- a new path, new road? it might increase a share of the vote and make it difficult for the german government to continue the way they are. read coalitions like the large -- likely just largest parties will be more difficult to do because the numbers will simply not be there. that is much more important than whether they get into power. their story about immigration and violence and criminal attacks by immigrants, that is not what people are talking about. baitare influencing their -- there debate. has written a fiery

essay today for bloomberg opinion where he literally talks about the collapse of the eu experiment and he is talking austro-hungarian eras. what does president trump need to do to assist or help europe stabilize? assuming he does want to help europe stabilize and that is a big assumption from what we have seen in the last few months. if he wanted to help europe stabilize, he should stop supporting parties that want to end the eu. tom: what is the cost of that? we have seen that in the czech republic, poland. what is the price of that? wolfgang: the price of keeping the eu together or the price of separation? tom: i will take either way. wolfgang: either way, i think

the eu is in the middle of a divorce procedure. i don't think the eu will fail completely. there is enough latency in the , it is backed about it -- backed by a lot of laws, domestic laws. most of the countries will not go down that road. thee is a schism between east european countries and the west. germany and france will hang together. italy, probably too. spain will be with france and germany. poland, hungary, the czech republic, they might go a different way. takeolitical decisions we on immigration will drive them further apart. we are definitely in a situation where the eu as we know it will change, but it will not bust up.

it might disintegrate, my fear is the eu will exist but will be completely dysfunctional. francine: yianos, what does that mean for the markets? you and the markets have singled out italy as the problem child. are they right to do that? markets may be a discipline device at this stage and it may be some sort of indirect positive for politicians to be experiencing the pressures in short -- in turkey and argentina and south africa of ignoring macroeconomic imperatives. i think that is a good reminder and has served well a lot of countries, including italy in the space because the main story here is there going to target both the prime minister and the minister of finance, less than

2% deficit for next year. there is going to be slippage, there is going to be slippage, but the intention is there. there is little to govern if you don't have a proper house. that is realized from both sides. think the path here is pretty well determined even in a case like italy. francine: yianos, thank you so much. wolfgang munchau of eurointelligence and yianos kontopoulos of ubs are staying with us. this is bloomberg. ♪

francine: this is bloomberg surveillance. south korea's president has returned home following a trip to north korea. this was his third summit with north korean leader kim jong-un. carrying --footage showing a plane carrying him landed near seoul. ,et's get back to business central banks and norway's central banks has raised interest rates for the first time in seven years by a quarter point. comes as scandinavia jiggy richest economy bounces back from the biggest oil crisis in a generation. we are pleased to be talking to the norges bank governor, oystein olsen. thank you for spending a little bit of time with bloomberg surveillance. today's rate hike marks a significant shift for your policy. our people ready for it?

-- are people ready for it? oystein: the country is ready for it. but is the most important answer. -- that is the most important answer. lowave solid growth, unemployment looking forward. growth is on its way up and also in light of the international picture, which is positive in the sense that there we are about to see a normalization of interest rates, it is time to gradually raise our policy rates as well. and were uncertainties are eager to stress that moving forward, the interest rates

raises going to be gradual and cautious. francine: this is a very important point because you increase interest rates but unexpectedly cut your rate half. does it mean the markets have to be more cautious about raising rates again? are you more doubtful you will be able to raise rates again? since you follow the path closely, you are right that we are slightly down adjusting the year path, but the main picture is that this path is very close to the path we forecasted in june. -- closely, then on a

probability basis, we have pointed to the first quarter of 2019 as the most likely period for the next raise in the policy june there is a slightly greater hope that probability of a possible increase in december of this year. youcine: would you say that should be more conscious about raising rates and if yes, is that because of your currency. do you worry that your currency will appreciate? yianos: we are jim -- oystein: where generally cautious on our way up. we see a gradual increase in the and yes,policy rates

we -- the news we have received cents june points in the as you have indicated -- since june points in the in -- in the direction as you have indicated. the board exquisitely says that the next interest rate increase will most probably happen in first quarter 2019. francine: would you say there is now disconnect between norway and the european union because you are seeing growth and inflation accelerate in norway? is there a disconnect? we don't use the word disconnect with europe and also

the european union countries is close. europe as a whole is our main trading partner, but the economic circumstances are different here than in europe. we are a much smaller country, we have benefited from oil. we benefit now again even with higher oil prices. we have very low unemployment and we have a tight stable market and altogether, this forms the background that we increase our policy rate now slightly ahead of the european union. this is expected to come after next year i believe. francine: thank you so much, the governor of norges bank, governor oystein olsen. still with us is yianos

kontopoulos of ubs. speaking to the governor reminds us of the interconnectedness of many things. he almost said he wanted to move before frankfurt did but they had to readjust the rate path. should central banks be more wary about a stronger currency? yianos: they certainly should be and there is an interesting pattern here. the contrast was with us earlier but if you think about it, there are two ways to look at it. when a central bank is moving from nothing to a cycle, that is where currency tends to move in a concentrated fashion. andappened with the u.s. smaller economies like canada and i think it is going to happen with norway and everybody who was against that or kind of fighting that moment is going to lag --

a greater way of thinking about this in an environment where the pressures from the labor market have not been as aggressive, you have to ask what is the only game in town in terms of affecting inflation, and that is the exchange rate. interesting, it works the other -- interestingly, it works the other way. the market will say they have to cut or delay or they have to hike faster and that is the play, especially for smaller countries like norway. tom: yianos, this is a brilliant insight. this shows up the monetary ambiguity that we are confronting into 2019. is the federal reserve system aware of the global ambiguity that they could create? i think they are yianos: -- yianos: i think they are. typically, they are not

quite a come out and say this is a critical factor and we really care about what happens to the rest of the world above and beyond the state of the world in the u.s.. in the back of their minds, they are always looking. central bankers have to worry, so they will worry about this. tom: is chairman powell worried about brazil? yianos: i think indirectly, that is definitely the case, but they are not voting for him, so i don't think he truly cares about this as now or within the next few months. francine: where do you see emerging markets going from here? last week we saw some positioning for people thought things were cheap but in the summer months, it was contagion, but nobody was buying on the dip.

yianos: there are two ways to look at it. there is something to do on the idiosyncratic part and you need to see policymakers in those countries that have been mostly affected give a little bit less weight to their own growth and a little bit more weight to inflation, so the need to tighten. everybody who titans will at least settle at some point. correctconomists are and they are outside the consensus right now, they are saying the u.s. is going to skip december and most likely march and have the next hike come up later in early summer. you are still going to get three hikes next year, but there is going to be an interruption because we will get a feedback from all of this trait noise into u.s. numbers because a lot of the manufacturing reserves in the u.s. will actually fail because of the import pressures you are going to experience. as a result, maybe the pressures

ofare seeing today in terms a really aggressive rate hiking cycle are going to moderate and things are going to be fine for the u.s. in 2019. long story short, at this stage, any aggressive stance against emerging markets has to be moderated tactically. is it the time to say i'm going to go by the turkish lira? i think on a risk reward basis, this is not the easiest thing to do and i would not recommend it. francine: when we expecting those numbers to start turning -- yianos: q4. francine: and that would be a dollar call. what does the dollar do from here? yianos: i think it plateaus and weakens. unless we start getting better numbers out of europe soon. should, i am not sure

how soon but it is in play. what we observed is not how much we get because it is priced for perfection. it is what the rest of the world does. if the rest of the world is not disappoint as it has in the summer months, we are in play and we saw what happened with china. china has become a little more forceful. tom: we have to leave it there. yianos kontopoulos, thank you so much for the briefing. in the next hour, we have that important rate call. we speak to the heart -- the head of foreign-exchange strategy. stay with us live and now streaming on twitter. this is bloomberg surveillance. ♪ this isn't just any moving day.

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this is staying connected with xfinity to make moving... 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. tom: this morning, simply u.s. rates higher, the fed will lift rates in six days, but what

about november 8 and december 19? china considers a bilateral response, call it my way or the silk road highway. and, well, selling books on the internet won't work, cloud won't work, prime will go down in flames. this is "bloomberg surveillance." we are live in new york, london. prime minister may or somebody , how would they be greeted in the united kingdom? francine: she will be greeted like she is always greeted, a leadership challenge, an unflattering column by boris johnson. stepsek ahead, two behind. it works.e way it doesn't mean we won't get an

agreement, but it may be delayed. tom: in our last hour, both guests were like this thing is going to go on forever, right? we will age watching this thing go on. for now, first word news with taylor riggs. taylor: south korea's president says kim jong-un wants to ramp up nuclear talks with the u.s. he returned from his summit with kim and says he wants mike pompeo to come to north korea for the meeting. china lowering costs for consumers as the trade fight with the u.s. escalates. aging plans to cut the average tariff rates on imports from the majority of its trading partners as soon as next month. china is raising duties on american goods to retaliate for new u.s. tariffs. the symbolic win over iran

for the trump administration. the trump administration has convinced volkswagen to comply with sanctions, undercutting the european efforts to keep the 2015 nuclear deal alive. abe set toshinzo of a set to prime the longest minister as the head of the lb are, clearing the way for him to continue with an ultra-loose monetary policy that has allowed japan to region strongest growth since the 1990's. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. thanks so much. nowblocks from tiffany's, breakfast with surveillance. we go to cells berg. francine would you please

translate? task,ime minister and mr. translate please. francine: i am on my phone checking donald tusk -- this is the real account of donald tusk. it is quite funny. this is t for two in his instagram saying a piece of cake, sorry no cherries. tom: that's original. francine: the eu response has picking,en no cherry no cherry picking, so kind of tongue-in-cheek. i like the one before. eating iced tusk cream, saying cooling down emotions before the salzburg summit. i can't see kissinger diplomacy by instagram. there is sure breakfast update for the day. bonds,quities,

currencies, commodities. not much going on except the continued equity left. the period showing that level. 200 points away from a record high on the dow. the yield is up. francine: i'm looking at stocks steadying,treasuries the dollar under a little pressure. the yield on the 10 year treasury holding well above the 2% mark after approaching its highs for the year yesterday. i'm also looking at the pound. the could be a move on what happens in salisbury. tom: 1.330 must unthinkable as well. , interesting as well. election comeal up we go, higher yields, everything will be great, then a cyclical churn.

we are right up on resistance. breakout would be noteworthy. francine: this is what i am looking at, 10 year yield poised to break and hold 3%, some technical levels layer. , the testingoints means we could see an upward direction. that is a great chart by hillary clark. tom: very good. with us today is hsbc. oft is important because hsbc's attention to asia and there call for lower interest rates, buttressed against a higher rate regime. so much to talk about. i want to go to your research note right away. i'd love this denial of strong dollar. let me bring up the chart. bloomberg dollar index range bound. a new got to weaker dollar, right? >> absolutely. it is possibly the most unloved dollar bull ever. tom: i agree.

the flipside is that people hurting are in the emerging markets. emerging markets are going to give us yields, returns, and this dollar run has scuttled that. every question i get is not how much further can do some bull run go. it is, can we sell it now? tom: i want to talk with you about amplitude. goes you don't know what you're talking about. what is your move in dollar-yen? big figures or a subtle move? >> small. tom: that is a distinction. >> some of the forces playing for the dollar are global trade were tensions and should be supported in the end. , thearket excepts the end boj is not heading to the exits, so another angle in the price. the dollar strength is more against the euro and other economies within g10, and

obviously em. tom: interesting. francine: we haven't talked about japan in some time. i'm glad you brought up yen. is japan going to be one of the pillars of strength for the world economy? >> growth wise, it is doing well. is running this story about how many consecutive quarters of growth japan has enjoyed. i'm not sure a pillar of strength. i looked towards the u.s. economy delivering on that. the bigger question is whether the eurozone can add to global growth momentum. what we have seen this year is has 10 ink, but japan the background. we don't talk about japan enough. ands an enormous economy currency come up but not fashionable and a big swing factor for markets, and as a consequence has faded into the

background. francine: let's bring it back in fashion. what will it take for us to talk about japan more, for the markets to wake up and look at japan differently? something happening on inflation, which feels very distant. if the market gets excited on , andabenomics has achieved to my mind it has not achieved its main directive to get inflation, so why has dollar-yen 1.10, 35% weaker? if you remember in 2016, we saw dollar-yen tracking towards 100 because the boj was seen as impotent. if that narrative creeps back, he creates gravitational pull it lower for dollar-yen. tom: low rate donald and the idea of a fed that is maybe a little behind it as well. it will be interesting to see , and a president

who clearly doesn't want yields higher. how will that tension fold into dollar strength and the strength you are calling for? do what it needs to do. we are hearing from the leadership within the fed. it was key last week in suggesting the cases is therefore pushing rates through neutral. and, sticking to the median dots. the market does not want to believe the fed. it always and doubts the fed will deliver the dots. been an expensive mistake in the past, and one they need to recalibrate again. they are 40 to 50 basis point shy of the median dollar projections. tom: forget about september 26, there are two more meetings. what do they do in november and december? >> i think they will pass in november and move again in

december. tom: stick right to the plan. where is the hsbc focus on 10 year yield, the tipping point where the sweat starts happening? i don't feel the sweat now. a we have talked about trading range up to 3.10% on the 10 year. tom: i will give you that. >> that is how you make money in treasuries. it is not always by indoor miss moves, but i being tactical. tom: they will load the boat at 3.10% to 3.11%? the great update there. this is what surveillance is all about him a 18 opinions on dollar and where that is going and how that folds into your life. there is really only one opinion on washington. more chaos to continue. the divisiveness of democrats and republicans. ever core isi, policy and

nonpolicy next. this is bloomberg. ♪

>> this is "bloomberg surveillance." i am taylor riggs. skyabbreviated auction for begins tomorrow and in saturday. the two bidders are 21st entry fox and comcast. disney has beaten out comcast to secure most of fox entertainment assets for $71 billion, including a 39% stake and sky.

of skywould get control if fox wins the auction. aston martin is filing for an ipo that could give it the same multiple as ferrari. of $6.7 a valuation billion. trading will begin on the london stock exchange in october. chinese food delivery and neighborhood services giant rose on its first day of trading. the company raised $4.2 billion in its ipo. it turned to a public offering to fight its costly battle for market share and is up against alibaba and didi. that is your bloomberg business flash. tom: thanks so much. some important imagery from the koreas, a stork moment for korea or any of us of a certain vintage. truly unimaginable years ago. this is in seoul, korea, as the

two leaders meet. it allows us to rip up the script with kevin cirilli. i have an outline, but kevin cirilli was in singapore with president trump not too many months ago. by any definition away from the distractions of washington and the election come in this is a huge victory lap for the president come isn't it? kevin: it is. the politics of north and south korea showing itself. if you look at the polling in south korea, kim jong-un has a higher approval rating than president trump. , includingrump within the last week, has spoken about the positive relationship korean peninsula. his critics would argue there aren't enough concrete developments with regard to denuclearization. wheni have to go to 1969,

sentiment change, redford and newman. i am unsure if you have seen this movie. newman, butchnd and sundance become rattled as they realize they cannot get away. who are those guys? -- if mr.. mueller mueller were to end this probe tomorrow, he would be judged one of the most successful special counsel's in history, as with butch and sundance, trumps en d will be dramatic. is the president ready to jump into the river or shoot the rattlesnake behind him? what is the mood now? that column is illustrative of the two thought chains in america. there is that thought process on the one side. on the other side, you have the complete opposite thought

process in which is the president has been able to criticize and successfully framed the bob mueller investigation as a political witch hunt. many centrist republicans would disagree with that notion, but it is an increasingly polarizing issue. the focus in washington remains on judge kavanaugh's proceedings. we talked about the impact on independent, suburban women in the midterm election. tom: thank you so much. greatly appreciated. he looks a little bit like upon newman now that i think about it. -- not lookinge like redford or newman, tom keene. remember when that movie came out? the movie just stopped. >> i watched it again and again. it was lovely. issues at get to the hand, which all of our viewers

and listeners want to know, what is the state of policy debate in washington? >> suspended animation right now. tom: as it should be. >> midterm elections coming up. they're getting the congress out of town and the government-funded to at least after the election. you have senators and members ,aying on the issue of x y or z we are setting it up next year and waiting for the midterms, so the short answer is not a lot of anything as far as congress goes, but the white house continues apace on trade and other things. francine: what happens after the midterm elections? do we assume the rhetoric against china is dialed back, or does it proceed as we have had so far? of the of the biggest mistakesi

hear people in the markets making is an assumption that somehow the trump administration's view on china will change after the elections, francine. if anything, congressional democrats are stronger supporters of the president's china trade policy than the republicans are. generally speaking, and i mean from the beginning when congress had its hearings about the president's trade moves in march , congress has been supportive of the goals of the u.s.-china trade policy. you will hear them criticize and squabble about the strategies and tactics, but that is a different thing, and that is being done to protect constituents and their own political futures, but generally speaking, the administration has the support of congress in what it is doing so far. francine: thank you. isiy haines of ever core and hsbc, both stay with us. coming up, the cofounder and chief executive officer at

eight: 30 am in your -- 8:30 a.m. in new york. this is bloomberg. ♪

tom: how about a chart to get into economic growth and policy? gdp, reset after the winter months.

at the 4% level is a massive consensus call back to the 2% level, and we are not there. atlanta fed now at 4.4% run rate. kerry haines with ever core isi. 3% offis prepared for gdp. boy does that change policy calculus. >> it does. what you get out of washington is policy stasis over the next couple of years. there won't be serious rollbacks on the tax cuts, but the muddled picture likely to emerge from the midterms will make either advances more difficult. tom: comments at the economic club of new york this week, the idea we grow our way out of the deficit. 4.4% gdp gets that done. >> it does. larry kudlow is being optimistic about that.

that is what he is supposed to do. at the same time, it is off to a good start. the initial predictions of what was going to go on with the tax bill have in fact come true. thisi look at all of playing into a strong dollar call, 3%, 4% gdp foundation like is how you get to a strong dollar. >> the u.s. economy is delivering. the currency is about the relatives. europe is under developing. i don't believe the dollar bull run and i think the dollar will weaken, 6%, 7%, it is remarkable. it is very strange. tom: this idea of the gradient at 2%, and all of a sudden you're looking at a q3 coming up that recapitulates the 4.2% earlier.

4.44 7% on atlanta gdp. we continue as we move forward into the next hour. an important interview here, front and center, health care in america and the dynamics. the unique scale. maybe it will be a roll up into one company standing come and maybe that company will be cvs health. look for to that conversation with david westin in the 12 noon hour. good morning worldwide, coast-to-coast. good morning on twitter. we stream on twitter. this is bloomberg. ♪ this is bloomberg. ♪ xfinity mobile is a new wireless network

designed to save you money. 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. tom: "bloomberg surveillance" welcomes you to london and new york am a good guess, good

conversation. as wecome all of you stream on twitter live. , the consecutive hours conversation on economics, finance, investment, politics, even breakfast with mr. tusk and miss may in salzburg. your global briefing. first word news. here is taylor riggs. taylor: hence of optimism for a nafta deal, including canada. u.s. trade representative robert lighthizer and canada's foreign minister met twice yesterday and plan another meeting today. a trade deal is probably needed within days to meet a deadline that would allow it to be side by mexico's outgoing president. alibaba co-founder jack ma says his promise to great one million jobs in the u.s. is a victim of the trade fight. he told the state of new service that his pledge is no longer

feasible because of an unstable trade situation. yeart the president last to adding u.s. businesses to alibaba's platform. a lawyer for brett kavanaugh -- for the woman who accuses brett kavanaugh of sexual assault plans to hold a hearing monday with brett kavanaugh and for testifying. as the eu summit in salzburg, austria takes place, leaders are warning each other time is running out to reach an agreement on brexit. emmanuel macron said the brexit of theth the integrity single market at risk and called on the u.k. to come up with a fix for the irish border. >> i am not the one who created an irish government. principlesy clear regarding the integrity of the

single market. border, ithe irish was decided in march and endorsed by the 27 members come a so we have to find collectively a u.k. proposal precisely preserving this backstop. theresa may called on the eu to make concessions and said talks will not be extended. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. francine: thank you so much. amazon considering expanding its amazon goes stores by 3000 locations over the next three years. bloomberg has learned amazon is aiming to reinvent the brick-and-mortar shopping experience. a spokeswoman declined to comment. news of the ambitions of the

jeff bezos sent shares of walmart and kroger lower. amazon go location open in seattle and 2016. more than $1 million of hardware had to be installed. i'm joined by our bloomberg technology editor for more. what does amazon and 10 to sell in the stores? >> primarily a play for food. the idea is amazon wants people to be going out, heading into an amazon store come up buying food, faster than its rivals can come and then get out quickly. bedon't expect this to buying a new bicycle. francine: why? amazon is everything you do online. are they changing strategy? do they want to dominate the fast food joints? >> absolutely they want to dominate that, not so much fast

food as a concept, getting your food quickly. amazon has several brick-and-mortar stores already. the appeal is to get that lunch market that jeff bezos thinks is too slow to walk sandwich, and there is a huge potential to speed that service up. speed is very attractive to disne busy people. tom: crime failed, then they adjusted it and made it a huge success. ,s that what is happening here allowing failure to learn what people want? i think so. amazon does a lot of experimentation. thats a lot of products did not go to plan, but this is a smarter strategy than that. people know the amazon brand.

at the end of the day, it is already the biggest retailer on the planet. tom: thank you for your comments. hsbc and terry haines of ever core i is side. i know you go to these parties by the embassy as well. mr. bezos has the washington post. how is jeff basis taken in washington? >> amazon is taken as a very powerful company. they have a big lobbying presence. in the washington marketplace, they are seen as one of the pillars of the way standard

business is done. their footprint is everywhere, basic commerce to defense applications. francine: how will the retail space change? will it change significantly from what we have now, or amazon and the like will take over more? judging by the things fundamental analysts say, i would say it will be evolutionary and amazon will continue to innovate and grow. the other is retail analysts have seen an end to the retail apocalypse come up a resurgence of the traditional work and mortar stores. be we are in a transition. tom: when you look at the strength of retail in the u.s., does retail strength away from amazon basically mean strong

dollar? >> for the most part. stronger consumption puts pressure on prices. as long as wages are there to support spending, and that is comethe fed comes back to because one of the other factors that amazon's dominance has created is the suppression of consumer price inflation, so there are these countervailing forces. this u.s. is a key determinant of the fed rate hike cycle, and it has kept them on track. tom: i spoke with the congressman from the 10th ohio district yesterday. does amazon play well in date ohio, topeka,, kansas. that does because people perceive it saves them money. it is simple. >> it is time convenience.

country, andover not that that makes me an expert, but there is no pushback against amazon in the heartland at all. tom: what happens if jeff bezos buys the redskins? >> jeff bezos might be a elected god junior after 20 years of current ownership. >> and he will promise to deliver the next day. tom: exactly. thank you so much. we continue with important comments on u.s. dollar and em market dynamics out there today. bloomberg daybreak, an important conversation with a colleague of david rubenstein after that important jeff bezos interview. the carlyle group and the 7:00 hour. this is bloomberg. ♪ this is bloomberg. ♪

>> this is "bloomberg surveillance." i am taylor riggs. a plan to focus on its food and beverage businesses. putting its skincare business for a possible $8 billion sale. nestlé is conducting a strategic review that should be completed next year. its lifereed to sell insurance unit for $1.6 billion this week. madeseven hours, fortunes and lost in the marijuana business. double beforeay wiping out the gain in the hour, but then finished 40% higher than where it started. touted plans to start a

consumer products company. meeting and planning service raise $230 million in its ipo, priced at the top of an increase range. it makes a platform for customers to sell tickets to concerts, fundraisers, and other events. shares begin trading today on the nyse. that is your bloomberg business flash. francine: thank you so much. major central banks including the fed and ecb are turning to tighter monetary policy despite political turbulence. check out the latest edition of bloomberg businessweek. the cover story is a profile on jerome powell and how he's working to protect the central bank against the whims of the president. we are back with hsbc.

who hasn't tougher out there? the ecb, boe, the fed, or boj? >> the ecb. thefed can deliver narrative, we told you so. we believe it and will continue to do it. the ecb has to reappraise. we had first quarter weakness in the eurozone that the ecb said is an aberration. now we have had no acceleration in the second quarter and they are telling this is a little bit longer. even industrial production in soy off to a soft start, there is this constant recalibration of the ecb. i think that has been tricky for them. boe has brexit. and boj are on hold. we come back to the ecb with the

problems and greatest debates between doves and hawks. what do you see europe doing? the zero also move? move?s the europa also >> there is the verge and's and monetary policy. the ecb is asking us to recalibrate and way through the summer of 2019. all of that continues to play out. it goes lower. we have a forecast of 1.13, next year 1.10, and consensus pushing in the opposite direction. i think they will have to capitulate like to have for the last three to four months. you alluded to the idea that inflation again disappoints, or the character

and make up of inflation disappoints. is that part of your contrary and call? >> it is, but particularly outside the u.s. norway hike this morning. the crooner sold off. why? the market is asking what is your destination point, where are you going? tom: i have to interrupt. thank you so much. i should have brought this up earlier. does hsbc reaffirm its destination point of terminal values in all these different markets that are set lower, lower yields, stronger dollar, all those dynamics as a terminal point? it is different than consensus. >> it is. part of that recalibration is happening elsewhere. they have all been dragged lower. we look at the five-year one-month ford, all lower.

the u.s. has held steady. that is what is coming through in exchange rate. it is not are they going to go next month. it is where will you end up, chaps? that is driving this dollar rally and will drive it further. thatine: we had ubs saying there are economists believe the fed will have the rate half by the end of the year because of worse than expected data points. do you believe that? 4.4% is the run rate at the moment for the atlanta fed. most data suggests the economy is doing quite fine. think the reassessment has to come from the fed, jerome powell. last week they were saying we may have to tighten through neutral.

they will continue to reassess, but what is the outcome? carry on. the dollar will carry on rally against g10 and currencies to some extent in emerging markets. fed look atould the the route or contagion in emerging markets and try to temper the dollar's rise? >> the feedback loop has not been particularly acute in the u.s.. risk appetite in the u.s., i don't think there is enough pain being felt in the u.s. as a consequence of em for the fed to feel this should be the chief determinant of rates. we are not there yet. tom: frame the biggest bet on the street. what is the biggest bet in place for the street? >> what is that trade right now?

skepticism on the dollar. euro-dollar higher. is getting towards the end of the cycle, the ecb has not begun, therefore i want to buy the euro in anticipation of that happening. it will happen at some point. francine: thank you so much. hsbc stays with us. bloomberg users can interact with the charts in gtv . you steal some of the charts and have a battle over who makes the best charts. follow us on twitter and tell us which charts you like the most. that would be fun. this is bloomberg. ♪

francine: this is "bloomberg surveillance." tom, francine. we have to talk about brexit, the only game in town. timesa may have a tough after vienna, not really making any progress on the brexit deal. tom: it will be interesting to see.

what we have heard today is an extension of this discussion out further. let's have a discussion with hsbc on getting to the first of the year. maybe the single best chart, but the single best thought this morning. we have been here when the leaves start changing and you have to make the rate. there is one additional bullish factor on equities as we turn the corner to autumn. fourth quarter seasonal strength, the market up big, barclays long-short index is up less, many long only and global macro hedge funds are feeling the benchmark he. -- heat. beingospect for managers forced to hold their nose and by apple, amazon, maybe go dollar long. i agree with this.

the sweat this often is bigger than normal. it is to chaset again. you are now in the last quarter. you have to make everything count. there is a pressure there. in the analyst marketing season, september and the beginning of october is a key point. tom: agreed. >> you do not have time to make up for mistakes. , thelabor day in the u.s. season starts in september. dollar weakness as a consensus call, the sweat across all asset classes is there. where do people make up the beta chase? ,o they make it up in equities or can they do it in a leveraged fx trade? how this is about an unloved dollar rally. thes scattering one of areas where they might make up for lost ground, a late your rally in em.

there you can get big yield, big return, but the dollar grinding higher changes that. there are options out there, but for me, the background of your narratives has to be an understanding that dollar weakness will not help your returns over this final quarter. inncine: what would drive emerging markets rally? >> we might get to a position where the fed says we are on track for our twin mandate and don't need to tighten as much as we imagine. you get this goldilocks the ratent where profile of the market is validated, but not with any u.s. slowdown. that would be supportive of em risk taking. it would be a negative for the dollar. i think this will be a tricky time for emerging markets. we have had make adjustments to

the high beta plays. argentina come etc. come us of the short answer is it will not be easy. tom: thank you very much. hsbc. we have to talk about streaming on twitter. i think it is exciting. it has become a global audience, another easy way to see our television broadcast over those three hours. francine: also, we urge all viewers and listeners to write questions. we have some smart conversations , some smart guests, and we want to make sure we pass on any conversations you want to have with them. tom: absolutely. i have my digital makeup to make me look younger. francine: more perfect. have tictoc,er, we which is a wonderful relationship with them.

our relationship is to drive for the conversation on economics, finance, and investment. look for david westin in the 12 noon hour as he looks at the politics of a fractured and pre-election washington as well. in the data space this morning, the foreign exchange space, a lot going on, but the theme today has been higher yields within the united states. bring that to your attention with 3.21 percent on the 30 year bond. from london and new york, please stay with us through the day. this is bloomberg. ♪ good morning. ♪ ♪

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bond yields. 10 year yields at a four-month high. cash becomes king. china could cut tariffs on imports for trading partners, not the u.s. we will hear from the co-ceo of carlyle group. move creates new billionaires. david: welcome to bloomberg daybreak. i am tired of salzburg and a again come off again, nafta, brexit, every day a new development. david: totally fair. it is the same idea. you inch it along, spots of potential news, then nothing happens to get the currency moving. moving fast.