>> u.s. stocks close at a record, investors shrug off trade tensions, and china has a good day. trudeau works as the summit ends. macron grants the campaign. apple's newest iphone hits stores as consumers and investors price the newest model. i am francine lacqua in london, this is what your markets are doing right now you can see the

stoxx 600 gaining yesterday. have fresh highs. euro-dollar 1.17. again, a lot of news out there characterized by the equity .arkets estimates coming in below forecasts. look at thetake a front pages, all about brexit. like humiliation and disaster front and center. may is shattered as the eu rejects her plan. european leaders tell her that her plan will not work. macron has a scathing attack on brexit.

he relation for theresa may, the battle prime minister faces a tory revolt. ugly as theyrns hit out at theresa may. she says she will not roll over on a deal. we will have plenty more on that, but let's get straight to new york city with first word news. in washington, lawyers for a woman accusing the supreme court nominee of sexual assault asked the senate judiciary to push back the hearing on her claims. until a testimony from an additional witnesses. they have learned that the attorneys said she will not appear on monday as the chairman councils. councils. donald trump is set to hit out at china after announcing another round of tariffs, signaling the trade fight will not end.

he made the comments to fox news at a rally in las vegas. it is time to take a stand on china. have been hurting us and our farmers are great and are starting to do very well again, very interesting. we are putting heavy sanctions and other things from various countries. we have been ripped off by the world. taylor: president trump's former attorney michael cohen has had lengthy interviews with investigators. say he was asked by investigators about from business and any business dealings with russia. been one of the closest associates over the past decade and admitted he made illegal campaign contributions and the 2016 election. the u.k. is promising fresh plans to break up brexit, only after eu leaders of bluntly rejected the blueprint and warned that time is running out.

two days of talks broke up without progress and leaders piled more pressure on theresa may to shift her stance. they say a special summit will only go ahead is the u.k. makes more concessions next month. may also reiterated she is ready to crash out of the block. >> let's know we have any doubt that, as i have said, we are preparing for a no deal. so if we get to a position where it is not possible to reach a deal, the british people can be confident that we will have done what is necessary. taylor: global news, 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine. francine: thank you so much. the s&p 500 is down since yesterday.

a strong economic day helped relieve concerns over the latest salvo of a scuffle. european and asian stocks have rallied, with china having its best day in two years. the present tweeted about record highs. for the hour, we are joined by a chief investment officer at allianz. and the managing director at blackrock. thank you both for joining us. there is still worry about trade. is that a danger that will correct? >> we have not seen the impact of the tariffs. in the second quarter, there was no impact on earnings. they were both looking forward to what happened next. that is what we would expect to see. possibly on cost,

cap ask. it is very strong at the moment. going into next year, they are likely to be less. francine: what is your take? >> i agree. we can characterize this as an equilibrium, where there is a backdrop led by the united states reflected in earnings. at the same time, the trade is the main driver or one of the key drivers. this week, we got news on the trade front, but at the same time. francine: and if you look at em currencies, they are seeing a rebound. so are we over the worst? >> we see the emerging market space as an idiosyncratic story. turkey was a turkey story. we have been pushing back against the contagion story.

if the trade noise can be contained, that can leave space for em to preform better for the rest of the year. francine: do you agree? >> i think it is a dollar debt. the age-old issue. and it is no different this time around. this is my chart, it shows you some u.s. equities. staying away from this 2018 rally. are they rebounding after the tax cuts? , theing into next year growth in corporate profits will be lower. that will be the case because it has been boosted this year into the low 20's. tariffs willrgins,

have an impact as well. strong,still looking but the momentum is going the wrong way. some said they do not expect the fed to hike much more before 2019 or until the summer. is the secret to market stability fed stability? the dollar not rising too much? >> the fed is certainly key. at the same time, we will see more hikes coming from the fed. we are still had an easy policy despite the noise. there is an over excitement around qte.

and the rates are normalizing. so that has an impact on markets. at the same time, we are still in an easy stance. i would expect them to continue and more in 2019. the market is not fully pricing this, but overall, we're still in a market where it will be accommodative and responding to tension. francine: does the world need a lower dollar? >> the markets need a lower dollar. broughtld certainly about the growth at the moment and the market performance which has been concentrated. let's talk about the

bank of japan. it on especially cut purchases of superlong bonds. inspired only ¥50 billion of notes with maturation's longer than 55 years. they're also accumulate at the slowest annual pace under what many describe as tapering. let's get back to john and lucy. at the boj, it seems like we do not talk about that anymore. is the trick with possible downturn in growth? >> japan has been out of the limelight. that has a part of the case, and there has been a little bit of disappointment. the reforms have been slow to come through. how about this renewed focus on getting a return on equity.

jean?ne: recently, we have seen positive news. week will need to see more signs of solid, sustained pickup before that becomes relevant. francine: but you think it has the potential to surprise the upside? , and oursurprising indicators are showing running through negative. we're seeing her signals are forming up. but the broader story for japan is more or less the same. thanks.: all right, now, remember, if you are a bloomberg customer you can watch the show using tv . you can also follow all of our chart functions and mention us -- message us.

we are also streaming live on twitter. you can ask a guest questions. up next, the u.k. divorce. theresa may leaves salisbury with no concessions. we talk with that means for markets next. this is bloomberg. ♪

francine: economics, finance,

politics, this is bloomberg. let's get straight to the bloomberg business flash in new york city. royal dutch shell is in talks to sell an interest in the gulf of mexico oil field to focus oil. bloomberg has learned the deal could value the stake at about $1.3 billion. shall declined to comment. they did not merely respond to a request for comment. talks. an early that is according to bloomberg sources. a bed for london-based delivery last valued at $2 billion. it marked a deal by over to dominate the food delivery business. spokesman declined to comment. has agreed to acquire a software maker for $4.75 billion in a bid to compete against salesforce and oracle in a fast-growing business.

deal, which would be adobe's largest ever, is expected to close during the fourth quarter. adobe purchased magenta -- mag ento to enter the market. wells fargo plans to trim its workforce. to poolas the ceo works the bank clear of customer abuse scandals. sloan, who made the announcement to employees has reduced headcount as he cleans up the bank and stream -- streamlines operations. the lender is struggling to grow under the weight of asset taps your -- caps. that is your "bloomberg business flash." promisingthe u.k. is fresh plans to break the stalemate after leaders bluntly rejected the blueprint and warned that time is running out. two days of talks broke up without progress and leaders piled on to shift her stance.

the french president was particularly blunt on the issue while theresa may said she was preparing for the possibility of a noted brexit. >> brexit is the choice of a british people, pushed by some who predicted easy solutions. i fully respect the sovereignty by saying this. demonstrates that it would be easy to do with your, that it would help make big profits, they are liars. >> let nobody have any doubts. we are praying for a no deal, if we get to a position where it is not possible, the british people could be confident that we will what is necessary to ensure we make a success of leaving the eu. francine: so what is next? joining us next is our guest from allianz and blackrock. david, how much of a disaster

was yesterday? crazy,. press are going but was it that? >> it does look pretty bad when you pick up the papers. she is not unused to negative headlines. she always seemed to ride out the storm. it does seem that while we never expected any breakthrough, it does seem like the town was definitely testy. they were thinking the prime minister was slightly surprised to meet such a strong words. you heard president macron laying into the brexit argument. it is worth remembering the two things that are still being argued. it is about solution for the northern ireland border and the checkers proposal. and while a lot of the vitriol was directed at the proposal, we don't technically need an agreement on that to reach an orderly exit. the future traded agreements come in after that, so ireland

is the sticking point. sheou mentioned, she said would come out with fresh proposals on that front and we still have a few weeks to go. the whole thing is in complete disarray, but certainly, controversy has had a better morning. francine: we are confused, because they seem to make progress and then there is cold water. what is the market pricing in, because that would be key. >> difficult to say what the market is pricing in, but overall, this is not a big driver of markets. which i think would be our assessment. mentioned, this is how negotiations work. we are getting an acceleration of the timeline, which i think is constructive. however, i time, think there is a tendency or a desire to put pressure and may

hope for drama leading to markets noise and adding to pressure and a bit of a dangerous game that could be played. overall, this is something we should look through and focus on the outcome. unfair? is there more or less of a chance of crashing out? >> and we have got uncertainty piled on uncertainty. have got many different scenarios in front of us and from an investment point of view, you would not be put it much money on it. i agree, it is not the most important thing that is happening in global markets. it is an embarrassing sideshow for the u.k.. and it is going to affect sterling and the relative performance of different parts of the u.k. equity market. that, it does not have a

major impact. francine: does it increase the chance of a second referendum? where does it avoid boris johnson? >> there are huge amounts of uncertainty around all those questions. have the conference coming up. the key is the labour party. they are still sitting on the fence. there could be a shift, and then there is a conference as well. so the other members of the conference are trying to replace may and give her more wind in her sales as she goes back to negotiations. she has a very slim working majority. of course, it has been uncivil. but we have talked about this about how fragile her company is, and somehow she has managed to survive. i will not be putting money that the government will fall.

francine: looking at the euro pound, it has not really moved what does it take for them to move? >> i think we are going to need a clear questioning. deal at the end. francine: thanks so much. our news director, he will be back on monday. our guests stay with us. bloomberg has learned that uber is in early talks to buy the food delivery company deliveroo, a move that would mark an attempt to dominate the food delivery industry. they were last valued at $2 billion, while people at both companies declined to comment. for more on this possible deal, our european tech editor joins us now. you. to have

what is the rationale for over to come in -- uber to come in? >> it is part of the diversification plan. he has got new text, he is investing in the middle east. there is even as well. -- e-bites. uber needs to find new space. and one way to compete is just buying opposition. francine: i-5 take away more than i should, and i know that in the u.k. and london, there are these services. why do they need deliveroo? is one better? >> i would not say one is better, but they have a very strong brand. while is strong in the u.s., they are incredibly dominant player in the u.k.. smaller, but they

are one of europe's biggest startups. our margins better when you deliver food that passengers? >> it is certainly faster growing, so the margins are definitely better. businesses are just lower margins. they deliver high and from restaurants. if you wonder around the city, you will be surrounded by drivers, and that is where the real money is. they are also one step ahead by launching was called dark kitchens, when they take upscale restaurants and move them out of areas where people cannot get those restaurants. it is a stronger on business. francine: is like a pop-up restaurant. do you like the technology overall? >> yes, but it is now everything. so when we are looking at it across the sectors, then

everything is digitalized. is one of the differentiating factors within the sectors, which of the companies are ahead of the curve and which are struggling. francine: are we expecting more from the chief executive? he had to fix the culture, first of all. now that he is and acquisitions, is it because he has felt he has done his first job? >> there are certainly more deals. it might not be the same scale, but if this deal goes off, it is a big hit. we know that investors are not that keen to sell. but if it does, it will be the biggest deal, and i expect more to come in the ipo is coming. they want a good perspective to show investors that here are the areas we are growing in. look at allw do you of these tech companies? does it confuse the way we measure the real economy and productivity? or do we look at it more from

the economy of tomorrow where everything will be changing. >> just a side note, the employees are already hedging their bets. was a personhere with a uber t-shirt and a deliveroo bag. it is about going forward and who will be the winners and losers. that is something we cannot ignore as a macro team. it raises the question about productivity measurements. we tend to be positive on technology overall. francine: thank you all for joining us. bloomberg's tech editor and lucy macdonald stay with us. coming up, as policy and business leaders gather in london for the cyprus for, we speak to this bank executive. we will also talk about periphery europe and some of the concerns of their. -- out there. this is bloomberg.

♪

economics, finance, politics. this is "bloomberg surveillance."

on bloomberg.com, theresa may has promised fresh plans for a brexit stalemate. our most read stories on the bloomberg terminal, in third place, macron's revenue for crest -- forecast. in second, the hong kong dollar jumped the most since 2003. on top, trump says it is time to take a stand. let's get straight to the bloomberg first word news. taylor: the u.k. is promising fresh plant to break the brexit stalemate after eu leaders rejected theresa may's blueprint. leaders in austria piled more pressure on the british prime minister to shift her stance.

novembera special summit will only go ahead if the u.k. makes more concessions next month. may also reiterated she is already readying to crash out after the block. in any doubt be that we are preparing for no deal, so that if we get to the position where it is not possible to reach a deal, the british people can be confident we will have done what is necessary to ensure we made a successful lead in the european union. hasor: donald trump continued to hit out at china days after announcing another round of tariffs, signaling the trade war won't end anytime soon. he made the comments to fox news. >> it is time to take a stand on china. we have no choice. it has been a long time. they have been hurting us. our farmers have been starting to do very well again, but we are putting very happy sanctions on various countries, and we are

getting along with some countries, but we have been ripped off by the world. washington, in lawyers for a woman accusing that kavanaugh of sexual assault of the -- asked the senate judiciary committee to take testimony from additional witnesses. her attorneys have said she cannot appear on monday. president trump's former personal attorney has had multiple lengthy interviews over the last couple of months was investigators -- with investigators. he was asked about trump's business in any business dealings with russia. trump'ss been one of closest associates over the past decade and admitted he made illegal campaign contributions in the 2016 election on the behest of trump. the enemies state media has reported that president has died in a military hospital.

he has been suffering from a serious on this for several months and had received medical treatment abroad and in vietnam. he is the largely ceremonial head of the largely communist country following his stint as the head of the ministry public security. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. francine: thank you so much. policymakers and business leaders are gathering here for the cyprus investment forum. five years after the island nation came close to financial collapse, it is trying to rebuild its status as an investment nation. issues surrounding nonperforming loan exposure are still impacting the island's banks.

thank you so much for sticking around. what was the rationale behind the merge? industry, big is beautiful. ryth all of the regulato , there is aowadays minimum to the cost that banks have to -- the acquisition of the second-largest bank effectively safeguards the bank, makes it bigger. therefore, able to support its customer base and generate -- francine: one with a merger be

completed? >> it has been completed on the third of september. integrationin the phase to make sure customer get a similar service by all of the branches of the bank. francine: are anymore opportunities in cyprus? >> there will be plenty. cyprus is a short market. that shows that we are toppling other banks. employeestion of bank is 80. whereas in the european union, it is 60. it is definitely the right size. francine: are you targeting anything? us.nis: not for

we want to make sure that we proceed with the integration. we expect this to take a year to be fully completed and make sure that we are a steady-state. point, -- francine: how will the bank benefit from the upgrades of cyprus? annis: the upgrade of cyprus is creating a lot of tailwinds with international investors coming on the island. hellenic bank now has a shareholder of international investors. investors are looking to acquire nonperforming loans. investmentfor direct

in areas like health and shipping. are mostly quick banks. that provides the opportunity for lending to expand, therefore the balance sheet of the bank and ensure that you have stable and healthy banking sector on the island. francine: when you look at russian sanctions, they have had individuals banking in cyprus.have you had a similar effect in turkey? annis: it has not affected the cyprus in a significant way other than tourists. the banks are ensuring they are providing best practice. francine: we have a viewer

question. keep on logging onto the bloomberg and keep asking our guest questions. this person is asking what the banks are doing about the entrance of new players and the market mobile banks payers. ioannis: clearly, the market is trending up. banks, especially hellenic bank, we are very much focused on upgrading our technology and that we provide the customer. you need to ensure that you have a good range of products, and banks tend to have a much bigger range of products to for phil -- fulfill thes requirements. you have to ensure the products either. the challenge to deliver the products. morest becoming more and

-- upgrading technology to ensure service. francine: thank you so much. lucy.l come back to we will go back to tech. apple lovers are waiting for their turn to fidget with the new apple 10 s. we will discuss that next. this is bloomberg. ♪

francine: this is "bloomberg

surveillance." the apple faithful continue their tradition of lining up at stores early morning around the world to get their hands on the tech giant's latest offerings. consumers are grabbing its largest and most expensive smartphone yes, the iphone xs. $200 more expensive than the iphone x. to see ifare watching the higher cost will affect business. excited because we have the iphone xs onset. how big were the keys? ini went down to the store london about 35 minutes ago. estimate there are about 250 people there. i spoke to six or seven of them and they have been queuing since 8:00.

i think the q key was larger than it was for the iphone x. was larger than it was for the iphone x. francine: you can also get "bloomberg surveillance." streaming live on twitter. it is a beautiful phone. nate: it is a lot bigger than last year's model. this is about the same size, if not slightly larger than samsung's galaxy note nine which is a gigantic it. it is quite a bit lighter than the 5.8 inch model we had last year. it really puts this out into a new category of devices. it.cine: the camera is on are people going to be really excited about it? what are the new features? nate: one is something you won't see which is how much more powerful it is. the other really important thing

is the camera. francine: even from the 10? nate: much more to tell in details, particularly -- in pictures, particularly in low light. a lot of people i spoke to in line were buying it specifically for the camera. the other thing is that you can once.to networks at francine: please tell me don't have to plug it every five minutes. is the battery life better? nate: the batteries are always bigger in every model, generally speaking. they last the same amount of time because mark things are pulling on the battery. it should last two -- more things are pulling on the battery. it should last all day. it's not expensive within the technology respect.

more of its gross is coming from the apps and such. francine: what happens between the iphone eight and iphone x? i need to ask you about the watch. you have also got the new watch. nate: i do, which has a larger display. i'm not sure if we can see this on camera, but it has got a bigger display and it is a lot faster and more power available to it. and x, i don't 8 think we will ever see a nine. very quickly, does this sell in the emerging markets? nate: the price tag is far too high. apple is keeping some of the endr and phones -- phones in markets. francine: thank you so much.

we will be back with lucy and john coming up next. will canada and the u.s. failed to get on the same page again. coming up, we discuss whether they can ever reach a post nafta agreement with mexico. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." i'm francine lacqua here in london. taylor: royal dutch shell is in --ks with shell declined to comment. houston-based focus oil did not immediately respond to a request for comment. uber is in early talks by food delivery companies for several billion dollars. a bid for the london-based delivery valued at more than $2 billion mark a major attempt by uber to dominate the food delivery business in europe. fargo plans to turn its

workforce by about 5%-10% within three years. that is as the ceo works to pull the banks clear of customer abuse scandals. sloane made the announcement to employees at a town hall meeting yesterday is working to clean up the bank. the lender is struggling to grow under the weight of an asset cap. francine: thank you so much. another day, another trade deadline missed. u.s.-canadian talks have failed to reach an outcome. robert lighthizer in the canadian foreign minister met again yesterday in washington. no agreement was reached, theough freeman insisted two countries remain in a phase of continual negotiation. jean are still with us.

thank you both for staying with us. against the concern is that a lot of top officials at the bank oncanada were debating whether to accelerate the pace of these potential rate hikes, they decided to stick with their current gradual partners. is that on trade, is the on fed, concerns about world growth? jean: i think trade is the key factor. ofhope to get a resolution the uncertainty on nafta at some point. i think it is a bigger deal than the actual format of the deal we are going to get. firms in canada have to make decisions on investment. do they grow their operation given the uncertainty and to try to get protection of what might be the outcome, or do they continue with the current plan? firms.eates holding back that creates a pretty challenging environment for the bank of canada because we are talking about the potentials of things to come.

it is not really happening. inflation is running at 3%. gdp an activity have been at a healthy pace. all of that would be suggesting continuing modernization. the fed now has passed the bank of canada. what is really holding back his trade and that can take different turns. i think there is a considerable amount of range of uncertainty about what the bank needs to do now. francine: how difficult is it to look at the implications on monetary policy of protectionism? we don't fully understand what the ramifications could be. jean: we don't understand them because it is not only a of theal story, but all global supply chain with mexico and more globally impacted by this. i think nobody really knows exactly how they're going to be working. i do think the uncertainty component of it is not knowing byctly what the deal is

itself the biggest factor right now. that is something that over the next few days we look at clarity and not to be constructive. margin, the adjustment we are going to see is something the canadian economy can cope with one way or another. the uncertainty could lead to people making permanent decisions that are significant. francine: lucy, i know you stock pick, how much does central-bank policy underlying everything you choose to do? how much do look at the fed? do.: we was spend a lot of time thinking about monetary policy because it is the most important underpinning factor for all asset markets. we do watch it carefully. thed curve is one of factors for how markets are going to behave going forward. if we do see more flattening, that is a signal for markets for next year.

francine: were you see the biggest risk for central banks? from the fed or ecb? jean: i think the ecb is pretty not autopilot, but i think we have a pretty clear path for the next few months, at least until summer next year. after that, i think they won't temper too much with the policy outlook. is in thee fed situation where we have a bit more uncertainty. we have conviction that they are going to continue with the gradual normalization, but we haven't seen the full impact of the stimulus. we think it is going to be natural headwind coming from this, but we don't know. there could be more inflation, and in that context, how does the fed react? that could have significant effect on the market. i think there is more uncertainty on that part. the headwind from fiscal --

francine: basically that it runs out at a time when the economy goes to a downturn. jean: we don't know what the midterm will look like, but if we have a democrat win, that could: to affect the longevity of the tax cut we have seen. call into affect the longevity of the tax cut we have seen. these are scenarios that could create more risk on what the fed might be doing on the back of this. hand, hower responsive will the fed be to the weakness of em? i think this is idiosyncratic, not driven by u.s. monetary policy. i don't think it is a key factor. if the pressure on him or to increase, it could lead the fed -- em were to increase, it could lead the fed. francine: thank you so much for joining us today.

stocks in europe following gains across asia. markets is he to be focused on this bullish move we are getting. it has been characterizing most of the week. at the same time, we are still dealing with trade tensions. treasury yields edging higher. "bloomberg surveillance. continues in the next hour. tom keene joins me out of new york. this is bloomberg. ♪

francine: trade war. u.s. stocks close of fresh

all-time records. china has its best day in over two years. eheresa may ambush at the salzburg summit. dk government promises a new solution. stocks taper. suffers.of japan good morning, everyone. this is "bloomberg surveillance." i'm francine lacqua in london. tom keene in new york. the u.k. papers are going crazy. they say this is a humiliation for theresa may. we know that theresa may will probably come up with a new proposal on northern ireland, but the brexit seems to have taken aback step certainly when you hear the heated words between theresa may and emmanuel macron. tom: especially when you look at the calendar. francine: let's get straight to the bloomberg first word news.

taylor: president trump indicated a trade fight with china won't be a short one. in the wake of the latest round of tariffs, the president told foxnews it is time to take a stand on china saying they are hurting us. the next round takes effect on monday. beijing has reacted by slapping duties are more american products. the woman accusing brett kavanaugh of sexual assault is willing to testify, but not until next thursday. bloomberg has learned that lawyers say she can't appear on monday as the senate judiciary committee requested. she once testimony from additional witnesses. no response yet from the committee. president trump has highlighted the scandal if a foreign government tries to meddle in the november election his issued an order making it easier for the u.s. to launch a cyberattacks.

the european union leaders timed that the u.k., that is running out to make a deal on brexit. the block says there will be a special november summit to sign an agreement only if the u.k. makes more concessions next month. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs, this is bloomberg. tom: thank you so much. how about record equities? bonds, higher yields. s&p 500, 2943 and still elevated this morning. steepening risk on euro. interesting fx conversations. vix, 11.90.

i would expect that to be lower sell stocks go to cash, record highs. weaker yen. gold with a lift. francine: i like the fact that we're looking at gold. stocks falling in asia. because there's a bit of bullish move out there. that is continuing. euro-dollar, also yen on the back of what we heard from the boj. tom: good morning to the late marty. here is the mother of all trends. here is the great depression. there is no equivalent in the modern age.

go, one great bull market. next great leg in the bull market. the trend is your friend. francine: i have a chart which i have to thank hillary clark for. it is one of my favorite charts looking at the smart money flow index. the u.s. bull market is about a decade old now. the funds, which is what we have, don't tend to rush in right at the open when price is actually driven by emotions. this, andsting bit in i will push it out on social media, is that this question that this indexing is that markets finish strong whenever this moves in tandem. when they diverge, there is probably trouble ahead. since laster, it has slowly pulled away. the u.k. is promising fresh plans to break the brexit

stalemate after eu leaders rejected theresa may's blueprint and warned that time is running out. two days of talk in salzburg broke up without progress. let's take a look at the newspaper from pages -- from pages. -- front pages. humiliateddian, may as leaders tell her heart plan won't work -- her plan won't work. balls. us now is andrew overall, welcome to the program. be close to anto agreement, one day they are not. is this not just the nature of negotiations? andrew: i think it is, and i think the europeans enjoy this process.

eventually, they stay up all night at the end and the deal is done. i think it is interesting. i read all of the papers this morning as a bond investor. expectation is that there will be a deal in november and it will not be that dramatic. it is important that they're not going to agree a great deal. all of the future trading stuff. they're going to have to do that later. headlines in the theater, there is going to be a deal we think announced before the end of this year. francine: is that what is priced into the market? andrew: i think the market is probably pricing a higher outcome than what we would suggest. you have the status quo for the next couple of years and dramatic in terms of the economy -- undramatic in terms of the economy. there's a chance it all falls apart. that would have a significant macro impact.

our estimate would be that the market is pricing in the higher probability. more attention maybe to the theater. i think u.k. interest rate risk being underweight makes sense here. within the broad sense, we are back to school and back to september, back to business as usual. what is the vibrancy of london right now? london, deutsche bank talking about making london a branch. i don't buy it for a minute. how is london doing? andrew: i think london is fine, they can improve the traffic and weather. in terms of the city, a think there is a lot of noise. one of the car companies early on seem to get a lot of concessions. you have a lot of noise, but , whenou look at the banks you look at their net additions -- i think there will

be some fragmentation. i think there will be some banks that will have to hire people elsewhere in europe. the baseline is not a huge change to how european capital markets work. there is significant risk you have to pay attention to as well. tom: i like that francine showed the charts. this is a little bit like the guardian photo as well. i get it. the suits andn, ties and lonely prime minister may and all of that this morning. great, but how lonely is she? is this just theater for the media. something to worry about in september, or if i am an investor, george really care about brexit? -- do i really care about brexit? are an investor, there is a high probability of not a dramatic outcome.

uncertainty over the future trading arrangements, the macro implications, fairly limited. there is a risk case you have to pay attention to. look at all european negotiations. they stay up late at night and miraculously there is a deal at the end. to some extent, there is managing constituency. to some extent, the europeans may think that being tough, appearing nasty gives theresa may cover to seek a deal at home. i think it is fascinating as an investor. there is a high probability of an outcome before the end of the year, probably in november. although it doesn't answer very many questions. all of the questions about future trading arrangements are going to have to be sorted out. the cliff edge moves forward to 2020. francine: we have a viewer question that will brexit lead to -- in the short term?

andrew: i would say no in the sense that pushing forward, maintaining the status quo, there is no reason they should have a big impact on the economy. i think if you have a no deal breakdown, the u.k. walks away, then you have significant recession risk. over time, when we try and figure out what this should mean in terms of our long-term growth estimates, we can't find a very significant impact. as long as you avoid the sudden , i think probability the macro economy continues on the path we have been on. the uncertainty is not helpful. i think this big uncertainty is going to move on for another two years thinking about investment decisions, or if you are a city firm, thinking about where to be based is not helpful. us fromrew is with pimco.

on asia, yes. on trade, a lot of good essays this morning. on the trade dynamics and president trump. stay with us on twitter worldwide. this is bloomberg. ♪

taylor: this is "bloomberg surveillance." hands of the iphone took part in a familiar ritual today. around the world, they lined up at apple stores to grab the latest version of their favorite device. their spending more to do it this time. iphones are now up to $200 more expensive than the ones that came out last year. wells fargo hopes slashing thousands of jobs will pull the

bank clear of scandal. the ceo plans to cut up to 10% of the company's employees over the next three years. wells fargo has promised $4 billion in cost cuts by the end of 2019. much.hanks so one of the things we try to do here is have intelligent conversation on international relations. trade has been front and center. here is the president of the u.s. on china. >> it is time to take a stand on china. they have been hurting us. our farmers are great and our farmers are starting to do very well again. it is very interesting. we are putting very happy sanctions on various countries. we are getting along with some countries. we have been ripped off by the world. tom: one of our themes to the morning, we will talk to kevin

later. i have on important -- an important opinion piece. right now, we want to dive into the sinking of the people of china. freya has some legit experience of the living in beijing. you have an exceptionally important thought in that china has the ability to neglect their households. does the president completely underestimate the ability of the chinese to just wait him out with sacrifice? it is obviously a very different political environment. i think the situation of the chinese authorities has been complicated a great deal by the appearance of swine flu; on the agenda. that will hurt consumers quite a

lot. actually, the chinese authorities are very much aware in a way that they have not been previously of the damage the import tariffs due to their own consumers. following tariffs last year with a further round of july, we now hear them talking about making more widespread cuts. there are really going for this transition towards either consumption. whether they will make it or not is a totally different question. the whole trade war issue is kind of a roadblock for that. they certainly, in the most recent response have been very 5%-10%d with only tariffs on goods compared to mr. trump's. we really see the chinese authorities, it is almost like a role reversal that the chinese

authorities are recognizing this could be damaging to their own consumers and a way that mr. trump overtly has not done. tom: a soybean former in iowa can protest, i get that. can someone protested china? can an industrialist two hours west of shanghai, can they protest these tariffs? freya: they probably could, but we might not know about it in the same way we would as the iowa soybean farmer. i heard your clip therefore mr. trump before i came on. maybe the reason why farming has been better recently is because of chinese stockpiling of these soybeans. back to your point ahead of those tariffs, your point about whether we would hear any processing -- protesting in china as the way you could and the u.s., the chinese have

stopped publishing the data on the number of riots and protests that they use to publish previously. they stop doing that a while ago.it is not related to the tariffs . we wouldn't know about it in the same way. that said, the chinese authorities do have to respond to some extent, it is just not the same kind of electoral cycle we are used to in the u.s. or europe. francine: when you look at china, do you worry that slowdown is so deep there that it will continue into the emerging markets and changes your outlook overall about fixed income? andrew: the baseline is no. we think that you have the new tariffs, a measure chinese response that is more or less the end of it. forecast,se, in our it has a small impact on chinese growth, but not big enough to be significant fofrom the market perspective.

you have a positive and negative risk case. the negative risk case starts to have an impact. mayshort asian currencies extend, there are better ways to do it. there is an upside case. we think with donald trump there is some element of fear. he may just declare victory and get rid of the tariffs and say on tv or twitter that everything is much better. there is an upside and downside case. the baseline is worth a couple of tenths, but not a big impact. tom: thank you so much. . an important conversation in the 10:00 hour. i was beat to the dean of the columbia graduate school of business. exceptionally important conversation for trump

supporters and critics. stay with us worldwide. this is bloomberg. ♪

francine: this is "bloomberg surveillance." tom and francine from london and new york. the bank of japan cutting purchases of superlong bonds by 10 million units in today's operations.

jgb'snk is accumulating the slowest annual pace in seven years. ands get back to freya injure. -- and andrew. be one of theg to economies that will save us from a downturn three years from now? : i would answer that as a categorically no. i think there has been some decoupling of the japanese economy from the external environment as we are speaking, in the sense that the economy seems to be changing lane from the business side of things which is very strong still in q2, but the wage growth is now finally showing a sustained uptrend. for the first time in a very long time-uptrend in wage growth. that to help private consumption, probably not in q3

because we have a higher base in q2. they do have that driver in a way they have previously. i say that is just a function of the fact that we were in a very strong external environment, and have been for a while in china providing a lot of the strengths there. there are currently -- the recovery we have seen in japan has been led by trade activity, which has caused a tightening of labor markets. that has led to the situation we are in at the moment. fordld look to japan coming jobs down by the rest of the world rather than becoming a savior or provider of real growth. the part where i would be more worried about things is on the financial side. in that case could be a catalyst for any kind of asian financial eruptions we might be seeing their. francine: what is your take on jgb's. andrew: we think it makes sense

to be underweight. shifts inongoing terms of yield curve control. it seems like a pretty asymmetric position. francine: thank you so much freya. andrew stays with us. ching up next, mathieru abran. -- mathieu chabran. whether we are going to see consolidation in his industry and so forth. this is bloomberg. ♪

tom: francine lacqua in london, i'm tom keene in new york. a special good morning on twitter. byhave been thunderstruck

the response to this technology of streaming bloomberg surveillance. come on over here to the screen. that is from genoa. there is a heart from rome. we have got a stream and we come back on, jack dorsey. do you think i need a beard? should i do the bare thing like jack -- the beard thing like jack? francine: if you get to 100 million views. thank you. we are excited to be on twitter and we answer your questions on the terminal and on twitter. let us check in on what is trending. britain has become a largest importer of cheese. paris -- theresa may has

promised fresh plans to break the stalemate. our most read story on the theinal, in third place, hong kong dollar jumps the most since 2003. trump says it is time to take a stand on china. you can find out more by logging on. let us get to the bloomberg first word news. taylor: another deadline has come and gone with no nafta agreement between the u.s. and china. -- canada. they discussed tough issues in the meeting with u.s. trade representative robert lighthizer. the two sides are in continuous negotiation. american companies should not count on exemptions from the latest round of tariffs on chinese goods. the trump administration has not put an exemption process in place, unlike it did for earlier

tariffs. the white house is giving companies more than three months to move supply chains away from .hina for raises tariffs -- before it raises tariffs. trump's former attorney michael cohen is talking to attorneys for robert mueller. talking aboutbe the president's business and dealings with russia. mike pompeo hints that talks with north korea are making progress secretly. north tells fox that korea is making progress on denuclearization. he says it does not get reported and he is glad. -- have have reported questioned whether the u.s. has much to show after the summit between president trump and kim jong-un -- kim jong-un. 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 taylor riggs. this is "bloomberg." francine: thank you. sachs,iving goldman matthieu chabran cofounded ti kehau capital. last month, the group opened a new york office and yesterday, its first earnings report saw a seven person earnings increase. we are pleased to see the cofounder joins us now. challengesok at the for the asset management industry, you have bought a smaller company to increase your footprint, is consolidation the name of the game? we you go after other companies? -- will you go after other companies. ? matthieu: thank you for having

us. we reported our first results and we announce the acquisition of the leading independent real estate manager in france. i do not know if the name of the game is consolidation but it is about being a cross as a platform when it comes to private assets. we have been doing that since we started and by hitting the $20 billion mark with this acquisition, we are reaching a milestone to take the business further. francine: what is your take on brexit? do you want to increase your presence in the u.k.? matthieu: that is a good question. we moved offices in london from a smaller office to a bigger office last week. london is our second largest office worldwide.

it is a key center. we are not subject to regulatory the london center remains key. any mobile investors will stick to this gateway to europe. we remain committed to london. debt andbe private private equity, the trend in the united states is financed or the private process. -- is financed through the private process. will europe see debt through private process? as you know, the u.s. , you have got specific vehicles like the bdc's.

the opportunity for private debt emerged on the back of the 2011 with2008 and global players joining. the opportunity has become structural. it becomes more punitive for insurance companies, and that is where credit asset managers and cross that's it managers -- cross asset managers have a great opportunity to finance the economy in europe and europe is fragmented. the only thing we have in common is currency. being local is key. it is paramount to be in every market. tom: what can be the french distinction of this new capitalism versus germany? what can france due to reassert a capitalism versus germany? mathieu: i will tell you one thing.

when i wasgo, traveling to new york, i was carrying my london business card. for the past 12 months, they did one great thing. they restored trust and confidence which is key for global investors to keep allocating. vis-a-vis germany, there have been a number of political factors across europe and at the time, it appears for the past 12 macronor so, that mr. has been doing a tremendous job. francine: talking about germany, how satisfied are you with your partnership with deutsche bank's asset manager? could you increase your stake? mathieu: new win public six months ago. deutsche bank remain 75% shareholder. at the time, it became less than

3% shareholder to access the german market. we have no german presence. we saw that, together with increase that access to private assets and agencies and for us to get access to the german market. we are moving in a satisfactory manner. francine: going back to brexit, what is your target for assets under management this year in the u.k.? at wherewe do not look do the assets come from. we started in paris 15 years ago. we have a strong domestic investor base. 25% aternational base was year ago. we are looking at that as thessing the u.s. market,

asian market, with his global investor base, looking to increase their location with private assets. this is evidenced by industry studies. tom: thank you so much. we appreciate it. balls of pimco will stay with us. let me show you twitter. we are excited to be streaming all of bloomberg surveillance on television. this is our home page. it is a miracle, it is digital. do i look digital? ♪

francine: this is bloomberg surveillance. budget -- over the over the italian budget hangs in the balance. there is fear of a breakup of the government. coalition leader's demand such as tax cuts and basic income rest on statistics. fargo. us now is wells political experts are saying has want risk because liga

so much space that entrepreneurs that are northern-based. is that our premise? >> it is one of the factors to consider. the compromise must be reached. francine: who holds power? thisthink it is 50-50 on one. salvini is on the right. this is an alliance between partners. they need to find partners. they are not going to risk bringing down the government. they will reach a compromise on this. they will make noise. they are supposed to announce a new decree to deal with migration. no major drama, no crises of government anytime soon. francine: what does it mean for yield spreads? andrew: it has widened a lot.

you should have more risk premium in italy given the government we have had, a government that keeps talking about leaving the euro. possiblear term, it is -- plausible that italy titans. the medium-term are difficult and not getting easier. tom: we were talking about french capitalism and the distinction of it. what is italian capitalism? outgang: well, if you look what the five-star and the liga have been doing, we are talking about the bigger role of the state, which is not positive. the way they handled the collapse of the bridge and the way they attacked the company running it before in the investigation was done.

sort of approach, the bigger role of the state and money supposed to come from the sky. clearly, they are realizing the money is not coming from the sky. this government does not have much positive to offer. tom: is there an opportunity in italy? opportunities since world war ii to profit from italy. what is the opportunity now? andrew: we have been underweight this year. in the short-term, it is a trading matter. we could see volatility. the long-term issues are serious. long-term investors should be careful on italy and you do not get paid that much. you can buy a u.s. treasury for a similar yield. potential growth is close to

, the next recession is not going to be easy. do a lot of these bonds move on the back of who replaces mario draghi? andrew: i think it will be the same. is something which seems not to controversial. across most members, it is less controversial now as a tool. going forward, it will be interesting to see who comes next. he is as much a politician as a central banker. the approach they have using the capital is something where the controversy over qe, it took them years to start, far too late, hopefully next time, it would not be the same theater. francine: does the next three or

four years prove difficult for the e.u. to stay together? we do not have a capital markets union. we have france becoming less popular by the minute. you have germany that looks fragile. are we going to test the 2011 greek crisis moments? mathieu: that will depend on the markets. 12 to 18k at the next months, it is a write up between elections, the council, the ecb, there is nothing happening. is there appetite to do significant reforms? zero appetite, regardless of macron or not. union is more focused on trying to strike trade deals abroad. creating some sort

of offer. they are not -- of buffer. they are not making it bigger. francine: thank you so much. you both stay with us. mthuli ncube oflen zimbabwe. that is at 11:30 in new york. this is "bloomberg." ♪

taylor: this is "bloomberg surveillance." let's get the business flash. it is a combination that would create the world's largest airline. emirates is looking at taking over etihad. both airlines are denying negotiations are underway prepared -- underway. that is your flash. tom: i will get this out on social.

this is an essay in bloomberg opinion on emirates and etihad. here are some of the thoughts. these sensible thing to do would down, cherrytihad pick the best aircraft, and employees. the group will have to maintain tovice levels to abu dhabi please the family, the final arbiter of economic and political power. fascinating, not only for the united arab emirates but for all of the middle east. air fre: as you know, ise and alitalia, this national pride. it is difficult to close it down.

if these airlines merge, they would be biggest -- would be the biggest in the world, bigger than american airlines which has a market value of $19 billion. it will be fun to watch. these are rivals. you merge them, it may give something interesting. tom: the cultural ties interesting. wolfgang piccoli and andrew balls. our emerging markets and opportunity? andrew: it is an opportunity. when you have seen this underperformance in emerging markets, you see more of an opportunity. there is this risk across countries. we had divergence in growth this strongeronger u.s., dollar. we think next year, some re-sync

renovation, the fed coming to the end of it tightening -- it's tightening. it makes sense to have exposure. the fx looks attractive. where is the source of shock? when you study em, where is the shock to come? mathieu: i guess it is the global trade story. all emerging put markets in the same basket, especially when we look at the politics. to ability of countries implement reforms and to shrink the budget that is required, in the case of argentina or turkey. story. it is the trade the domestic politics are becoming more of a factor for

investors. doncine: does it have to with the instability or possible slowdown in china or is that going to be the end-all of markets? mathieu: you not think it is that. it is more -- i do not think it is that. it is more the external backdrop. china is one factor but it is not standalone that makes the difference. francine: do we need to resolve turkey? andrew: i do think so. turkey, -- i do not think so. turkey, argentina, there are a number of factors. the outlook for the fed is important. when people are trying to adjust positions that can amplify movements, i can see other places doing fine while turkey

seems to have a high level of political risk. tom: thank you so much. not enough time today. we need to get you back for more extensive conversation. our next hour, worldwide will be extraordinary. not only peter hooper joining us from deutsche bank. we are going to talk with a moderate republican and we will have a discussion on dollar is a shoe in of currencies -- on dollarization of currencies. we will do that in our next hour. this is "bloomberg." ♪ this isn't just any moving day.

this is moving day with the best in-home wifi experience and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows. 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. morning, again, as in january, that very of last year

-- february last year, record delhi's in this market. -- record highs in this market. the fed will meet, they will ignore the yield curve, they will ignore argentina. peter hooper of deutsche bank. etihad, it is a disunited arab emirates. i'm tom keene, ready for the digital world. francine lacqua, it is exciting. we're on digital. i am growing a beard like jack. are on twitter, live on twitter, you can follow us. ask guests a question through twitter and our terminal. you have two venues. tom: cool for our international audience.

let us migrate to taylor riggs. taylor: president trump indicates a trade fight with china will not be short in the wake of the latest round of tears. it isesident told fox time to take a stand saying they are hurting us. the next round take effect on monday. beijing has retaliated by slapping duties on american products. the woman who is accused brett kavanaugh of sexual assault is willing to testify but not until thursday. lawyers for christine blasey ford say she cannot appear on monday as the senate judiciary committee requested. she also wants testimony from additional witnesses. no response from the committee. preseident trump has highlighted the potential for a counterattack if a foreign government tries to meddle in elections. he has made it easier for the u.s. to launch cyberattacks. order thatescinds a

required consultation among agencies. the european union leaders warned the u.k. that time is running out to make a deal on brexit. to come up promised with new plans to break the stalemate after the e.u. blueprinter current at a summit in austria. 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. blueprint at a summit in austria. i'm taylor riggs. this is "bloomberg." tom: equities, bonds, currencies, equities looking better than good. risk on curve steepening. noteportant deutsche bank earlier in the summer. oil with a lift. there is that high, with the s&p

2931 on the close. gold, i just picked gold. francine: gold is always a beautiful thing to look at especially when the markets are on a high. top marks for tom keene on a friday. europe are following gains across asia. there is this move that has characterized most of this week. treasury yields edging higher with the dollar, though the u.s. dollar is set for its worst week since march. tom: thank you. we have got a presidential tweet about the equity markets and this is political optimism. any president would do this. congratulations, the united states of america. through this market, one of the great optimists has been peter

hooper of deutsche bank. his theory is grounded in economics. his application of theory has been one of optimism. are you still optimistic and is for next yearall a better than good economy away from the gloom they we go back to 2%?- that we go back the fiscal stimulus is going to last into next year. financial conditions near the high point in terms of support. toare looking for growth continue in the 2.5% to 3% range next year. it will begin to slow after that but that is good news. the fed has to get the unemployment rate accept to avoid a recession. -- great backup to avoid a recession. we think they have a good chance

of avoiding a soft landing from unemployment. why the first time? i have not heard this phrase in ages. soft landing. why is this time different? peter: take a look at the data. the modern history of national income accounts in the u.s. every recession has been preceded by an overshoot of unemployment that has gone below full employment levels. inflation started to rise and the fed tightened. isompanying those downturns the fact that investment in the

economy has gone too far. we have over invested in housiny , in business capital. you do not see it. it has been a gradual recovery. productivity is low. business capital is growing slowly. tom: i just got any mail which foggies.are two old go to francine. she is more digitally appropriate. francine: in my head i am. what is the one thing we misunderstand about the markets? if where going through a bull market, what will make it corrected? -- correct it? peter: we are starting to feel a little pain. as the fed continues this gradual pace of rate hikes, you will see, you are going to see spillover into equity markets as well.

part ofes the latter next year. you have almost always seen this kind of pain. there will be correction along the way but the good news is that correction allowing the labor market to adjust enables ando have a soft landing continued expansion. does anything look like it is in a bubble now? colleague, who is more bullish than i am about the u.s. and global economy, will confess that the valuations are on the high side, not quite bubble but getting close. i am going to go back to the market strategist, alan greenspan. greenspan was adamant that a

good stock market benefits and economy. uproar, is that true that this bull market creates a confidence that feeds on itself? peter: not only does it create confidence and household and , but theconfidence most important channel is household wealth. household wealth to income ratio is at new highs. tom: we have got glenn hubbard coming up later. i want to talk to him about supply-side theory. does it work? .udlow says yes t peter: the congressional budget office has longer-term debt projections. those numbers do look troublesome as you go out the next 10 to 20 years.

the baby boom generation is going to put pressure on spending. we're going to have to raise the revenue shared to pay that. we have challenges ahead on that side. peter:, is there a danger that the fed will not be able to hike as much as they want to in the next eight months? peter: it would be a surprise to me given the momentum we see in the economy, the labor market. there are risks on the horizon. should trade conflicts spill over into a confidence s thatm, my sense i things are going well so far in terms of avoiding conflict. if a nafta problem gets into the issue, if a trade war with

europe comes up, we are in trouble. if we begin to get a significant amount of pain in emerging markets spilling over into , they space, i think yes fed would positive we saw a drop in financial conditions with a major equity market condition. tom: much to talk about here. i willn the morning, speak with glenn hubbard from the columbia graduate school of business. he has announced his retirement. he will exit stage right and right to economics. we will quiz him on supply-side theory. stay with us. this is "bloomberg." ♪

taylor: this is "bloomberg surveillance." fans of the iphone took part in a familiar ritual. they went to buy the latest version of their favorite device. to $200iphones are up more expensive than the ones that came out last year. mania is starting to show signs of fatigue. canadian cannabis producers took investors on a wild ride and reported its biggest drop since july. it fell 17% and is down in premarket. day before, it doubled, wiping that out, gaining 40% before the close. slashinggo hopes is thousands of jobs will pull the of crises.clear

the ceo plans to cut up to 10% of the company's 265,000 employees over the next three years. wells fargo has planned for billiondollars -- $4 dollars in cost cuts by the end of 2019. that is your business flash. tom: jump over to this on your business chart, the fomc calendar for next year. peter hooper with us to drag us into next year. everybody is fixated on next week. tell us about next year. peter: next year is interesting. some of your dates do not line up with the end of quarter which has been the pace. has decided to go to press conferences every meeting.

this opens up flexibility. should the labor market begin to moreup more, should we see inflation pressures, if inflation expectations begin to rise, they will do what it takes. tom: the vector of higher interest rates is not linear. the higher they go, the more impact it has. clickoes, this matters, in? peter: there is uncertainty about the neutral level of fed funds. we think that is somewhere in 5%-3% range. tom: alan ruskin can publish it. yesterday quoted 3.13 on the 10 year as an important point.

on a 10 year yield, when this is click and word affects the economy. peter: it needs to get above 3.5% on the 10 year and we expect to be there by the second half of next year. we think things will begin to slow and some of the painted emerging markets -- some of the , all ofemerging markets this begins to reduce growth. in 2020, what happens are we going to see a recession or a reduction? 2020 is going to be crunch time for the u.s. and worldwide. peter: we think it is going to be slow down time. 2%,ee growth getting below an f to begin to move the unemployment rate up. -- enough to begin to move the

unemployment rate up. that is a narrow window. has going for it is a lack of an investment overhang. normally, you begin to slow things down and this overhang kicks in and you see a drop in cyclical spending. we do not have to see that this time. we think the fed reversing course, cutting rates a couple of times in 2020, helps to cushion the blow. tom: one of the great essays of the summer is on the yield curve. is yield curve is where it but do not give us this recession and interpretation. update us on why the curve is less problematic than many people think. peter: the long and has been held down by central bank balance sheet expansion. is normally 50m basis points, historically,

closer to 100. it is at zero or less. that is going to slowly come back. such a depressed levels, this collapse we have had is due to something that is not related to recession, it is the term premium. the risk neutral portion of the has come down a bit. i think the market is looking forward to seeing slowing. at levels to say we're going to have a recession. tom: peter hooper of deutsche bank with us. willnuing with him and we talk about this debate over what emerging markets should do. without question, the interview of the day, if you have nostalgia, this is the conversation.

coming up from outside philadelphia, ryan costello of the sixth congressional district. this is "bloomberg." ♪

francine: this is "bloomberg surveillance." let us take a look at the newspaper pages. it is all about humiliation and disaster. and the daily mirror, may is

shattered as the e.u. rejects her plans. macron'slegraph, attack on brexiteers. the embattled prime minister faces a revolt. the summit turns ugly as the e.u. hits at may. may says she will not roll over on a deal. what does this mean for theresa may? where does it leave things in the battle between london and brussels? our bloombergby columnist. this is a disaster but it could just be a negotiation phase. >> you would think she is on the ropes. it is hysterical. look at what happened.

nothing changed. all that was surprising worthy tones. we had harsh words from the likes of president macron. perhaps, theresa may was not prepared for that. no one has changed their position. we were not expecting a deal at the summit. areing has shifted so we going to have to see what she comes up with. is theng to look for conservative conference, the week after next. can she get through that with her authority intact? we have the european council summit in october. that is when they think they need to come to some proper arrangement. when sheebated over look like she is about to head out the door but do not count her out. francine: does theresa have to come up with a new plan or does

she tweak it? it does not have to be agreed upon in order for us to get a withdrawal. the irish border question does. that needs to be result. in the transition agreement next year, that is when the details, at that point it can stand or be rethought. the focus needs to be on ireland. she has said she will come up with a new plan for the irish question soon. that will be the next piece of information where we can see whether the side start to come together. francine: do these make a difference as to what bankers are thinking? look at the news out of

the financial institutions. saying, we have put in our plans, according to the worst case scenario. it is not going to make any difference whether we get no deal or some deal. we are putting those into action. tom: always a briefing on brexit, a continuing story for the united kingdom. you are in from london with deutsche bank. you have got a meeting at 11:00 a.m. with peter hooper. your knees are shaking. tell him the trend is your friend. still our charts. ♪

tom: good morning, worldwide. good morning on twitter. francine lacqua in london, i'm tom keene in new york.

peter hooper deutsche bank with us. we have been brilliant about acute notes on the dollar, the in the with the dollar next year, what is the view? peter: george has been on. he is calling for a weak dollar. part of it is the market looking ahead for a mature cycle in the u.s. this is feeding into weakness. as we get into next year, we mode.to see ecb in exit it has been a good call. tom: what against -- what about against em? you are looking at me like, you do not know what you're talking about. peter: you have a mixed bag.

em is going to be under stress as the fed raises rates. as trade tensions, vis-a-vis china, going to be putting significant pressure on the rmb. there is dollar weakness against the advance currencies, dollar strength against the yen. tom: peter hooper, thank you so much. here is taylor riggs. taylor: another deadline has come and gone with no nafta agreement between the u.s. and canada. foreign minister said she discussed top issues in a meeting with robert lighthizer. the sides are in continuous negotiation. american companies should not count on exemptions from the latest round of tariffs on chinese goods. the trump administration has not put an exemption process in place, unlike it did for earlier tariffs.

the white house is giving companies more than three months to move supply chains away from china before it raises tariffs. president trump's former lawyer michael cohen is talking to attorneys for robert mueller. he has had multiple interviews. he is said to be talking about the president's business and dealings with russia. secretary of state mike pompeo hints that talks with north korea are making progress secretly. pompeo tells fox news that the u.s. is making progress on denuclearization. he says it does not get reported and he is glad. skeptics have questioned whether the u.s. has much to show after the summit between kim and president trump. 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 taylor riggs. this is "bloomberg." thanks.

46 days until the midterm election. kevin cirilli with us right now. axios notes there is voting in minnesota for the midterms. what is the strategy into the weekend, the message for republicans and democrats? kevin: democrats are going to continue to talk about judge kavanaugh. ast has engulfed the beltway this hearing is looking like it is not going to happen given the she has said that will improbable but that you will be willing to testify later this week. what republicans are going to be talking about, the economy, and trade. this is where it is interesting to get into the divide. to many of president trump's supporters out of the beltway and they say there with

him on trade. you talk to senators from iowa and they have got issues. tom: thank you so much. greatly appreciate it. a nostalgia for a politics of the used to be, this is the interview of the day. ryan costello has been gerrymandered outside of pennsylvania. he is with the six congressional district. he is retiring and he is a republican from a different time and place. are you a dinosaur? can democrats and republicans find a middle ground? think our politics should be anchored from the middle in terms of solving problems. we are not going to address the big stuff, spending, to name one, if we do not anchor things from the center.

in this election season, republicans have to focus on the , addressing the opiate epidemic, and point to the fact that democrats are looking to investigate everything. the democrats are going to turn this into a referendum on president trump and his ratings in districts such as mime. it is shaping up to be fascinating. zeitgeist right now is women. how do they garner those most? ryan: you have to get beyond the president. you have to accept some people are not going to like what the president says and does. focus on your message and what you have done and how your votes have improved the economy. some of those kitchen

table issues, the opiate epidemic. we have increased nih funding. we have made our school safer. there are areas we can point to where we have done good work but let us be honest. a almost every new cycle. thedo have to break with president at times when he says things that are off-color. not, those suburban women who view trump unfavorably are not going to give you the benefit of the doubt. tom: you are the definitive gerrymandered congressman. you have lived it. how do we need to improve a process that america wants, which is to straighten out these stupid districts. what have you learned? ryan: that, no matter what you do, someone is going to complain.

one definition of fair district is another's definition of gerrymandered. the most important thing is that lookve compactness and you at a map and say, there is logic. our counties are not drawn in perfect shapes. our school districts are not. there is going to be some element to these districts. having some standard is the most important thing we should aspire to. say, it has been viewed as a political exercise. it is a political process. we vote for state representatives and governors who are charged with drawing these districts. we cannot be so naive as to think we can remove political considerations from redistricting. do republicans worry

about speaking up against president trump? i think, for some, that is the case. there are districts that are pro-trump. there are some that are anti-. at the end of the day, voters go to the polls and they can separate what the institution is from the institution of congress. congress is charged with being the check and balance on any president. you have to speak up when you disagree with any president. some of the trade issues are of concern and some of the things he says. districts, you do have to speak up. you also need to say where you agree with the president, even if you are a democrat. if all they're going to do is be anti-trump, that is not going to

sell well. do worry about the democracy of people are afraid to speak up? then the institution of congress is not working. minelicans in seats like are best advised to speak up when they disagree. tom: this goes back to what mike about thees republican identity crisis. tot does the gop need to do react identify to five after the shock of the president's victory ntify after the shock of the president's victory? ryan: we need to make sure we that with workforce development training, education,

college is great for some. we need to make sure those curriculums are translating to good jobs. 3-d manufacturing is but one example where you do not have to have a college degree to get into that space. the technology platforms which are driving economic growth are areas where we need to make sure we are not leaving people behind and that dislocated workers have opportunities. that is the message that is beyond partisanship. the party needs to make sure they are speaking to all voters. francine: thank you so much. costello from pennsylvania and peter hooper of deutsche bank, staying with us. .oming up, mthuli ncube we will ask him about emerging markets and the promise of africa. this is "bloomberg." ♪

tom: washington, d.c. beginning international diplomacy in the autumn season. andmeetings in bali important meetings coming up. traffic in manhattan will be appalling. francine lacqua london, i'm tom keene in new york. we are honored to begin our coverage on international economics with the finance minister of zimbabwe. his name is mthuli ncube and he begins -- and he brings economics from oxford and

cambridge to us. you know statistics and volatility and you lived it with your currency. do you have a currency in control? moment, ncube: at the we have a currency regime dependent on the dollar. a domestice back to currency but that will require consolidation and manage policy a terms of holding pollux -- building blocks and engaging partners. tom: argentina is not zimbabwe. whopoke with johns hopkins have been critical of the regime and how your moving toward a quai-currency. argentina, the zimbabwe

lesson? country ncube: every needs a stable currency, a currency investors can rely on. the experience has been building toward a stable currency to be issued in the future. argentina has been impacted by the oil and emerging-market volatility. south africa has been impacted. you have different factors impacting these global emerging markets. zimbabwe's volatility has been driven by internal factors and some external factors. we are pleased with the way the oil prices has held up. the other metal prices have held up. we produce tobacco.

in terms of the global impact of global demand, we are benefiting more than argentina and south africa. francine: your country will continue to use these bond notes and the currency system until the economy stabilizes. is there a time frame? minister ncube: we need this to happen sooner rather than later. such as makings sure that we have a full monetary policy committee that is able to move toward a market-based allocation of where those who are exporting can have a foreign currency account in dollars and build those building blocks for full monetary policy. also, rebuild reserves, including gold, that we need to issue a domestic currency

safely. francine: how worrisome is the current outbreak in zimbabwe? minister ncube: the cholera outbreak, we are containing that. million.aised $29 we are raising more from our partners, both internal and external. we have launched a crowd fund domestically, our contributors have contributed. i am pleased with so far how this has progress. resources but the response has been phenomenal. the response by government. tom: let us have a question from dr. hooper. fed, we were talking about the fed raising rates, at what point are you

concerned, tom asked me at what level of 10 year yields, would become a pressure point for emerging markets? if the fed gets to 3.5%, is that worrisome? minister ncube: that is. means that hardening monetary policy in the u.s. would be worrisome. we wanted to stay where it is. the u.s.e are using dollar as the dollar strengthens , that hurts our competitiveness in terms of exporters. a stronger dollar is not good for zimbabwe. peter: as you noted, most of the issues are idiosyncratic domestic issues. at what point does it become

contagion because of the dollar? -- if chairmanll powell raises rates once a quarter, at some point, is it the middle of next year, do you see this contagion beginning? minister ncube: not in a small country like symbolic weight but butainly -- like zimbabwe certainly it will impact other major markets. it will be impacted through two channels. the first is south africa, that is our largest trading partner. it will impact zimbabwe. stronglyica is growing and that is good for us. the second is the commodity channel. anything that has demand for , via china,globally

and so forth. tom: this is where i wanted to go. the theme has been the broader concept of eurasia and the idea of the chinese continued expansion and investment in africa. we remembered, 10 years ago, when china bought a lot of cobalt. with hissident trump, foreign policy, creating a point where china has every opportunity to capture african commodity assets? minister ncube: the chinese investment has been welcome. chinese invest everywhere, including the purchase of u.s. treasury bills. the issues where african countries can negotiate better deals for themselves and control the level of indebtedness.

it is an additional source of capital for africa. in terms of global capital flowing into africa, africa cannot expect as much foreign aid as taxpayers in the u.s. and europe are put under pressure. investment from china is welcome but africa must negotiate better deals and get a fair deal for any investment in any sector. francine: do worry about a slowdown in china? minister ncube: not a slowdown. our prognosis is that global 6.5% is adequate to support the flow of investment into africa and support global commodity prices that impact africa. i'm not worried about that slowdown. we are going to do what we

call the single best chart. we are going to go to -- this is the bloomberg dollar index. it is capturing much of em dynamics, with a big 2014 move and then we go to points of stability and i think, this caught a lot of people by surprise, this dollar weakness. we talked about this before. and does it mean for em zimbabwe? peter: if you extend this going forward, our sense is that the dollar is going to continue to weaken against the advanced economy currencies. , which are em sensitive to fed tightening, you're going to see things going the other way.

the dollar will go up. , how does theis em respond? minister ncube: we talk about the impact of macro policy on economies but also on development issues. u.s. is some focus on the and the dollar and monetary policies globally. any weakness in emerging markets is going to cause trouble, especially in argentina, south africa, to mention a few. for thel cause concern imf. francine: i want to come back to trade tensions. , andere was a trade war escalation of the tension between the u.s. and china, what impact would it have on zimbabwe

and the region? would it lead to more inflation? trade tensions ,etween the u.s. and whoever will have some impact but not a big impact. thatork we have done shows it is going to boost u.s. growth which is strange. a stronger u.s. is good for commodities, which africa cares about. in terms of impact, it is going to be muted. theca worries about survival of an agreement that gives good exports. it has not been threatened and thank you for that. please, do not do anything about it.

you must give us easier terms. africa is a small economy and does not threaten the u.s. at all. please, do nothing. thank you so much for joining us this morning. , the finance minister for zimbabwe. peter hooper as well. congratulations on a terrific summer at deutsche bank. francine, you have brexit. francine: this is after tree promised a new brexit offer after -- after theresa may promised a new brexit offer. we are getting headlines from poland. the deputy foreign minister speaking to bloomberg, saying that poland once to shape -- wants to shape the stance.

poland is on the fence. they want to be a helping hand for the u.k. there are polish workers in the u.k. tom: thank you. we thank you for watching worldwide, on twitter. newre thrilled with our twitter streaming. jon ferro and i can barely contain ourselves. stay with us. this is "bloomberg." ♪

>> bulls in charge. global equities catch-up.

it is risk on. battered and bruised by brexit, pressure mounts on theresa may her brexitu rejects blueprint. exports fall to a five-year low in europe. we will speak to portuguese economic minister david: when we thought we did not have enough volatility, hong kong dollar. 0.6% it strengthened. alix: the biggest gain in five years. this is the next effect from those higher global yields and fed hikes. you are doing a carry trade, and you have to unwind. yields are rising. you have to do. david: or because the holidays are coming up, or because there is a shortcoming. i don't know. alix: we take a look at where w