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 we are sitting for the index.

the dow finally catches up to the s&p and nasdaq yesterday. what kind of follow through will we see the weekend. everything gets volatile for the end of the we did hit 118. we had economic data came out for eyes. yields are up two basis points. where will we see the biggest selling on the curve? oil is up 0.7%. it is undeterred by president trump. they have big meetings. david: we are going to get u.s. pmi for the month of september. tomorrow, they will have that one day auction for sky. championshipe pg concludes in atlanta. alix: i fell asleep. what did you say? david: tiger woods is in

competition. alix: did you watch? david: no. i was on tv. alix: that's fine. we are joined by romaine bostick and lisa abramowicz. this chart caught our attention yesterday it is the 10-year yield versus the bloomberg dollar spot index going in opposite directions. i don't know that i am going to add the potential reasons it fell flat, but the recent this is concerning -- reason this is concerning his wife are foreign investors hedging against the dollar? that is the key question underlying some of these moves. perhaps we're not seeing the same kind of international investment we should be seeing in treasuries to keep the yield stabilized. romaine: i have a theory. a lot of this centers around the head and the fact that we

destined the fed -- around the fed and the fact that we are in this tightening cycle. you are trying to reallocate, and if you are not already deep into treasuries, why would you move into the u.s. at this time? why not wait until the end of the year? lisa: yields are still higher. isn't that the whole point? tightening, we are tightening. david: boj made a little change, buying long bonds. italy's want to maybe be strengthened. the u.s. is not the only game in town. a lot of investors are looking ahead the next three months, and if the fed it's going, and the boj huge their face, maybe the yield is not in the u.s. in january or february. david: the real question is what is happening with exit. -- brexit.

[laughter] i'm sorry. it was high drama in salisbury. they thought they had a deal. theresa may was not too pleased. look at what they said. >> let there be no doubt that as i have always said we are preparing for no deal so that if we get the position where it is not possible to reach a deal, the british people can become we have done -- the confidence we have done what is necessary. alix: we were not laughing at you by the way. [laughter] david: i am laughing at myself. come on. lisa: you are right. it is a big deal. theresa may, what is her negotiating power? she can say we want this and that. her political power is waning.

you are trying to navigate that heading into a november meeting with a week leader. david: the eu keeps saying this is not good enough. she keeps coming back with the same deal. what are you doing? romaine: while she was speaking, macron was speaking in another room down the hall from this, calling a lot of the brexit supporters liars. those were his words. this a talking about couple weeks ago. lisa: and a couple of weeks before. romaine: it looked like they were laying out the hell is for a soft landing. -- pillows for a soft landing. what happened? this is awful for her. when you look at the currency over the last five days, a g10 currencies would not normally trade along those

lines. lisa: this raises the specter of a populist government forcing the country's assets to look more like developing markets. we have seen that with italy, with britain. are we going to see some elements of that in the world's biggest economy? we have not yet. as more of the global developed populism,ved towards some of the volatility is implied. alix: if you come inside the bloomberg, this is manufacturing pmi in the blue line. that has rolled over. the lowest in about five years. there are two narratives. one is things are still good. domestic economy is still good. the other one is we have some tea leaves we are reading on trade. romaine: i don't want to buy that narrative. i want to take a shot at cameron crise.

he is not here to defend himself. pmi, they were at 60 earlier this year. they have been coming down closer to that 50 market it is in germany and france. -- 50 mark. it is in germany and france. maybe the growth story and you'll story that lisa -- yield story that lisa is for is not working in their favor. lisa: for the eurozone economies, still be endless expectations are coming in underwhelming. you look at the citigroup economic surprise index, it has turned negative over the past few months. even though analysts have been saying we expect declines in growth, their expectations of the two high. -- too high. david: we have seen this again

and again. europe over promises and under delivers. i don't think you can overestimate the effect of exit on the eu -- brexit on the eu. until they get this resolved, e.is is going to continue t alix: it is so hard for me to want to make it a top story every day. lisa: david just got vindicated. alix: i appreciate that. thank you very much. a reminder that you can check out all the charts we just showed you, even save all of our charts, just go to gtv . yields go higher. dollar goes lower. withll talk about that steve chiavarone, federated will investment management portfolio

manager. this is bloomberg. ♪ is bloomberg. ♪

taylor: this is "bloomberg daybreak." fans of the iphone took part in a familiar ritual today. around the world, they are lining up at apple stores to buy their new device. they are spending more to do it now. the new iphones are $200 more expensive than the ones that came out last year. that theyo is hoping will pull clear of scandals and a lagging stock price. they plan to cut 10% of their employees over the next three years. wells fargo has promised $4

billion in cost cuts by the end of 2019. adobe is betting it can compete against oracle and onlinerce.com in the software marketing tool space. develop arying to software suite that includes advertising, analytics programs. david: thank you. yesterday, the dow became the last of the major stock indexes to hit a record high as the stock market shakes off worries about trade. we welcome steve chiavarone, federated investment portfolio manager. we have a lot of concerns kicking around. steve: we have talked about this all year. there has been this rotating group of concerts that is able to capture the market attention until fundamentals remind us

things are quite good. you have continued strong economic growth. interest rates are higher, but they are still in benign territory, as is inflation. badtariff story was not as with a 10% instead of 25% story. been the question has rising yield versus the dollar. this says it all. it is the 10-year yield versus the dollar spot index. that is not playing on the equity market. >> this is a conundrum on the yield markets. the explanation i am hearing from foreign-exchange markets is this is risk off. get out of the dollar because em is stabilizing, and look forward to what is happening next year. people are done with the fed. they want to know the ecb is going to do.

they are thinking this is as good as it gets in the u.s. economy. david: they are done with the fed? i have not heard that lately. steve: i don't know about done with the fed. the prevailing theory is the fed is going to go once a quarter from now until the end of time. we don't buy that. 2019, growth is going to continue to be fine, and inflation is going to surprise to the downside. the fed is going to pause. you can very well see the dollar weakened. you see a preview in the markets now. david: do anticipate the fed as seeing the end of the path? they are going to keep hiking, but not too much. this chart suggests it will go

to 3% and then max out. lananh: i think the currency traders are looking to see what the fed finishes. -- when the fed finishes. people are thinking the fed is going to go, but when is it going to stop. investors are tried to get ahead of that move. that is why b.n.p. paribas spoke to me yesterday, and they are backed by that you that the fed is priced into the markets, and currency traders want to see what is coming from other central banks. alix: a week ago, it was about central bank divergence. is the carry trade the dollar and not the yen? aspect toere is an that. we are seeing more pressure on the dollar and that risk trade. there is also the element of the dollar fundamentals being baked

into the cake. we know the u.s. is doing well. we know growth and unemployment are positive. it is kind of an old story. alix: the selloff in yields has been led by the u.s., but it is elsewhere. take a look at the 40 year jgb in japan. the u.s. is buying less of that duration. that has a trickle-down effect on the market. steve: the backup in yields international it allows -- internationally allows a backup in yields in the u.s. market,throughout the rising yields backed by strong growth but not a sharp pickup in inflation is fine. the market can digest that. we would be more worried if you had a backup in yields in the u.s. because of a spike in inflation. inflation is still benign. we think the market can handle

yields meaningfully higher from here without real compression. david: there is never one explanation. it is complicated. what about trade? two to three weeks ago, we heard the dollar was up because of uncertainty. has that just dissipated? hasnh: it certainly dissipated. we are hearing convergence. a lot of investors are talking about some nice global growth. they are less worried about trade. they think we will get a deal on nafta and that china will de-escalate trade tensions. that has turned really fast. alix: that seems to be the price setting the narrative. steve: i think what you have is a short-term and long-term. in the short run, what can be dangerous for post-coming after the long dollar trade, the pound, you have to be careful. he does not want to be seen as

being influenced by comments from the president. you may see the fed pause. broadly, you have to look forward. you have to assume they are getting closer to a nafta deal and the fed has an opportunity to pause. david: i want to come back to that. is the question the rate or where we end up? it doesn't matter, we are going to get to that number, whatever the number is. will we get there quickly or slowly? lananh: trade and next week's meeting, i think that is a real question if the fed does race trade. that will be a dovish surprise for people. if the fed says we are worried about trade, that casts doubt on where they are going forward. alix: we also have the 2021 forecasts.

change sector diversification? if you were in utilities, would you do? if you are encyclicals, what do you do? steve: there are two teams, you are high-growth value cyclicals, and your lower growth on proxies. we have been liking the value cyclicals. the market is changing multiple on those two teams. let's say it is trading, out-of-favor closer to 15 or 16 times. real valueere are opportunities in financials, industrials, materials. we want to take the over under on those. alix: is that why we will not see money coming out of the equity market in the u.s.? you are seeing sector rotation that is propping things up? steve: i think it is the

hallmark of a longer bull market. you have these grinding earnings. you are never faced with a market that is exhausting itself . we are itching for opportunities internationally given our outlook on next year. i think the u.s. still has an opportunity to do well, but i think sentiment might have they didn't too much -- might have of a negativeuch story internationally. david: thank you. lananh nguyen and steve chiavarone. amazon alexa all over your house. we'll have more on the new products coming up next. this is bloomberg. ♪ ♪

alix: amazon is betting big on voice commands and wants to get alexa into every room in your home.

they unveiled a microwave, security camera, and wall clock yesterday. products they announced yesterday, what do you deal has the -- feel has the most potential. audio interface for the car has the most potential, the connected interface between the car and the home. alix: totally agree. do you think this is going to be enough to pull investments from google and apple? alexait is really the technology that is going to be integrated in so many things on a consumer level and commercial level as well. it is really the interface capability. over time, alexa will learn how to hear voices better, understand better, and to be

connected to more things that it will control. you want to be able to connect all the appliances in your home, including the alarm system and lights, to give instructions on what to do on different days, and also to go into work and have your computer start and open my daily to do list, give me my file on a specific project. that to integrate with your computer, -- you want that to integrate with your desktop computer. it is the interface that is powerful. david: i feel like we are seeing the battle of the ecosystems. appliances.ious who has the upper hand in that battle? will one ultimately prevail over the other?

now amazon's right alexa is in the league. it has the most capabilities. it works well. in sooners seem to like it the most. -- consumers seem to like it the most. siri has been buggy. there is a lesson from amazon, na, from microsoft -- corta from microsoft, google as sistant, and siri from apple. consumers tend to stay with one brand of devices. what i find interesting is the 3000 stores they want to create that you can just walk in and it knows what you are buying, how substantial could that be to their business going forward?

ivan: it is a technology platform that could be used in all stores. it is something they could license and develop. it could be in all supermarkets, not only whole foods. i'm sure they would like it to work the best in whole foods. this is a platform that uses rfid to scan. one of the biggest frustrations of doing to the supermarket is waiting in line, especially if you have someone in front of you taking their time there coupons. alix: thank you very much. ivan feinseth of tiger's financial. portuguesek to the finance minister next. ♪ nister next. ♪ xfinity mobile is a new wireless network

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included with your internet. plus, get $300 back when you buy a new smartphone. xfinity mobile. it's simple. easy. awesome. click, call or visit a store today. alix: this is "bloomberg daybreak." finallyy, the dow catches up with the s&p and the nasdaq, catching up to the record. risk on in asia and the rest of

the world. you have futures, options, indexes and stocks. in europe, the ftse is up because sterling just got whacked. it was an ugly look back yesterday when it came to the end of the summit in austria between the eu and u.k. leaders. in u.s., you are seeing a selloff on the backend in bonds. you are seeing a little bit of buying, so that global selloff is coming to a pause. nice bounces despite the fact we have no resolution on trade. risk on. david: it is a new world for trade. let's go for a look outside the business world with taylor riggs. taylor: president trump indicates a trade fight with china will not be a short one. the president told foxnews it is time to take a stand on china. the next round of tariffs take

effect on monday. beijing retaliated by slapping duties on more american products. the woman who accused brett kavanaugh of sexual assault is willing to testify, but not until next thursday. bloomberg has learned that she appear on monday as the judiciary committee requested. a response yet from the committee. leaders warn the u.k. that time is running out to make a deal on brexit. theresa may announces to come up with new plans after the eu rejected her current blueprint in austria. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries.

i am taylor riggs. this is bloomberg. david: thank you. european pmi indicated continuing softening in european growth comes in manufacturing. we welcome portugal's economy minister, manuel caldeira cabral. manuel: good morning. david: do you look at your and see a trailing of growth and how much is because of exports and trade issues? manuel: we are seeing some signs in terms of european growth of smoothing of the growth as we were seeing in the beginning of the year and last year. i think it is too early to be very pessimistic about it. we just had an upward revision of growth last year. the prospect this year is to grow at about the european

average. our prospects are positive as we focus on the growth of investment, which is quite sustainable. david: how much of your growth is dependent upon exports, and where are the exports to? are they within your or more abroad -- your or more abroad -- abroad?r more manuel: what we have done in the last five years is continue to gain market share in the european market. brazil, south america and general, and we are having an interesting performance the u.s. we are worried like everyone in the world and europe that it is about maintaining open routes as we have managed to do with a trade agreement with canada. alix: we also saw in the pmi

data today that european export orders fell the most in five years. how do you view that? think the thing with trade, it has a specific short-term impact that happens for sure. it can have long-term impacts that are negative for the well-being of everyone. i think the signs and doubts we are having about trade, also brexit are already having some impact in terms of expectations and decisions that are delayed. what we want is to combat that. i think the european union has shown signs with canada and japan as well. i think we should go forward with negotiations with brazil and argentina and so on to give a different perspective. i think many countries in the

world, if you look at india or china or brazil, are giving signs that they want more open. i think it is a very interesting opportunity for industry in to reachd in the u.s. new trade with these countries. i don't think we should focus to much on the past and the deficits we have. we should look forward and see where our developed economies can be more competitive. alix: that is the global outlook regionally, there are -- outlook. regionally, there are concerns about italy. the oecd said the associated decline of equity prices and italian banks demonstrated a pace in which european vulnerabilities can reemerge. is italy toa threat

your economy? italy is not our major partner. france are.ny, and italy should be a focus of concern. institutionspain -- european traditions are resilient. in the perspective of portugal, we have had the revisions of our numbers. today, we have a tech firm that is doing an ipo that will be here in new york, which is fantastic news for the country. we already have big firms were $5 billion. close to $5l be billion. it is a technological company. we have several new technological companies in that area. this growth is coming from different sectors.

we still have traditional sectors that are doing well, but we are developing new sectors. with companies that are already in the billions, that are growing globally and growing in a sustainable way, and this ipo, we already have several other portuguese firms. fews the first big one of a tech companies. it shows the links with the u.s. are going to continue. david: another important economy is the u.k. we just had some results yesterday in salzburg where we thought there would be an agreement. fromof what we heard was president macron in france. this is what he said. sovereigntyect the of the british people, but i respect the sovereignty of the 27 other members. they decided to join the european union.

protect the interests of my citizens, but more importantly, of this project. there is no blind deal. david: what will be the effect on the broader, project if there is a hard brexit? does that affect the economy of europe more broadly? brexit is aink negative subject. i think hard brexit is worse than soft brexit. i don't think we are going to have a disaster, but i think we should work together putting forward the interests of the u.k., but also putting on the table of the 27 other economies. understand the links that connect the european countries are quite strong.

disentangling all of these knots is going to be a hard process, but we should have an agreement that makes this process that gives stability and that investors understand. it is important for the british people but also important are all of europe. it is also important for trade around the world. the risks we have been talking about, it is trade, brexit, italy. those are three big risks. you feel optimistic. you have to be looking at contingency plans on what you do to insulate your economy from the negative side effects. what are they? manuel: are contingency plans are what we have been doing in the last few years. we have reduced deficits. we have focused growth on investment, exports, reinforcing

the capability of private firms by leveraging their investment. and doing exactly that on the public sector as well. that is the way to move forward. i see very interesting .pportunities las we had a very important mission to india with our prime minister last year. i don't think he signs are all negative. i think they should be addressed with responsibility. i think in the end that is what the 27 plus one in europe are doing. we have a lot of bravado in many moments. i think finding a solution will show the european union is a project to go forward, and the united kingdom will be a partner for sure because it is a very important country. david: a lot of bravado. thank you.

manuel caldeira cabral. alix: still with bothalix: still is ivan-- still with us feinseth. -- steve chiavarone. steve: we like your more than some other places. you have brexit. pmi, the slowing of labor market is still quite strong. you have countries like portugal that have taken on structural reforms that are well-positioned. we are looking at opportunities for valuations that are attractive. david: em versus europe, where would you put your money? steve: right now, we prefer europe.

is strengthening in em really going to benefit europe because a lot of these countries have really strong sales to emerging-market economies. david: is it time to skip to loom? that is next in pursuits. this is bloomberg. ♪ ♪

alix: -- taylor: this is bloomberg daybreak. coming up in the next hour, the reserve bank of zimbabwe john mangudya.

waysrt is looking at new to attract new hires in a tight labor market. they have asked employees which perks are most meaningful to new employees. they were asked to rate potential incentives, including a sign on bonus, childcare, and a gym membership. the executive suite exit is at tesla has resumed. the vice president of global supply management has resigned. he is the fifth senior executive to leave tesla in just a few weeks. that has coincided with a series of missteps by elon musk. uber is in talks to buy london-based delivery service deliveroo. their last valuation was $2

billion. beene past deliveroo has reluctant to give up their independence. alix: thank you. we turn now to pursuits, or we take a look at the life of luxury. goodbye tulum. nayarat.iera almost 60 years after its first -- opened, "playboy" david: this is bloomberg's editor for global luxury coverage. let's start with the riviera nayarit. beautiful stretch of 200 miles of beaches north of port of our top.

there will be four or five luxury resorts coming. david: four seasons has been there for a while. >> there is. it is part of this region. people that go to los cabos, they don't go into the water. tulum more beaches, and has historic runs, it is an undeveloped area. alix: it is gorgeous. am i going to get together or is it more -- to go or is it more les moonves? >> you can get hotels for $300 a night. there will be a rosewood, a one and only, a cirque du soleil theme park. alix: that sounds terrible. that sounds stressful. david: can you get there? can the airport handled the traffic? this isf the reasons

going to happen is because the airport is handling more direct flights to the u.s. and canada. alix: what happens when you build a wall? planes go over it. the playboy club reopening in new york. i find this so interesting. it is ara of metoo, bold decision to make. >> the last one closed in 1988. they are going for that old school "playboy", all the waitresses are bunnies, stark, glamorous. they are about personal freedom. just because metoo is happening doesn't mean people cannot have fun and be sexy. they are doubling down. david: i love the way they take these pictures. really bright flashes. that is great, libertarianism

for the guys. i'm not sure there is a lot of libertarianism going on for the women. >> the ceo says that nudity is not bad. these women are empowered. they are testing it out in the u.s. alix: they are also targeting a younger clientele. it will be interesting to see the kind of uptake you will get in a millennial world. experiences,ing on not things. "playboy" does not license anymore. they are betting you are going to want this rare experience more than you are going to buy playing cards. david: i think it is a hunch that men are going to walk that experience more than women. tables,en i was waiting you have to look good to get your tips. that was not a "playboy" bunny outfit. this is going to make him feel really uncomfortable. name: we all know the

because they have designed cars for other companies, particularly for. beautiful cars. they have decided they are going to have their own cars. >> the company has been around since 1930. they have not made their own car. they designed coaches for other companies. $500have put in more than million into the company, and they want to design their a car. it is kind of a concept now. it is going to be on the road by 2020. it is going to be expensive, about $2 million. david: that is a lot of money. alix: that's a car? that's pretty cool. david: there are other cars in that stratosphere, but because seconds,0 in under two all electric. alix: electric thing is cool. explain to me why you need to go

from zero to 60 in two seconds? david: if you asked the question, you're not going to understand. it is obvious why you want to go. why six seconds or five seconds? alix: the pretty thing and electric thing are cool. teslayou have been in a and felt that acceleration, this is going to be faster than that. david: i have been in the chevy bolt, it just goes. it is like geforce. >> is this a tesla competitor? i know that $2 million is a different number. >> they are aiming to make their name with this supercar. this is like an aston martin. alix: this is on your wish list? david: no, no. i want one i can drive around. around not drive this

the streets of new york. you would racket. alix: you could go to ohio. david: thanks to chris from bloomberg proceeds. india's stock market rocked like -- by a sudden plunge. alix: you can interact with us directly on tv go. this is bloomberg. ♪

david: this is where i am watching, india today. there are a lot of machinations going on over there. they have a bank called yes bank where this regulators said the ceo can longer be ceo. that has had ramifications throughout the stock market.

there is a nonbank bank that defaulted. it triggered something in the housing market. it seems to be percolating around the financial system. there is a lot of concern. there have been a lot of defaults. it is just this one. alix: that is the micro in india. you have rising yields and fed hikes and goldman earlier this week said they downgraded india shares because of volatility. it is a big risk. david: i don't know what is connected to what. we talked earlier, hong kong dollar had this huge step up. there seems to be a lot of volatility. it is not just turkey and argentina. you are seeing it around the world. alix: in addition to things like turkey, which is also idiosyncratic, with india, they import all their oil.

oil prices have gone up so much because their currency is so devalued, that is a true headwind for their consumer and deficit. on the flipside, india makes a lot of sugar. they have exported a lot into the market. they are trying to get sugar out, which causes prices to go down and farmers are affected. david: they are going through a big transformation. they have this burgeoning middle class. alix: watching india, not politics. i cannot believe it. of tg up, sebastien page rowe price will be joining us. this is bloomberg. ♪ this is bloomberg. ♪

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investors nor higher bond yields for now. the pressure mounts on theresa may after the e.u. rejects her brexit blueprint and pushes the u.k. to make more concessions. europe's trade turmoil. we dig into the vulnerability. david: welcome to bloomberg daybreak. i am david westin alongside alix steel on the last day of summer. i think so. use it well. alix: after that, we can never see the sun. is ae markets, it quadruple witching day. everything expires. s&p volatility is now flat. the dow finally caught up and closed at a record high yesterday. it was a weaker dollar story and now it is a mixed dollar story,

the dollar getting a little bit of steam from the conversation yesterday. a 3.07 time print on the 10 year. shape up andestors start to pay attention? that is the question from markets. david: they are yawning so far. alix: gold. david: we do not yawn at gold. time, the month of september -- sky and its did -- bid. sunday, the pga tour championship concludes. let's get an update on all of the things making news out of the business world. taylor: president trump indicates a trade war with china will not be a short one.

in the wake of the latest round of tariffs, he told foxnews it is time to take a stand on china . the next round of tariffs take effect on monday and beijing retaliated. accusing supreme court nominee brett kavanaugh of sexual assault is willing to testify but not until thursday. monday, whentend the senate judiciary committee requested. no response by the committee. leaders warned time is running out to make a deal for brexit. the e.u. projected the current blueprint -- there will be a november summit to sign the divorce agreement if the u.k. makes more concessions . -- next month. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries.

riggs.ylor this is bloomberg. alix: yelps climbing, dollar falling come up market or disappearance trying to make sense of the diversion. >> we had the 2018 level earlier. markets are concerned. they know the fed is going. i think the rates are cresting. >> the vall market is due to go up-- vol market is due to go and the fed policy is starting to leave a mark. >> when risk appetite picks up, apart from selling bonds, they are better investments in dollars. >> we have twin deficits, equal optimism, the fed raising rates. some spots where the treasury is going up and the dollar is going down. >> we think the weakness in the dollar is going to continue into 2019. fed continues hiking

rates, you may see the dollar weakened. >> dollar rates have been moving as a result of expectations that the fed will continue to hike. it is tough for the dollar to move a whole lot. joining us from baltimore priceastien page, t. rowe global head of multi-assets. i see a million different explanations to why that is. is it a significant enough to have keynesian allocate -- implications? sebastien: driving yields an dollar growth and expectations, this is an important question.

the yields are bad for risk assets but as always, sometimes yields rise because of higher growth expectations. in that context, it is possible for the dollar to weaken a bit. the dollar tends to be a currency where if markets become more confident, they stay outside of the u.s. dollar. it could come down to growth expectations. david: safe haven largely has been trade. how much of it has been driven by a reduction in the anxiety about trade policy? sebastien: the thing with trade, and we hear a lot about it from media, but sometimes it gets swamped by other major economic forces. fiscal stimulus in the u.s., we

are talking about 200 billion tax, repatriation of cash from overseas, and 100 billion in fiscal spending, so $1 trillion. compare that to $30 billion to $50 billion tariffs on imports from china. they get swamped by other horses, so what -- forces, so while trade can be bad, sometimes other forces push risk assets higher. this is the same for earnings in the u.s. -- --t had

alix: and you have yields higher in the u.s. but you are not seeing a risk off move. --you rotate and asset sebastien: quickly they will get to 2.5%. david: sebastien page will be staying with us. prime minister theresa may saying she "will not change" on brexit. this is coming after salzburg.

the british pound is weakening on the news. it sounds a little bit like maggie thatcher in the 1980's. the difference is she has a minority government. alix: she may not be for changing, but will her tory party? david: she thinks she has no maneuver room back home in london. she is locked in as a practical matter. alix: we will break it down. david: europe's surprise slowdown. weighing on the euros growth, that is next. this is bloomberg. ♪

adobe is betting it can compete against oracle and salesforce.com the marketing tool business, agreeing to buy a software maker from $4.8 billion. is trying to develop a software suite that includes advertising, analytics, and e-commerce programs. the trading business at jefferies group is rebounding after trading revenue rose 4.2% in the third quarter from december 4. the gains came on jeffries exiting strategy. fixed income revenue was virtually unchanged. that is the bloomberg business

flash. a sharphe pound took decline after the bbc reported theresa may will not be changing brexit. on as we were talking yesterday, let's go through this. agreement, we just go to wto rules. how would that change your investment allocation? political risk matters, but we also look at other key factors. we look at valuations, macro, and fundamentals, and we create a thesis around the big picture. ultimately at the moment we are overweight stocks outside the u.s.. political risk will create volatility and will create short-term drawdowns, but let's look at valuations. an 11 for emerging

markets and 16 for the u.s. so there's a case to be made there. economies outside of the u.s. our earlier in the business cycle. from a fundamental perspective, you look at margins, margins do not grow to the sky for corporations and there is more room for companies in europe outside of the u.s. and japan, to expand their margin more than in the u.s. yes, we will take into account political risk and it will be a factor, but in the big picture of things, at the moment we remain overweight. currency matters quite a bit. u.s.,s. equities versus the currency matters quite a bit. gett 30% of the returns you when you do not hedge the currencies, the volatility is driven by the currency itself.

that will be a factor. it brings us back to earlier in the session about yields in the u.s. dollar. david: you are talking about valuations and growth in europe. what about the u.k.? the pound has gone down consistently. does that make it less effective of an investment opportunity? sebastien: the downtrend in the pound, it definitely does. it also creates valuation opportunities so you have to weigh this against the uncertainty. we tend to lean against the wind so to the extent that we find more opportunities in those markets, we will invest in that area. we have a two-step process. we start with broad asset class level decisions and then portfolio managers make tactical

decisions around the country allocations. alix: just to reiterate the headlines, according to bbc, may will not change tactics on brexit and she will be making a statement at 10 downing street. she will not be changing tactics on brexit after an extraordinarily difficult 48 hours summit in austria and negative headlines overnight. how your question is wind up investing with long-term businesses and how you wind out playing it out with intervals. here's what he had to say. isi think the market probably pricing a higher probability of a no deal outcome. ratenk the u.k. interest risks maybe a sense here, the rate is too low. alix: do you need to start hedging risk? it has not paid off, do you

think about that? sebastien: you concur -- hedge the currency in italy in your portfolio and hedge interest rate risks as well. interest rate list -- risks could elevate as central banks start pulling liquidity away from the markets. this perhaps is a risk that is underestimated. to the extent we get political volatility brexit risk, that pace ofve pause to the tapering for central banks outside the u.s. populism is also a risk and we have italy and other situations that create uncertainty. generally speaking, interest rate risks, to the extent we see inflation, to the extent we see political uncertainty, we can get different scenarios around this and that will drive markets. david: just to unpack what you said about the reduction of liquidity from the market globally, i wonder whether what

we are seeing is we are having a reduction in liquidity and that makes every idiosyncratic development a little larger, whether it is turkey, argentina, brexit, and the u.k.. if we properly priced that, what would it tell us about our investments? sebastien: the longer term perspective is that we have 20 trillion in liquidity injections and we arerisis starting to peel this back from the markets. the u.s. is ahead of the curve in doing that, as the ecb starts doing that at the end of the year. as we take liquidity out of the market and we face other tightening factors like a stronger u.s. dollar, this clearly introduces fragility for risk assets. i should say, it is not by definition that if we see rising kiwis and declining global -- qb that we will see major

drawdowns in equity markets. calibrating our expectations, the last nine and a half years we have had 17%, 18% annualized return on u.s. stocks so perhaps going forward we will see something different, something lower as that liquidity it's taken out of the system. as long as the liquidity gets taken out of the system at the same time as growth improves and inflation fears do not take over , we can get an orderly, or what you might call a safe landing. alix: sebastian page of -- sebastien page of t. rowe price with us. at 8:45, theresa may will be speaking at 10 downing street in a state dining room. according to bbc, she will not after aact on brexit very difficult today's for her in austria. the question being, how much room to she have two human ever

own party and the european union . the currency market is moving, sterling 8/10 of 1% higher. staying with the u.k., it is a battle for sky nearing its finale as it gets ready to be put up for option -- auction. more on that next. ♪

♪ time now for three company stories we are watching today. tesla, once again, it is almost not news. . not put them all in full screen because there were so many of them, they have lost so many people at that company it is a problem. people say-- alix:

they are leaving not because something sketchy is going on but because they want to pursue new things. do i believe them? david: data chief accounting officer leave and they put someone in who was only there for about a month. they say elon musk needs more help, not less, in running the company. alix: we have a headline talking about how bank of america is gun shy on taking risk and that means some managers are taking leave. more riskbeen much sensitive and risk-averse. david: what he will say to you is, we don't need to have the highest revenue, we need to have the highest profit. we can be smarter even if we are not bigger. maybe there is a big side of this, we need to think our -- rethink our investment banking. alix: wells fargo headcount den find percent to 10% over the down 5% toears --

10% over the next five years. david: how can you turn it around? alix: howdy you are -- how do you grow and cut the workforce? david: our third story, sky hit the auction block this morning. newsore, our bloomberg deal reporter joins us. nabila: the first round of hitting will come from fox and then comcast comes in and the third and final round will be both of them. it is a blind auction so they have to put in their best offer. have: the shareholders some time to think about it and say how they vote, right? nabila: they will say with a bid. alix: is it a silent auction?

nabila: it is a blind auction, yes. you do not know what the other person is bidding. it is an electronic auction. rounds. three fox is the lower better for the moment so -- bidder for the moment so they get to bid first, then comcast. david: this has already bid so far up beyond what we thought it was worth. why? gives these companies access to 23 million customers in europe. on day one, i told you this was during the crown. they played this really well. i am not sure how you avoid paying too much. when the shares have risen about 60% this year -- david: it is not so much what it is but what it could be. they want that direct consumer

last. nabila: this helps them take on netflix and disney, which is launching a netflix competitor. this gives them content and a distribution platform. alix: whomever loses, where do they go? loses, a fox disney disney has already won the bulk of fox's entertainment assets. if comcast loses, this is a big blow for brian roberts. loses, you would think that it has to do something, has to go after something else. to go you said he wants international, which he has not thus far. bob has artie got an international -- already gotten international offers. nabila: some people say maybe he could by viacom. that is like saying, i would

like to buy tesla but instead can i buy a scooter? david: it has got a lot of work to be done on it. it is not coming along right now. ng along right now. alix: that is what you will be doing, watching it tick. nabila ahmed, thank you very much. the pound taking a dive and u.k. yields dropped as well. we discussed the latest on theresa may as the bbc says she is not changing her tact on brexit. ♪

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head to xfinity.com/stream to start watching. simple to rent, easy to buy, awesome to go. ♪ alix: this is bloomberg daybreak. the dow closed at a record, finally catching up with the nasdaq and recipe but it feels like a little bit of a softer -- and s&p, but it feels a little

bit of a softer day. up by a full 1%. the why is the big drop in the cable rate. 1%. the why is the big drop in the cable rate. theresa may reportedly will be speaking in about 10 minutes and the report is she will not change any tact she has when it comes to brexit. if you look across asset classes, the cable rate down 8/10 of 1%. it is a stronger dollar story so that is not helping. you have the dollar and yields diverging.-- 3.08 is how we print. you have commodities having a real nice day today. totally sell the rumor and by the facts. david: we have to give theresa

may credit, she is consistent, she is not varied. it is guiding -- not getting her where she needs to go. alix: she is consistent with both sides when they do not match up. david: it will be interesting to see what she says. let's find out what is making headlines outside the business world with taylor riggs. taylor: another deadline is coming on with no nafta agreement between the u.s. and canada. canadian foreign minister christie friedland says she discussed top issues. she says the sides are in continuous negotiation. opec and its allies appear headed for another contentious meeting in algeria this weekend, but it probably will not matter .or the oil market internal fighting over the 2016 yield to cut output is largely irrelevant because russia and saudi arabia have move past the

agreement -- moved past the agreement and they are pumping oil. as we have been mentioning, prime minister theresa may reportedly will hold firm on her brexit position. she speaks a few minutes from now from number 10 downing street. according to the bbc, she will say she is not changing tack on the split from the e.u.. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. us aboutylor just told it, theresa may is about to give a big statement in london about sticking to her guns. we will welcome our colleague and friend guy johnson from london. she has been pretty consistent. will she say she is ready for a deal or no deal? guy: i think she will try to

stick to her guns. it is difficult to see her going away from the checkered position she has. if she goes in one direction she will split or alienate one part of her party and if she goes in the other direction, she will alienate the other. she has almost got to double down on what she has delivered thus far. there are a number of sticking points, the irish border clearly remains one. that is one of the areas we saw that is one of the areas we saw coming out of salzburg. she has been called flat-footed. the british papers this morning, the one word that stood out is "humiliation." clearly she has to make a move and figure out how to solve these problems. david: her friends across the pond did not do her any favors. macron laid down the gauntlet and basically said, we are not moving. why didn't they give her no wiggle room? wasn't there a way to papal this

-- paper this over? guy: i think it caught a lot of people by surprise. to save theresa may being generated by the rest of the e.u. that certainly was not the case. the language that came out of macron and donald tusk was a lot harder. you can see the reaction to this of the last 24 to 48 hours in the sterling rate. the market does not know what to do with this news. is at 1.32. of the positioning is neutral shorter, so the market has got itself back. it is short sterling, but it has got back to neutral. the market does not know what to do with the current set of news it is getting. it knows theresa may is in a bind and is surprised by the fact that e.u. leaders were

harder in salzburg. it is a rumor going around in london that she will resign, but it is hard to get to that point. david: how secure is her position? i thought about maggie thatcher and the lady is not for turning, but she had a solid majority. theresa may does not enjoy that. how secure is her position? guy: not very secure. you have to think about how the hard brexiteers, they really want to change horses at this point. have they got to the point where they feel like they need to do that? are they willing to risk going to a general election? the risks are in norman us, and the risk -- enormous, and the risk of voting down a deal theresa may brings back is enormous as well. we are a ways away from a second referendum but we may have a parliament backing a soft brexit

. both sides in that story are finding themselves in a difficult position, but it is hard to get to that point right now that they are willing to in favor of may someone like boris johnson. david: her statement is coming in about nine minutes. alix: the oil price is up about 2%. brent looking at its second week of gains in just days, as the algiers opec meeting will take place. the conversation will be about politics overproduction, with president trump setting the agenda. he tweeted -- we protect the countries of the middle east, yet they continue to push for higher and higher oil prices. we will remember. the opec monopoly must get prices down now. joining us now is julian lee. how does opec talk about this?

julian? this is a monitoring committee meeting, not a policymaking meeting. half at least of the opec ministers will not even be there , so we will not get any grand opec policy going forward. it is about how they are implementing the current deal. when they met back in june, saudi arabia and russia said the aim was to take production to 100% compliance with that agreement. at the time, they were over complying. reduction was down much more than they anticipated, so this was about bringing production back to that overall level. the saudi-russian view is those who can -- saudi arabia and russia and others -- should take toduction others can't make bring this total to where they wanted. the iranian position is that every country has an individual

target. all they have agreed is that every country can produce to that target. that is where the tension is coming. i think where we will see this meeting is the saudi's and russians arguing there is still less production than they have agreed, there is still some more to make up, and this will feed through ultimately into an production production for russia and saudi arabia over the next couple of months. alix: bloomberg's julian lee joining us. copper rising to its higher in a month and metals extend their rally. joining us is andrew cosgrove and sebastien page is still with us. there is to conversations. , oris the uptick in metals is this some fundamental juice going on in the market? andrew: it is definitely the former.

the market was pricing on $200 billion worth of tariffs. datescture across most metals -- base metals right now is ok. high butremiums are the underlying demand is ok. what got us rallying is the macro picture changing. alix: we are getting calls from some of the big banks on whether or not the rally is sustainable. goldman sachs seems much more that they, saying sickly the reason the market has factored in an extended standoff and the u.s. and china growth of the big four have not hardened significantly, but data do not show a material slowdown in chinese growth. short-term, berkeley says a -- trade trade form war could contribute to prices dropping the hello -- below $5,500 per ton.

andrew: i think short-term you have to be bullish. factors are clearly pointing in that direction. i would agree with the latter opinion is the copper market is pretty much balanced over the last couple of years, and you are running 10 years into this elongated business cycle. you have em rates heading up and china potentially slowing, and more tariffs ratcheting up next year. david: what is your view on commodities and in particular, what are they telling us about global growth? is not uncommon for commodities to do well that late in the cycle. weight cycle accelerations have been quite often through history. from a long-term perspective, we look at supply. of course, economic growth will drive the demand for commodities, broadly speaking, but from a fraught -- supply perspective, for oil, we pay a

lot of attention to u.s. shale and gains in productivity and moves towards electric vehicles on the demand side. we think the secular forces speak to lower commodities prices. in our portfolios, we have under waited our real asset equities at the moment. -- under weighted our real asset equities at the moment. we have the oecd downgrading their trade forecast. global pmi's have come in softer. what areas have the fundamental backdrop and what don't? sebastien: if you ranked -- andrew: if you ranked the base metals, it would be probably copper, aluminum, and zinc. the long-term fundamentals look good with electric vehicles.

zinc, we are moving from a period of extreme tightness to extreme balance. i would be more bullish on ball .ommodities -- bulk commodities the chinese backdrop is better. alix: great stuff. andrew cosgrove and sebastien page. david: we welcome from london, bloomberg's guy johnson. alix: no, not yet appeared here are the headlines as we know them -- no, not yet. here are the headlines as we know them. theresa may was to give a statement at 10 downing street. the question is, what will she say? david: it strikes me how many of these talks she has had to give, that everyone is waiting for. remember when she went to italy to lay out her plan? she has had so many of these, now we will know the answer. as you pointed out, she is between a rock and a hard place.

tox: this time is ticking november with a meeting that may never happen. this is bloomberg. ♪

♪ taylor: this is bloomberg daybreak. coming up later today, glenn hubbard, columbia and graduate school of business -- columbia graduate school of business dean. south africa is taking new steps to revive its on economy -- alix: south africa is taking new steps to revive its economy. easier visa requirements. joining us as mark bohland. you have the rand whip sawing on

that news. what is your biggest tape away? -- take away? not: it is a reallocation, an increase or decrease. the proof will be in the pudding . there is some confidence this will be an improvement in spending, and south africa had a large budget for the last couple of years and since the crisis they have tried to pare it back. an increase in the budget deficit in the past year ago, probably to do with week growth -- weak growth. now, the due administration is trying to do its best to reallocate their spending so you get more, better use out of the spending that is more supportive of the economy and the mining taxation and regulatory regime

are very important to south africa. alix: mark bohland, thank you so much. david: another country struggling to see growth is some bob way. -- zimbabwe. >> we are not on china. there is a number of projects. we are also talking to western companies, the u.k., germany, france, with mining. arember of minerals exploited. the second largest country in africa, reproduce platinum. lithium, cobalt, echo, all of those products. -- nickel, all of those products. -- the second part is agriculture. we have a good climate in zimbabwe.

it is perfect for tobacco. david: for an update on how these efforts progressed we welcome zimbabwe's central bank governor. specific about what you hoped would happen with some bob way. -- zimbabwe. a lot has happened. how has it affected zimbabwe specifically? talking about mining, china, germany, how is it affecting your plans? john: positively so far. we are seeing our growth production go up. 20%,s gone up by more than which is almost 25 times by the end of august. markets.oing to the we are quite happy with what has happened so far in zimbabwe.

world,ot dominate the but we supply what is required. david: when you were here last time, you said zimbabwe is open for business. there had been a regime change. what about foreign investment? john: we are seeing foreign investors from everywhere, from the u.s., u.k., germany, china. , we are talking the talk but we need to walk the walk. what are we providing those investors? we need to provide a package of invest -- incentives so people come to zimbabwe and invest. david: so people are kicking the tires, but are they buying the car? are they putting money in? john: what you are seeing is the negotiations.

some have come in and we think it is a process. investment is a process. alix: what is the impact of and then the u.s. at 3% dollar that has really shaken out emerging markets? it has to be affecting capital allocation foreign investment. john: it does, but if you look at the investment in africa, in required by the investors for been officiating those countries. the investment climate in zimbabwe are maine's positive. -- remain positive. it is cost expensive but will provide incentives. alix: other central banks have had to raise rates quite a lot to stem any selloff.

how does this work in your world? zimbabwe uses different currency. devaluation, the currency becomes not a hindrance. the challenge in zimbabwe is to balance between the aggregate demand and the supply of foreign currency. imbalanceshe fiscal and to increase the flow of foreign funds. that way, we will rebalance the economy to show that -- and sure there is nore excess demand. david: there was reporting about fundamental currency reform in zimbabwe. where are you on that? is that coming and when? it will happen after the

fundamentals have been met. right now, the fundamentals are week for the local dollar. the fundamentals which are there , we need to improve on business and consumer confidence. to reduce the fiscal imbalances that are putting pressure on the financial services and the rates of exchange. we need to have access to foreign finance and when those things are done, then we can have a stronger local dollar. david: when will you have satisfied those conditions? john: we believe the open for business environment we have achieved will be the next three to five years, we will be able to achieve. alix: what world do you think cryptocurrency could have at the central bank? not big and cryptocurrencies.

i am strong dollar. we are using those in terms of the nature of the debt. we are the blockchain, the big data. david: governor, thank you very much for being here. i hope you come back to give us an update. bankis the reserve governor of zimbabwe. alix: bbc is saying theresa may might the delayed and she is expected to say there will be no change in her brexit stance. thatd -- were waiting on and we had cable moving lower on that announcement. david: she says she is not changing tack, that is a sailing turn. -- term.

if she thinks she is getting where she wants to go, it is great to stay on tack but if you are a sailor and are not staying in direction, then you might have to change your tech. alix: the papers' humiliation overnight, how can theresa may respond? guy: there was some speculation that the whole sulzberger story was some sort of fabricated creation to give theresa may a better shot running into the .arty conference coming up the fact she is making the speech takes her look a little more rattled by that response from the rest of the e.u. maybe this is not a premeditated story, maybe she is dealing with the situation on the half. -- hoof. what she has said that she will suggest -- stick to what she has

suggested is a reasonable one. it is hard to see any other options improving her position, so she is likely to stick to what she had said and double down on the checkered plan. david: my question is, how could she have been surprised? normally one does not go into these kind of discussions without a good sense of where they are going. because she has been let down by some of her people who do not have a proper read on the e.u. position? guy: that is one argument that can be made, her diplomats did not get a proper steer and she walked into something of an ambush when it came to that salzburg meeting. it may also be that the e.u. is not completely -- the e.u. statements are not being taken as they were intended by the british press. this may be a lost in transition story -- translation story, but she seems more rattled then you may have assumed that it seems

as if it was a surprise to the people who do all the work before these meetings that that was the outcome. mr. macron took a hard line. mr. tusk took a hard line as well and it seems as if the british have been caught by surprise. why that happened is hard to determine. alix: bloomberg's guy johnson, and we will be watching that. bbc says there are some technical issues, not political issues. theresa may speaking at 10 downing street that she reportedly will not change tact. nexthan ferro is coming up what the market open, waiting for theresa may to speak. this is bloomberg. ♪

jonathan: from new york city, i am jonathan ferro. 30 minutes until the start of trading. this is the countdown to the open.

coming up, equity markets worldwide rallying. the s&p 500 coming into friday at all-time highs. heading for a second week of losses as risk appetite returns, fueling a quiet selloff in core bond markets. yields rising on japanese fonts and treasuries. futures climbing higher by two points. the fx market, euro-dollar erasing some of this week's gains. yields up a single basis point on the u.s. 10-year. the global risk appetite returning. u.s. stocks at records, rally in your and asia. -- in europe and asia. >> the u.s. is booming. it is broad-based. >> when risk appetite picks up, there are better