francine: shiny walks away in beijing says it won't hold further trade talks unless the u.s. stops threatening tariffs. opec defies $80 as trump's calls to increase production. sky surges. the broadcaster hits an 18 year high after comcast muscles outfox. ♪ nejra:e: welcome to --

welcome to surveillance. the stoxx 600 off about one quarter 1%. the hang seng was lower by more than a percentage point. risk off perhaps with the trade war escalation yesterday. thenew those imposition of 200 billion dollars of chinese tariffs were coming. investors took an opportunity to sell. if you look at european equities , the best performers of an media stocks and oil and gas. high. a two-month above $72. brent above 80. they'd only be boosting production of customers wanted. they pushed back on trump's demands that prices were too high. three .08r yield at a handle. -- a 3.08 handle.

in the past couple of weeks, we have been seeing treasury yields boost higher but dollar weakness last week. are up 9%. one of the best-performing stocks on the stoxx 600. comcast basically knock it out of the park with its bid. little but below that 1724 right now. we have headlines coming through on the bloomberg. we will show you those numbers as soon as they come through. on surveillance we will speak to 9:30 year time. the first world news from taylor riggs. the u.s. china trade wars heavy reached a new phase as more tariffs come into effect. of chineseon dollars products are subject to increase levies.

at the same time, 60 billion of goods from the u.s. will take higher tariffs in china. beijing caught off plans for talks in washington and said have them under the threat of terrorist by the u.s.. we'll prices are higher this morning after donald trump's demands that opec take action to got a tepidrices response. opec said they would only do it if customers respect -- requested it. saudi arabia, russia, and their allies signal less urgency and stops short of promising specific extra volumes of crude. >> we can bring an additional 1.5 million barrels. we have said that. we could start in june and the rest subject to demand. brett kavanaugh's

nomination to the supreme court is at risk after his sexual misconduct allegations have emerged. new yorker magazine has reported that senate democrats are investigating an incident that allegedly took waster his college years at yell. it comes as the senate judiciary committee prepares to hear testimony from a woman claiming he assaulted her in high school. the white house issued a statement saying it stands fully behind his nomination. the u.k. opposition labor party is raising the pressure on theresa may, proposing the option of a national vote for brexit. offered toe delegates at the annual meeting next week. jeremy corbyn says he will discuss with her the conference decides. idea of asmissed the second referendum. global news, 24 hours a day on air and at tictoc on twitter powered more than 2700 journalists in more than hundred

20 -- in more than a hundred 20 countries. -- in more than 120 countries. china says trade talks for the u.s. cannot happen as long as president trump keeps running tariffs. this came about an hour after the u.s. impose duties another $200 billion in chinese goods. .oining us is sonja laud we are seeing a risk off after a positive week last week. our equity markets -- were equity markets pricing into much positive news? thea: i don't think so but risk on/risk off will continue. we have not really conflicting headlines but there's so much going on. focus on trade talks in politics. the situationf where in europe we saw bit of improvement in underlying data that was a bit optimistic around

brexit. had a bit of a vacuum in terms of the trade talk. there was sufficient room for those sectors to perform that have been underperforming since the beginning of the year. those that have been directly affected by headlines, they continue to outperform and we're back to trade talks, brexit talks, and lots of negative headlines. of the big questions is whether u.s. equity markets are can to continue to outperform. will it continue? sonja: we have to focus on the minerals because the u.s. economy is outperforming the world. this is on the back of the fiscal stimulus program president trump has put in place. for the time being, we have to make sure it's not related to any headlines or america first but pure economic performance. can this continue?

is it related to the fiscal stimulus side of the equation? of 2019/2020,d this is going to fade and turn into a fiscal headwind and we have to address the question, when is the market going to discount that this is going to happen? is when thet, this markets will continue to move in line with the rest of the world. one copy out, the fiscal stimulus has been put in place towards the end of the cycle and might increase inflationary pressures and hence we might have implications of how the fed is going to raise. an interesting balancing act and there's a very good reason why the u.s. is been doing so well. fact: you pointed to the that the sugar rush of from the sugar rush from the tax cuts might wear off. if money stores to move out of the u.s., where this ago? profitart is showing

forecasts showing bets on divergence. this is the s&p 500 within the msci emerging markets index. rotation out of the u.s. and into emerging markets? time to put money into emerging markets? sonja: i will be very mindful that the dollar holds the key to most of these traits. the weakness in the emerging markets have been related to the dollar. at the same time the fed is raising rates, we have in seeing them doing balance sheet reducing. they been financing the the fiscal program and it means we have removed all of the entity from the world. this has led to general weakness in emerging markets with particular focus on turkey and argentina with lots of idiosyncratic risks of where these two countries. ? iswe make the reversal

there sufficient evidence the dollar will stay where it is? any idiosyncratic risk off the table? i would be careful here. i'm sure there are opportunities already. still, can we assume that the dollar strength will turn to weakness? if we look at the fundamental drivers, the demand for dollars within the united states, can you will removal of dollar theidity from the world to u.s., these are dollars support factors. there's a bit of thought -- of a pause because of better data but i'll be very mindful that this is not the end. looking for opportunities but don't go all out into emerging markets. nejra: not quite the end of dollar strength even though we saw bit of week's. sonja stays with us. we will talk more. plenty coming up including the oil surge.

opec's tepid response to u.s. is demand for lower prices. in comcast has won the bidding war for sky. he will bring you the latest on the show down for europe's largest satellite broadcaster. this is bloomberg. ♪

nejra: economics, finance, politics, this is bloomberg surveillance. i'm nejra cehic in london. here's taylor riggs in new york. taylor: comcast has won a bidding war for sky with a $39 billion offer for europe's largest online broadcaster. auction,-- rare comcast bid 10% more than fox. in but assuring investors

london will tender their shares to the philadelphia-based cable carrier. those in -- they are considering putting shares to comcast if disney supports a move. withold is combining barrick gold. barrick's executive chairman will take the addition of the new group. thomas cook shares have plummeted this morning. as the tour operator replaced its cfo after botched travel forecast from an unusually hot european summer flush to pass the forecast from the stash for the second time in two months. a former lego executive will come in on an interim basis.

the trump administration is considering to draft an executive order for the president that would instruct federal antitrust and law-enforcement agencies to open probes into practices of google, facebook, and other social media companies. the white house officials said it was in the early stages and has not been brought past other government agencies. lyndsay walker says the government is not part of official white house policymaking process. that's your bloomberg business flash. trying to commodities, oil prices higher this morning after opec's tepid response to donald comes commands. the group says it would boost output only of customers requested it. russian energy minister about his country's output capacity. of all, let's see how september ends because the month is still not over.

we can only judge after the month is completed. we have recovered about two or 47,000 barrels. that means that we are still within the october cut limit. within thoses been levels. i would like to once again underscore the fact that this is the agreement that was made into -- in june so i would like to remind that in june we should -- we decided to increase output by about one man borrows -- barrels. so far we have increased by about 500,000 barrels. we have tried to achieve 100% conformity as agreed in june. in terms of short-term potential, there's a couple of hundred thousand barrels and if you look at the longer-term

prospects, it depends on the overall situation in countries and the stimuli. discussedntly being in the government but no decisions have been made yet. we have quite a complex tax aging and quite an reserve basis so the government is reviewing a number of proposals made by her ministry. means measures accepted didand if we would be ready in our forecast. >> which russian company will pick up the extra output? >> all companies that participate in the voluntary cuts have significant output growth potential and i continue that all russian companies that currently exist can increase their reserves. nejra: that was the russian energy minister speaking exclusively to bloomberg.

anne-marie is with us now. great to see you again. i know you have been busy all weekend. the impact of yesterday's decision. rent above 80. above 80. what are people tiny about where the oil market goes from here? callsare seeing a lot of being updated after the statement. as we go into the next few months, and a rainy and sanctions really start to hit the market, we're going to see tightness in the market. many thought the trade war would hamper global demand area and it seems the radiant sanctions are also going to impact the market. two big global traders saying they could see the price go up as high as 100. an analyst over city says while city has maintained a dollars a barrel, they could see a

potentially go to 90 are hundred of these geopolitical concerns materialized in the market. pack and heard oh allies -- we heard opec and allies pushing back on trump demands that they bring the price of oil down. would that make up for iran's losses? >> it looks like they are running -- walking a very thin line. compared to earlier in the year when we saw the make an abrupt u-turn when they're were under some pressure from consumers, particularly the present of the united states, speaking to these producers off the record that their prices were too high, it looks like now they are saying there is enough oil currently in the market and they will only ifrease if the demand -- there is demand. i just spoke to the ceo of so natrach and he was saying how the fair price for the market is

somewhere between 70 and 80. looking at a country like algeria with the developed economy like the states or china or japan. we need to have a stable price to predict are economics for the next 10 or 20 years. , it will hurt us because it was less than 70, there is not enough advancement. >> speaking to me just moments ago. we are talking about the price of oil here and that has been driving the market today. you have been tracking it all morning. over $80 a barrel now. he was saying the year you of the oil market is what they really watch. if it's above 80 it's too much pressure on consumers but as a head of one of the biggest oil and gas companies in that -- in

africa, he says the low 70's can hurt investment. nejra: thank you so much to annmarie hordern. is still with us. interesting what she was saying there. they want to you or 70 and 80. is that the price range that works well for european oil companies? sonja: i think it's a comfortable level for most european-based oil companies. all the market for vincent general have been surprised how supplant and successful opec has been in implementing the cuts. and the impact it had on oil prices. ont we should not forget is the flipside, oil companies have done a lot to decrease the marginal price so that the breakeven price of oil for new projects, they are much more comfortable now. 70 to 80 for most would provide a comfortable cushion.

nejra: you pointed out to me in the brexit on the stoxx 600, oil and gas not only outperforming but outperforming the next in the group i quite a margin. of more -- up by more than 12%. the next group find that is tech. with this outperformance, this that mean theoes companies are trading at a premium and not looking as attractive or is it a reason to get in? sonja: i'm not sure on aggregate how the valuation looks like. trigger wouldbig be if you look at the composition of the big oil thers, the big worry with price hovering around 30 or 40 was the dividend did not support the cash flow. at 60, 70, $80 means not only is the dividend good but we seen a huge improvement in the cash low profile these companies but most

.f the efforts operated even you have a much better profit wall from a investors point of view. it pays 6% in dividend yields, and that's pretty good. lowcially in the context of -- greater global uncertainty. also kind of in settling paces of news. i think that in combination with the higher oil prices a good way to get into those things. is the three year yield on the 10 year yields so attractive? a lot of people say cash the attractive. -- cash is attractive. sonja: i think it's a much more nuanced picture. what we believe is important, yes. the 10 year treasury is much more attractive. want to put cash into your asset allocation, depends where you are based.

not in europe or switzerland are a lot of other countries is this an option. depending on where your-based, and what your base currency is, you have to consider hedging. if you're based in europe and want to get engaged with a 10 year treasury, you take it currency risk or hedger bet. i think dividend yields have been a strategy that have come under a lot of pressure. not because i think these companies are worth -- worse or less quality but we had a very strong market leadership which concentrated in a very small number of stocks. and sectors and regions. the question from here is what your expectations for global markets -- global markets in general. we believe overall market returns with a lot more moderate going forward. if you have a company that pays your start if that's contribution to return expectation, you have a balance

sheet that is safe. you have a reasonably transparent as this model. that's a good proposition to listen to. nejra: we had a while were industry groups let others. the dow was the fourth u.s. market to hit that record. did that tell you there's more breath in the market wasn't too early to make that call? sonja: it's still not the kind of market rent we would like to see. it's clear that it's a difficult question whether we can see this into the final part of this cycle or whether we have to wait until we come out of the potential downturn. what we are seeing is we are moving away from a handful of stocks dominating the market. you have seen a broader participation. pharmacare stocks and stocks finally picking up and performing much better. great interest in utilities. in this -- it is this idea of

how do you prepare for the end of the cycle. if you have a company with the right characteristics, that's a good way to try and hide but it might be a much more difficult market environment. nejra: you talk about preparing for the end of cycle. will the fed bring about that end of cycle more ugly that a lot of people expect? of the mostis one important questions. if we think about how i cycle comes to an end, the fed has had to raise rates aggressively because of the overheating of the market. we see the labor market has reached capacity. about the credit cycle because you see these nonperforming loads coming to the surface. -- nonperforming loans coming to the surface. stimulus -- fiscal stimulus adding extra stimulus to the end of the cycle in a tight labor market where

capacity is just where it is about, it will accelerate the end because the fed has raise rates faster than anticipated because of the stimulus. nejra: with a do that? sonja: for the time being, we don't have the evidence on the ground but we are watching it very carefully because it might happen sometime in 2019. nejra: sonja laud stays with us in up next we will speak to german fuest after the business confidence fell in september. this is number. ♪

nejra: economics, finance, politics. this is "bloomberg surveillance." cehic in london.

taylor: the u.s.-china trade war has entered a new phase. another $200 billion worth of chinese goods are not increased. -- subjectincreased to increased tariffs. oil prices are higher this morning after donald trump demanded opec take rapid action to reduce oil prices, got a tepid response over the weekend. the group said it would boost only of customers requested it. the dramatic policy outcome his released, -- they stopped short of releasing specific volumes of crude. we have brought over half a

million in the first quarter starting in june. the rest is subject to demand. taylor: that kavanaugh's nomination is a risk after sexual allegations have emerged. are investigating an incident that allegedly took place during his college years at yale. that comes as the senate judiciary committee repairs to your testimony claiming that he assaulted her in high school. he denied the allegation and the white house issued a statement saying they firmly stand behind his nomination. 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. nejra: thank you so much. taylor was just updating us, but --r the weekend, an algier

1851 is where we have hit on brent crude. some major oil trading houses predicting the return of $100 crude for the first time since 2014. let's talk europe. german business confidence fell in september and mid and intensifying trade war between the u.s. and china, germany's trade surplus leaves them open. thanks for joining us. this downturn and confidence that we have seen in, september is a just a blip, or the start of more falling confidence? >> it's a decline, but not a very big one.

we don't think there is really a turning point now. the declines that of manufacturing crude companies are worried about the trade situation, about the trade war and domestic economy. the overall picture isn't too bleak. nejra: if a trade war does escalate further, what sort of preparations are we seeing companies make? clemens: companies are checking their supply chains. many german companies have productions in the u.s. they are affected by chinese tariffs now. to have production all over the world. as protectionism succeeds, his company needs its own strategy basically producing more in the market countries and closer to the consumers. changing that in the short term is very difficult.

the hope that most companies have is that the trade war will focus on u.s. versus china and not so much on europe. on set withe sonja me is a question for you as well. a: just a question in the broader context. obviously, 2017 has been extremely strong. i know that ever since we saw the 2018, we have had a lot of headlines around protectionism, yet you could argue we are more in a normalization trend than anything else because 2017 has been such an outlier to the upside. if we compare today's episode, it is much more in mind of what we saw in 2016 in 2015.

how can we differentiate? clemens: in terms of protectionism, we haven't seen very many tariffs in europe, the u.s. trade so far. it is limited to the steel trade so far. the answer companies give us is growing uncertainty. related to the potential of an escalated trade war between the europe and the u.s., and the brexit issue. so far, the real impact is not very strong. the other thing weighing a global sentiment is the selloff we are seeing in emerging markets. is there any evidence of this filtering through to manufacturers or other companies in germany? clemens: one of the factors explaining that business sentiment is a week in manufacturing, and not so much

in the rest of the economy. again, the impact of the turkish crisis on german exports is not very visible, but a welcome. the same applies to other emerging economies. there may be more to come. nejra: what about china. when we talk about the trade war, we are mainly focusing on the u.s. and china. have we seen any sort of weakness for export demand from china? clemens: i don't think we have. this u.s.-china trade war has two sides for europe. one is that business in china will slow down. on the other hand, there are opportunities coming up for european companies, also for companies from emerging countries in the u.s. market. chinese competitors will have these tariffs and will be weaker. i don't think there is an impact of the u.s.-chinese trade

war on german manufacturers operating in germany. won said the german economy can deal with any repercussions thanks to strong demand, would you agree? any repercussion is too much, but it is true that what is driving the european economy is not so much export growth as it used to be. it is the domestic economy. the construction boom is growing wages and employment. solid, the domestic economy is very stable at the moment. nejra: thank you so much for joining us. president of the ifo. stay with surveillance, plenty coming up.

this is bloomberg. ♪

nejra: this is "bloomberg surveillance." let's check in on the oil price. we have seen a jump today, hitting a least a two-month high. brent above $80 a barrel and rising to its highest since november 2014. wti rising as well after a meeting between opec and its allies over the weekend.

they gave a tepid response for president drop's call to bring oil prices down. they said they would only increase production if demand increased. we have got a number of trading $100. reporting oil next year is seven our corporate showdown in london has resulted income cost poised to buy sky. fo u.s. cable carrier outbid x. sky shares have soared to an 18 year high this morning. guy andus now is sonja. great to have you with us on set. the final price comcast offered for sky, higher than what you expected.

probably on the cusp of overpaying, but they had to make sure there was a bit out there sufficient to get 21st century fox to attend to their 39% shares. clearly there was expectation that with this bid, that will. nejra: we're not sure yet if it will happen. do you think it will? telling youket is that there is a very strong expectation that that will happen. effectively, fox has to wait until the document is updated with revised pricing. then they can actually make a decision. nejra: what big outstanding questions do you have for sky's future with comcast? guy: comcast is more of a conversion player. sky's strategy going to

be in a convergence world? is it going to be more committed to these businesses in the u.k.? is looking to roll out a broadband offer in italy as well. how aggressive is it with that decision? nejra: what do you think comcast will do with sky given these outstanding questions? guy: very surprised if in the short term they do very much. clearly, they have a greater financial capacity, which means that when there are incremental rights coming up that sky feels it would want, you have the firepower to build for those. that could also put off competition. it doesn't necessarily mean that prices escalate, but it means that sky is in a very strong position. i think over time, you will see

slightly more of an asset infrastructure and convergence heavy model then perhaps he would have seen with an alternative owner. nejra: it is so is hard to talk about the counterfactual and what could have happened. in terms of how this could have been different if fox disney has d won, what else could have been different? -- that is the big point and that will be the big focus. sky is very important to the u.k. telecom market as much as the media market. we are having all of this investment in u.k. fiber. sky is the big broadband customer. sky taking fiber upgrade products will be very important to making the economics. there is a lot of decisions and a lot of power that sky has got to improve the economics of

those businesses, including making, costs more asset heavy -- comcast more asset heavy. nejra: does a deal like this change anything for you when you look more broadly at the sort of space in europe? think it just shows that scarcity of sizable assets still available. -- therly shows that wou network owners are under contact. if you look at what is still out there to be acquired, it is not a loss, which is why there wasn't much interest in the steel. it is more interesting to see where the opportunities are. it is interesting to see how the pure telecom operators, the old monopolies will react to it. there is a lot of pressure to make sure that you are using the network you are having in the

best way possible. to make this work, you need to be able to add a decent return on it. nejra: sky at 8.8% in the session. any final thoughts? guy: there is still a small uncertainty over what the stoxx do in the coming days. in the coming days, we will know more. nejra: thank you so much for joining us. bloomberg.e on argentina's president joins us for an exclusive interview at 2:30 p.m. at u.k. time. more next. this is bloomberg. ♪

nejra: economics, finance, politics. this is "bloomberg surveillance." let's get the bloomberg business flash with taylor riggs.

taylor: comcast has won a bidding war with sky with an offer for europe's largest satellite company. bloomberg has learned that fox, which is selling their 39% stake to disney, is considering hares to the sky s comcast if disney supports the move. on offshore deal -- the executive chairman will the new position that the new group. while the chief executive of randgold will be the ceo of the new business. operator replaced its after an unusually hot

european summer forced it to slash its forecasts. that is a bloomberg business flash. much. thank you so the u.k. opposition labor party is bracing pressure on theresa may, proposing the option of a national vote on brexit. peter jeremy corbyn saying he will decide whatever the people decide. we had a flurry of headlines over the weekend. of the realistic risks out there, are they a snap election? are they a second referendum, no deal, none of the above? sonja: i knew we would end on a

cheerful note. to put it in perspective, i think the events around salzburg last week were classic events. the lack of understanding on both sides around sensitivities, red lines. it is clear that televised speech of theresa may friday afternoon set the scene for what is next. again, she reiterated that no deal is better than a fair deal, and really creates the impasse that seems to have to be off the table. you wonder how they can continue the negotiations. still around the iris question that we have not progressed in any meaningful way. the referendum, i'm not quite sure it is possible without new elections. the labour party is discussing this and i think it would have to come in the context of new elections. you have to combine those options in one.

i think the chances of a no deal has increased because both sides seem to have parted unless we can come to an agreement there, which is quite difficult if you see the way theresa may has obviously put forward her check as plant. -- planned. time is quite tight. nejra: with all of that in mind, our sterling traders pricing the market correctly? sonja: we know the market will react accordingly. we should not forget that sterling has been reasonably strong over the past couple of weeks. i think it is just a bit of a relief there. i think ismarket, relatively cheap already. we are on a 131 handle. i'm glad you brought up equities because i have a chart here showing that, in dollar terms,

dropped.cks have does that mean you should be buying? sonja: to explain, for overseas investors, the political situation is so difficult to understand that they have said why bothering gauging? it's not that they have tried to dissect whether they are more part of the market, but given the size of the u.k. market in the global economy, it is something to see. there is opportunities because if you look at valuation levels, and particular domestically oriented stocks, they do trade of a massive discount valuation. would i buy them now? not, but i would start identifying where you have the best opportunities in business model. you can pull the trigger in case there is a positive headline.

nejra: as you are waiting to pull that trigger, which kind of stocks, industry groups would you be looking at, ready to buy if we did a positive outcome? sonja: it is with a stock specific. we should not forget that everything we have discussed prior to ie, the questions around where we are in that cycle, whether the fed might prematurely bring the cycle to an end, obviously will weigh on u.k. economic growth. even if i think there is a tactical rally to start on the back of positive headlines, the selection has to be done in the context of who has the most robust business model, even in the context of the global growth slowdown and potentially, a recession. the framework is always the same. strength of the balance sheet. nejra: definitely not taking a light position.

just waiting to pull the trigger. thank you so much for joining us. "bloomberg surveillance. continues in the next hour. francine lacqua and tom keene are both in new york. they will be talking to economic minister. this is bloomberg. ♪ xfinity mobile is a new wireless network

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included with your internet. plus, get $300 back when you buy a new smartphone. xfinity mobile. it's simple. easy. awesome. click, call or visit a store today. francine: china walks away. beijing says it won't hold

further trade talks unless the u.s. stops threatening more tariffs with more going into effect today. opec defies trumps calls to boost production. sky surges. the broadcaster hits and eight senior high. an 18 year high. good morning, everyone. tom: let's start rude on a monday. will she go home as prime minister? rude, but you ask it every day because every day is a new challenge. a lot of people were expecting her to maybe resign on that speech on friday. she hasn't. i would say if there is anyone resilient at the moment, it is theresa may. we will get more on that and

comcast. the first, let's get straight to bloomberg first word news. the trade fight between the world's two largest economies has escalated. midnight, the trump increase anon additional $200 billion on tariffs. not holds it will trade talks until the u.s. stops making threats. brett kavanaugh s nomination to the supreme court is in danger of falling apart after a new claim of sexual misconduct. senate democrats are investigating an incident that is said to have taken place during his college years. he is denying the allegation. on thursday, a woman who says kavanaugh assaulted her decades ago will testify before the senate judiciary committee.

as you were mentioning, british prime minister theresa may is getting hit by all sides today on brexit. executorsson and the will endorse a plan calling for a much harder departure. meanwhile, the opposition labor the door openng to a second vote on leaving the eu. may has already rejected that idea. barrick gold has agreed to buy randgold. the shareholders will own about two thirds of the company. comcast has won a bidding war for sky for europe's largest satellite broadcaster.

in an option, comcast bid 10% more than fox, all but assuring investors would tender their shares to the philadelphia based people carrier. bloomberg has learned that fox, which is selling a 39% stake to disney as part of a deal last sky shares toing comcast entity supports the move. 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. riggs.lor this is bloomberg. tom: thanks so much. barrel.near $80 a morning.hurning this the euro getting out. there is american crude. $72 a barrel. lives, 2.32%.

sterling, 131.13. francine: i like the fact that you put sterling. interview that anna edwards did earlier on. stocks in europe declining. i guess people are time to figure out whether this trade war escalates. after opec gave a tepid response to president trump's call to boost supply. i put two stocks. i never do that. randgold and skied both bucking the trend on merger news. they are both up. lost on a monday morning. sky up near 9%. over to the bloomberg chart.

i was going to do a china reserves, carpet let's go back to oil. here is the $100 a barrel mark. the real average of that three-year period on oil was $110 per barrel. -- francine: we are joined by ismail patel. this is on the back of the comcast team camping out over the weekend after a seven hour batch in london. what does it mean for the regulators? will they have to divest anything or break apart? l: there were serious regulatory concerns. however, that has been pretty much alleviated. there are some concerns associated with comcast taking on the sky.

particularly,, comcast owns sky. as havenot as serious disney and fox taken over sky. francine: are they ever pain? is -- overpaying? ismail: possibly. this is something that really excited sky shareholders. of comcast will have to make the case back in the boardroom to go ahead with the deal. of the great themes of the american analysis of this is that brian roberts, is he fighting the last war? do you perceive this transaction as a martyr of old technology versus the new technology of streaming? : comcast has the but operating only in the u.s.. it has been pretty much

landlocked. what this deal with sky offers is a great way -- gateway out of the u.s. obviously, sky operates in five countries with its satellite operating service. sky has its own offering in the form of tb. sky can say it is comcast's european twin. it has managed to offset the rise of online tv players. sky hasn't suffered in a manner that traditional pay-tv operators is capable of. sky is very much a natural fit for comcast expansion plans. both have similar technologies. tom: thank you so much.

it is a fed week. it is a month and even an autumn of central bank in action. there is no one better to about the dynamics of bonds. anthony of pemco joins us today. right now, you have to write an sa on the short-term bond. what do you write on? i wrote a note internally about this last week. i would say that there is a short run neutral rate and a long run. there is a level of interest that was that it could be appropriate now, but not in the long run. in the long run, the fed has said historically that it is the neutral risk. right now, the fed thinks it is

around 3%. for now, it is probably above the 3% level, meeting the fed may have to go to even as high as 3.5%. markets are thinking they will only have to go as high as 2.75%. it is highly skeptical now. it is a big decision point. for three years, it is decided. they will have to decide as a get to it, but they will have to go higher. tom: this is critical. what is the dynamic you are studying? anthony: look at the transitioning effects. are all of these things together working to slow the u.s. economy down? no. stock prices remain high. level itrs at the same

has been for the average of the past five years. only bond yields are up. the most important thing is that financial conditions have not changed enough for the fed to be comfortable it could stop raising interest rates. francine: what is inflation bestely doe disciplined. anthony: witha -- think from a risk management perspective, they will continue to rise. secondly, risk management. one of those two arguments tend to win not in the meeting in terms of what the fed does. because the unemployment rate is , the fed will lean on the side of risk management factors and decide to keep raising risks. it is not true that inflation has succeeded somewhat.

they could keep rising to a level the fed is not comfortable with. tom: much more to come in this hour. here is an important conversation to set the tone for .our autumn look for that in the 8:00 our. we are both in new york and on speaking terms. ♪

taylor: this is "bloomberg surveillance." opec has given a lukewarm response to president trump's demand a take action to reduce oil prices.

they said they will boost output only of customers requested. -- request it. >> there are political issues that impact oil and we try to face them. towill not allow politics interfere with the economic commodity that is to political to subject to politics. cook has replaced its ceo. unusually hot european summer forced the company to slash its forecast for the second time. shares are following the most since the u.k.'s brexit vote. siemens has confirmed it has gotten positive feedback from iraq after making a bid to boost power generation. a german newspaper says a deal would increase iraqi capacity by

half in over four years. the paper says the deal is near completion. o in the united arab emirates may the latest casualty of president trump's trade policies. u.s. tariffs on aluminum imports have forced the company to delay. that is where bloomberg business flash. tom: thanks so much. it is the most interesting sunday evening. the kavanaugh issues and affairs and also on china. anthony is with us now. this is the real deal. we are here, tariffs locked in. idea of athoughts very assertive white house in the coming weeks. we are in a trade war. anthony: we are going to talk a

lot about trade here, also at pemco. how big is it as a percentage of the global economy? what we have seen in terms of the total amount of goods that tariffs have been put on, is $400 billion. the amount of impact on prices, let's say about $100 billion. how big is the total size of the global economy? $100 trillion. tom: i get this time and time again that it is no big deal. don't tell the farmers of iowa. tony: we have heard things like this. these things are not having big macro effects, but big local effects. they will not have a big impact in terms of the trump administration until after the election. all of the policies are resonating with the american public on the aggregate. the farmers and retailers -- the comments lately, you're going to see an upgrade after the

election -- uproar after the election. president trump might even see authority visibility to implement these tariffs, stripped away. francine: i don't know if i buy this are not. if the things that we by suddenly go up in price, it feels like a big deal. how can you say that we can look through the trade tensions? tommy: that is the thing -- tony: that is the thing that is important look at the u.s. economy. 85% of them are in the service sector. because we are human, we think of physical items. often, this tends to be gasoline. as goods prices start to move, the most important thing that can happen is that it will influence inflation expectations at a time when the labor market

and federal reserve may have to raise rates more than otherwise simply because the most important variable in inflation has moved up. that is the thing to watch in the next year. thatine: am also hearing china has canceled talks with the u.s. that were scheduled for this week. you have a slow in china, looking inwards. are taking actions to offset and lowering interest rates. but that is all money now going to the emerging markets. there is no question it can have some influence on the global economy, but we are not looking at a major change. what is expected this year close to where it was last year. in the end, china will want to

avoid the idea that are rising won't want to get caught trap that could hurt itself in the long run. does pimco feel there is enough tension here within the self china state to get to some sort of military altercation? tony: no, we don't think that is xi jinping wants to get into a trap. your $13,000 by 2021. cannot -- xi jinping will outlast him. francine: tony stays with us.

coming up, the republic of botswana minister of investment, trade and industry. we will ask her about commodities at 6:30 a.m. in new york. this is bloomberg.

francine: this is "bloomberg surveillance." we are live from new york this week. the fed announces its latest policy decisions wednesday.

the market expects a hike after weeks of the u.s. 10 year staying consistently above 3%. days after the ecb kept rates unchanged but altered its outlook for the u.k. and european economies. tony, overall, the ecb is starting to consider a range lift off. is this the right time? tony: no. the highest of the ecb policy rate will go in the next five years is plus 0.25%. markets think it might be closer to 1%. that is still a very low rate. we think that summer in the next five years, europe will go into recession. the united states probably well since it has had nine years of economic expansion and can't go on forever. the likelihood that the ecb will keep its policy rate low, same as the bank of japan. the fed will probably put its

rate in the low threes, which is still low historically. the ecb will be held back by numerous factors. ow rapidlyan't gr without human beings and services. francine: are you telling me that europe is not seriously in danger of becoming like japan? tony: in a sense. europe is facing nothing like what japan is, but a much smaller increase of growth. much.ne: thank you so tony stays with us. peter fromater on, goldman sachs. he will focus not only on what we saw in equities, but also tax

cuts. dollar dynamics. waste -- poised to get the broadcaster. we will see what they have to sell, if anything. tom: worldwide, this is bloomberg. autumnal morning in new york. stay with us. ♪

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"all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. tom: bloomberg surveillance. good morning. her entourage said i had to be nice to her. francine lacqua in new york.

great week here, lots going on, including wednesday at the plaza hotel. bloomberg'sis is global business form. -- for him. you have a lot of heads of state. there was a rumor that theresa may could resign. i see her strong because no one else wants the job. i will get her take on brexit when she is here in new york. tom: it is a week where i get and chiseled because you cannot drive anywhere so i walk. speaking of getting in shape, taylor riggs with us. china says there will not be any peace talks in the trade war as long as president trump keeps threatening to impose tariffs. on u.s. impose levies another $200 billion of chinese products.

beijing has promised to retaliate with duties on $60 billion worth of american goods. president trump says if that happens he will impose more tariffs. president trump's threats on iran are dialing up the opening for the united nations general assembly this week. economy is's struggling since the u.s. impose sanctions and has threatened more and less there is a new nuclear deal. nbs has unveiled what would be the largest health care. the program relies heavily on partnerships with private hospitals. there are questions about how much it will cost. in golf, tiger woods has won his first pj golf tournament in five years.

he captured the championship in atlanta by two strokes. his career has been plagued by injuries and scandals which cost him sponsorships. next up for woods, france. 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. one of the greatest assortments of experienced experts on international experts is ts lombard. ,ith them is lawrence brainard or merging market which barely describes his eggs --, emerging market experience, which barely describes his experience. guy, there are a

couple of other guys who have seen it all. can you suggest where on the path to an em crisis? like 1982.eels 1982 was the imf meeting in montreal. mexico had defaulted. i spoke with one of my university of chicago colleagues , who is the president of banco centrale in brazil. freight trainis a coming at you and he said, we are getting money from the japanese. six months later, they were in default. tom: is the trump administration policy, is that going to get in the way of an emerging market workout? larry: it is going to be the

trigger for significant changes. people do not think about the market. what did globalization do? it disaggregated trade from goods. now, we have barriers. ehina is going to re-globaliz based on these. what we are going to see is the development of an asian trading block not because of chinese politics but because of the market. the market is going to create a trading block because they do not have access to the u.s. market anymore. francine: what is your take, tony, we have a great story saying u.s. markets they say trade reality check -- face a trade reality check. ishony: the federal reserve often blamed for the problems in emerging markets.

we would say it is not to blame. these nations have had time, since 2013, for the changes in the monetary policy that have occurred in the united states. it is more political factors. lawrence, do you believe in the idea of convergence over time between developed markets and emerging markets, the idea that -- is there any interruption occurring? you cannot talk about emerging markets in general. you have to look at individual countries. china is going to emerge as the major force building this trading block and the u.s. is going to fall behind.

controls and technology but technology, you can disaggregate technology, you can buy human capital. we are looking at changes. when you talk about convergence, convergence to what? we are going to have a new trading world and this is what people have to get there had around. as aine: will be dollar reserve currency come into question? larry: i do not think so. it is not a problem. francine: what are the consequences of this shifting? we are going to see the global trading environment degenerate into blocks, because of the trade wars. we are going to have an asian trading block, a european trading block, a north american trading block. tom: you had the privilege of

studying under milton freedom -- milton friedman. he invented the study of information. is our international economics different because of the rates of information, the speed, a need to react? it is a combination of things. it is the information flow and the control of information and logistics.an control they can have inputs from all over the world and reduce the cost of production. that is globalization. we are going to have a different reassembly of these forces and it is going to look different than today. to seee: are we going more contagion from emerging markets?

how do we fix turkey and argentina? , the crisis will be triggered by emerging markets. francine: the next crisis? larry: the next crisis. francine: what timeframe? larry: two to three years. what we have is a perfect storm. china, the china economic war. it is not an economic -- it is not a trade war. tom: can i steal that? larry: of course. turkey is not systemic. we are going to have a financial crisis in turkey because the leadership does not understand how to deal with the crisis. the other crisis is not argentina. the other crisis is brazil because we have an election in three weeks.

right. the left and that is going to create volatility. tom: going back 36 years. francine: thank you both. anthony crescenzi and larry brainard. users can interact with the charts, using gtv . tom: the economic war. francine: you can browse recent charts, use them, make them better, send them back. this is "bloomberg." ♪

francine: this is bloomberg surveillance. let us check in on what is

trending. tiger woods is back. the 42-year-old has won his first tournament in more than five years. this could bode well for sponsors such as nike. could the u.k. opposition be closer to endorsing a second brexit referendum? jeremy corbyn would prefer general elections but will be bound by the decision of the labor party. they will debate the decision tomorrow. our most read stories, jpmorgan sees market risk from overconfidence. in second place, the second round of u.s.-china tariffs. opec gives a tepid response. bloomberg spoke exclusively to the russian oil minister and he told us that his country has capacity to boost output. terms of the short-term

potential, a couple of hundred thousand barrels. lot of it depends on overall policy of the country and the stimulus which we will be ready to give. these are being discussed in the government but no decisions have been made. francine: great work there over the weekend. what are traders telling you? is there a danger opec cannot fill the vacuum? good morning. if you look at the price of oil, you can see the response to this meeting yesterday. $80.51. in asia this morning, they are saying they could see by

christmas, $90 a barrel. they do not think the group could fill that vacuum if we are to see 2 million barrels a day being lost due to sanctions on iran, which exports have dropped 35% since april. algiers has its own instabilities and there are others across the middle east. how do they play into the next meeting in vienna? that is a good question. it is not just iran. the losses we are seeing as part of opec, they talked about the fact the group is over complying by 29%. they are cutting more than expected. they are losses. it is not just iran. it is in venezuela.

about 2it could be million barrels a day but how much more could venezuela lose? libya is producing now. we had a scoop on how much they are producing. these are zones where security issues are at risk. that is why you're seeing more of a premium into the price. the skinare saying, by of their teeth, you have russia, maybe kuwait, a beat -- able to fill that gap. we are going into a tight market. tom: we have seen that. thank you. us and crescenzi with lawrence brainard with us. a dovetail of experience on emerging markets and bonds. this time is different. in the bond market, what i am is in a better

place because they have a more developed bond market than they have had? ofry: also, the balance also, the- anthony: balance of payment story is better. the bond markets are not developed. you could say the italian bond market is developed, one of the biggest in the world. it needs liquidity, it matters a lot to the global investor, and there is not meaningful liquidity in these emerging-market bond markets. tom: the word is dollarization. and its successful

outcome. point is we have had qe for 10 years. we have increased central bank trillion,eets by $9 $10 trillion. we are moving into qe exit. what happened is going to reverse. they pushed a lot of money into emerging markets. the reality is, u.s. interest rates are going up. reversede going to be because they are no longer profitable and that is significant -- a significant drain on emerging markets. individual countries, countries that have done reforms, are going to be ok. there are countries that have not done reforms and are going to get squeezed. francine: you make a difference between structural reforms and

nonstructural. do make a difference between oil exporting and non-oil exporting? larry: yes because the oil market is going to continue to be -- you have countries like russia who are running fiscal surpluses who have not done the reforms but are in a strong position. francine: what looks attractive now? one, we have to get over complacency about this qe exit because it is going to happen and we have to look at places that have become overstretched in terms of our wing. -- in terms of borrowing. we have seen an increase in corporate borrowing. turkey, for example, the sovereign is not overextended.

debt to gdp is only 28%. the banking system is overextended. is it a shadow banking system? we think about the opportunities in emerging markets, we think about currencies. , you have ae find basket of high-yield emerging-market currencies. it is a liquid market. they trade $5 trillion a day. tom: let us come back. anthony crescenzi and larry brainard. it is an important conversation always. argentina, look for that in the 9:00 hour. this is bloomberg. ♪

francine: we are getting breaking news out of versace. we heard this morning from the national newspaper in italy it could be nearing a potential sale. there are does go names in the running. kors as the front runner and the deal could be announced tomorrow. kors is near buying the few fashion companies that has remained independent. fashion website here. francine: blackstone already owns about 20%. john mcdonald spoke to bloomberg this morning where he discussed

brexit and the plan to force companies. >> we will see what the government comes back with in november, what deal they can bring back. we do not see they can bring back a deal they will support. -- we will support. , we think there should be an election. people can have a debate and determine the team that will do negotiations. francine: that was the shadow chancellor. we care about whether labor supports a second referendum? been an important change in labor policy whether or not they are going to support any second vote to give britain's a chance to think again. there is going to be a motion on

tuesday that they will vote for. mr. corban saying he would go along with whatever the conference decides. if there is a proper policy of labor to have a second vote, it makes the whole thing a lot more likely. the prime minister has ruled it out. with so much instability in government,nd in labor does become increasingly important. francine: where do see it going? -- where do you see it going? anthony: it is difficult to tell. what we would say is think about the power of democracy and capitalism. think about populism. look at the buoyancy of markets. it does reflect this idea of ongoing capitalist and democratic regimes affecting businesses and profits and that

is what matters. tom: thank you so much. david, too short of a visit today. asook forward to your work the prime minister speaks here on wednesday. there are many themes, china, the trade war. we will continue this conversation with brian levitt. with deepr funds international exposure. more. francine lacqua and tom keene in new york. she misses london. this is "bloomberg." ♪

tom: fifth avenue in manhattan is closed. it is united nations week.

america and china are united, beginning a trade war. the president will speak tomorrow. 43 days until the election in washington. they're consumed by all things kavanaugh. this 2018 of golf ends with an emotional walk to the 18th hole. good morning. we are live from our world headquarters in london. francine lacqua is here for a week and one of the highlights, the bloomberg global forum. a visit from the prime minister. moreine: she is no beleaguered then she was last friday. u.k. an may give the easier time and then they said, no way, we do not like the proposal.

do you remember the instagram we showed on air, that upset the u.k. where he was making a joke about cherry picking. those on radio, the tone of her voice. francine: she was firm, telling the e.u. not to mess with her. brexit probe exit -- pro politicians launching a counteroffensive. tom: this is lost in translation for americans. we try to analyze it and i do not know what i am talking about. francine: it is a tough month, tough year for the u.k. tom: with our first word news, here is taylor riggs. taylor: starting with the trade war between the world's economies, it has escalated.

the trump administration imposed tariffs on another $200 billion of chinese products. beijing is poised to retaliate with duties on $60 billion of american goods. president trump has said that would lead to tariffs on another $267 billion of chinese imports. china says it will not hold trade talks until the u.s. quits making threats. brett kavanaugh's nomination to the supreme court is in danger of falling apart after a new claim of sexual misconduct. senate democrats are investigating an incident that is said to have taken place during college years. he is denying the allegation. on thursday, a woman who said kavanaugh assaulted her decades ago, will testify before the senate judiciary committee. it is a victory for comcast after a series of setbacks. the company overwhelmed 21st century fox with a bit first guy, -- bid for sky.

is that but it sure comcast will win control and have a chance to build a global television giant. buyick gold has agreed to ringgold in an all stock deal. the transaction creates a gold mining giant with a combined market value of $18 billion. barrick shareholders will own two thirds of the company. the takeover helps barrick boost output at a time when it's stock has been punished for its production outlook. opec is given a lukewarm response to president trump's demand a reduce oil prices. saudi arabia, and allies said they will boost output only if customers request it. >> there are geopolitical issues that impact oil. we try to address them in the context they arise. we will not allow politics to

interfere with this commodity that is critical. taylor: 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." tom: thanks. can you bring it up or? let us see if you can do this -- up here? let us see if you can do this. there it is. there is taylor and they were out there live. you can hear paul sweeney. francine: you can ask questions. you can log on and ask guest questions. -- ask guests questions.

should we save you? tom: you want to go to data? equities, bonds, currencies, commodities. the equity market, go to cash. 12.30. with a . the dollar, 3.22%. francine: we are poor. stocks, equity futures declining and china dashing products is -- dashing prospects for talks with american officials. gave alining after opec tepid response to president trump's call for boosting supplies. gold rallying on merger news. we are going to have

important discussions, including sunday afternoon and sunday evening. we are honored to bring you paul sweeney. he drives bloomberg intelligence worldwide and he joins us. you have followed this. moffett said, why does comcast want sky? paul: comcast needs international exposure. tv business is mature. if you envision yourself as a global telecommunications media leader, you need to get outside the u.s. borders. sky is a crown jewel. it has 23 million subscribers. this is a great waysky is a croo diversify.

including jonathan ferro watching soccer games on saturday morning. is the idea ofl technological obsolescence. model sod technology fractured that maybe it is at risk? we are seeing cord cutting, 4%, 5%, the u.s. market drops. about marketshink where they are not cutting the cord. the u.k. markets are still growing in terms of penetration. that is the growth they are looking for to augment what is a good business. francine: what happens to fox's stake in skype? disney does not want to be a minority shareholder.

my senses they will sell the stake or swap it for the state comcast owns in hulu. are you watching for regulator action? paul: i think this will be smooth. they have received clearance for this move several months ago. it came down to price and comcast came in with this bid. tom: i'm going to bring you my david brinkley look. thent to talk to you about valuations that paul is enthused about. is the market cheap? market of value? is there value in international stocks? the market is not overly excessively price.

we had a tax cut in the united states. when you look at the denominators, the multiples are not excessive so people concerned that this is 1998, 1999, it is not. we should lower our return expectations. this is not 2008. international markets are cheaper but sentiment is weak as a result of trade wars and brexit concerns. has been good on this bifurcated market. was it all apple, amazon? faang stocks continue to be decent. we are seeing decent earnings coming out. if you look at jean's work, she is focusing on earnings work. this is the first time

i am meeting brian. when you look at the industries , what isough m&a demanding a higher premium? what has been demanding a higher premium in the market for the last year's has been the more growth oriented parts of the equity markets. what you've seen as a shift toward the more value oriented parts of the market. we are going to continue to be in a growth market long-term. are missing is that stronger dollar, tighter fed policy is going to lead to slower growth in the united states. think we are shifting to a more value oriented market. we are going to continue to remain in a growth oriented phase. francine: thank you both for

joining us. and brian levitt of oppenheimer funds stays with us. in the meantime, you can follow us on twitter. we are live. we will answer your questions. tom: we have got an active site where you can keep up with the trends we are following. the streaming thing is so cool. twitter, thank you for developing this. love it. stay with us. from new york, this is "bloomberg." ♪

taylor: this is bloomberg surveillance. i'm taylor riggs. let's get the business flash. bloomberg has learned that micha el kors is nearing an agreement by versace. sayle familiar with a plan the family would continue to play a role. thomas cook has replaced its cfo after a botched travel forecast for a hot european summer. that forced the company to slashes forecast -- slash its forecast for the second time in two months. the finance chief will step down as the company brings in a former lego executive on an interim basis. siemens has gotten positive iraq.ck from

the deal is near completion. that is your business flash. tom: thank you. it has been an emotional weekend for america and within the beltway, concerning mr. cavanaugh. let us listen to senator graham. >> what am i supposed to do? life, based on's an accusation, everybody named in regard to being there, said it did not happen. unless there is something more, i am not going to ruin judge kavanaugh's life over this. she should come forward and she will be respectfully treated. tom: it has consumed the beltway. there is no other topic. kevin cirilli is our chief washington correspondent. distinctive thing right now in the kavanaugh

debate? what matters this morning? a new there was allegation reported last night that other democrats are investigating a second allegation of misconduct, this from judge kavanaugh's freshman year at yale university. looksies this and he forward to testifying publicly on thursday at 10:00 a.m. in the committee. another allegation, another denial. the parallels to anita hill becoming more clear. tom: is his nomination threatened? is there a belief it could be derailed? most tellingk the piece of comments released last week came from mitch mcconnell, keep the faith and that

if the judge is not confirmed by october 1 when the court reconvenes, he would be confirmed sometime in the lame-duck session. that is what i hear that the likes of senator collins, that they're going to get on board, even if it is not on the timetable. francine: good morning. when will this be settled? when are they looking into these allegations? democrats are saying this ought to be investigated by the fbi. the hearing is scheduled for thursday and after thursday, we should have an estimate about whether this will be brought to a vote or whether it will spill into the lame-duck session. tom: thank you. our chief washington correspondent, with an event for week. with us, brian levitt of

oppenheimer funds and we're thrilled to bring you john hudak. i do not think any of your coursework prepared you for the debate, the heated debate, i should say. will you review all things kavanaugh? john: the most important part is the hearing. what dr. ford has to say and the detail she gives is going to be a make or break moment for judge kavanaugh. she has the opportunity to derail his nomination and to make republicans think differently about their approach and what his nomination might mean moving forward. we doet us move on and that with a smart essay on china. here is jeffrey sachs of columbia university. this is his will house.

heelhouse. accounts for half of -- half or more of voter funding. is an incoherent attempt by the trump administration to stall china's economic ascent by trying to stifle exports and access to western technology. what is the playbook for september for the trump administration? axios had they're going to go hard against china. is that feasible? john: it is feasible. he is facing a landscape in which he needs to score points with his base. he thought that was going to happen with the tax bill and the kavanaugh nomination. neither has panned out.

that heter countries was successful attacking as a candidate is going to be the thing that connects him to middle america and manufacturing america where he needs to do well. francine: does that give him votes in november and where does the womens'vote go? john: this is a careful balancing act that republicans need to make. they need to talk about the economy. americans are feeling it. the more the president can lean on that, the better his party will do. you said, women voters are going to be looking to the kavanaugh hearings and look at how the republican party not only handles this nomination but the respect or disrespect they

give toward dr. ford and if this, it isbumble going to be problematic in november and problematic across the board. francine: i know it is different in europe but does the average american go to the polling booth and say, stock prices are at a record high. i feel good about myself? john: most americans look at their day to day situation. factors thatot of go into why a person votes a certain way. the one thing we know in studying voter turnout and preference is that if the average american is doing well economically, they are likely to reward the party in power. president trump has not been able to capitalize so far. he has 45 days to do that.

he and the party will be working hard to get that vote back. is, it iseality always an opportunity. where is the opportunity now? brian: the best opportunities are outside the united states. that is unlikely to play out. tom: they are a value trap because of tensions? brian: and because of sentiment. what investors are underestimating is the fact that stimulus,despite the there are going to be second order effects from these tariffs which will slow domestic demand, economic activity and investors will awaken to an environment where, outside is not as bad as people think. those growth stories in the emerging markets. tom: what about the banks of the

emerging markets? i think investors would be better served focusing on the growth stories of the emerging markets, the chinese consumer, the millennials inc. china -- millennials in china that are consuming. tom: he goes right to growth? what could stifle growth? what is the biggest risk you see? brian: a policy mistake somewhere in the world. in the united states, the federal reserve is committed to gradually raising interest rates. they got space with the 10 year yield going up. at some point, they flatten the curve. the risk persists. trade wars, the biggest issue is

not the nominal amount. it is a global gdp. the bigger issue is if the dollar continues to strengthen. that will slow economic activity. if you remember, when the emerging markets outperformed, it is because of china's stimulus, that growth picked up significantly. that is not going to happen this time. you will see the u.s. slow and come down to where the rest of the world's and that is where we will see international markets outperform. do the midterms change the stock markets? if it is a democratic win, do markets fall? then: i do not think midterms change it. for the party that controls to pick up seats. i think the only president who has done that is george w. bush.

even if you were to get a democratic wave, the legislative achievement was the tax cut. risk would be, it does it lead to impeachment proceedings? you had that in the 1990's and yet, the stock market was up. i do think it is a risk. tom: i want to go to you. everybody is talking about the doom and gloom about america. if i go over to the bloomberg, i got a 17% 12 months trailing. it is hard to see for radio. s&p up 17%. dow jones industrial average, 12 month trailing, up 20%. that is a make the market great again statistic. john: it is.

the markets have built-in expectations about the midterms. the president's party loses economy was doing well under president obama. it is doing better under president trump. most investors are not going to look at the economic landscape and say, if there is a change in congress, there is going to be this upheaval economically. francine: thank you. john hudak, brian levitt. next, bogolo kenewendo. that is coming up shortly. this is "bloomberg." ♪

francine: look at that. we are in new york. i am in new york because we are following that u.n. general

assembly and the bloomberg conference on wednesday with prime ministers. the hour maybe theresa may because there is so much uncertainty surrounding break that. -- surrounding brexit. theresa may responded quite firmly. tom: she will speak at the wednesday andm then she flies back for a soiree . francine: the labour party conference is tomorrow. the conservatives meet up and she is going to get it from all sides. let us get to the first word news. taylor: china says there will not be any talks in the trade wars as long as president trump keeps threatening to impose tariffs.

the dispute escalated after midnight. the u.s. imposed levies on another $200 billion of chinese products. beijing has promised to retaliate with duties on $60 billion of american goods. president trump says if that happens, he will impose tariffs on more chinese goods. theresa may is getting hit from all sides on brexit. her fiercest critics will spell out their demands. former foreign secretary boris johnson and the ex-brexit secretary david davis will endorse a plan, calling for a harder departure. the opposition labor party is leaving the door open for a second vote on leaving the e.u. >> this will be about the deal. we are respecting the referendum. will be putting forward our own proposals -- we will be putting forward our own proposals.

i think our european partners are up for that. what we have been witnessing from the existing government is a form of negotiations which is unacceptable. taylor: india has unveiled what would be the largest government health care program. the prime minister has kicked off what is being called midoc are, a plan to cover the poor citizens. the plan relies on partnerships with private hospitals but there it -- but there are questions about how much it would cost. latest meeting with opec did not yield a positive result for president trump. the president wants them to reduce oil prices but they say they will increase output only if customers wanted. russia has excess capacity. a couple oft is hundred thousand barrels. longer-term about

prospects, a lot will depend on the overall quality and the stimulus which we will be ready to give, which are being discussed in the government. no decisions have been made. taylor: tiger woods has won his first pga tour and event in five years. -- tournament in five years. he captured the tournament in atlanta by two strokes. his career has been plagued by injuries and scandals. next up, france. 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." tom: thank you. is the one place in africa where everybody goes and they rave? botswana. joining us now, bogolo kenewendo

, minister of investment and trade. brian levitt as well. is botswana, has the greatest access to wildlife of africa. it is threatened. it is not the hippos. maybe it is the elephants. how critical is it, the wildlife in the linkage to tourism? >> the situation is stable. there has been a lot of drama about our situation. that it is asis monthful as it was last or two years ago and all we are trying to bring now is the human face.

conservation has to be a responsibility of the people. tom: last week, we saw emira tes-etihad talking about a merger. to botswanat access and what you're doing to drive the aviation trade? addis andis by johannesburg in south africa. we are working on plans to great more access. tom: nonstop. francine: that would be good. war,lk about the trade does botswana have a role to play? does it affect your linkage to the u.s. and china? we arere concerned and keeping our eye on it because it could have a drastic impact on our economy because we are diamond led.

francine: what is the government doing to have a sustainable income? there are a lot of things going on with diamond prices. >> we are looking at diversifying. we are looking at growing the agricultural base but we are also into the tech space because we think we can improve the continent if we deal with our challenges with technology. trade, and alld the stereotypes. what do we need to know about the reality of diamond mining? >> i am a product. i was born in a government hospital. go to university by the government and i work for the government. that is a product of the diamond. there are no black diamonds in

botswana. all of us are a product of that. i know there are negotiations regarding botswana s regarding a longer-term sales pact. where are those? >> there are hopes we will reach an agreement. francine: when will we know? >> i'm not in a position to respond to that. tom: what do you hope to accomplish in new york? >> i have several meetings and the main thing is to get botswana out there. one of our challenges has been branding and investors knowing more about botswana. it is about sharing our message. is peoplestration centered and in the investor would need to know our expectations are that investment should be human centered. francine: how are the plans

going to become more energy self-sufficient? >> plans are going well. we are going into renewable energy and we are excited. centera may be an axis the sun'scenter of raise. into an opportunity to tap solar energy. francine: thank you. so nice to see a woman in position of a finance ministry. brian levitt will be with us. coming up, the exclusive interview with the argentinian president. he will have possibly a message to investors. that is coming up at 9:30 a.m. in new york. this is "bloomberg." ♪

taylor: this is bloomberg surveillance. i'm taylor riggs. let's get the business flash. the largest privately held technology company is taking a step towards an ipo. plans to interview banks of this week for underwriting roles in a traditional public offering. that is a backup to a plan that has met resistance which is a jpmorgan iss stock carrying out a plan to expand its consumer bank and more than a dozen new markets. the u.s. largest tank by assets branches in the philadelphia area and increase small-business lending. it is its first retail presence in pennsylvania and delaware. the european central bank is

starting to prime investors for the first rate hikes since 2011. mario draghi' as lieutenant want to communicate more on the face of increases to avoid stirring up markets. that is your business flash. francine: thank you. staying with central banks and the fed announces its latest policy decision on monday. the market expects a hike. participants will give their expectations for growth. brian levitt of oppenheimer funds is with us. if you look at the fed, ecb, boj, what does a policy mistake look like? centrale cannot have banks get two tight at this point in the cycle. the u.s. looks good. we have looked good for a time. we had a lot of government spending in these last quarter's

and growth is likely to moderate. that is not always popular. some think the u.s. is moving to a new higher sustained level of growth with this repatriation of foreign earnings. i am skeptical. europe should be cautious. there is what we used to call green shoots. there is improvement in earnings growth and credit growth. the policymakers should be cautious and not pursue deflationary policies. francine: does this -- is this trade war related? if there were tariffs hitting carmakers? is going to be the biggest challenge for the federal reserve is, do they view tariffs as inflationary to the u.s. consumer or do they look at the second-order effect which means it slows down activity?

it is not all that different from a rise in commodity prices. why does the fed look at core cpe? they want to strip out the noise. a similar dynamic could play out. tom: let us get an update on a chart we have shown many times. this is the real fed fund rates. 10, 20, 30 normal years ago. we are not back to a positive, even with raising rates, we are not back to a positive rate. there are miles to go to normal. brian: but what is going to hold back the fed is the flattening yield curve, the stronger dollar. we talk about the first rate hike in 2015 and they had to back off. -- can youu'd carry

carry your statement on the ?ollar over to em brian: to the extent that if the fed continues to get tight, you , greater problems problems arise in emerging markets. fiscal ands. running trade deficits, a lot of that stimulus leaks to the emerging markets, like you saw in 2004, 2005, 2006, and the dollar weakened. if you get too far down a path of strong dollar, that is not good for emerging markets and the united states. francine: does the dollar get a little bit of a reprieve? anotherou could have leg of dollar strength because of what is going on with the

trade war and uncertainty around that. we believe the next cycle will be dollar weakness given the trade deficits we're going to run. fiscal deficits, it needs to be funded. tom: how do respond to people tf? dom going to buy an e the big phone company like we all did? what is the way if you're not buying and etf? carefulou have to be when you're buying individual country etf's. even the emerging market index, you will end up with state owned energy companies, banks. our view, we invest in emerging markets for growth. we believe investors should be looking to emerging markets. tom: growth for what? brian: broad macro growth.

where the demographics are, where the productivity gains are going to be. there are stories that are going to play out that you might not pick up as much owning individual country etf's. francine: the places in the markets that look fluffy. some of the uncertainties out there. brian: there is nothing that looks extraordinary. at the corporate bond market in the united states, spreads are tight. valuedcause something is does not mean it is going to roll over. there would have to be a catalyst, a deterioration in economic activity in the u.s. or china. francine: what would you do with

some of the southern european assets? brian: you need to be cautious. the real yields of emerging markets are attractive. i do not think investors need to be loading up on italian bonds. what is going on in peripheral europe, we going to be dealing with them -- with that for a long time. tom: brian levitt, thank you so much. i want to tell you how excited francine and i are about streaming out on twitter. this is wonderful, amazing technology. we have got breaking news. francine: this is out of italy. , they haveprimerica reached an agreement to cut migration related spending. the italian government pass new rules on migration. that the mostas

important players in the government met today, i head the budget law. of the budget law. there is a secret push to make sure the president is trying to keep the populist things in check. user oppenheim or will join -- peter oppenheimer will join us at 8:30 a.m. in new york. this is "bloomberg." ♪

francine: this is bloomberg surveillance. i'm francine lacqua in new york. tom keene has gone to the radio studio. this is what we are looking at in terms of our biggest stories. by -- it is down. -- pretrade.ped sky up 8%.

a lot of questions that comcast be fox in this $39 billion sky auction. what is next. one of the things we try to get paul sweeney to answer is what happens to fox's stake in sky? it is unclear what will happen but unlikely if you think of the rationale they will hold on to that. let us get back to brian levitt, oppenheimer funds senior market strategist. we talked about the fed, about brexit. what we have not talked about is japan. stocks are doing well. they posted the biggest weekly gain since 2016 and we do not talk about it. brian: japan was an economy many left four dead because of -- the for dead because of lost economic activity and lost economic returns.

gdp per capita growth has been good and the big story in japan is the restructuring of the businesses and the focus on returning value to shareholders and creating value for shareholders. japan is investable. for years, people have been saying that the japanese yen is a bug looking for a windshield. we have this selloff by ford investors. were they on the wrong side of a trade? you have got to look at, you are not going to see economic growth because of demographics. what you do have are good companies producing high-quality products for the rest of the world and those businesses are

focused on shareholders and that is a big change in japan. it is going to create value. francine: you could see that in two years, if we see a downturn in the u.s., is japan strong enough to counter that and support world growth? brian: i think the policy gets too tight in the united states. u.s., we'rey of the going to see the rest of the world experience that. what investors should be focusing on is what should the next returns look like? need to lowerou your expectations given where multiples are. that is hard to talk about right now when we hear about trade wars and stronger dollar.

returns are likely to be stronger outside the united states. francine: thank you so much. he will continue the conversation on bloomberg surveillance radio, later on. i am looking at european stocks. u.s. equity futures and european stocks declining. china seems to have dashed prospects with american officials aimed at improving relations. oil climbing after opec gave a tepid response to president trump's request to boost supply. this is "bloomberg." ♪

>> china will not hold trade

talks unless president trump's that his threats. and opec plus ignores president trump. prices surge above $80 as they pledge of supply more oil, awarding of a price spike and triple digit prices. pays $39 billion for sky, and almost doubles its customers. david: welcome to bloomberg daybreak. i am david west and, he looked alix steel because forget about trades, the real news is tiger woods is back. alix: that was really exciting. we all know viewers were shocked, but this was amazing. to see the crowd rushed on like they were rushing -- david: on the 18th hole, it sounded like a football game. they were shouting -- usa, usa! it was pretty exciting. alix: