♪ francine: blowing the budget. italy agreed on a 2.4% deficit for 2019. yields a spike, the ftse mib sinks. judge kavanaugh and dr. ford offer opposing accounts. president trump stands by his nominee, republicans push for a vote today. elon musk gets sued by the u.s. regulator, accusing him of misleading investors and making up valuations to impress his girlfriend, as shares plummet. ♪ welcome to "bloomberg surveillance."

i'm nejra cehic in for francine lacqua in london. in terms of regional equity benchmarks, the ftse mib definitely under par from today -- underperforming today. a lot of the worst performers are italian companies, particularly italian banks. we have been seeing it yields a spike by more than 20 basis points across the curve. meanwhile, the euro took a little while to react initially for at least half an hour it was initially unchanged. it is heading a little lower now. quite a contained reaction in the euro compared to what we are seeing in italian bond and equity markets generally. let's take a look at what else we are watching the global markets. overall, and by the way the msci asia-pacific index ended the week on a high over in the asian session. we cite u.s. stocks again as well in some time -- and something like as many as four

days. seeing the losses we are on europe's equity benchmark nothing compared to what we are seeing on the ftse mib. you are seeing 10-year bund yields drop by 2-3 basis points. dollar-yen and focus because we have seen some dollar strength since the fed decision generally. the yen hitting in this session its weakest level in 2018 against the dollar. , thehis quarter to date yen is one of the worst-performing g10 currencies, along with the aussie dollar and new zealand dollar. that could have something to do with trade tensions. take a look at what is happening to tesla shares in the premarket, down 10.7%. the shares in the premarket and after-hours taking a significant hit on the news that the -- that elon musk is being sued.

big questions on whether he will be staying in the company and at what capacity. let's get the bloomberg first word news with taylor riggs in new york. taylor: italian bond yields have surged and the euro is lower this morning after the government says next is budget deficit targeted at 2.4% of output. this comes as the populist party pressure finance minister johnny ria tovanni t provide work funds for their collection. retail sales accelerated as a faster that -- at a faster than expected pace and factory output jumped for the first time since april. retail sales grew 2.7%. the figures suggest japan's economy remains healthy despite a likely hit in the current car there -- quarter from extreme weather and an earthquake. the governor of the bank of canada is confident that each radio can be reached with the u.s. and mexico.

addressing brazil's leaders in new brunswick, he said the -- business leaders in new brunswick, he said the u.s. is less -- to his country than it once was. >> canada's dependence has been trending down these last 15 years or so. that's of course because we are developing markets in other places, and no doubt the free trade deal with europe is going to add to that momentum, and the trade deal for the asian 11 or 12, whatever it is, is going to help. has shown interest in joining the transpacific partnership trade agreement, according to sebastian panera. almost 25% of our trade is with china, which is by far the largest trading partner. the second issue with the

chinese were reactive in calling that. the third one is in lending, but in that order. if they propel all the requirements, they're welcome just fulfill all the required -- fulfill all of the requirements, they are welcome. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. nejra: i have to bring you some breaking news on the bank of japan. the boj cutting its october greater than 25 year jgb auction to ¥10010 billion billion. basically look -- this looks like the boj paving the way to cut purchases of superlong bonds in october. we had some rumors around this in the last few days and we saw quite an impact on jgb yields. 10 year jgb yields up one basis

point. if i look at some of the maturities over 25 years, again it you are looking at moves higher than about one basis point. donald trump is standing by dayt kavanaugh after a of emotional testimony on capitol hill. dr. christine blasey ford's said she was 100% sure it was him that sexually assaulted her in high school. >> i am not here today not because i want to be. i am terrified. i am here because i believe it is my civic duty to tell you what happened to me while brett kavanaugh and i were in high school. >> i was not at the party described by dr. ford. >> his assault on me drastically altered my life for a long time. i was too afraid and ashamed to tell anyone these details. i did not want to tell my 15, wasthat i, at age

in a house without any parents present drinking beer with boys. >> the drinking age was 18 in maryland for most of my time in high school and i was 18 in d.c. for all of my time in high school. i drank beer with my friends, almost everyone did. sometimes i had too many beers, sometimes others did. i like to beer -- liked beer. >> i was happy to undergo the polygraph test, although i found it extremely stressful. >> i'm not questioning that dr. ford may have been sexually assaulted by some person in someplace at some time, but i have never done this to her, or to anyone. >> i don't have all the answers and i don't remember as much as i would like to, but the details about that and that bring me here today are the ones i will never forget. they have been seared into my memory and have haunted me

episodically as a nadal -- on adult. >> this confirmation process has become a national disgrace. you have replaced advise and consent with search and destroy. i demanded a hearing for the very next day, unfortunately it took the committee 10 days to get to this hearing. nejra: joining us now is isabelle mateos y lago, chief multi-asset strategist at blackrock institute and valentin marinov head of g10 affects research at credit agricole. stephanie, you watched the entire hearing. without getting into the facts about who is right and who is wrong, hasn't changed anything in terms of -- has it changed anything in terms of what might happen with the confirmation of brett kavanaugh? >> i think it has. it is the first time we heard

from christine blasey ford and saw her in person. i think she came across as credible, sincere. it was clear she had nothing to gain by coming forward. on the contrary, she had a lot to lose. i think on the contrary, brett kavanaugh's testimony, he was understandably angry and outraged, but i think it went a little bit further than that. he appeared unhinged. he was very partisan. he ripped into the democrats, saying that this was a search and destroy mission by them, and and he for the clintons, resisted, i can't remember how many times in resisted any calls for an mpi investigation into -- fbi investigation into all of these allegations. i think now that you have the american bar association calling for a delay, calling for an fbi

investigation, i think that is a game changer. if you recall, in the testimony he cited the american bar association's endorsement of him as a reason for senators to confirm him. so i think it did change a lot of people's minds, but i think it rallied the base on both sides. it is unclear how it will affect independence that are on the fence. got the producer talking to me saying it was at least eight times that he resisted. we can see how much this sort of captured everybody watching this testimony yesterday. stephanie, what is the timeline now in terms of kavanaugh getting confirmed to the supreme court? are we -- we are looking at today and next week as well? >> i think the judiciary committee wants to call a vote on friday. it looks like senator jeff flake of arizona, who is retiring, it is unclear where he stands, and

whether or not he will back is fellow republican senators and vote to move it to the full senate vote. it is clear the republican senators want to get this through as quickly as possible. they wanted cleared by the judiciary committee on friday and move it to a vote next week. it remains to be seen whether or not some republican senators that are moderates, like lisa murkowski in alaska and susan collins of maine, women senators who had expressed reservations about him anyway, how they will vote. nejra: let me bring our guests in for this hour. we have isabelle mateos y lago and also valentin marinov onset. you do a great geopolitical risk monitor at blackrock. we are talking specifically u.s. political risk. is there more that investors should be pricing in in terms of the risk this might pose regards to the midterms and beyond -- with regards to the midterms and beyond?

valentin: i think until now -- isabelle: i think until now markets have not been paying too much attention to the story. the question here is, is it possible that the democrats could win not only the house, but as well the senate? i don't think we are at this point. if it looks like it is moving in that direction, i think at that point we start paying more attention. it will call into question perhaps the durability and persistence of the tax cuts that have been implemented in the first two years of the trump administration. nejra: you have written about the dollar. what does it do with the political situation like this? valentin: political risks are not necessarily on the radar screens. i would agree that what we may see as a result of what has been happening of late is that the ,wing in favor of the democrats especially with how important the women's vote is in all of that, may indeed be more sizable

than expected at the moment. from the dollar's point of view, which at the moment is supported by the aggressive fiscal stimulus that the trump administration managed to push through congress last christmas, that particular mixture will likely weaken if the democrats won the house. it means trump will be unable to continue his fiscal stimulus. we have another one planned in the pipeline. if that does not come the feds will be dealing with the economy, which is doing ok, but more protectionism. the feds may turn more cautious after the midterms on the back of that. at this stage it's maybe a bit too early, but these of the the negative implications for the dollar. nejra: valentin marinov from credit agricole and isabelle mateos y lago from blackrock, and stephanie baker from bloomberg news joining me onset. let's check in on italian assets. we see yield jump across the

italian curb. the 10 year yields on a 315 handle, of 26 basis points. the euro below 117 and the ftse downnderperforming, 2.4%. elon musk says the sec has left him deeply scented -- second and disappointed -- saddened and disappointed. this is bloomberg. ♪

♪ nejra: economics, finance, politics, this is "bloomberg surveillance."

i'm nejra cehic denver francine lacqua in london. tesla has plunged in extended trading after the securities and exchange commission accused elon musk of misleading investors. they are also asking a federal court to bar elon musk from serving as an officer or director of a public company, saying that he committed securities fraud. >> while leading tesla's investors to believe he had a firm offer in hand, would allege that mosque had arrived at the price -- elon musk had arrived at the price of $420 by assuming a premium of teslas share price and rounding up to the amount because of the significance of that number in marijuana culture, and his believe his girlfriend would be amused by it. nejra: elon musk says he is saddened and disappointed by what he calls the unjustified action. joining us is alex webb from

bloomberg opinion, isabelle mateos y lago from blackrock investment institute, and valentin marinov are with us as well. surviveas share price without elon musk as ceo? i was a tesla investor i would want someone other than elon musk as the ceo. elon musk's strength is not operation. they love the products when they work, but having someone who has the ability to deliver does is something the company really needs. it increasingly seems elon musk is not the person to do that. nejra: i have heard opposing staying terms of elon on as some sort of visionary, and have some kind of involvement that way. some say that is good for the stock, others say it wouldn't be. what's your view? >> i think the apple model is

really interesting. steve jobs -- i'm not sure steve jobs would appreciate the comparisons with elon musk, but both sort of visionaries. tim cook is the operations guy, the one that's has -- the one that has a hard grasp on how the phones are manufactured and the financial markets. when things got tricky at apple he started accelerating buybacks and dividends. tesla would clearly benefit from that sort of person. there was a tesla who said he bull whoe to see -- said he would love to see tim --k become teslas chief officer. of sort of where we go from here, how likely is it that mosque is actually going

to -- elon musk is actually going to leave or will he reach some sort of settlement? >> they had reached a settlement with tesla and elon musk, but elon musk backed out at the last minute. interestingly, the reporting says he would be banned as an officer of a public company. perhaps there is a way of putting a time limit on that, i'm not entirely sure. the issue is not whether he had a deal in place, it's whether he had a deal at that price in place. nejra: thank you so much to alex webb from bloomberg opinion. isabelle mateos y lago from blackrock investment institute and valentin marinov from credit agricole stay with us. italy's government has reached an agreement on the budget after negotiation.e . the target is 2.4%, over the 2% threshold which emerged as a litmus test for financial

markets and finance minister tria. the 10 year rising on the highest since june. credit agricole was one of the houses that sort of said 2% was a line in the sand. it's clear the market is not happy with what we have arrived at here. clearly, they blew up the budget on the fx site. i think there are reasons to be concerned, at least in the near term. the s&p will consider its outlook for sovereign outlook for italy in the coming weeks. some cautiousness may definitely be warranted on the currency, with the euro likely to take its cue from the btp market. longert said, over the term i would still argue that those political risks may only prove temporary -- a temporary draghi on the euro itself --

drag on the euro itself. so long as their note -- there is no evidence of contagion. i think the ecb remains firmly on track to normalize policy come december, and on the road in 2019. we maintain an upturned projection for the euro, but near-term definitely cautiousness warranted. hundredtb bund spreads spread 265 basis points. at blackrock would this be an entry point in btp? no.elle: i think we need to find out more about exactly what is going to be in this budget submission. last night there was this news that next year's budget headline would be 2.4%.

there are now reports suggesting it would be for the next three years, which would be a much bigger deal in terms of their trajectory and really throwing out the euro rulebook. i think italy's partners would have been willing to make a gesture to give them some leeway. government. i think if we are looking at breaking the rule book for three years in a row and a massive way and getting the italian debt on an upward trajectory, that is completely unacceptable. i think this is early in the process and the actual submission to the commission is 15.due until october i'm sure there will be a lot of back and forth between now and then between italian officials and their counterparts. do we get this market discipline that policymakers are hoping for? i think this is the start of the process and right now probably much too soon to consider it an entry point. nejra: you make a good point about the lack of detail and lack of clarity. just to come back to the euro,

you said it might take a hit short-term. . was surprised by the euro's resilience. what does that tell us? at the market is telling us it is very contained to italy and will affect the rest of the eurozone? valentin: i'm tempted to say that the euro is all about the policy outlook. i'm not saying italy does not matter, but i think for the euro, for the -- for elite to matter you would have to -- italy to matter you would have to see some kind of contagion. i think europe as a whole on aggregate looks ok with or without more italian headlines done the pipeline. i'm not saying you should be buying dips in euro-dollar just yet, but we think the resilience of euro swiss, euro-yen is definitely resilient -- is definitely indicative of that.

also mention that taking all that into account, we stick -- still think the euro is pretty cheap. it looks cheap against the dollar and swiss franc. longer-term projections are pointing at renewed outperformance. nejra: i'm surprised by the euro not being even lower. what is happening in italy, does that impact how you view european equities at all? isabelle: of course it does. it's a question of political risk that is potentially systemic. italy is not a small economy. it is a large economy at the heart of europe. it is a fault line, to put it clearly. and so it's hard to ignore it. you have to factor in the possibility of things going seriously wrong, and against that, return expectations, earnings growth for european equities are not on par with those of their american counterparts, emerging market counterparts. if you put two and two together, we just prefer other regions for

equities. nejra: our guests stay with us. bank of we hear from england governor mark carney on his efforts to get companies to report on their climate related risk. that exclusive conversation is next. this is bloomberg. ♪ this isn't just any moving day.

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simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. nejra: economics, finance, politics, this is "bloomberg surveillance." cehic in for francine lacqua in london. let's check in on what's trending across the bloomberg universe on tictoc.

it's nearly impossible to imagine tesla without elon musk, but the sec lawsuit has raised questions about his future. on a day of emotional testimony from both sides, brett kavanaugh deny the sexual allegations against him. president donald trump is said to stand by his supreme court pick. in third place, a manhattan dealer sentenced to 18 months for fraud. btp yields search across the curve. and top, treasury yields have turned negative for european and japanese buyers. we have some breaking u.k. data that we are waiting to come , so we on the bloomberg are just waiting for those numbers to come through in terms of gdp. gdp quarter on quarter. we are looking at that, back in line, 0.4%.

reaction. amount of the pound is taking a little leg lower. let's get the bloomberg first word news with taylor riggs in new york. taylor: italian bond yields have surged and the euro is lower this morning after the government said next is budget deficit target at 2.4% of output. this comes after the populist theies measured -- pressure finance minister into providing more funds for their election promises. trump iss., donald standing by his supreme court nominee, brett kavanaugh, after a day of emotional testimony on capitol hill. he accused the democrats of a total sham. the judiciary committee plans to vote on the nomination today. kavanaugh spoke after one of his accusers, christine blasey ford, says it she was 100% sure it was him who attacked her in high school. >> i don't have all the answers and i don't remember as much as

i would like to, but the details about that night that bring me here today are the ones i will never forget. they have been seared into my memory and have haunted meet episodically as an adult. >> this confirmation process has become a national disgrace. the constitution gives the senate an important role in the confirmation process, but you have replaced advice and consent with search engine destroyed. -- search and destroy. and japan, industrial production expanded for the first time since august and retail sales exceed elevated -- accelerated as a faster -- at a faster than expected pace. retail sales grew 2.7%. thefigures and suggest economy remains healthy despite a likelihood in the current

quarter from extreme weather and an earthquake. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. nejra: taylor riggs in new york, thank you so much. the governor of the bank of the bank of england says climate disclosure is becoming increasingly mainstream. mark carney leads the task force and says some of the biggest banks and funds are backing this type of reporting. carney spoke to francine lacqua at the global business forum in new york. >> i think the best companies across a range of industries and geographies, look, part of what came out today is a survey of 2000 of the top companies around the world. you see that all those companies, investment geordie of them, are disclosing at least -- a vast majority of them, are disclosing this type of

information. we will come down to what is material, what is useful. what is that 100 chilean dollars want to walk in order to make the capital outlook -- $100 trillion want in order to make their capital outlook --? you are thinking about how this affects strategy. it's the disclosure around strategy and if i could use the awkward term strategic resilience. how resilient are you to changing climate policies? francine: how difficult is it to measure data when it comes to air pollution, water? >> i think actually what is relatively straightforward to measure is that carbon footprint. what is your footprint in your court offer -- core offer? so-called scope one, what's the footprint of that? nt's relatively easy to the go and say, my energy use, with

my carbon footprint of that? what's difficult is to look at the carbon footprint after it started. -- first bit tells it a lot tells you an awful lot. francine: some people in the trump administration have said that climate change is a hoax. they are busily dismantling a lot of the rules that protect climate change. does that help or hinder your cause? >> i would take a neutral view in terms of disclosure around those issues. there will be climate skeptics and others who say this is the absolute top priority, and companies need to act now. there will be a lot of people in between. the people in between i think will react to what happens to climate policy around the world. stiller 195 countries are signatories in paris. a lot of them will translate that into action.

what you need to make a market between the deniers and true believers is to have the information. 100 trillion of assets looking for the information. we've now got five hundred of the world's largest companies providing the information in quite conference of cents -- comprehensive sense. i think a virtual -- virtuous cycle starting here focusing on what's relevant. nejra: that was the bank of england governor, mark carney, speaking to francine lacqua at the global business forum in new york. after making no significant progress at the salzburg summit, time is running out for the eu and bring to make a deal. reporter says --.

he says all three are performing dramatically differently and will likely continue to do so. tim craighead joins us now. valentin marinov and isabelle mateos y lago are still with us as well. i love the nuance in your analysis in the bloomberg intelligence report. book and the performance of these three complexions of u.k. shares until now since june 2016 tell us about how they will perform from here? >> i think it's quite clear that while you can make a broad sweeping view of the u.k. markets about what's going on with brexit, its impact on currency, a weak pound tends to be a positive for the overall you can market. you can -- you can market -- u.k. market. you can get much more discerning emphasize about where you think things are going -- and precise about where you think things are going. with a hard brexit

, which you would translate into a weaker pound, that's good for that international group. they are up about 15% since the beginning of 2016 in that weaker pound scenario over that amount of time. the domestics, in contrast, are down about 14%. they would stand, we think, too weaken.n -- nejra: are we talking about the commodity producers? >> yes, this is a group that makes up almost half of the u.k. market. there are big miners and energy companies that report either in euros or dollars. they are very driven, if you look at a coronation -- correlation analysis with what is going on with commodities, they are not so dependent on

what is going on with brexit per se, but they depend on free trade. that brings in another political element from a global perspective. clearly we are back to highs at this point. -- draw outscenario one scenario. we seem to be heading toward a hard brexit, weaker pound, and we have relatively robust energy. that begs for these non-pounders , it begs for the international. it plays against the domestic u.k. companies. nejra: isabelle mateos y lago what view is blackrock taking on u.k. assets? isabelle: i was going to agree with tim, but no. the domestically oriented one continues to struggle.

what i do not agree is on the idea that we are more likely to head towards a disruptive drugs it are a hard brexit -- brexit or hard brexit. and our view, if you look behind the noise and bluster, it seems to us that we are headed towards a good place come a towards a deal -- a good place, towards a deal, or even a scenario of reconsidering getting a second which was completely impossible just a few weeks ago. it's not likely, but it's not impossible. even beginning to see some kind of convergence between the position of the labour party , as expressed by jeremy corbyn early this week, and what theresa may is trying to do. it seems to me even though we are not going to get there in a straight line, the odds are still overwhelmingly towards finding an agreement that will , and from thenne

on you could see a rebound in the pound, and in u.k. assets generally. it will be checking to get there and things could get ugly, so at this point we are cautious. nejra: if things get ugly, should investors be paying for some downside protection in cable? valentin: yes, they should. we have advised our clients on that. the straight line trajectory as a forecast, it is the case that the next few weeks, months, up until march of next year are peppered with all these potential pockets of events. you mentioned the conservative party conference, which i think they will highlight they will agree to disagree. is, that what is quite astounding is how stable the pound is in all of that. i think that's just a lack of conviction. most investors expect something positive to come down the road.

that kind of keeps being pushed back into the future. in the meantime, it's difficult to trade. the better bet is volatility. what you could bet on in the near term is higher volatility. that is our best guess. what you should do in the pound is just buy downside volatility, -- obviouslyith uncertainties with the pound. that's their best bet. nejra: valentin marinov recommending a long and six month cable reversals. thank you so much for joining us. thank you so much to tim craighead. meanwhile, isabelle mateos y lago from blackrock investment stays with us. let me bring you some breaking headlines on italy. matteo selby anything that the finance minister is not in ni saying salvi

that the finance minister is not in danger. next year's budget is designed to encourage growth. the ftse mib down 2.3%. the euro a little lower, but btp yields have been surging across the curve. the 10 year yields on a 3.13 handle. one man on the front lines of the 2008 financial crisis said donald trump's trade war with china risks long-term pain. from thexclusively former u.s. treasury secretary. this is bloomberg. ♪

♪ -- a: >> in some ways the worst in america, the problems in some of our regulatory systems and so on, but at the end people came together and i would really like got forbid hade another crisis like this, that the country could come together. but you are right, the things we did were so unpopular that i think it will make it even more difficult for our successors. nejra: that was former u.s. treasury secretary hank paulson.

he also said a trade war with china carries dangerous long-term risks, because companies and agents pullback from doing business with the u.s.. >> i think we don't pay enough attention to the dangerous long-term impact. companies and countries want to do business with the united states because we have reliable, stable economic policies. is, hisuestion really china going to start looking for new markets for which they are going to buy soybeans, brazil and africa? to be concerned that they needed to protect themselves if there is another tariff war and they need other suppliers. nejra: make sure you catch the full conversation later today at 12:30 p.m. london time. it is a wide-ranging discussion from lessons learned in the financial crisis to forecasting the next big risk.

isabelle mateos y lago from blackrock investment institute is still with us. on the u.s. china trade tensions, this is something blackrock acknowledges receives high attention from investors. does that mean it's priced into global equity markets? isabelle: yes, that's our analysis. of the 10 risks we monitor on our dashboard, this gets the most attention from markets. as much as we can measure it using our big data infrastructure. attention, of concern right now is around three times the long-term historical average, so it's high. aat leads us to believe that lot of bad news is already priced in. we think that's why there was such a limited reaction to the most recent announcement of additional tariffs. i think the question is, where do we go from here? there seems to be a pause. the most recent news coming out

of china is that they were actually contemplating cutting tariffs on their overall imports, which frankly would be excellent news for the world, irrespective of this tension between the u.s. and china. i think what's going to be important for markets going forward, of course if we could see a truce between the u.s. and great, but would be even if we don't get that, as long as there is no other further escalation, and other countries continue signing new trade deals, this can still be positive for global growth, although it can be detrimental to the u.s. that's from a longer-term perspective. short-term, markets are intensely focused on this tension. in our analysis they are not likely to go away anytime soon. nejra: how much worse could it get next year? isabelle: it could still get a lot worse. there are still half of u.s. imports from china to these higher tariffs. there is definitely more pain

that the u.s. could try to inflict. the question is, we are getting into the area where the level of tariffs is getting macro economically meaningful, and so our hope is that the u.s. administration would think twice before doing this. kind of narrow agreement on reducing the size of the trade deficit can be reached. the important point from us is that even if they can find an agreement on some trade issues, there is a strategic rivalry here between these economies, and the u.s. is clearly out to try and contain the rise of china as an economic superpower. we don't really see these tensions coming down anytime soon. nejra: at what point does it hurt u.s. equities? isabelle: i think it could hurt u.s. equities, arguably you could say it has already hurt u.s. equities. when you see the dynamism of earnings growth that you are seeing in the u.s., that would justify significantly higher

valuations. what we have seen is a repricing andwards of u.s. multiples, arguably this has something to do with the trade tensions environment. right now you do not really see it in terms of it macro picture. that is in large part because of the benefits of the fiscal stimulus. when you go into next year and a special the second part of next year, the impact of the stimulus will start to decrease. if we don't have a bit of an appeasement on the trade front this can be difficult. nejra: isabelle mateos y lago stays with us. up next, we discuss some of the big market moves of the last three months. this is bloomberg. ♪

♪ nejra: economics, finance, politics, this is "bloomberg surveillance." i'm nejra cehic in for francine lacqua in london. let's get some final thoughts. isabelle mateos y lago from blackrock investment institute is still with us. as we move from the third-quarter to the fourth quarter, your big predictions for the fourth quarter? isabelle: five big predation is

that we will see a continuation of the macro insurgency, which has prevented markets from getting better returns. we expect the macro environment environment to continue. unfortunately, we do not expect to be able to move out from there. we expect a continued tightening of financial conditions. where we are more optimistic is within the emerging markets a lot, we are fairly optimistic about the ability of em to rebound in the fourth quarter, particularly on the equity side. apart from that, largely more of the same. for us it is an environment where you still want to be generally risk on, but focus a lot on building resilience in portfolios, because there is a lot of potential for bad things to happen for volatility.

markets get scared, it's the low-quality assets that selloff first. focus on companies with strong earnings, strong balance sheet. that generally means u.s. equities in fixed income space. focus on the high grade and more liquid paper, because otherwise you could see sharp moves. nejra: isabelle mateos y lago chief multi-asset strategist at blackrock institute, great to have you with us today. francine lacqua and tom keene are in new york. we will be talking to the confederation of british industry's chief economist, ray newton smith -- rain smith -- newton smith. this is bloomberg. ♪ xfinity mobile is a new wireless network

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offer opposing assaults in the sexual assault allegations. president trump stands by his nominee. deficit fort a 2.4 2019. yields a spike, that ftse mib sinks. the tesla chief executive, elon musk, gets accused of misleading investors and making up a valuation to impress his girlfriend. he is sued by the sec and shares plummet in extended trading. this is "bloomberg surveillance." it is a busy friday. we focus on politics in the u.s., politics in europe, and we talk about tesla. tom: the news flow is just extraordinary. to get to the immediacy of it, in this early u.s. hour, midmorning in europe, italy. explain. italy is saying we are want to

do this budget and the eu says you can't? it's that simple? francine: it's that simple and a lot more complicated, as usually things are. the budget limits that the eu put into place, they say any budget cannot go above the percent -- 3%. it was whether they were antagonizing the eu. a lot of investors said anything below 2.3 was not antagonizing. 2.4 seems a little bit antagonizing. first let's get to the bloomberg first word news. kavanaugh'st passionate denial of allegations of sexual misconduct have given republicans the cover they need to vote yes. democrats,ash criticized the media, and claimed to be the victim of a conspiracy driven by anger over president trump. >> my family and my name have been totally and permanently destroyed by vicious and false

additional accusations. taylor: his accuser, christine blasey ford, testified first and told the senate judiciary committee she was terrified. >> i don't have all the answers and i don't remember as much as i would like to, but the details about that meant that bring me here today are the ones i will never forget. they had been seared into my memory and have haunted me episodically as an adult. judiciary committee is expected to vote on the nomination today, and meanwhile, the american bar association has called on the senate to delay a vote until the fbi can investigate the allegations. shares of tesla are following in premarket trading. musk fors suing elon his controversial tweet last month about taking the company private. regulators say he misled investors claiming falsely he had lined up funding for the deal. they want to prohibit elon musk

from serving as officer or director at a public company. he calls the suit unjustified. as you were mentioning, over in italy a victory for populous in the battle of the budget. the government set the budget at 2.4% of output. the italian budget includes $12 billion for so-called citizens income, aimed at eradicating poverty. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. francine, tom? equities, bronze, currencies, commodities, futures flat. points tony's two basis on the curve -- 22 basis points on the curve. euro, quite interesting, eroding away. 1.15 when the extraordinary.

oil churning. on the vix we had an 11 handle with record highs. -- yen way out. argentinian peso out to a new regime. i've got a chart on that this morning. a 5.99 lira down to stronger turkish lira. francine: what i am looking at his stocks in europe overall dropping at the end of a pretty volatile month. political concerns once again taking center stage. italian bonds plunging the most in almost four months. in the upper hand in the battle over spending. it's a battle over spending and whether they want to antagonize the eu. the levels do not really matter, it's basically the perception that investors will get on whether this government wants to

pick a fight or not with the eu. i wanted to show you longer-term with the -- what the ftse mib is doing. it was kind of gaining in the last couple months, and it shut downof -- couple of months and it shot down. we heard the finance minister said would stay on for at least a couple more months. tom: tesla and mr. elon musk, we will touch on that as well. yesterday a truly was an america transfixed. everywhere i was, there was really no other story whether by television, radio or prints. let us listen into cavanaugh and forward -- 4 -- brett kavanaugh and forward -- ford. >> i am not here because i want to be, i am terrified. i am here because i believe it is my civic duty to tell you what happened to me when brett kavanaugh and i were in high school. >> i was not in the party

described by dr. ford. >> has a saw on me drastically altered my life. for a long time i was too ashamed and afraid to tell anyone these details. i did not want to tell my parents that i, at age 15, was in a house without any parents present drinking beer with bullies. >> the jerking -- boys. >> the drinking age was 18 in maryland. i was 18 in d.c. for all my time in high school. i join to be a with my friends, almost everyone did -- beers with my friends, most everyone did. sometimes i had too many. i liked beer. >> i was happy to undergo the polygraph tests, although i found it extremely stressful. >> i'm not questioning that dr. ford may have been sexually assaulted by some person, in someplace, at some time, but i have never done this to hurt, or to anyone -- to her, or to

anyone. >> i don't have all the answers and i don't remember as much as i would like to, but the details about that night that bring me here today are the ones i will never forget. they have been seared into my memory and have haunted me episodically as an adult. >>'s confirmation process has become a national disgrace. you have replaced advice and consent with search and destroy. i demanded a hearing for the very next day. unfortunately, it took the committee 10 days to get to this hearing. tom: extraordinary. washington.i is in kevin, just an open question on this friday. your thoughts of what we observed yesterday? kevin: gutwrenching for lack of a better word. this was on like any other hearing that has happened in anynt memory -- unlike

other hearing that has happened in recent memory. the obvious parallel and anita help --in a needed anita hill. take a listen to what republicans are saying. senator graham: to my republican colleagues, if you vote no, you are legitimizing the most despicable thing i have seen in my time in politics. you want this seat? i hope you never get it. i hope you are on the supreme court. that's exactly what you should be. i hope that the american people will see through this charade. kevin: the democrats have argued that there should be an fbi investigation and this process should be slow down -- slowed down. the republicans said that is not the case. senaterassley as well as

majority leader mitch mcconnell again moving forward with this process. unknown right now were some of the centrist and even some centrist democrats, where they will vote on this. tom: give us a window into how some of the senators, maybe the alaskan senator, the arizona senator, how will they come to this decision before the 9:30 meetings today? kevin: the committee vote at 9:30 is just whether or not to move this along to a floor vote. it's not the first -- final vote, just the first step. the on the swing vote is retiring senator jeff flake, republican from arizona. can tell youts i there is an infinite amount of pressure coming from the right on him to move this along to the floor. last night reportedly senators michalski of arizona -- alaska,

flight of arizona -- jeff flake of arizona, and susan collins of maine huddle together about this process. the president's tweet just moments after this hearing in which he backed judge kavanaugh was seen as a massive, massive sign of an endorsement for judge kavanaugh, in which he reiterated that this is a search and destroy strategy, a disgrace, and the process has been a total sham. the vote could come as early as next week. again, the intense pressure and the backdrop of the me too movement really playing over this entire hearing. tom: kevin cirilli, thank you for your reporting. francine: let's also talk about tesla, which plunged in extended trading after the securities and exchange commission accused elon musk of misleading investors with his go private tweet last

month. they are also seeking to bar musk as an officer or director of a public company. elon musk says he is deeply disappointed or what he calls the unjustified action. tesla's board released a statement thanking it is fully confident in the chief executive. with are now joined by bloomberg tech opinion columnist alex webb. how does this change tesla and elon musk? >> clearly he is coming under more heat than he has ever before. the fact that these charges came is so very soon after the initial tweet on august 14, less than six weeks later. that demonstrate the confidence that sec has in their investigation. very much seems as though elon musk will have to settle on some level, whether that means he will be banned from holding either directorship for officer of a publicly traded company for a limited time. i think that would seem an

eventuality that is on the table. francine: overall, do you think there is a possible prospect that has low would be without elon musk, and would survive -- itt it survive -- would survive? >> i think tesla without elon musk would survive. there was a settlement that they agree to, but elon musk backed out at the last minute. i think it is a real prospect he loses at least one of his positions at tesla. he is both chairman and ceo. that has led to a huge failure of oversight at the company. it would seem to me that some ending -- surrendering at least one of those positions would seem likely. ultimately we have been talking about this for several months now. tesla really needs an operations go route. elon musk is not that guy. what is extraordinary,

besides this would be the only story out there if it were not for the politics and emotion of washington, is the idea of where is the board? as a board with be to get in front of the story. why have they not done that? >> the word cronyism has been thrown around already. many on the board are very close to elon musk. even the directors who are technically classified as independent, there are questions over the extent to which that is true or not. there needs to be far better oversight at tesla. that seems to be a significant failure of the company. tom: alex webb, thank you so much for this breathing on tesla -- briefing on tesla. stay with bloomberg through the

morning, particularly with our focus on washington. we will focus on tesla. we are honored to bring you john coffee of columbia. his perspective on the actions against tesla. we have a conversation with henry paulson. from new york, this is bloomberg. ♪

♪ taylor: this is "bloomberg surveillance." let's get the bloomberg business flash. china's on-demand service saw losses almost double in the first half of the year. the company, backed by tencent holdings, sent furiously to expand its business into bike rentals and online travel. it posted a whopping $1.42

billion loss. the largest health insurer in the u.s. has expanded into pharmacy service business. united health has agreed to by general health care, which runs more than 425 pharmacies in behavioral health centers. bloomberg has learned that united health opaque the united billion.rm almost $200 in australia, a report on the nations points -- banks stopped short of recommending penalty. it criticized regulators for taking a timid approach. thank shares rallied after the report was released. that is your bloomberg business flash. tom: there is economics, finance, investment, there is the markets. barry eichengreen will join us in the next hour. we are thrilled by that, a very academic view of what he has observed in this quarter.

we thought we would get a briefing of what this actually means with geoffrey dennis of ubs. usnk you for joining numerous times over the recent weeks. let's cut to the chase. it's not all clear, is it? geoffrey: it might be, it's hard to tell. we like to think it's probably all clear, and the reasons for that, first of all, we tend to think the dollar is now picking -- peaking. but also, you have seen a number of the central banks in emerging markets respond well. tom: the philippines and central-bank right in line step. well and indonesian as you finally have some unexpected action from turkey. it's always hard to time these things and be sure you have hit the bottom, but it feels to us

like we may have hit the bottom, short of course of there being another massive flow of money back into the u.s. francine: what would be a trigger for that? geoffrey: massive flow back into the u.s.? it would most likely be a continuation of the strong growth you have seen recently and more pressure on the fed to raise rates. we pretty much think the fed is getting very priced in now. we thought it was interesting how the fed took the work accommodative out of their statement -- word accommodative out of their statement. they are getting closer to neutral. e.m. is going to suffer again because the money will come out, definitely not our view. francine: that is a bit of an outlier call from ubs. that's a good -- let's say that dollar goes higher.

how much contagion with that spark in emerging markets? geoffrey: that's about sentiment but it's also about flow. a stronger dollar sucks money out of risky assets. i very much have the strong view that the deterioration of emerging market fundamentals you have seen this year has been limited to three major countries, turkey, which is actually not a major country in the index but just feels like it, brazil, where the economy is disappointing, and of course south africa, which has dropped into recession. weaker,encies have been forcing these countries to act. once the dollar pressure begins to subside, the pressure on the central banks will begin to subside, the currency pressure will subside, and the flows will come back. tom: you and ubs in general have done a great synthesis of all of this. to me what's important is your core competency. and equity. is this the moderate -- equity.

is is the mother of opportunities to find the right spots in emerging-market equities? are you suggesting this is the best chance? geoffrey: absolutely not. the asset class is not super cheap by any means. it's about fair value, maybe slightly below fair value. it was quite expensive in late january. we have seen many better opportunities over the years, late 2002. this i think is probably a buying opportunity. we kick markets are probably going about 5% higher in e.m. by the end of the year. this is not bargain-basement stuff just yet as far as we are concerned. we would not recommend people go to some of those high risk markets like turkey and argentina. timing this thing is so hard. if you are getting -- going to

put money into yen, has to be into -- p.m., has to be into mark-- em, it has to be in core countries. francine: what do you think about china? thatrey: we have the view one of the interesting things we think will happen over the rest of the year is that the u.s. economy will slow a bit the chinese economy will pick up a little bit. they are already stimulating. they are slowing down on the deleveraging process. that's going to provide some stimulus. china's economy will look a little bit better over the next couple of quarters. as long as you get a stabilization growth, maybe a little bit of a pickup as these measures are taken, i think that will help the asset class overall. china is 30% of the index plus now. we continue to believe the chance of a sharp slowdown in china, which would spook the asset class again, is extremely

low. tom: let's move to the edge of emerging markets. canada is not an emerging market , you've got the nafta opportunity. mexico some would even say is not an emerging market. area.s about the grey geoffrey: obviously mexico is an emerging market. we have had the view for quite some time that the peso got whacked way too much. we argued that if they were to get nafta done, someone said to me yesterday nafta done without canada, if they get something done between mexico and the u.s. on nafta, the peso will rally. that is starting to happen. although the markets are nervous about what the new president will do when he takes office on december 1, people tend to believe, and we believe as well, and dollar a just in mexico have cheapened quite considerably. what could go wrong is an aggressive fiscal expansion by the new president or the nafta

talks stall once again. canada is so much harder because they are so much further from enacted deal. tom: let me insult francine right now. is italy the new emerging market? is italy -- i mean, come on. let me bring up the screen right now. this is what the actual bloomberg screen looks like. this is old technology. bring it up here, it's flat. it's like boys and their dictionary when they are eight years old. you are italy here with the g7 countries. should italy be here? geoffrey: yes, it should be there. the wayd be there, but of course it affects emerging markets, and we have seen that to a certain extent this

morning, is if you have problems in italy. we did not think that budget deficit target was particularly in line with what you expect to happen. it puts pressure on the euro. spreads have blown out since may. you put em under pressure because it brought many -- money back to the u.s. francine: doing it to make a difference between well run economies and not well-run economies? geoffrey: that's fair. my job is to give advice on emerging market equities, which are not include italy. certainly are concerned about expanding fiscal policy and the way it's been done at this stage of the economic cycle. we don't think it's going to lead to a major problem in the economy or a major blowout of inflation, but we do think because of the impact of the tariffs on consumer real incomes, and investment, this

economy is going to slow over the next couple of quarters. the fed may even pause and not raise rates in december. one of the reasons we are negative dollar is because we think we are at the peak of expectations about the u.s. economy and probably at the trough of expectations in europe. that is the view we have. francine: geoffrey dennis of ubs sticking around. coming up, rain new in smith. we will talk -- newton smith. we will talk to her about productivity and how brexit negotiations are going. this is bloomberg. ♪

francine lacqua and -- thank you for being with us. friday briefing with our first word news. >> president trump is demanding

the senate vote on confirming supreme court nominee brett kavanaugh. moments after his impassioned of sexual assault allegations, the president tweeted that he was powerful, riveting, and honest. ed democrats,h blamed the media -- >> my family and name have been totally and permanently destroyed by vicious and false additional accusations. his accuser, christine blasey ford, testified first appeared she told the judiciary committee she was terrified. >> i don't have all of the answers and i don't remember as much as i would like to, but the details about that night that bring me here today are the ones i will never forget. they have been seared into my memory and have haunted me decidedly as an adult -- haunted lly as an adult.

>> -- has called on the senate to delay a vote until the fbi that can investigate the allegations. mexico is hopeful for a nafta deal that involves canada. -- that the deal be trilateral. the u.s. and mexico have reached an agreement, but president trump says canada's negotiators have refused to budge on key issues. signs ofpan, resilience in an economy that has been battling headwinds. for theal output rose first time in months and retail sped up at a better than expected pace. consumer prices were up 1% in september from one year ago, only half of the bank of japan's target. it was a scene reminiscent of the miracle on the hudson when a jet crashed on the water in new york city. a boeing 747 landed in the

pacific lagoon after missing the runway in a remote island in micronesia. there were 47 people on board and all survived. dozens of small boats came out to rescue the passengers and crew. andal news 24 hours a day on air and on tictoc and twitter. i'm taylor riggs, this is bloomberg. u.k. and britain's former foreign secretary urging prime minister theresa may to scrap her faulty exit plan. boris johnson condemned the government handling of brexit talks while laying out his own how to exit the european union, all ahead of the conservative party's annual conference. joining me is the economics director, rain newton-smith. he was once looking at it -- she was once looking at a -- for

joining us today. i want to start with the economic thing before we migrate to the politics. the u.k. current-account deficit, how difficult is it going to be as we manage brexit, as britain prepares to manage brexit? what is most , thetant is, as you say best possible agreement with the european union, that is what is most important for our economy at the moment. we need to get the withdrawal agreement secured, which will allow us to enter a transition period with the european union that should last between march 19 -- december 2020. i think we also can't forget the domestic economy in the u.k.. there's a lot we need to do to make sure we have strong

business investment growth, to increase our productivity, and there is a series of issues that both business and the government need to do. francine: it's clear that brexit has put the current account back in the spotlight. will foreign investors be willing to keep financing the deficit by buying british deficit after brexit happens? depending on what kind we have. i think what is important is we have a smooth transition to a new relationship. i think investors want a certainty around that. i think at the moment, u.k. exports have increased over the .ast six months manufacturing in the u.k. has enjoyed a bit of a recovery. i think for investors to feel confident in the u.k. over the long term, we need to make sure we have the best environment to invest. there's a a lot --

lot of fundamentals in the u.k. economy that are fundamentally strong. we have the lowest corporation tax rates in the g20. we also have the highest employment rate since records began. we've created a lot of jobs here in the u.k.. we have advanced in terms of language and time zone in a vibrant and growing tech and digital center in the u.k.. i think there's a lot that tech can build on. what are the chances of a no deal brexit and what does that mean for interest rates for mark carney? rain: there's always the possibility of a no deal arrangement, and i think that is the biggest concern for businesses at the moment in the u.k.. it's clear that a no deal scenario would be bad for the u.k. economy and european

economy. that's where efforts need to be focused, on avoiding that. i think in terms of the past for interest rates, i think what mark carney has been clear about is that -- would be damaging for the u.k. economy. it would have an impact in the short term on our demand and in the long-term on our supply. interestture path for rates in that scenario is one for the bank of england, but my sense is that we would see a negative impact on demand, and i think that would be the forefront of their mines in terms of policy response. an organization like yours, the big companies get all the press. .ritish telecom, rolls-royce tell us about midsized businesses in the united kingdom and brexit. not the little guy, but the bulk of service sector and goods producing midsized businesses. how heard are they buy all this madness? it's really difficult for

those midsized businesses, and i think that is one of the challenges. when you talk about bigger have thes, they resources to deal with the range of scenarios. are -- thinking, what are the range of possible scenarios? what does it mean for my business, what kind of tariffs facing, differences in regulation? i would also say it is about people. one of those things people don't talk enough about. 3 million eu citizens working here in the u.k.. they help drive our medium-sized businesses. ifre's a lot of uncertainty we end up in a no deal scenario. the thing that small and medium-sized businesses talk to me about is they don't know how to plan for the range of scenarios, and there is a huge cloud of uncertainty on how to

run their businesses for the next six months. you so much,nk rain newton-smith. staying with the bank of england, shifting to climate change, mark carney says climate exposure is becoming more mainstream. some of the biggest banks and funds are backing efforts for this kind of risk reporting. he spoke with me a little earlier on at the bloomberg global business forum. the best companies across a range of industries and geographies, part of what came out today is the survey of the top companies around the world, and you see that all of them, the vast majority i should say, are disclosing some aspect of climate related risk. but this is a process of learning by doing. i'll come back to what is material, what is decision useful? what is that $100 trillion going allocationmake their

? i think the thing we are seeing now, in terms of static disclosure, what is my carbon footprint, it's more getting involved with how it could affect strategy. if i could use an awkward term, strategic resilience. how resilient are you to changing climate policies? francine: but how difficult is it to measure data when it comes to air pollution, water, substances? i think what is relatively straightforward to measure is the static carbon footprint. your so-called scope one in terms of your production. if you have a plant, what about that? go, ielatively easy to have my energy use, what is the carbon footprint? the thing that is tough is to look down the supply stream. after it has started and the components that come in.

but you move to the first bit, that tells you an awful lot. and the more the market is disclosing, you can fit upstream and downstream because you've got the information. >> some people in the trump administration have said the climate change is a hoax and they are trying to dismantle one of the rules that helps climate change. does that help or hurt your cause? >> i take a neutral view on exposure to this issue. there are climate skeptics who might say exactly what you said and there are some who would say this is the absolute top priority and companies need to act now. the people in between, i think, will react to what happens to climate policy around the world. a hundred 90 clients are still signatory to paris. between a denier and a true believer, if you

will, what you are seeing today is hundreds of trillions of assets looking for that information. we now have 500 world's largest companies providing that information in quite comprehensive sets, 2000 of which, once we look more broadly, they are starting to do think, of cycle, i learning by doing, focusing on what is relevant. ,rancine: that was mark carney bank of england governor. we will be back to focus on brazil. also joining us is the president and formerzil ambassador. ♪

francine: francine from new york. especially good mood today. one of the most hotly contested elections since -- outcome could determine the future of latin america's most productive oil reserves. the brazilian president wade in during an exclusive interview monday. do you think we will be moving towards different political -- candidates, the of society,t sector if you will, which in one way or another, voters will be able to make a choice, it will be easy for them to make a choice. was the president of brazil.

joining us is the former brazilian ambassador to china and the u.k., and geoff dennis is still with us from new york. what do people misunderstand? 13 candidates, and it will twoably whittle down to candidates, far right and far left. the selection is probably the most polarized of the last many years. andresponsible for trade investment and we don't foresee many changes in this respect. over the past few years, brazil has increased its availability to foster new trade agreements with different parts of the world, with europe, canada, korea, and others, and i think we are going to pursue this fact. prior, we were concentrated on achieving a global understanding , but this is clearly out of reach for anybody now. francine: what does it mean for

investment in the country? investments in brazil have always been significant. rizzo has always been one of the preferred fdi destinations of the world, even in these years that have been critically, politically and economically, foreign investment continuing to pour in. investmentsto have over the last few months of a lot more expectation. we certainly don't expect a reduction in foreign investment in brazil. francine: even as the market favorite candidate gets through, how can brazil bank back -- bounce back? i think brazil has already overcome the brunt of the biggest recession we have 2015, 20d from 2014 to

16, and even still a little bit in 2017. last year, we already witnessed effective growth. this year, even more. growth in sectors that have been the hardest hit, such as the industrial sector. , we haveverall overcome many of the main arelems we face, but there many challenges ahead. there's a fiscal challenge which many countries faced, including brazil. there's a competitiveness issue in some industrial sectors. tom: back to the brazilian spring of 2013, everyone worldwide was thunderstruck by of the protests within brazil. within the selection of a fraction election, how attached or detached are the traditional brazilian elites from the people of brazil? brazil, i think

although far, is not outside the planet. so brazil also suffers from the lack of representation that people perceive in many other democracies throughout the world. this is clearly a case that has been happening in brazil for a long time now. what are the key things that investors want to i think for us, in terms of the equity market, the ambassador is correct, we said recovery in the economy, but it has been weaker than -- focus was around 3% growth, maybe a little bit lower. recovery has been disappointingly slow. economists care about that. the other point is i think we all felt that by now, there would be centrist, market-reformist, if you'd like,

liberal in the old-fashioned politician toord, come forward to win the election. now you've rightly said you've got this extreme situation. a lot of uncertainty is to how these policies play out afterward. probably a left-wing candidate against a very right-wing candidate. whereas i 150% agree with the ambassador, the brazilian realities cheap -- the prison right now -- at some point, when people get a sense of clarity that the world ,s not going to end their people will say, they are too cheap we need to invest. tom: thank you so much for your perspective. coming up, david westin, and exceptionally productive trip to

washington. not only his conversation with secretary hank paulson, but also an important, timely conversation with randall , the mathematics, reaction function of the federal reserve system. this is bloomberg. ♪

>> this is bloomberg surveillance. let's get to your bloomberg business flash. lane says he's ready to become the european central banks chief economist if asked. he says the job has now is an honor. he talked up the euro area economy, but said there are a couple stumbling blocks. >> if it turns out the trade passion fades away, that the brexit outcome is ok, on all of these fronts, if it is an ok outcome, sounds like a shock to growth. but if those go badly, we have clarified risk. it is the end of the quarter. i've got to catch up and make money by the end of the year.

loading the boat on the chinese stock market. >> don't load the boat. we think there is an unwarranted level of weakness this year, a market we want to make some sort -- because ofut the uncertainty about trade and the impact it will have. get intoif we equities, aren't i going to currency adjust myself into oblivion? day, theyend of the are clearly not going to use the currency as a weapon, if you'd like, in the trade war. the currency is soft because the dollar is strong, but it's not going to collapse because they won't let it. everine: will they actually use it as a weapon? geoff: we don't believe so, but who knows how it will play out?

francine: because it would escalate to quickly? echo amonge is an chinese authorities and central bank in january 2016, when they oflly lost control of a bit the currency, they've tightened up on the ability of companies and individuals to take money out of the country, stabilized policy toward the currency, and they don't really want to let that go again. it would have to go a lot worse in terms of the tariff war and trade pressure. on the treasuries, they are not going to sell their treasuries, you expect the margin they made -- plenty of other things they can do before they weaponize effects or treasuries. greatly appreciated. what is prime minister may doing this weekend? --ncine: i imagine she is

, monday, sunday tuesday. i'm sure the first thing she does every morning is she reads or gets someone to read what boris johnson wrote. ,t's a leadership contest saying the prime minister's plan is wrong, this is what i would do. be at theedwards will conservative party conference. we have much more to talk about. kevin cirilli in washington. we are thrilled to bring you in the next hour, an entire hour, barry eichengreen on your emerging markets. ♪

tom: this morning, it is not just president trump and , barry eichengreen

on globalized capital and trump's exorbitant privilege. with unusual speed, the securities and exchange commission will slow elon musk and tesla to a grinding halt. at 9:30, the senators of the judiciary committee will choose. good morning, this is bloomberg surveillance, live from our headquarters in new york. francine lacqua is with us. yesterday, the world stopped across america around noon. extraordinary to see one testimony after the other. francine: and it was very uncomfortable at times. it goes to the strength of the institutions. we'll see how it plays out politically in the midterms. something the rest of the world is watching. news flowve terrific

this morning with our first word news, taylor riggs. kavanaugh'st passionate denial of the allegations of sexual misconduct may have given republicans the cover they need to vote yes. democrats,attacked media, and claimed to be the victim of a conspiracy driven by anger over president trump. >> my family and my name have been totally and permanently destroyed by vicious and false additional accusations. his accuser, christine blasey ford, testified first. she told the senate judiciary committee she was terrified. >> i don't have all the answers and i don't remember as much as i would like to, that the details about that night that bring me here today are the ones i will never forget. they have been seared into my memory and have haunted me episodically as an adult. committeee judiciary

is expected to vote on the nomination today. the american bar association has called on the senate to delay a vote until the fbi can allegation.ford's shares of tesla are falling in premarket trading. the sec -- regulators say musk misled investors by claiming falsely that he had lined up funding for the deal. they want to bar him from serving as officer or director of a public company. he calls the suit unjustified. in italy, victory for the populists in the battle of the budget. the government says next year's target is 2.4% of output after the ruling populist party demanded more money to pay for campaign promises. $12 billion for so-called citizens income, aimed at eradicating poverty. global news, 24 hours a day on air and on tictoc on twitter. powered by more than 2700 journalists and analysts in more than 120 countries.

tom: equities, bonds, currencies, commodities. quarter,d of the churning in the equity markets, a weaker euro over the last couple of days, curve flattening off chairman paul's press conference. the vix at 12.55. the yen is weak, earlier, comes back to -- and i'm showing the argentine peso to keep barry eichengreen happy. also looking at the political concern taking center stage and looking at the italian bonds, this goes back to the populist the country's leaders have gained the upper hand in the battle over spending and that is how you have to see it in a battle of whether they want to fight with europe or not. my second data screen is a very simple chart of the last couple

of months. tom: this is the italian stock market. francine: the ecb has been dropping on some of the budget concerns. tom: all of the nation, as thecine said, much of world, riveted on the drama in washington yesterday. let us look at a section from --anaugh and forward >> i am here because i believe it is my civic duty to tell you what happened to me while brett kavanaugh and i were in high school. >> i was not at the party. >> the assault drastically altered my life. for a very long time, i was too to tellnd ashamed anyone these details. i did not want to tell my age 15, was i, at in a house without any parents present, drinking beer with boys. >> the drinking age was 18 in

maryland and was 18 in d.c. for all of my time in high school. i drank beer with my friends. almost everyone did. .ometimes i had too many beers sometimes others did. i liked beer. separateon this counsel, i was happy to undergo the polygraph test, although i found it extremely stressful. >> i'm not questioning that dr. ford may have been sexually assaulted by some person in someplace, at some time, but i have never done this. to her or to anyone. >> i don't have all the answers and i don't remember as much as i would like to, but the details about that night that bring me here today are the ones i will never forget. they had been seared into my memory and have haunted me episodically as an adult. this confirmation process has

become a national disgrace. you have replaced advice and consent with search and destroy. i demanded a hearing for the very next day. unfortunately, it took the committee 10 days to get to this hearing. in washington, kevin cirilli with the emotion of yesterday, and no doubt the emotion of this morning. your observation on yesterday's events. .evin: gut wrenching unlike any other hearing we've covered in recent history, obviously the most recent one that comes to mind is anita hill from decades ago. there was a moment yesterday from senator lindsey graham, republican from south carolina. take a listen. >> to my republican colleagues, if you vote no, you are the most despicable thing i have seen in my time in politics.

you want this seat? i hope you never get it. i hope you are on the supreme court. that is exactly where you should be. and i hope the american people will see through this charade. so, republicans really backing senator graham and his defense of judge kavanaugh, democrats suggesting there needs to be an fbi investigation. they pressed him on that particular point. senate judiciary committee chairman chuck grassley, republican from iowa, still moving ahead to have a nomination vote in order to move the nomination to the senate floor sometime within the next couple of days. the first step in the voting process on the republican-controlled committee set for 9:30 this morning. tom: you listed the republicans of import in the last hour. mike allen just published on the fact that president trump took west virginia by a solid 42%,

democrats in the fight of his life. is that going to be the surprise? where democrats in west virginia go to support judge kavanaugh? kevin: could be. manchin whosenator senatorsough battle -- collins, murkowski, retiring senator flake. what's interesting here is the junior senator from west virginia, a republican, shelley -- went too, is also the same high school as dr. ford. francine: does any of this play into the midterm elections? does it change the polls and do we believe them? kevin: definitely this grip, the most recent hearing in which washington and the country felt like it was at a standstill was

when james comey testified. yesterday, the entire country came to a halt and was gripped around this hearing. yes, i think it is very much injected into the pulse of american, not just politics, but culture, particularly weeks ahead of the midterm election. when republicans are going after suburban women, as are democrats. tom: we look forward to your reports in the morning as well. on therging markets history of international economics. barry eichengreen, economic professor at work week, and far more, an american historian. an populist temptation is extraordinary effort to educate us on global populism and indeed the american populism and perhaps those tensions witnessed in the last 24 hours. you here, wehave could speak to you for three or four hours. you trace us from jennings bryan

to huey long to donald trump. what happens after donald trump as you look back at american history? i think it will be imported to see whether the center holds and the political mainstream response to the economic grievances that donald trump's election. so far, there has been little response. tax cuts have not benefited the working class. the tariffs have not benefited the working class. i worry that the economic grievances will deepen, will intor, and that will play -- by blaming china, the rest of the world, by blaming the foreigner, it would inspire his base and get more voters? can blamehink trump the chinese. blame the canadians.

francine: the germans? barry: and the debt as well. we've heard a bit of that and i fear we will hear more. the real question is the disconnect between his policies and the absence of trickle down. by blaming the fed, does it actually hurt his independence? feds: i hope the independence will stand. i think the markets will react badly if trump seriously interfered with the fed's independence. and the president takes the market as a measure of his success. his appointments to the board have been strong. out of character, if you will, which is reassuring. .rancine: thank you coming up, our exclusive interview with hank paulson. at 7:30 a.m. in new york. ♪

taylor: this is bloomberg surveillance, i'm taylor riggs. group areackstone among potential buyers who have expressed interest in the indian finance conglomerate -- total of $3 billion. it is backed by -- boeing has won it's their defense contract in months. the deal worth as much as $9.2 billion. to build the next generation of share -- of training jets.

shrinking for most of the past decade. meta's on-demand services one almost doubles in the first half of the year. the company backed by tencent holdings -- expanding into businesses from bike rentals the online travel. a posted a whopping $1.2 billion loss. last week, they completed the largest tech ipo in hong kong. we are just getting breaking news out of italy. italian assets overall tumbled after the government set the deficit target wider than th envisaged. -- widening, having an impact on the banks because italian banks traditionally owned so much of the debt. they were halted down and it is impacting the euro. i don't know if we talk about

contagions, but we need to look at the ripple effect. even the 2% is the threshold for whether that nation's bonds will rise or fall. tom: the headlines stream is really, you say gone to the bank, this is unicredit. it shows from 1250 here early in 2, 6%nth, up, and then 1, plus this morning. is a change moment from where we were even two hours ago. will keep a close eye on the euro and these banks. tesla has plunged after the sec accused elon musk of misleading investors with his going private tweet last month. the sec is seeking to bar him from serving as officer or director of a public company. news saying hehe

is deeply saddened and disappointed by what he calls the unjustified action. released ard statement saying it is fully confident in its chief executive. butters in destroyed. what does this mean for tesla? will you london mosque -- will elon musk stop tweeting? >> for uncertainty about this company and how it is going to run, day-to-day. and the long-term hold of their chairman, cofounder, and inspiration. francine: what does tesla without elon mean? >> the sec often seeks to bar a person frome seekingl in ao keyn role, they often don't get that. -- he covered -- could be a temporary thing

role,he can't service the or doesn't mean they can't pay him in stock and large amounts .f money to do some other role they can't call him an officer, but they can call him a product designer and pay him as a star. but it can be challenging with the shareholders and customers. this person, there is no one else so tied to the brand today. frame for us, detroit to america automobile engineering with this unique thing, tesla. i thought that gene munster's lengthy memo of optimism over the future of tesla was interesting, but it was removed from the rest of american automobile manufacturing. do they want to buy this thing? do they want it to go away? what does detroit actually want to happen here? >> i was thinking about this

last night, driving home. , roll back this all the clock 15 years as if tesla never happened. some people look at the auto industry and u.s. industry in -- andket alert and say -- industry in particular tesla was a big hit. it really caught people's imagination, inspired people. for anyoneeally hard else to sell electric cars in decent numbers in this market. should tesla go away, then everyone goes back to saying let's just get really efficient gas cars. nailed it.st given the legal action, isn't this the perfect time for one of these people to swoop in and grab a company that seems to get electric right? >> maybe. maybe more likely than someone else. musk doesn't want -- elon

doesn't want to be tied to a company that makes most of its money selling cars that burn gasoline. it is anathema to the brand and him. but if the stock falls and it becomes more attractive, and it has got to fall more than it has --far, then maybe apple [beep] just in time. the beacon coming in. it's good to speak to someone about the legal aspects of this case, john coffee of columbia, law school. to have you with us, particularly with barry eichengreen on international economics. where is the board and what would you expect to see from the board given the sec action? >> i think the board has to step toand tell mr. musk he has

settle. typically when the sec sues and executives, they give him a chance to settle before they announce. he has refused to settle and this is pretty close to an open and shut case. his funding was not secured and he really has no grounds for disagreeing with the sec that his statement was materially false. and because the sec is not willing to settle, i suspect this is the reason, they are asking the court to prohibit him from serving as an officer or director of any public company, and that would include tesla. that is the real shocker here. , it's notost musk clear there is anyone else who could run this company. this is a real threat to shareholders. a tesla without musk is going to trade at a much lower value. whether he has taken his first step toward settling. tom: explained to us who matters on the board. that silicon valley,

venture capital, all of us migrate to the name murdoch james murdoch, rupert murdoch's son. but who does john coffee pay attention to on the tesla board? it could be murdoch or it could be someone who has a visual presence. they would have trouble with the market if it looks like mr. musk is going to sit there and be unwilling to settle and possibly increase the possibility that the court really would prohibit him from serving as officer or director. this is a situation where i think he's taking an unreasonable decision and only the board can tell him to do something because we are all in big trouble. way for teslaonly and elon musk to continue this is why taking the company private? i'm not sure he can. the whole point of the recent revelations is he didn't have

any source of funding. the sec makes it clear he didn't talk to anyone. the company is already leveraged up to its eyeballs. werethe south africans doing it on the hidden condition that he built a large plant in south africa, and i don't think the company can afford to do that, nor is it the proper place for tesla to build its cars in a world filled with trade war's right now. so i think they are not in a situation where it is feasible to raise the billions of dollars necessary to take this company private. tom: thank you so much. listening to all of this, barry eichengreen of berkeley. it speaks to innovation in american manufacturing excellence. the president screams about finding an american switzerland, almost, where we nostalgically go back to what we work. you've said for years we won't do that. how dire is it we lose our

exceptionalism in manufacturing processes? >> i don't think it is all about manufacturing anymore. >> you said that for a long time. productive's,ut well-paying service sector jobs, and we have to pay people for them. people are going to have to work with artificial intelligence and robotics. tom: are uber drivers robotic? the uproar about the dynamics in pay, the further atomization of the american labor force? is it occurring because of technology? i don't think robots are going to replace uber drivers, but uber drivers may ultimately unionize and get the pay they want. and other problems the sharing economy creates, like the traffic in the case of uber. tom: did you notice the traffic

in new york? francine: do we fully understand what driverless cars have on the economy? think we are beginning to understand. we touched on tesla before, which discovered that it could all of itsze manufacturing operations. that there were important aspects that could still be done much more efficiently by human hands than by machines, and i think that remains the case in a variety of other sectors as well. francine: this goes back to populism, or governments now thinking of how they can help the ones that are displaced, because of the technology advancement? >> governments need to think about how to get people the skills and training they need to compete not just with workers, but robots in the 21st century. that doesn't mean they're doing

it. i think here in the united states, we are doing a singularly poor job of equipping working-class people with those skills. francine: professor, thank you. on the what i'm seeing markets. italian assets tumbling after the government set next year's budget deficit target wider than the market and vision. we've basically seen. before the numbers were unveiled, analysts are saying the target of 2% was the threshold of whether bonds would rise or fall. we've had a big fallout from the 2.4% number. european banks down, italian banks sculpted to the limit. ♪

>> this is bloomberg surveillance. check in on what is trending across the bloomberg universe on tictoc. it's nearly impossible to

,magine tesla without elon musk but the sec lawsuit has raised questions about his future. emotional testimony from both sides, brett kavanaugh fervently denying the sexual misconduct allegations from dr. christine blasey ford. president trump is set to stand behind his supreme court pick. place, a manhattan dealer is sentenced to 18 months for fine art fraud. second place, btp yields surge as we target a deficit of 2.4%. up top, treasury yields have just turned negative for european and japanese buyers. those are the most read stories. tom: with the italian story, extremely fluid to say the least. did you know that there is nothing in america as we move to this morning's decision by the judiciary over the future of judge kavanaugh? we have tried

at bloomberg surveillance to find different interpretations forward of this historic moment. we can do that with elaine kurt important book gives us extensive history. much for joining us. will these events have direct ramifications on turnout in the midterms, and will they provide an important foundation to the base of 2020? yes they will. these developments are practically guaranteed to increase turnout among women. two groups of women we've been watching. obviously, democratic women, but the key swing in this midterm are republican suburban women. to the extent that they feel youice has not been done,

can expect a lot of them to cross over and vote on the democratic line. we've seen this earlier in the year. republican women were key in several races we've had in the off year. that's who everybody is watching in november. if we go back to clarence thomas, study how presidents reacted to those debates then, what would be the appropriate script for donald trump? what should he do right now, given your look at history? >> shut up. [chuckles] that's what he should do. the problem that i think has brought, not -- has brett kavanaugh so close to not getting confirmed here is he to thetrumpian approach u.s. senate, as opposed to the usual approach, of deference to them. , andhighly partisan attack

aggressive approach, i think could backfire on him. we'll see. we are only a couple hours away from the vote in the judiciary committee. but there are four senators on the fence. of them, not to mention all of them, i think his confirmation is doomed. that how can we be so sure it will energize suburban women to vote in the midterms? i remember after those taped , the vulgar comments about women, he was still elected president of the united states. that's right, he was. but since then, there has been a big shift in the zeitgeist, the #metoo movement. this has been a topic of conversation among women, a speech beyond party and beyond the usual political class.

it is a profound difference in the way we evaluate public men in public life. it thisatly appreciate morning. he has waited patiently, barry eichengreen of the university of california berkeley, is with us, and we now speak on our history international trade economics. i think the only better thing would be to have you and doug erwin on the set. "war" is the trade war? >> it is now real. i think the problem is there is no offramp for the u.s. and china. being able to declare a victory, the chinese are prideful and i don't think they will back down either. i think we are fully in a bilateral trade war and it is going to continue. barry: -- tom: your classic covers --

talked about the development of the imf. you are going to have to write a book about this trade war. the heart of it is chinese culture. do they just outweighed the wait thet -- just out president? barry: they have significant capacity to wait, and indoor economic suffering as well. -- is not the same as the chinese economy responding negatively. yesterdays european central bank think, indicative of reality. that companies that stand beside from the u.s. trade work and continue to do business with one another, the european and chinese economy, can skip through. tom: are we going to see -- francine: are we going to see more exemptions? where it is rhetoric but not

having much impact on the economy? that by way of analogy, with brexit, it took more than one year for the vote to negatively affect investor confidence in the economy. we are going to see that in the trade war as well. francine: why haven't we seen it yet? i was speaking to the previous governor, he said he's not worried about the impact on the economy, but the psychological ' minds.n the consumers and what that might mean for the stock market. in china, the consumers, but in the united states, it is the investors. supply chains are being disrupted. investment will eventually respond negatively to those uncertainties and costs. i remember a g7 meeting in singapore million years ago, the central bank head of india went

at you and you went back with history.ledge of it's got to be institutions to the rescue. i spoke with madame lagarde this weekend. does a lagarde, even a world bank, do these institutions come to the rescue? or has it been the u.s. that comes to the rescue? barry: i think it has got to be the community of nations and not their agents behind the world bank. did you see from emmanuel macron? barry: i think they need to work with the brits and chinese and others. trump has weaponize the dollar. barry: what do you mean by that? weaponization of the dollar given -- dominantemains the international currency and trump is using that fact that threaten european companies and losenments that they will

access to dollar financing and u.s. bank funding if they continue to do business with iran. tom: can the president win that battle? run,: i think in the short but the longer run consequence will be that the europeans and chinese and others build alternatives. i think the alternative is the euro. before, foreign policy shock and institutional response leading to a change in the dominant global currency. , the end ofld war i the fed leading to the rise of the dollar. this would be huge. how long would that take? given all the troubles in europe at the moment and what we are seeing with the italian government, is the euro the right currency? listening toeen your discussion of italy and the euro. 2.4 percent of gdp deficit is not that gigantic.

above what the markets were hoping for. the end of the story is not clear. that is a bunch of proposal rather than a budget. -- a budget proposal rather than a budget outcome. so i think the euro will remain intact. i don't think the italians pose an existential threat. tom: we want to come back and speak of italy. in the future of the euro, steeped in the decades of w ork professor eakin green has done. thinking about an interesting experience an experiment of europe. coming up on bloomberg daybreak, look for randall kroszner, david westin in chicago with henry paulson ♪. ♪ ♪

cirilli will stay with us through the morning on washington. right now, first word news with taylor riggs. taylor: president trump is demanding the senate vote on confirming the supreme court nominee, brett kavanaugh. moments after his impassioned denial, the president tweeted that he was powerful, riveting, and on this. democrats,ashed criticized the media, and claimed to be the victim of a conspiracy. >> my family and name have been totally and permanently destroyed by vicious and false additional accusations.

taylor: his accuser, christine blasey ford, testified first, told the senate judiciary >> committee she was terrified. >>i don't have all the answers and don't remember everything i would like to, but the details that brought me here today are the ones i will never forget. they have been seared into my memory and have haunted me episodically as an adult. >> the judiciary committee is expected to vote on a nomination today. the american bar association has called on the senate to delay a vote until the fbi can investigate. mexico is hopeful for a nafta deal that involves canada. mexico has insisted from the beginning that the trade deal be -- be bilateral. the u.s. and mexico have reached an agreement, but president trump says canada's negotiators have refused to budge on key

issues. former treasury secretary hank paulson says the government did not have any choice when it came to the bailout in the financial crisis. he said that could make matters worse in some ways, the next time. >> the financial crisis brought ways, the worst in america in terms of greed and the problems in some of our regulatory systems and so on. but at the end, people came together. believereally like to that if we, god for bid, had another crisis like this, that the country could come together. but the things that we did were so unpopular that i think it is going to make it even more difficult for our successors. all of you can watch that interview with hank paulson coming up at 7:30 new york time here on bloomberg tv. it was a scene reminiscent of the so-called miracle on the hudson where a jet crash landed on the water in new york city. a boeing landed in pacific

lagoon after missing the runway on a remote island in micronesia. everyone survived. the plane was flown by air new guinea. global news, 24 hours a day on air and on tictoc on twitter. powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. now to the ftse index, dropping steeply, marking its sharply -- its sharpest intraday decline since 2016. they tumble back, next year's government budget deficit target -- we will get to professor eakin green in the second to see if the market is overreacting, but what is the market trying to do? campaign promises or to aggregate -- to aggravate the

eu? >> certainly no, it is campaign promises. they want to keep those promises as much is possible. tax breaks, the citizens income. and the fact that there is a coalition with different things they want makes it even more expensive. they need at least 2.4% deficit to even start keeping some of those, but they need at least that. francine: thank you. still with us is university of california professor barry eichengreen. u.s.now italy like few professors do. what will happen next? other markets just overreacting by the 2.4% deficit target? barry: i think they may well be.

there is populist governments in italy. expensivemade campaign promises and they need a big budget deficit. the league, on the other hand, believes more, at least, in fiscal responsibility, so one could see an end game where the markets react badly, i've star loses more support. the league is in a stronger position, at least partly. i wouldn't rule that out. i guess the key to this is if the finance minister, , seen as the markets someone you can rely on, stays, what would we see? mery: now you are taking beyond my knowledge of italian politics. i don't think anybody knows if he's going to stay, or for how long. in a heatedte this essay in the guardian four months ago. steepedlism, that has

italy this morning, and this talkd we don't want to about, fascism. not franco's fascism or the kind steve bannon is talking about, but it is the modern tinge of fascism. is that an arch worry? fascism?-neo- want awell, people strong leader. we see this in the u.s.. authoritarianism appeals to people in uncertain times when they feel threatened economically and by the other, by immigrants or by whomever. i think there is a danger, as our institutions are eroded, rules are disregarded and strong leadership comes to the fore, that we end up with something worse. tom: we have a bloomberg global forum where we go to davos and

do this or that, and all the elites stop and listen to you because of your sense of history. what do you tell the upper half of 1% who are grinning and smiling within this gilded age about the populism you've written about? what do you say to these elites? barry: i think people have to realize they are part of a larger society. in their gated communities, behind the wheel of their teslas, people forget that. tom: nice, did you see that? with story flow. francine: is a technology or globalization? blame people globalization for their economic plates and insecurity and feeling left behind. but if you look at the evidence and data, it is primarily that has led to the stagnation of working-class wages, the growth of inequality over the last three or four decades. it is robots rather than chinese

workers, first and foremost. ?rancine: how does this end if you are a politician who can rally the troops but the more moderate, do you go to the extreme of populism? populism, if you take care of the people, is not bad at all, but how would it change the world economy? in the past when these kind of populist threats have been faced down, it has been a combination of better performing economy, economic growth, which we've had for a time now, but is not guaranteed, and public programs that address valid concerns of people left behind change inal globalization. we've seen proposals to that effect. we haven't seen action to that effect from our congress or governments elsewhere. tom: i want to bring us back to the wonderful week that francine and i had in new york. this is a quick

chart i've made of the italian two-year. you can see the motion of higher yields. this morning we've been up to the and only, professor's perspective, only two standard deviations. is fear is within that chart that we get out further than linked together. that is the arch fear of the germ that europe has. they want to keep greece and italy away. italian problems are uniquely italian at the moment, but we know other european banks are linked to the euro bank market. it may not stay in italy. tom: this goes back to your thinking and back and forth on the history of the euro. let's go back to the president

of the ecb after mario draghi. can the european experiment work without a true banking monitor? >> they have no choice but to make it work. they aren't going to move to full banking union or full fiscal union anytime soon, but they will take more baby steps in that direction. i think that will be enough to hold it together. -- alternative is to dyer the banking that union will come so late that there will be a profound shift in the banking industry so that it will be outdated by the time it comes into force. europeans are doing other things on the financial front. capital markets swinging. for ae been over banked long time. they need to build up securities

markets and unify the ones they have. the fact that some of these italian banks -- probably a good thing. will we see a capital markets union in our lifetime? isry: yes, i think it something they can do, just like they have developed a single supervisor for the biggest 130 banks, i think they can develop a single securities market regulator and move significantly in that direction. your book, globalizing capital, are we now globalized? i bring this up in the terms of president trump's second speech to the u.n.. he says globalism is a plague. globalizing capital. what are those, and are we there yet from the dream that came out of world war ii? barry: know, we don't have a unified, global capital market. -- been moving in that direction since 2015 and so have other

emerging markets. i think we are learning, slowly and surely through trial and managehow to international flows better. the international monetary fund had a more nuanced view of how to manage those capital flows than 10 years ago. so it is not a seamlessly integrated global capital market and probably shouldn't be. francine: how does brexit fit into this? barry: not comfortably. i'm of the view that brexit will the u.k., forfor the city of london. francine: no matter what deal? tom: we've got to go home in another hour. francine: i'm staying in new york. there are about seven options here? or a disaster no matter what happens? itry: i think no matter how is arranged, some of the euro-denominated business done in england is going to move to paris, frankfurt.

tom: the high paying jobs or just staff positions? high-paying jobs as well. border,the irish americans -- i did that sophomore year in college. it's the heart of the manager right now. is that a justified part of the matter within the leave/remain debate? barry: i think it is very important to the peace settlement in northern ireland. it matters to the irish and the europeans. and that creates tension for the single market that i simply don't see how they would resolve. thank you so much for being with us. i can't say enough about this new effort, his monograph on populism is well-timed to say the least. it has been an exceptional news flow. francine, thank you so much. francine: are you going to come see me soon? tom: i'm working on it. will be is in washington

on monday. the conversation with christine lagarde of the international monetary fund. well-timed, to go from barry eichengreen to madame lagarde, speaker of the imf, to speak about argentina and the latest bailout and redo down there. madame lagarde in washington. stay with us through the morning. bloomberg television and radio and print as well, with the kavanaugh decision. ♪ xfinity mobile is a new wireless network

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estimate. high italy,wer of populism in 2.4% in a win for the five-star league party causing chaos in the market. the next crisis, hank paulson ones that lack of tools to fight the next financial crisis and worries about financial managers like lack rock. welcome to "bloomberg daybreak." i'm alix steel. this is a live shot of capitol hill in washington, the scene of partisan contention as part of the confirmation hearings for brett kavanaugh for supreme court. david westin is in chicago. what is next now? i don't how we go forward. david: chicago is riveted to the tv screens yesterday -- was riveted to the tv screens