francine: the euro jumps on a report that italy they cut their budget deficit. bond yields seat relief. theresa may is set to paint a rosy picture of her efforts. as the conservative party comes to a close, the pound gains. sky fall, shares in the james bond's favored carmakers slide. we talked to the chief executive shortly. welcome, i am francine lacqua in london. are your markets, the stoxx

600 gaining 0.2%. a little bit of relief after the pressure. there is a report that italy make it into the eu and try to get down the budget deficit. we are also getting to the euro area september services. bang in line with exactly what we were expecting. back to political risk, you can see the italian 10 year yield. i am looking forward to the conversation. coming up, andy palmer's, chief executive of aston martin joins us for his first interview. , andompany goes public that interview is 30 minutes from now. to bloomberg first word news. the chairman of the federal reserve has welcomed recent increases in american wages while expressing confidence that low unemployment will not force interest rate

hikes. jerome powell said he expects to stick with the central banks current path of gradual hikes while monitoring a set of risks presented by the low unemployment. >> this historically rare pairing of low inflation and low unemployment is a testament to the fact that we remain in extraordinary times. our path of normalization reflects the efforts to balance the inevitable risks that come with extra there are times. expansionthe current and stable inflation. taylor: tax authorities have opened an investigation into donald trump and his family, who created the real estate empire through quote instances of fraud. according to the new york times, the president received vastly more than previously stated. the fed backstopped his

business during times of distress. the white house says the report is misleading. the chairman of bank of bullish. stays , the exclusive interview ceo says she is confident that the banks of brazilian unit will deliver strong returns. >> i am very proud of my team. brazil has lived close to 20% this year. those are the objectives. we have an election coming up. we need to remember that the election on sunday is not the end of the beginning for brazil. i see it as a normalization of politics. and i have huge faith in a country i have known for 30 years. taylor: global news, 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg.

francine. francine: thanks, taylor. let's take it off with italy. they have opened higher for the they time in nearly a week report that italy's government will plan to cut its deficit after eu pressure. according to the country's draft budget plan will see the budget produced by 2021. as recently as yesterday, the prime minister indicated they would stay at 2.4%. joining us now is our rome bureau chief. markets are more positive than yesterday. of a believing this a budget scoop -- are they believing this budget scoop? in the long run, this may be too little, too late. we don't even know if it is

true. secondly, the numbers are still high if you consider italy's highest debt and tendency for low growth. even with these numbers, the debt may rise. at some point, the markets may realize that and it will not be good news. and the thing that is disturbing everyone is that we still do not have these fiscal targets. it has been several days. and we are afraid they just cannot get the numbers square. we do not know what the government will percent today or tomorrow. the moment of celebration, but we are not sure what the future holds. francine: what do you think is actually within these targets? how much will be handouts as opposed to infrastructure spending? is the government talking behind closed doors? longandra: it is taking so

because the numbers do not square out. if you have a deficit, let's just talk about that. it is unlikely that will go down, unless you have a very high road predictions. -- growth predictions. or other ways of bringing in money. but this government is not in favor of privatizing anything. as you said it before, they are not spending on things that promote growth. two thirds of the promises are handouts. they are getting citizens income of some form. they are allowing people to retire early. that does not stimulate growth. the tax cuts might do something, but it is not enough. when they say italy will grow, they have not shown us how. francine: thank you so much. so what is next for italian markets? joining us now is the head of economic research at barclays. always great to speak to you.

are we going to see more volatility is the markets figure out what these governments want? christian: volatility will continue. there will be some news like we saw overnight, like maybe they will reduce the deficit. -- the loss of confidence is significant. people trusted the finance minister that he had control. ,hat the governments had seated at least that was our scenario. until we then figure out how strong are those elections. this has now been lost. and whether they move around the decibels, i'm not sure that will make the difference. francine: was its 90 for the --kets to think that -- 90 the markets to think

that? christian: excellent question. why were we suddenly confident? the thinking was the following, lvini have gained in the polls based on his anti-immigration policy. and people thought that maybe he would set before the fiscal and say that is enough. that was a narrative people believed. francine: yesterday, i guess the markets are scared. saying that italy would be better off outside of the euro. we spoke with him, he said it is a personal view. should investors take him at face value? or does the trust mean they will question the euro question? christian: there have been others who have started to question. and there are certain people who believe that italy will be better outside of the euro area.

if it really comes to it, complications, they will not go for it. the politicians will play with it. they think it is their bargaining chip, because they can always say look, we are not greece, you cannot take a second. -- take us out. this is a negotiation strategy. i'm not sure it would ever come to this. francine: i am frantically trying to get my favorite chart of the day up, the differential between these yields and the rest. you have the spanish italian yields and the portuguese italian yield. are we going to see stress? what has happened is that spain and portugal, to some extent, were decoupling.

seen, sothat spain was far i'm showing some of the. -- it. as long as they continue to implement policies with the eu, european growth doing fairly well. francine: they are ok. christian: i think markets would make the difference between italy. francine: thanks so much. someg up, we talked to affect presidents, -- fed presidents. and later this afternoon, president of the federal reserve bank of philadelphia also joins us. we will be talking dollar dynamics. this is bloomberg. ♪

francine: economics, finance, politics. this is bloomberg. let's get straight to the bloomberg business flash. aston martin has fallen on its london ipo. shares have been priced at 19 pounds each. joins usf aston martin for his first interview of the day at 9:30 a.m. u.k. ton. -- time. tencent has filed for a public offering in the continuing search of u.s. listings. the online music arm of china's largest social media company listed its offering size at $1 billion. the amount is a placeholder and may change. jpmorgan's ceo says the number of publicly traded companies is dwindling and part because of

excessive litigation and frivolous shareholder meetings. speaking in washington, they also said that many companies are adverse to ipo's because of regulations. >> look, i love my shareholders. but the shareholder meetings has become a farce. that is what it is. social groups, i'm not against social groups, but they have been hijacked. taylor: that is your bloomberg business flash. francine: let's focus on the u.s., the industrial average climbed half a percent. boeing and caterpillar were amongst the top contributors. but how long can the run actually continue? now, head of u.s. equities at columbia, our guest is still with us. thank you for joining us for

staying around. where do the markets go from here? can it last? nadia: yes, there has not been much exuberance. we had a very mutated growth until now. , therms of devaluation markets are in line with historic averages and we have earnings above. bar the exogenous risk factor or a protectionist agenda, we think this market could continue. francine: do you agree with that? there was a call say trade is having an impact and the fed cannot height. christian: we do not share the view. our view on equities, just 3000 by the end of the year. i will say the following.

if you look at the valuation models, there are several that show we are beyond long-term averages. it depends on what you pick. crucial at the moment are earnings. that is what the market is building up on. with regard to trade, over the long-term, there could be significant impact. but for now, it does seem contained. the crucial question is those who make a big impact, do they believe that there could be a confidence impact. -- whetherhat other it will impact in a big way. companies believe the way they operate will change. francine: this is my chart. christian, you are hired as my new coanchor. these us to look firm.

what needs to change? nadia: the trading rhetoric for could, asism christian said, could impact confidence. and investments. or policy mistakes. francine: what would that look like? in my opinion, it would be hiking too soon. moment, we are not seeing any ramping inflation pressure. it is a healthy, sound vectra -- backdrop. it is in line with the growth we are seeing. it is not without risk. francine: is the dollar strength a policy risk? christian: it is one. markets are watching the

potential in version of the curve. if you think we will see another-by the end of the year, for more next year, by next year the curve will be inverted. the fed is suggesting it should not have too much of an impact. but markets look at all of the recessions. and typically, they have always been preceded by an inversion of the yield curve. these are things markets are watching. francine: we will have plenty on the markets and the dollar dynamics. both of our guests stay with us. up next, oil with a four-year high. we are live in moscow at the russian energy week we talk futures for the oil price. will we hit $100 a barrel? this is bloomberg. ♪

francine: this is "bloomberg surveillance" let's talk commodities. oil studies at its highest level in four years as lingering fears outweigh expectations. president trump also took aim at saudi arabia once again. he had this to say at a rally in mississippi. >> we protected saudi arabia. said love the king, but i "king, we are protecting you."

you have to pay for your military. francine: for more on oil, let's get to russian energy week, kicking off today. our reporter annamarie is there. how much will they talk about being able to put extra supplies out there? >> that is the big question, especially as we head into these iranian sanctions. we already know their biggest fire, south korea, japan, india has stopped by. the big question is if will china persist? the markets are trying to figure out how much. when these sanctions were first announced, top oil traders have to see it at possibly 2 million barrels a day.

this is the big question. who can make up these iranian a barrels, and how high can we see the price of oil rise? francine: quickly, the iranian minister was going to come but is no longer. is that right? annamarie: that is right. the minister was supposed to attend. i'm not sure why he dropped out. they are dealing with sanctions, leading to a currency crisis as ran. within 10 run -- teh francine: let's continue talking about oil. christian, overall, how bad for the economy and how bad for oil demand if it touches $100? -- christian: i think the impact is underestimated. we came from oil at 100 and 10, and then we had a crash.

at the beginning, nothing happened, but later we saw a global recovery. oil played a large role. now we are back to levels of 80. these are significant differences. in particular, where we see a lot of damage is in the emerging-market importers. there are a lot of importers getting hit by hollinger -- higher dollar price. if you add them all up, it is significant. in the u.s. consumer will feel it. markets have started to think about the impact on headline inflation and growth. francine: what does that mean for big oil? the energy companies should benefit from that. exposure, particularly these.

in terms of a consumer, we think the average is still ok. that it is with you because the dollar is very strong outside of the u.s.. it is probably being felt a lot more outside. we not hearing anything on the consumer side, but we will definitely watch closely. francine: thank you so much. coming up, we talk santander. of spaceto the chair biggest bank and talk brazil and emerging markets -- spain's biggest bank. ♪

francine: economics, finance, and politics. this is "bloomberg surveillance." let's check in on what is trending.

malaysia and thailand are racing to become the first asian country to legalize medical cannabis. both countries currently have strong penalties, including capital punishment. is europe's economic engine starting to run out of gas? germany shows increasing signs of instability. that is a must read. and are most read stories. and third place, fears of a no deal brexit are pushing japanese investors away. in second place, tax authorities are looking into allegations that the jump family created its real estate empire through instances of outright fraud. and our most read story, peer-to-peer lending crash leads to protests in china. we are also getting breaking news out of the u.k.. u.k., i am looking at the services pmi, a touch below estimates. positive -- composite

pmi, a touch above estimates. you can see the pound is basically moving sideways. let's get straight to the bloomberg first word news in new york city. the euro has snapped five days of losses. italy's populist government will bow to eu pressure to reduce its budget deficit. as recently as yesterday, the deputy prime minister said the administration would stick to , sticking to 2.4%. in the u.s., the chairman of the federal reserve has welcomed recent increases in american wages while expressing confidence that low unemployment won't spur a takeoff prices

forcing interest rate hikes. jerome powell said he expects to stick with the central banks current path of gradual hikes while monitoring a set of risks presented by the low unemployment. and low inflation. >> this historically rare pairing of low inflation and low unemployment is a testament to the fact that we remain in extraordinary times. our ongoing policy of gradual normalization reflects our efforts to balance the inevitable risks that come with extraordinary times. extend the current expansion while maintaining employment and stable inflation. taylor: tax authorities have opened an investigation into donald trump and his family, who created the real estate empire through quote instances of outright fraud. according to the new york times, the president received vastly more from his father then previously stated. -- those funds backstops

backstopped his business during times of distress. global news, 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine: thank you so much. let's talk financials. santanderp with the chair for an interview. we talk emerging markets and the environment for banks. on: one of the things i work is having a team that complements itself. i believe this is the best possible team. and the experience he brings, as we build these platforms, it is managing in a horizontal way and putting in place strategy. he is very good at managing across cultures and,

importantly, has a proven track record. francine: will you become a bigger or more focused in the next couple of years? ana: we want profitable growth. we have an opportunity that few have. we have 140 million customers. and our strategy has been a loyal customers and digital excellence. that is why it is about building global platforms. it should give us profitable growth, as we have done. francine: will you focus on capital levels? ana: what we have done it last year's is a lot. we are making a bit more than 5 billion. the consensus for this year is more than 7 billion. capital, and we said that he will reach 11%. francine: i guess investors

worry that you are doing great on capital, but lacking -- lagging some rivals. it would put into question your all-cash evident. -- dividend. them?ould you tell ana: we are one of the most predictable, in terms of earnings. in a better than our peers stress test. we believe that about 11% is the right level for us, given the predictability in our quarterly eps. francine: you are sticking to your policy? ana: i cannot say what we will announce in a few months, but we have increased the cash dividend per share by 30%. , the targets that we gave the markets is double-digit earnings per share

growth. i think that is quite good performance. francine: that was the santander chair speaking to me in exclusive interview. more from her and her thoughts a little bit later on. but let's talk financials. still with us are our guests. nadia, what is your take on financials in the u.s.? in the u.s., as long as the consumer holds up, they are doing well. nadia: indeed, i agree. and yet, the banks have been penalized and are now trading at levels similar to the pretax stimulus. given that they are fundamentally sound, it is a very attractive proposal. and we are overweight financials because they have good momentum and valuations. francine: if you look at the

markets, of course you have to be on the right side, but are you expecting good at volatility to come back? nadia: i think so. qee broadly, as we go from we should- to qp, see a lot more dispersion. it is good for us as active managers. francine: christian, how does that translate? first of all, you need monetary policy to be transmitted, but there is also a discrepancy between the united states and europe. we are seeing geopolitics affected banks everywhere. christian: in our quarterly outlook, we call the u.s. and the rest. they have caused an environment where taxes are reduced, growth is strong, rates are rising. overall, it is a good

environment. germans have not worked out there banking situation. there is a system that is loaded up with italian government bonds, which is currently losing value. there are more problems in europe. valuations, however, do show the differences. it is not that valuations would not price a lot of trouble in europe. francine: i know you cannot talk specific banks, but looking at , there is talk about the lending market. is that the chicken that lays the golden a? -- egg? christian: they are quite strong. and banks with access to these s m b's are quite strong. but there are also questions

about the future, a lot of them related to the industry. francine: because of trade concerns? christian: i think trade, the car model, etc.. there are a lot of question marks around germany then there were if used in. before. boti was quite bullishn about brazil, saying that no matter what happens, the bank is in good shape. i do not want to disagree. i would say the following. they grew by 2% after the biggest contraction since world war ii. longer a country of 3.5 or 4% in growth.

when commodities comeback in this way, during the past, households haven't levered up a lot. now they have to deal with that leverage. it will be a tough environment for banks with the debt that has been created. know, interest rates, inflation at four. brazil will have a difficult time, i think. francine: is that true for the emerging markets as a whole? do you worry about contagion from fed normalization? can it be mash-up into one? christian: everyone who comes says this about e.m., and that is true. but the fact is that most are dependent on dollar funding. the growth rates are generally

lower, and we now have additional issues where oil is higher. the whole complex of china being the main driver for emerging ,arkets, sucking in imports that is now in question. we have been telling investors that it looks very attractive when prices, down over the summer, but what we do not see is the inflection point where you think this is the bottom. and many of the emerging-market countries need more time to work this out. francine: how much are these earnings propped up by tax cuts? year, on average, financials are above market rates. 25%, i guess. , there is probably a 10 or 12% coming from the tax relief. underlying half, driven by the

fundamentals. better economies, strong consumers. they can deliver operational leverage on the top line and are allowed to give back more to shareholders. francine: thank you so much. with "surveillance." plenty coming up, including the aston martin debut. shares slide in london. the ceo joins me for his first interview of the day. that is next. this is bloomberg. ♪

francine: this is "bloomberg

surveillance. " aston martin shares tumble on their trading debut after an initial public offering achieved a valuation on par with competitor for -- furry. -- ferrari, aroundnitially hovering that level, they fell by as much as 6.6%. tencent music entertainment group has filed for a public offer in a continuing surge of u.s. listings by chinese companies. the online music arm of china's largest social media company listed is offering size as $1 billion. that amount is a placeholder and may change. ceo says the number of u.s. publicly traded companies is dwindling because of excessive litigation and frivolous shareholder meetings.

speaking in washington, he said many companies are adverse to ipo's because of regulations. >> i love my shareholders, i speak them all the time. but the shareholder meeting has become a farce. , i'm not against social groups. but they have been hijacked. taylor: comcast has sold bonds to finance its acquisition of skyy. the philadelphia-based cable giant put $27 billion of unsecured bonds. they learned that the longest portion of the offerings yields 1.75% above treasuries. that is less than initially discussed trades between 1.95 and two percentage points. that is your business flash. francine. francine: thanks, taylor.

botin is staying a bullish on brazil, even as divisive elections threaten the reason. she says she still has faith in the country. ana: we had a conversation a few years ago about brazil. we delivered 14% in the recession. i am very proud of my team. brazil is considered 20% r.o.e. this year. those are the objectives. we have an election coming up. we need to remember that the election, it is not the end of the beginning for brazil. i see it as a normalization of politics and i have huge faith in the country. and really, for three reasons. institutions are working, second, a strong private sector. and three, a huge internal

market. my point of latin america, maybe one exception, venezuela, the other questions where we have a presence, the lows are always hire. -- higher. that is why i am so confident. francine: i was going to ask you whether investors understand the markets. they see the election as divisive. important, but it will not change the direction, it might change the pace, and that is the key issue. francine: are there any countries where you could exit? ana: not at the moment. in 10 corey we are markets. 98% of our profits. when investors look at santander

, they may not understand the amazing opportunity for growth. brazil and mexico with 33% of the net profits. , 33% of groupl profits. the total lending in mexico and brazil was 100 billion. the total lending in the euro area was 350 billion. to risk return opportunity beget get investors in latin america is very attractive. francine: that was santander's chair speaking to us. let's get to a corporate story, aston martin shares have tumbled after its initial public offering put them on par with competitors. -- priced were pace at 19 pounds each, giving them a

valuation of 4.3 billion pounds. they fell as much as 6.6%. joining us now from the london stock exchange is andy palmer. first of all, congratulations. what is your take on the share price? disappointed? , we have taken 105 years to get to an ipo. i don't think will worry too much about the initial shares. we will always look over the longer-term. and the plan at which we have is long termipo'd . --ncine: shareholder value how will you create shareholder value? plan is seven cars in

seven years, one new car each year. copy repeat. plan,hree cars into that , and the nexted key car is coming from our new plant in wales. the first entry of aston into the suv market. that will be followed by a mid-engined car. 's. then the two lagondas francine: are you strong enough to survive the tech disruption? or do you see the need for a partner? andy: we have a great partner. 5% of our company is owned by daimler, our technology partner. and that is a great partnership we fall back on. the electrical system in our the eight engines are coming from

our friends. we have a partnership with red bull racing, which helps with formula one racing and with new platforms. very high tech platforms. we have those partnerships. ferrari and-- ourselves starting to do very well. francine: i was thinking more of a partnership with google or ap are tech player -- a pure tech player. do you need that? andy: what google and apple are doing is interesting. of course, what daimler is equally doing and others. there is not an exclusivity to the likes of google. there are lots of ways you can develop that autonomous driving technology, either by yourselves

or with partners. , when will if a electric car beyond the market -- will a full electric car be on the market? andy: we will have it soon. will have 155 of those cars. we are in the fortunate position to select our own customers. the customers will give us the qualitative data. this is important intellectual property that we will then carry range. to the lagonda francine: what about the hybrid suv? andy: we start with hybrids with the suv. in fact, by the middle of the 20 20's, all cars will be hybridized. agonda's will be

electric? . why did a tie up happen with ferrari. andy: i was not there yet. i cannot comment because i was not involved. francine: looking at valuations, they are the ones to beat. do you feel you are a challenger? we have been around 150 years, they have been around 70. maybe they are the challenger. francine: do you really think that is true? looking at the valuations, do they need to catch up with you? awesomeariis an company. ferrari ispled a -- an awesome company.

there is more than enough room for both of us to be successful. francine: i want to come back on pricing. it was set new the bottom of the but still a tenfold increase in to value and a little more than five years. how do investors redact? -- react? andy: one of the key points was that we needed to choose a high quality look -- book. we wanted investors looking at the long-term. price, we have also been able to select what i would call an awesome book of investors. francine: thank you so much. final question, do you worry about trade? does that impact asked the margin more now that you are martin more now

that you are listed? andy: selling to high net worth individuals, they tend to be a little bit less price sensitive. is an ability to trade on tariffs to some extent. ,f you look at brexit basically, we could lose a little bit of market share in europe. what we will gain market share in the u.k.. these things tend to be a wash. and you have to look beyond the immediacy. you have to look at the long-term. francine: thank you so much. this is bloomberg. ♪

♪ francine: the euro jumps on a report that italy --

brexit brightside. painta may is expected to a rosy picture as a conference comes to a close. the u.s. -- turkish inflation is pushed to 2.5%. turkish assets risk off. good morning. this is "bloomberg surveillance." i'm francine lacqua from london. tom, i have a great chart looking at the widening for yields, retracing the growth. and i am looking at the euro and it is edging up a touch. tom: it is interesting. relief as we mentioned of the italian markets. i am focused on india. with as one to watch huge petroleum issue there. link it together, francine.

oil $85 a barrel. what does that mean for emerging markets? francine: you have to look at the emerging markets that import and export. let's get to first word news in new york city. taylor: new york state tax authority have opened an allegation that president trump and his family fortune. the new york times said the trump's created their real estate empire through outright fraud in some cases and avoided paying taxes. according to the paper, the president received more money from his father that he previously stated. the lawyer for the president calls the allegations 100% false. itsy reportedly given european union and will cut deficit targets. according to an italian newspaper, the populace government is reversing plans for wider gaps in the market. the deficit will say a 2.4% for the next year and cut it to .2%

for the following two years. secretary of state mike pompeo heads back to north korea to meet with tim commune for a second summit -- to meet with kim jong un for a second summit. pompeo wants a firmer commitment from kim to give up his nuclear weapons. in the mystery of what happened to one of china's best-known actresses has been stalled. for hasany she worked been ordered to pay billions of dollars in back taxes and fines in a tax invasion investigation. she vanished from social media since june. on social media, she said she was deeply ashamed, and apologized. 10 shares of aston martin are falling in their debut -- and shares of aston martin are falling and their debut -- in their debut. analysts have expressed concerns about the evaluation and about

aston martin's profitability. dayal news 24 hours a powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. tom: i am sorry, that car says john farrell. commodities, it is turning. risk on through equity evaluations with the euro churning and oil flat out higher. you really wonder what the sustained -- with futures churning, you wonder where the vix is going to head in the coming days? italy.lso put in there downche bank has nudged over the last five or six days and has distanced itself of 10

euros per share. i am watching that. francine: well done. i am also looking at the vix, tom. at 115.71. currently rallying on these reports of a government well reign and spending plans, but there is no confirmation whatsoever from the italian government. i am also looking at turkish. the country'sg inflation surge. euro has snapped a five-day losing streak against the dollar after reports about the spending plans of the government. that is what we are looking at. they are expecting the budget deficit to be reduced to 2%. the deputy prime minister insistent that it would say at 2.4%.

guests.a panel of thank you all for joining us. reports that the two populace governments don't have the same agenda and now want to back out to please the e.u.? >> we can probably believe it. theirid not back down on 2019, 2.4%. they decided to be more reasonable. why we have the rally this morning because it means the probability of -- it also means the probability of -- downgrade

there is still a lot of uncertainty going on. we hope to see the final numbers. then we have the italian budgets through 2019. and we have the reviews coming. francine: overall, we are hearing from him saying there is one perception of the italian government. on this program, we spoke to one of the key lawmakers. are they misspeaking? they're trying to say, look, i am against the euro, it is not on the agenda. but if the finance minister in charge? realize that they shout loudly and taking negotiations to the brink, and then claim it is some great victory.

aso think taking a step back a long-term investor, this is just really noise. italy's problems is not about meeting its budget deficit. it is about to may undergo some deep-seated structural change? their problems are a lack of structural growth. a lot of these populace agendas don't make steps towards that. i think we are delaying the day of reckoning at the moment. francine: do you believe -- do you agree with that? >> yes. that is a good construct. it is a necessary factor in the european market in that context. there has been steam taken out of the euro. is there a devil in the details? are the budgetary improvements of -- info was a product of the

forecast? it is a scenario where we have near the 115 threshold, a very attractive level. but that relies on the italian's government throwing another curveball. tom: from the standpoint of unicredit and the upset -- in the upset of italy, what are the elites betting on? we're of a putting their money? what is -- where are they putting their money? what is the response to this uproar? >> this morning, there were headlines. they were a bit worried about the measures that were announced. as i said, we don't yet have the budget in our hands, so we are not able to judge at the moment what the measures look like and what impact they could have on growth.

in the medium-term trajectory. of course, we had headlines this measures notese being very growth-friendly, and could -- moment, thehe feedback we have, we have to wait for the publication of the budget of 2019. francine, we got those headlines coming out. what's to me so interesting is not only is it the financial and fiscal, but it is social headlines as well. francine, what do you make of the social policy we see in these italian headlines? francine: i think we need to take a step back and remind all of our viewers that the current an an easyernment is

coalition. they just want different things. they campaigned under different things, so the effect they can pull the government together was a surprise to many people. on social, he is saying the growth well create less deficits comes a lot of them are banking. when you look at what is in the budget and we don't have the details, it is about a lot of things you are talking about. one could argue they are handoffs, and not what could make the economy grow. >> i think the reality is we have probably seen the best of growth across the eurozone for this cycle. you see mr. draghi talking about an acceleration of inflation. idea of meaningful growth is behind us. we have tapering of qe. and we have interest rates at

some point in the future. when i put those things together, those growth projections that we have seen across the eurozone are heady growth projections at these low levels. i think a lot of this is just noise. the repair -- there are reckonings yet to come. tom: let's continue. central bankers speak. we heard from chairman powell. conversationon and with trails evidence. if you don't know him -- and our guy johnson in a conversation with charles evans. two fed presidents today. this is bloomberg. stay with us.

♪ in: "bloomberg surveillance" new york and london. barreltained at $85 a and you see the knockout effect to emerging markets. excuse me. effect of higher inflation in turkey as well. we emphasize all of this. we have jeremy stretch with us. jeremy, if i look at central bank action, i am looking at the reality of the powell press conference. they are data-dependent and waiting. no one has waited more than mr.

draghi with a path out well into 2019. is mr. draghi going to have to blink? jeremy: i do think there was a degree of consistency between the forecasts of the ecb with their projections and some of the language. i do think there is a suspicion negativewe don't see a growth in the shorter term, there may be a case to be made that mr. draghi and the ecb could back sooner than that. i think in the context of what we have seen in other central banks where there have been those on a gradual basis, i would not be surprised if the ecb are considering an action earlier than that. that is something the market has yet to take on board. tom: that is the heart of the matter. you do multi-asset studies.

within multi-assets, there is the movable force that events will happen. how are you protecting yourself from these macro shocks within investments? >> we really have a portfolio, which i described as high quality. i realize that is a little consensus in a reflection of what we have seen over the last few months. it really leaves us to u.s. access where the federal reserve interest rate hike looked pretty reasonable. we know they are going to be slow and accommodative. and evaluations are not super cheap or super expensive. we can win on u.s.-based assets. though still make sense over the next months or so. francine: what do you worry about in the markets? you seem to think they have a handle on it, whether it is shadow banking in china, or the

dollar going higher in emerging markets. >> we know the federal reserve allows highs interest rates -- allows a hike in interest rates. says he feels confident about the u.s. economy, and we have seen that will last month or so. that is the kind of thing we worry about, that we get a blowback and to develop markets. i see that as a relatively small risk at the moment, which we have dipped our foot back into emerging-market corporate, but when we look at equities, it is probably too late because they will be the lightning rod that could develop equities and markets. francine: do you worry about the blowback, jeremy? >> the fed is mindful about all of the external risks, as indeed, they should be. that is one of the reason why

the fed will remain very cautious in terms of their timing. we are sliding more cautious in terms of the fed pathway ford toward 2019 -- pathway toward 2019. neutral and towards being aware there is a deceleration in the u.s. cycle. they want to see how the markets react to that. tom: spirited with interesting moving parts. not only in europe, but worldwide as well. we will continue with our justices. -- with our guests. are interview of the day, we have evidence of the fed and patrick harker of the fed. we have stanley fischer of the fed, the retired former vice chairman of the federal reserve, stanley fischer, a very rare conversation, so look for that in the 10:00 hour.

worldwide, this is bloomberg. ♪ ♪

♪ >> this is "bloomberg surveillance." let's get the bloomberg business flash. the chairman is blitz on brazil even as the election threatened latin america's largest economy. he spoke to francine in london. >> i am very proud of my team. to 20% this year

projected. we have an election coming up. what we need to remember is that the election on sunday is not the end, the beginning of brazil . i see it as a normalization of politics, and have huge stakes and a country i have known for 30 years. taylor: that is your bloomberg business flash. francine: staying with the emerging markets and consumer inflation, it climbed to the highest since erdogan came to power in turkey. we are back with our guests. jeremy, this goes back to what we saw and the lira over the last couple of months, and affect the president or the one does not -- and the fact that president erdogan does not want higher rates. >> it is an element of both.

markets were frustrated when the central bank did not do as great back in july. they were much more aggressive in the last meeting, but in the light of this uptick in inflation, certainly well above what was expected by the market, and seeing rates moving back into the negligible levels. there will be more pressure on the central banks to act. it puts them in a rather insidious position and the strident criticism -- in the strident criticism. francine: does the fed look at turkey? do they look at argentina and try to mitigate risks? >> you have not really seen them link at all. they would view this relatively as idiosyncratic. i do think the politics around it is much more difficult. contrast that with what is going on in argentina. interesting isas

that these two countries, which were the first emerging-market stabilized over the last few weeks. early to get aggressive across the sovereign space. but we have been looking at emerging-market corp. where we do think -- emerging-market corporate where we do think we see that wave of liquidity coming out of those markets. we have been dipping our tell back in -- we have been dipping our toe back in. we stay on the sidelines on that. tom: i want to show a chart, which is what we have seen it so many em. and is turkey inflation, all you have to know is that it stretches through -- deviations. what does it signal when we see

a six deviation off-trend move in inflation? it has ramifications, doesn't it? >> indeed, it does. it is a legacy function of the collapse and the currency and the confidence in the currency. when you contrast that with the rise in oil prices, then it does underline the fact that the central banks do need to act, and it will imply much lower growth. that is a problem politically for the president. francine: jeremy, thank you so much. on "bloomberg markets," the italian economic advisor.

♪ francine: this is "bloomberg surveillance." i'm francine lacqua in london and in new york, tom. let's see what it is trending across the board. malaysia and thailand are in the

race to be the first asian countries to legalize medical cannabis. both countries have strong penalties for marijuana, including capital punishment. germany shows increasing signs of stability as technology brings deep changes to the country. a no deal brexit is pushing the number of japanese investors away from the u.k. authorities are looking into allegations that the trump family created their empire through is to says of outright fraud. andprotest in china -- protests in china. tom: thank you so much. there is a conference after conference, after a conference that wants to be davos. one of them is russian energy weak.

week.sian energy how do light in color help? us from moscow are mr. putin will speak. there is no other issue than $85 a barrel. how has that changed russian energy weak? question, the big elephant in the room surrounding the conference. we have heard a fair price with fair- we have heard a price would be around $50 to $70. know this doesn't sit well with the president of the u.s. the last time the two met in st. petersburg, the president of the u.s. was taking aim on twitter.

now he is saying they are ripping off the rest of the world. and last night, he took aim at the saudi king. pres. trump: would you say saudi arabia is rich? i love the keane caps on of the king, but i said, we are protecting you -- i love the king, but i said, we're protecting you. >> it will be about who has the spare capacity. how much can they make up for the fall? questioning the president of how much the sanctions pushed up the price of oil? >> that's right. they pushed the price of oil up tremendously since he announced those sanctions. and mostly since april 1 we saw -- and mostly since april,

when we saw iran -- those sanctions are set to hit and a month. we have seen production or outright stopped buying from south korea, japan, and india. the one question is china. continue to ask for --vers to continue including and continue importing crude from iran. tom: thank you. here is jeremy stretch to understand the markets. he is here with $85 oil. what is the linkage between $85 oil? contextnk just in the of the previous communication with moscow, it is a case that oil is impacted by the supply reductions we are seeing from the iranian sanctions. and that is driving up prices.

in the subtext of that,, to that will play through into global inflation into 2019? we have seen a substantial uptick in prices through the course of this year. that does bake inflation into the cake. but i don't think you can draw the usual direct influences in terms of the valuations of oil and the u.s. dollar. us. jeremy stretch with right now, first word news the taylor riggs. taylor: a lawyer for president trump says it is 100% false that the president and his family created the real estate empire through incidents of outright fraud in some cases. he was reacting to a new york times report. evadedes set the trumps taxes on hundreds of millions of dollars that prompted new york state tax authorities to open an investigation. accusing -- the

three women accusing supreme court nominee brett kavanaugh. the president attack the credibility of christine blasey-ford who testified last week. earlier, trump said her testimony was very credible. nato defense ministers meet today to discuss concerns that russia is building a medium-range missile. the u.s. has warned moscow it could take out those muscles. the kremlin call the u.s. statement irresponsible. and shares of aston martin are falling and their debut in london. to sports carmaker made famous by james bond films went public in an offering that offer the company $5.6 billion. the ceo andy palmer was not worried about the early trading. >> we have taken 105 years to get to an ipo. i don't think we will worry too much about what the initial shares are doing. we will always look over the

longer term, and our plan and the plan of our ipo is very much a long-term growth plan. taylor: global news 24 hours a day powered by more than 27 journalists and analysts in more than 120 countries. i'm taylor riggs and this is bloomberg. francine: thank you so much, taylor. we are in a delicate phase for the european union with italy under pressure from brussels after the budget deficit target scooped the market, and brexit continues to steal headlines. speech, was called through. joining us is alexander stubb. us a littler giving bit of your time. first of all, how serious is the euro area dispute with italy over the budget, the italian budget?

alexander: it is always serious. it is important stick to the rules, especially when the weather is good only have a tail wind in the economy. i think all the finance ministers are right to discuss this. francine: i feel like i ask every time, but especially in europe, you just became commission president. i want to try to understand how you would counter political populist forces if you would annan -- if you would win. do you need to explain this? alexander: i do think we need to take the populist head on. i don't think there should be a frontal attack, but there should be a discussion. you have to understand the concerns of people. some people are worried about

technology oh available -- technological development. europeanst is we need solutions to solve problems. tom: you have submitted yourself o a trans european -- what form of allies do you need to be selected for this position? haul.der: it is a long it is a primary really, each bu part has its on primary, and then they put forth their commission president candidate. and then in may of next year, you have parliament elections and then all things considered, the largest party in the lead candidate will take over and start forming the next european commission, so the next commission will start the first of november of 2019. triathlon, first

you swim, then you bike, then you run. francine: looking at your twitter page, you are starting your campaign. how are you best able to run the european commission? alexander: from experience. work of the european union and then i became a member of the european parliament, and then i was in the british government for eight years. probably all of the things that tick the boxes. but i have to convince the hearts and the mind of our european party delegates on the eighth of november and we will see how it all adds up. francine: how would you advise european commission to deal with the trump administration, and the challenge of this multilateral trade order? alexander: it is all about values and they are being attacked from the outside, inside, and from within the

party as well. number one, i would try to put the power back to the left of values. that is the basis, fundamental rights, human rights, liberal democracy and the roll of law -- and the rulw of law. you have to do those types of trades. we do bilateral trade agreements. e.u.-u.s. freean and fair trade agreement. against theeing internet. it is best to influence the context. i think my values are quite different from those of the president of the united states. tom: if we look at your public service to finland, if we look at europe moving beyond world war ii, what is your vision for europe? alexander: my vision for europe

is actually pro-european. by that, i mean we need to tackle three big things. one is a technological and digital revolution because i think that artificial intelligence will change. it will change the economy. it will change politics as media. and actually, it will change science and the future of mankind. so we need to grapple with that. number two, we need to deal with security. that is absolutely clear, whether it is internal or external. number three, we need to deal with climate change. so, technology and climate change. -- so, technology and climate change. tom: alexander stub, thank you so much. with wonderful interviews. david rubenstein with jeffrey bezos. he does it again. what a perfect time to speak with mr. dillard.

barry dillard on the future of media. stay with us. this is number. ♪ >> if you are starting your career all over again, what area would you going to? mean, i never really had a goal. i have never said, i want to be that. so, to me, it was whatever i was curious about. >> one thing i like to ask is leadership. what skills do you have is a leader? willfulness --ed blind willfulness. the stronger the well -- the stronger the will

♪ francine: that is the italian at ane minister speaking italian lobby event. he is laying out his thoughts on the budget overall. it started out that he started out by -- he started out by talking about growth. he said the government is aiming to reduce the death -- reduce the debt in line with the e.u., and he is also talking about world growth. is 3%, so if you, -- so if you come up with a budget of 3%, that is in line. finance minister is in a 100% in charge of his

destiny and promised around 2%, which is the market -- which is why the market is difficult with the 2.4%. this is what the markets are thinking and we are expecting more news with him on the report that they will try to please the e.u. a little more after the markets yesterday. on to mr. trump and some of the taxes. one of our most read stories after a new york times article said president trump participated in some pretty dubious tax schemes in the 1990's. those are the words of the new york times, not mine. let's go to one of our correspondents. what do we know exactly about trump's taxes and what comes next? >> these are a series of allegations in this article by the new york times. what they claim is that the trump family, engaged in a

series of tax maneuvers to radically reduce tax bills to the 1990's. the times claims these amount to a pattern of deception that the irs never seriously challenged, but tax experts of the newspaper i talked to said could be viewed as criminal. saysew york tax authority it will take a look at this. there is nothing clear of what they are going to do yet. but what it does show is that donald trump's claims that he is a self-made man were a centrally --yth by the family self-made man were a myth by the family. francine: the new york state tax authorities have opened this investigation.

how long can this last? three months, six months, year or more? >> these investigations could take a very long time. it takes a long time to get documents and cooperation from witnesses. it could be faster if there are documents and the new york times claims they have read through thousands of pages of documents. the new york state tax authorities could have access to those as well and that could speed it up. the trump family lawyer says there is nothing here. that these are all old allegations and accused the new york times of defaming them. there will be pushback on the trump organization. tom: talent, you have lived these really difficult investigations. i read the lengthy article by the new york times carefully, and as you correctly state, there is a partition of the president, a self-made billionaire, but the past of all of these allegations, all of

these facts, it appears, in many cases, is there a statute of limitation for a family, whether it is fraud or not? isn't there a point where you cannot go back? or are we back to the france of the 17th century? [laughter] >> tom, you know i live in france. tom: yes, i am taking a shot at you. ofthere is a statute limitations on criminal pursuits of these allegations. i wasn't aware of this until i read the article, but in terms of civil penalties, there could be demanded by the new york state attorney's office. that is where the crux wood live. they may be able to go after them for some fines. detailsannot convey the in length, i am not an expert. but alan, it seems like they go in and find one transaction out

of hundreds or indeed thousands. or do they do a more broad investigation? what they are trying to do is a broad investigation, but you are right. click they are picking out our specific -- what they are picking out our specific examples. the most egregious ones to try to highlight what they are talking about. when they talk about how they highlight a particular building for loans, or with the way that ownership of a company was transferred from fred trump to his children, they do try to find, as all reporters do, the most telling examples to use in the article to show what you mean. are those the only examples? they imply they are not, but we do not know. francine: allen, thank you so much. bloomberg, a boeing

chief executive is coming up at 3:00 p.m. an interesting discussion about subsidies, his fight with the e.u., and of course, trade tensions. this is bloomberg. ♪ this is bloomberg. ♪

♪

."m: "bloomberg surveillance jeremy, when i look at foreign-exchange and the dollar dynamics in oil, what does the cibc called on dollar? jeremy: we are expecting the dollar story to start to run out a momentum toward the end of the year. we are anticipating a cheapening in the valuations of the dollar in 2019. we are assuming the drove -- we are assuming the growth trajectory will grow. we are assuming the fed will be slightly last -- 70 less activist -- will be slightly less activist. that underpins a stronger european -- that underpins a stronger euro dollar view. we are becoming increasingly mindful of the fiscal dynamics in the u.s.

that is something -- the fact we will see that fiscal pressure starting to become more obvious and talked about. francine: let's bring up the chart. tom: this is different than indonesia, turkey. this is india flat on its back years ago with a roof the -- with a rupee. we do it again here one more time. what have we learned about e.m. flat on its back? jeremy: well, it is very much a case when you have emerging-market pressures, it is a case where investors will look for monetary authorities. we were talking about turkey earlier. turkey had been hit by a lack of confidence in terms of the market structures and political risks. if we can see a more proactive response from the r.b.i., and we have that upcoming rate decision

, we will see the r.b.i. be more activist in dealing with the inflationary consequences of this move, that might start to sway some of the market concerns rupeeing the rise and the , which is detrimental to india's exports. tom: much more to talk about, including important conversations with stanley fischer later this morning out of canada. important conversation out of chicago with charles evans. stay for that. this is bloomberg. his is bloomberg.

♪ tom: this morning, oil sustained. , 80% of imports out of

petroleum. record weakness, inflation will rise. it is wednesday in washington. shows, and onk monday there will be an "kavanaugh vote." thenew york times lays bare path from father to son. good morning everyone. this is "bloomberg surveillance." is francine lacqua. whether italy or the president oiling out, the reality is globally $85 a barrel. francine: this goes back to foreign policy of the u.s. the presidentsy talk in mississippi about the saudi king.

then it goes back to the emerging markets. can it handle $100 oil? does demand readjusts itself? tom: italy with an edge, better data this morning. let me do a data check. equities, bonds, currencies, commodities. elevated futures. brentexas $75 a barrel, just below $85 a barrel. deutsche bank struggling well under 10 euros. stockse: european climbing, rowling on reports the government will rein in spending plans. .sian stocks dropping investors continue to figure out the strengths of commodity

prices and what they mean for india and indonesia. tom: very good. an important conversation. you saw chairman powell's speech the other day. many presidents of the fed across america. is of the most interesting when mr. evans speaks. our guy johnson with charles evans. >> thank you. yes, chicago fed president charles evans. good morning. desk, i checked where december is priced. 72% was the number. function. are you comfortable with 72%? submitted a summary

of economic projections and the median dot was six rate hikes this year. i am quite comfortable with the expected half embedded. i think my own take on a neutral, longer funds rate is 2.75%, so policy at a slightly 3%, 3.25%e setting at would be consistent with the good economy and inflation. >> you like the idea of a december hike? >> i am quite comfortable, yes. we are not supposed identify which dot is ours. >> a slight softening of inflation data, does that

concern you? >> i think the inflation data picked up in a nice fashion, 2%, under, but has improved quite significantly in the last couple of years. we needed to provide enough accommodation so we got to 2%. fine to goetely above 2% for some time. 2% to come average of the above 2% perhaps. so getting inflation to 2% is in this congressman -- is in a congressman. accomplishment. what was your read on amazon's decision to raise its wages yesterday? it is picking up to around $15. from an amazon point of view, it is interesting, but from an fomc

point of view? what is the reasoning behind all of this? trend whereinues a firms and corporations are announcing modest o adjustments to the lowest entry wages they pay to their workers. they have a variety of skilled workers and their firms, so wage growth has been increasing somewhat over the last year or two. we are at 3% now. during the mid-2000's, we were slightlyand have higher productivity. i think that 3% seems reasonable given demand and the economy growing in a strong fashion, as it is now. aboutirman powell talked

the curve becoming flat. i we getting to the other end of the flatness in this process? resource likend is flat, so even though the unemployment rate has moved down, my own assessment is 4%. even with a steeper phil loves curve, i would not expect much of an increase in -- phillips curve, i would not expect an increase in inflation. my own forecast sees unemployment falling to 3.5% before it picks up more towards a sustainable rate. easily inflation could be 2.1%, 2.2%. it is the fact expectations are anchored a little too well. i think they could be higher and be better consistent with our symmetry around 2%. the inflation outlook seems good. >> jerome powell in boston last , the u.s. economy sounds

on was too good to be true. is that the case? >> fundamentals are strong. strong labor markets, the payrollment rate, inclement growth month after month average around 200,000. that is a strikingly large number. were only replacing incoming workers into the workforce, we would expect month.to 100,000 a it continues to be strong and we are adding 200,000. something good is happening with the labor market. finding work,e increasing their attachment to the workforce. that pay strong dividends going forward. >> picking up on the goldilocks theme, asset prices. the last two recessions were caused by asset price bubbles.

are there asset prices out there that you look at and think things are getting a little top py, the dow hit a record again yesterday. >> we have seen quite a lot of change in public policies. there has been quite a lot of deregulation, which is beneficial for businesses, so they have been optimistic. naturallyis supports stronger asset valuations, and we have seen that. you point out the last two recessions which were preceded by high valuation peaks, and i would say they were each different come because in the 2000 stock market peak when there was a decline from the tech bubble, there wasn't a lot

of leverage embedded in the economy, so we had a mild, but prolonged, recession. a different story because there was so much leverage embedded in the system. leverage is not that big of a concern at the moment. i would say risks are moderate. these are valuations that could will stay around. can i ask you whether you worry about italy? part and parcel of the narrative over here is the narrative about what is happening. down, you talk about what is happening globally. the international situation does impact the domestic focus. how far off the list of concerns

right now does the international story sit, and what part of that is italy? if there was to be a problem in italy, would it delay the ecb, impact euro-dollar? makers,monetary policy the fomc, we are always looking at the international environment, here, the situation -- europe, the situation in the u.k. is of interest. every aspect of the european union economy is interesting. growthger story is around the world is good. of strength -- on strength of the u.k. economy. every country has their own challenges. i come from illinois.

we have our own tension challenges, and how that gets dealt with is more of a know how tohen i appreciate from the standpoint of the u.s., but it looks like financial markets are handling this. >> you could argue the potential not to leave the united states, zone.o leave the euro you talk about the effect of brexit. what is your assessment of the effects? what could a hard brexit deliver for the uk's economy? >> it is difficult to say. looking at the state of where the discussion is, it seems well poised there could be an agreement and maybe things go

well. certainly the economy in the u.k. seems like it is strong. i have seen the forecast and the inflation environment, so it looks pretty good. have had trade discussions and renegotiation of nafta. it is a difficult thing to watch. the outcome seems to have been pretty agreeable, so in the case of brexit and the eu, it will work out as well. the link between brexit, trade, and the u.s. >> let me wrap up the conversation with the united states. massive 2.0 seen a usmca. what is your assessment of the economic impact that evolution will have? closer to illinois than italy di.

>> it is latebreaking news. elementsas if many tpp were rolled into resolving a couple of other issues, so i ,hink the auto import situation there is some content adjustment there, but it does not look like that will be a tremendous challenge. on balance, it will continue to be quite positive for all three countries, and businesses that have arranged their supply chains crossing the border ifularly, it was a big risk that was to be altered in a way they had to move their operations, so that relief is welcome. >> you don't see this having a significant economic impact? >> there are benefits as to what a free trade agreement means for the larger area and whether that could be extended to other countries and allies that would

be envision with tpp, that would be a benefit. >> china is the next question. what is your assessment of the aonomic impact that china and trade war with china is having? it looks like it is starting to show up in some of the data, showing the effects of that going through. do expect the affected to increase? ultimately see this being resolved in terms of the way you are planning and modeling? >> tariff issues are quite complicated. you can easily imagine individual businesses are affected in a strong way. are using steel as an important part of your production process, prices have gone up dramatically, but in terms of its overall effect on there wereonomy, if

a permanent rearrangement of activities that would reduce the effect on growth per se, there would be a a lot of losers, some winners, but growth would only be diminished by a few tenths of a percentage point each year for a time. it is always difficult to get a handle on that. it affects a number of parties and the different way. economy wide, it is not as large. china is an interesting and complicated situation. i can understand the trade thetionships we have and supply chains put in place, but the issue of how you deal with ip protection is a big one. it is so big that i often go, that is not what i know for proper advice, but a big heart of their conversation seems to be aimed at getting the attention of each party to

address that in a more productive way. typical wto negotiations drag on for years and years. the current approach is geared toward something happening much more quickly than that. renegotiationa has taken place in the timeframe that it has come a may be something will work out. >> maybe something will work out. just to come back to the economics of it here he talked about the impact -- economics of it. you talked about the impact of growth. the inflationary impact is? >> probably modest. it usually would find itself into relative rise changes. relative price changes are not inflationary necessarily. i think we could take that into account and focus on our inflation objective over the medium horizon. it would be fine. >> thank you very much for your time today. charles evidence joining us.

back to you. >> guy johnson with a great interview from charles evans, chicago president and chief executive. some headlines coming in from italy. this is in the way of concessions from the eu. it is pretty much priced into the market, although i would love to get a euro check to see if there is further movement. is speaking to the business lobby, saying the attack government is committed to cutting debt towards the eu objective. it depends on whether the market believes him. he did promise to percent. you can see euro at that level. tom: very good. to follow on this conversation with charles evans, then stanley fischer later this morning.

our guest joins us now. it is wonderful to have you here . do we know the reaction? charles evans has always been an idiosyncratic academic with a real humility about the functions of what is going on? >> i agree with everything he said about the rate hike path of the fed thinks it is on. it is next that things get more fuzzy. raisingpy with the fed rates three times next year. some issues are uncertain. know.riffs, we don't the 10% tariffs on $200 billion is going up to 25%. we have the threat of further tariffs on the remaining $270 billion. that is a real wild card for growth and inflation. >> are we wrong so far?

dothe old days we didn't this. we looked at december, and that was it. why do we think we have dots into the summer of next year? mario draghi did that with one headline on the bloomberg. >> gtv the fed -- >> the fed gives us the dots. it is impossible not to be drawn into the discussion how did they get them. i welcome the transparency, but and reduce a conversation about how we should take them. leastk they will get at three next year. they might get four or five. two.s are like one or so we had this bunching of use where the fed is, but we have these unknowns because the tariff situation is such a wildcard am a plus the labor market. it is in great shape.

it is not threatening the inflation forecast. the middle of next year, it might be, because maybe that labor markets to looks curve is getting steep. amazon has demonstrated that clearly. the scarcity premium for labor is rising. productivity growth is rising, inflation is higher, maybe we will see higher wage growth in the fed wants to see. francine: do you worry about a policy mistake or the markets miss pricing that, dollar strong and contagion to emerging markets? >> i do. i would not call it a mistake from the fed's perspective. is the bac feedback , which markets don't, which markets don't trust, the leadership, the current account the picture. em's are at risk if the fed is

raising rates. 'sfortunately i think the em in trouble now will be in more trouble down the line. i am reasonably confident the fed will do as much as they say they will do. for someplace that's going to be very difficult. francine: what is your take on italy? should we trust the finance minister and what he says? >> to try and comply and comply and comply are not the same thing. they are encouraging noises. the 2% number is what everyone wants. on the face of it, this is a welcome development, but the devil is in the details and the execution is more important than the intention. intention is the first up in the right one, so happy for now. francine: until what? are you expecting more volatility in italy? click italy have an existential question about participation in

could italy have an existential question about participation in europe? brexit allnot 2016 over again, where there was significant public support. in a deadly come as support for leaving the eurozone is 30% or less. this is an issue that will not go away. i don't think there is a head of steam that would beat me to lose sleep over a fundamental breakup of the euro. wouldleaving the eurozone be a catastrophe for italy and everyone else in the eurozone. it is unlikely at this point. tom: where are we in terms of global growth? we have the economic outlook next week, widely speculated to be a markdown and growth, but then we have other interviews that say things are ok, not bad, but then all of a sudden oil is $85 a barrel. instability into

that underpins all these conversations? >> that is a real risk because the oil story plays out differently depending on where you look. the u.s. now response to higher oil prices positively, because the gain in the oil business outweighs the hit to consumers. tom: in the u.s., not india. >> absolutely. if you are an oil importer, you have a problem. this is a new thing for the u.s. higher oil prices are now a positive because of the immediate response in the shale business to the prospect of making more money. , the story is the same as it ever was. if you are a net importer and prices are rising, you have a multitude of problems. willans central banks probably have to raise rates to dampen the risk of the currency,

which has weakened substantially, and it will be painful. it is not because they have done anything wrong on domestic policy. they are at the mercy of the fed in the oil price. at $75 for wti and 80 field dollars for brent, this is a difficult position. francine: is there a price to perfection here? if it goes higher, maybe it will hit demand. to $95 maximum because the market will readjust itself? >> there is a redistribution of income around the world, so there becomes a point where it becomes painful for oil consumers. the hint to oil consumers globally tends to be more negative than the gains come in because the producers don't spend all the money they are making, so we get a slowdown. this is coming at a time where the global industrial cycle has peaked.

pmi's around the world have peaked. they are stable, but not rising. goes, as the global cycle this is a good place to be. if you have been looking for further incremental improvements this year than last year, that was always going to be tough because last year was pretty good. now as not revealed plausible to go to a better place from here. saying not the same as the developing economies are about to rollover. i don't think they are. markets, especially in europe, were looking for italy to be better. that was never realistic or the rising oil prices will make that more difficult. francine: overall, what does the price due to the economy if it goes to $100 question mark >> in spending more capital in the shale business and higher gas prices. the net effect will probably be positive.

in 2015-2016, oil claps from $100 a barrel to $25 a barrel. wth slowed.o , it is bad, but for the u.s., probably a small positive. ian shepherdson. coming up, a conversation with patrick parker, president of the philadelphia fed. the linkage here to the complex industries and manufacturing of history strict. please stay with us. a beautiful new york after the rain, this is bloomberg. ♪

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the u.k. prime minister will speak shortly on the final day of the tory party conference. may toexpecting theresa lay out a positive vision of what the u.k. will look like after brexit. willo weeks, theresa may talk at other eu leaders about her brexit plans. while she is expected to compromise on the customs union, wanteurosceptics will assurances she is going in the other direction. let's get to first word news. taylor: a lawyer for president falsesays it is 100% trump and his family created the empire in cases of fraud in some instances. a new york times article says

they evaded taxes on hundreds of millions of dollars. president trump is turning up the pressure on one of his closest arab allies to curb rising oil prices and pay for military protection. the president said saudi arabia's king might not last two weeks without u.s. support. another case where the u.s. protects origination and is not get reimbursed. buildingthat russia is a medium-range missile that violates an arms control treaty. the u.s. has warned the kremlin that it could take out those missiles. the kremlin call that state irresponsible. from the u.k.s -- from america and

one britain were honored with the nobel prize in chemistry. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. tom: thanks so much. francine, this is extraordinary. andscience prices come out we look at the nobel prize in economics on monday, but this is extraordinary on chemistry. she is a giant in the industry. vibrant, aech, breast cancer survivor. another out of the midwest of the united states, very quiet. he is the guy that took antibiotics are mammals and mice

-- and animals and mice and brought them over to humans. he is a giant it cambridge. the nobel committee nailed this award in verona g today. kevin cirilli is looking at washington. how will the new york times bombshell piece be taken in washington? it fits in the narrative they have used to attack the president. essentially the president not taking this too seriously. it potentially becomes a midterm issue and poses a smaller political risk for him and the state of new york. tom: i went through the thousands of words and tried to pick out the lines. the morning must-read.

mr. trump won the presidency proclaiming himself a self-made billionaire. he helped his parents dodge taxes. it is unlikely mr. trump would be vulnerable to criminal prosecution by helping his parents evade taxes. , quiet sentence at the end "the father took care of everything." they really emphasize this is in the past and not that big of a deal, but what a distraction? definitely a distraction. you noted the correct part, unlikely to face prosecution. it doesn't measure up to the

mueller probe or the kavanaugh proceedings. where are we on kavanaugh? i have 18 articles and i am being bombarded on both sides. waiting for the fbi to complete their investigation. mitch mcconnell said this fbi report not the released to the public. he said the senators will review it independently, make their assessment, and shortly thereafter the senate majority leader will push to have a vote. investigation will not be public. folks will not see the completed report. the tone from the majority leader indicates there will be a vote this week. francine: when this week, and how is that eating taken -- being taken? there is a small fraction

. like joesome someone manchin of for a tough reelection that the president carried in the last cycle who are also on the fence. we don't know when the fbi will conclude its investigation. and the apy leader reported they interviewed mark judge. we are in a holding pattern. tom: thank you so much. kevin cirilli, our chief washington correspondent. we are waiting for prime , waiting for the prime minister. book on trade is

extraordinary important, failure to adjust. ian shepherdson with us as well. great book. , important book on our trade history and path forward. i love what douglas or when of dartmouth said -- erwin of dartmouth said. nafta 1.1.ok, it is isn't it nafta 1.1? >> may be 1.1. mexican negotiator called at 0.8. there were some modest tweaks over all. this does not change north american commerce in any fundamental way. every concession president trump got appeal to democrats and organized labor.

he brought home a deal that would have been hard for democrats to do them a but business and his own party will be on board. this move straight in the direction they have been demanding. name debate?ut the everyone is having fun with it. , free north american trade, and now a spoof on the village people song. of this soup affords we have got? >> it is pretty funny. i think there is a purpose. nafta is a four letter word in the american discourse. i think you give it this and a dime acronym that nobody can pronounce and you take some of

the steam out of it. think this is all trying to downplay it. francine: does the usmca help or hinder president trump or the republican efforts in the midterms? >> i don't think it hurts them at all. cane are constituents we point to and say there is some stuff we have done for you here, particularly the auto workers. i don't think this plays , andnently in the midterms the big fight with china is still on the horizon. that probably drops after the .idterm if the democrats take the house, political different

calculation, but not probably going to affect the outcome of the midterms. francine: how could the kavanaugh hearing affect the midterms. >> you are asking me of big picture question. i honestly don't know. it has energized a lot of folks on the democratic side, but that was there before you have this error -- outpouring of new candidates. enthusiasm andof this has become a bitter divide with democrats and republicans looking at it in different ways. will mobilize both sides. elections these days are about getting outer voters. thank you very much. let me tell you about an important interview. we are waiting for prime minister may's comments. created therks has must read book.

mastering market cycle. 's really looking forward to that. this is bloomberg. ♪ is is bloomberg. ♪

>> this is "bloomberg surveillance." i am taylor riggs. the dividend at the highest forward is 2001, yielding 7.9%. some are concerned the company may have to pare back the payout. ford insists it won't have to do that. microsoft is coming out with upgrades to its tablets and laptops.

the updated surface tablet and laptop have faster processors. the desktop computer comes with a brighter screen and improved graphics processing. chairman very dollar talks to david rubenstein about his career and what he would do differently, if anything. >> today, if you were starting your career over, what eric would you go into? -- area would you go into? >> i never really had a goal. i never said i want to be that. i wasme it was what curious about. people i like to ask about his leadership. what are the skills you had as a leader? >> often blind willfulness. will ihe stronger the

that at least allows people to follow. all of thatatch interview with very diller tonight on the david rubenstein show on bloomberg tv. that is your bloomberg business flash. francine: thank you. we are waiting for theresa may to speak on the final day of the tory party conference in birmingham, expected to paint a rosy picture of her efforts to reach a brexit deal. we heard from boris johnson saying we should support the prime minister, but not an "deranged checkers plan." ian, last year at the party conference, theresa may had a difficult speech.

it is amazing she has lasted a year. does it mean she will last until the end of brexit negotiations? no one really wants that job. >> it is the worst job in the world. it is amazing how many people want the worst job in the world. the problem is getting their hands on it because the way the conservative party elected leaders. boris johnson wanted the job badly. they have to get sufficient support from parliamentary colleagues to get to the vote among the party membership in the country. they don't have that support from their colleagues, so they are leaving theresa may dangling. theycould topple her, but are not sure one of them could in thisher, so she is limbo where i don't think she can last much longer, but for now suits all sides to have her twisting in the wind rather than one of them. they will say paralysis and

depression of business investment is weak and generally an awful mess. is it impossible to know what kind of brexit we will get. there are something like 10 options on the table. canada, not canada? >> somebody has to blink. is the u.k. government will blink before the eu blanks. they will end up at some kind of within theto keep us european trade structures more or less indefinitely without coldstepping out into the world, but that is not certain. possible that the deal that most parliamentarians want is not the deal that

happens and we wake up one morning and we have crashed out. unclear how we get to where we need to be. tom: the fringe right tone is about 18% of the public. that boris johnson does not have that much support among the assembled in birmingham. what support does he have with the british public, 18%? 's support is within the conservative party, but not the conservative mp's. you have to get past your colleagues before you can put your case to the conservative part of the country. enough to be a sustainable prime minister. tom: let's do surveillance math. >> it's not clear because the question isn't being asked at

the moment. asked his college before he can face the country. his support is deep, but narrow. most people who have worked with him don't like him. you notice, francine, they clap in birmingham the same way they do in beijing. francine: i think they clap the same everywhere, don't they? tom: it doesn't change. they just keep going whether they love you or hate you. francine: you have to clap to show your support, but without doing too much noise, a very british thing. i don't know whether the chinese took it from the british, or the other way around. we are awaiting the prime minister to address her party conference. you can see it there. they are calling for unity for the conservative party, which is

what most strategists say they need. coming up, plenty more on and theon italy interview with the boeing chief executive. this is bloomberg. ♪ this is bloomberg. ♪

tom: good morning. "bloomberg surveillance." prime minister may speaking of the global business form as she moves back to a more acrimonious audience in birmingham, u.k. right now a single best chart. we will segued to the brutal where twohepherdson, or three deviations are normal, and six deviations now. social.ut this on this is turkey inflation. it is normal. it is five. then you rationalize 10% or 12% and you are out six standard deviations. the nobeldicine, prize in chemistry, or economics, it ain't good. >> that chart captures

everything wrong with turkey. tom: and india, indonesia? 's this is what happens in em when the fed is raising rates. tom: when does chairman powell ?lank -- blink not 2015 where wobbling china makes the fed cause. they keep going. em'smeans the pressure on continues to ratchet up and makes life difficult for the people who lived there and policymakers as well. deviations,ndard eight, 10 standard deviations, i don't buy it. who keep score with the indian rupiah? i don't. i note that is an ugly number. what does powell do? he has to bink.

isi don't because employment 3.9% and dropping like a stone. em is now on its own, i'm afraid. ♪ tom: francine, translate the dance, please? francine: they are clapping. theresa may is walking on stage. queen" by abba. it is quite something. it is jubilant to see theresa may. signaling everyone to settle down. >> thank you very that warm welcome. can i just say you will have to excuse me if i do cough during the speech? [laughter] i have been up all night super

gluing the backdrop. [applause] you, i suppose if anything happens, i could just borrowed the voice of jeffrey cox. wasn't that fantastic? [applause] are some things about last year's conference i have tried to forget, but i will always remember the warmth i felt from everyone in the hall. you supported me all the way. thank you. [applause] this year marks a century since the end of the first world war. just a few hundred yards from this conference center stands a hall of memory built to honor

the sacrifices men and women from the city in that terrible conflict. in scribed with in it are some familiar words. sun andoing down of the in the morning, we will remember them. we do remember them. the young men who left their homes to fight and die in the mud and horror of the trenches. we remember the sailors who shuttled whole into hellfire furnaces in the bowels of battleships. we remember the selflessness of the remarkable generations whose legacy is the freedom we enjoy today. grant. a few but my father's cousin in whose honor he was named, he fought and died at passion dale at the age of just 19. last year at the service to mark

this into nearing of that battle i took a moment to find his name on the gate alongside thousands of his comrades. we will remember them. [applause] but the builders of the whole of memory also wanted us to do something else. alongside a commitment to amember, they in scribed command that still calls to us today, see to it that they shall not have suffered and died in vain. those words express a determination that transformed our country, a determination that the men who returned from the quagmires of passion dale to birmingham and across the land

should have homes fit for heroes, but the women who kept ,he buses and trains running serviced firefighters and police officers, should have a voice in our democracy. inountry that stood together solidarity with people of every class sharing the danger should become a fairer place. a generation later, another victory built on shared sacrifice renewed that determination. twice in a century britain came together to beat the odds and build a better future. where everyemocracy person no matter their gender, class, has an equal voice. a fairer economy -- ♪ >> the deputy prime minister of

italy confirms they have discussed ways to lower the budget deficit targets. dancing queen, theresa may bogeys on stage at the tory party congress while analysts see an 8% selloff in sterling on a no deal brexit. jerome powell highlights the economy and shrugs off inflation fears. >> welcome to "bloomberg daybreak." impressive.y we got dancing queen in there very quickly. that was just a few moments ago. >> what would be your theme song? >> it goes from dancing queen to world war i. >> that is a tough turn. that is a big tone changed. all about the future d