>> cybersecurity selloff. sales of lenovo slump after china infiltrated almost 30 u.s. companies. 10 year hovered new seven-year highs after investors wait on payroll numbers. the consumer goods giant backs down from a plan to move to the netherlands, bowing to shareholder pressure. hello everyone and welcome to bloomberg surveillance, i'm francine lacqua in london. we have a lot of news, just trying to digest the week that was.

in my mind, it's all about the u.s. 10 year yield. we saw a big repricing so it's the u.s. job space that's what happens next. currently the unit 3.21% and it could also move dollar. dollar has been rising and will change is china reopens today? i don't know if it has so far but it could on monday. you can see the stoxx 600 a little bit lower. coming up on bloomberg surveillance, we talk commodities. our guest joins us at 10:30 a.m. u.k. time. we will talk about commodities. this get to the bloomberg first word news. the u.s. senate will vote on a procedural vote for judge jet -- judge kavanaugh later. a single copy of the report was made available.

democrats say the white house restricted the inquiry were republicans claim the allegations have not been corroborated. set a senate should not fundamentally un-american precedent here. right to basic's fairness does not disappear just because some disagree with his judicial philosophy. claimsa has hit back at by the u.s. of election interfering. the allegations are unwarranted allegations that slander china. mike pence of the country was tempting to sway american public opinion on tariffs and a propaganda campaign. china security agencies have masterminded the wholesale theft of american technology. including cutting-edge military

blueprints. technology,till in the chinese communist party is turning plowshares into swarts. swordsssive stash into on a massive -- turning plowshares into swords on a massive scale. the u.s.esent has said will do extensive cyber operations of their own. separately, to democratic lawmakers says the report shows the risk of chinese cyber as cannot to america. u.k. starting salaries through the fastest pace in more than three years in september. it made it higher -- harder for employers to find enough qualified candidates. job vacancies progrowth permanent integrate physicians rose during the month. hourly pay with temporary workers gained at a faster rate

while demand for medical care professionals grew as well area european union financial regulators are stepping up plans to avert a market meltdown. the european central bank head ucb --rvision says the the ecb is ready to help with brexit no matter the outcome of political negotiations. she is not alone in the chairman of european securities has called on brussels to guarantee blocked is not lose access to london's clearinghouses. the philippine president says he ,s not certain he will continue showing a readiness to step down if he has a serious illness. he is waiting for the results of medical tests after a recent hospital visit. he is admitted suffering digestive track problems, migraines, and other issues.

news 24 hours a day on air and at tictoc on twitter, power by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs, this is bloomberg. stops -- asian tech stocks have slumped after a bloomberg report about china hacking america using microchips. the index at the lowest since july of last year and lenovo l the most in's february 2014, dropping as 2%. this bloomberg story is your pulling through the tech space. alex, what this is actually mean? are we going to see this production shift to the states? is it too soon to tell? >> it's probably too soon to tell.

there's a lot of chip manufacturing in the u.s. but as we've seen, it extends very deeply back into the supply chain. it's hard to switch and all the sun manufacture chips in the u.s.. has enjoyedpple such excesses because they are able to manufacture chips at such low cost in countries like china and that is not an economic model which is very easy to turn on its head. the company still able to maintain that's financial success. francine: i have a great chart looking at chinese tech stocks. is this link to trade? how much does the existing trade standoff have to do with this? performance has to a trade so i asked you if the -- i thought for a moment if you're asking if the story has to do with the trade story. much to do with importing electronic goods and

u.s. goods into china. these things are produced in special economic zones which therefore pay tariffs over the border. the whole nature of apple's supply chain are ours numerous crossing of orders others components a rate -- components over a period of weeks and months. accelerating the cost of that minute -- manufacturing process is a huge threat. tiertends way back to the 1, 2, and three suppliers. you look at semiconductor stocks, they seem to have already been under pressure. that thislot of talk demand for chips has peaked. concern about growth and there is a concern that more and more competencies are being brought in-house by

the likes of apple and they can , taiwanmeone semiconductor, to manufacture for them. pressure on the margins for the likes of intel and qualcomm and broadcom and others. given the huge chunk of cash that apple is sitting on, there is no limit to their ability to do that. beenig growth area has microchips in this is right the center of what is in the bloomberg story. we have seen the pressure on smartphones. it now shifts to servers and it's not something they will be happy about. francine: thank you so much, alex webb. the dollar has made its best run of 2018 initially been one week in the past 15 months with the dollar was higher. role inons played a key

allowing dollar appreciation back in august what now that .hina has returned from holiday really cool off the dollars advance? that is are in life question of the day. you can log on to mliv and join the conversation. will the dollar rally die when china returns from holiday? this is what we need to talk about with simon french. there's a lot going on. we are looking this selloff in tech stocks, we are looking at china returning to the markets on monday, what that means for treasuries. what do you see as the biggest story? simon: i think the china stories huge. most investors probably came to the conclusion that after november midterms, the dynamic between the u.s. and china on trade rhetoric would start to be dialed down. that was a fairly consensus view heading into the middle of the

year. this jets fans on another leg, the story that bloomberg broke and mike pence's speech. the statements for moore junior officials in the u.s. administration suggesting this is far more structural than cyclical. this is in one president with one agenda looking to rebalance what has been an economic war that china has one versus the u.s.. it's much more embedded within the way business is done. long data and that's why things the most important story. focusing if there are on ip, they would have the backing of the europeans. is it for political reasons? could it actually get messy? do we see nafta 2.0 showing that the u.s. could actually cool dominic comes to trade tensions? simon: it's an interesting point. itself, a place to

the fact that the battle between the u.s. and the eu is not gone away. it's gone out of the headlines for a few weeks but there's an expectation amongst european union policymakers at this will all come back. they are cautious and where they will position themselves. it's a three-dimensional chess game on trade. and why you cannot read too much from the nafta scenario through two the conflicts between the u.s., china, and the eu and it's one of scale. come to the mexico table, it's because they have to because of the relative scale. those blocks in china don't have the same pressure. will the u.s. treasuries continue in a what point does start affecting the broader market. simon: let's take a really short term. wages are expected to be a little bit lower.

i think it will take some of the heat out of the short-term rally. on the longer-term view, i've done the analysis to look at when yields start to be destructive for corporate earnings in the u.s. area and to go out and borrow, companies on average taking projects. i think it starts on the long end of the yield curve. we are 3.2 and i think that's worrying. i don't think you'll get to for this year. that spread we keep talking about between u.s. treasuries and the rest of the sovereign bond space will could you to hold back that appreciation. it just the rebalancing of portfolios are is a part of a trade war? -- or is it part of a trade war? it's not a one-way street for china in terms of retaliation through treasury. it needs treasuries given the level of u.s. dollar denominated corporate debt in the chinese

economy. it also doesn't want to put too much pressure on u.s. households. they are the big consumers of what china exports. play, igeopolitical to bethink it's going defamed because as penalties in the tail. francine: he stays with us for the hour. we will be joined by janus capital fund management bill gross. we will talk jobs and jobs day and wage increases in the outlook for u.s. bond yields. this is bloomberg. ♪

francine: economics, finance, politics, this is "bloomberg

surveillance." let's get the bloomberg business flash. >> unilever has abandoned plans to consolidate its headquarters in the netherlands. this comes after mounting opposition from u.k.-based investors. the company said they recognize the proposal has not received support from a significant group of shareholders and therefore consider it appropriate to withdraw. lenovoand pewter maker have slid the most in him as the decade. that's as investors digest a bloomberg report that beijing had hacked computer networks by a microchip. mike pence criticize china across economic, commercial, and diplomatic fronts. elon musk has mocks the sec days after settling with the agency.

in a tweet referring to the sec as short seller in richmond commission, musk wrote sarcastically that the regulator was doing incredible work. an agreement he reached with the agency which is not final would are him from serving as chairman for three years as punishment for problematic posts he sent about taking tesla private. francine: thank you so much. the controversial budget plan of italy is hanging on a view of the economy that could be too optimistic. a week after releasing an coalitiontimate, the unveiled the figure that underpinned the aim. in 2019growth of 1.5% followed by 1.6% and 1.4%. it paints a far rosier picture than forecast. join us is bloomberg's rome bureau chief. is the italian plan realistic?

>> economists say it's not completely insane but it's very optimistic. targets, no analyst has it that high. the government says it will be able to implement a wonderful plan that brings growth to italy. the problem with that is a lot of what they are doing doesn't really boost growth that much. they are lowering the pension age, they have the beginning of a citizens income for lower income. that's great in the government thinks that will boost spending but historically it has proven it doesn't make a huge difference. there are some tax cuts but not as big as they hope initially. overall, very optimistic targets from this government and that is concerning the market somewhat. what happens next couple of months? , and those viewers

and listen on radio, the coalition is quite an uneasy one. it's a different agenda if you are a five star or the other party. >> that's why we have such difficult -- they have such a difficult time with the targets in the budget. these are parties thrown together to form a coalition because there was no other way. soy have different agendas implement in two different programs. prefers low income earners. that's a lot of spending going to the budget. what happens next is they present the budget to the eu. the eu will look at it and where already hearing noise from the eu that they are served. the debt will remain high despite targets lowering the debt. that's a lot about the budget that doesn't quite square out. they don't think

it's reasonable and then italy can just go ahead and do it in -- anyway. they are free to do so but then there'll be more problems with the eu and the market area and that's what we are expecting for now that we won't get an actual letter from the eu until the spring. it's a slow process and that might give the government some breathing space. the analysts don't think anything will happen until after european elections so they are stuck together until then. then who knows, we may see the coalition maker. francine: thank you so much. bloomberg's rome bureau chief joining us from the capital. once next? , simon.th us you are not really a market skype. -- the markets guy. economy of at the italy, does the plan make sense?

simon: go back at -- look at the last 20 years. of growth in the italian economy, to expect that to quadruple by the end of the decade, suggest a big transformation. you are either getting a large fiscal stimulus or you are of changes weort haven't seen for the last two decades. from that perspective, i think it's inconceivable. we have been focusing in the last couple of weeks if it's two and a half percent, 2% deficit, the average deficit in the italian economy has been 3.1% of gdp. even these proposals raising eyebrows less stimulus in the economy has faced on the last 20 years. putting that altogether, it makes the think there is a face-off looming here between the italian government and the

eu is at this stage in the cycle , the eu, with a hundred 30% -- with the debt and italy, they want them to be running a balance are surplus. -- balance or surplus. francine: does the italian economy, because it is export led, rely so much on europe and the rest of the world that you could see at least 2% increase if the world were to stay where it is? say there're right to is an output gap. yes you get above that point in growth. quiteou saw in 2017 was exceptional, both in the eurozone area but also the global level. we're on a seeing the impact on trade volumes. i think it's difficult to expect

that trend, that materiality to continue. i think it is come down to a debate over whether the italian government can use the leverage 2027 eueed on the budget, if they can use that as leverage secure a better deal. francine: we are just getting a headline from the italian news agency, the deputy prime minister saying that jean-claude juncker ruined europe. andy ruined italy. -- and he ruined italy. it only will receive the elections when we have an idea of italy was to stay in europe or not? simon: it's a scenario making investors very anxious and i think rightly so. from aa long way away particular government's in italy. actually saying we want to leave the eu. for the simple reason that i don't think it's commands

widespread popular support. it would be hugely damaging. i think we find out a bit more when we get to parliament elections. i would caution in a strong message from that. people use those kinds of votes to protest, it doesn't necessarily pass through that they want to be governed like that. they know the impact is fairly secondary to their lives. euro weakenes the or strengthen? i have heard 50-50. simon: i think it weakens. you know my views have been bullish on the dollar all year and i haven't changed my view. also, mario draghi, we haven't spoken about him and what his role handed over to his successor. will have to push

out to the right the pathway to normalization which will take some of the money off the table. who were you expecting to replace mario draghi and does that make a difference? should we assume that whoever takes charge will keep its same for at least a year? simon: i will give you the boring answer. i think the germans are continuing. i think they want it. have luckily gone on with a qe program that is taken longer and seen a greater skill they feel comfortable with and the quid pro quo is they get the next governorship. i think what you see going forward is a policy environment that remains broadly agnostic to the present of the central bank because as grand coalition, the governing council, done by majority vote. don't think it's as

presidential as the title suggests. francine: betting on brazil as voters had to the polls on monday. what does it mean for latin america's biggest economy? there's a view that it is idiosyncratic if you look at turkey come if you look at brazil and venezuela, argentina too but it all goes down to what the fed and dollar does. u.s.ill get back to the jobs report today and i think that will be very significant. this is bloomberg. ♪

francine: let's check in was

trending on the bloomberg universe. $16le are lining up for the million jackpot. chinese spies allegedly infiltrated 30 top u.s. companies by installing a tiny microchip on hardware. the 385 local savings banks could bring trouble to the companies -- countries economy. elon musk trucks the sec. let's get more on that unilever story. join us as eric, the team leader for him european news. it's great to see you. why the idea to abandon the plan? eric: their shareholder opposition to this. there are fund managers speaking out more strongly against this,

10% of shareholders had already said it they were opposed to this. it seemed like there was no way for them to ram this through. they faced losses on holdings potentially when they had to sell them because unilever would have dropped out of the benchmark u.s. -- u.k. stock indexes. francine: what does the safer the chief executive? eric: it's a big embarrassment for him. he is already on his way out potentially at some point because they started a search for a replacement. this was going to be his crowning plan, to cap off his career. now he's got to back down and climb back on this. of it doesn't look good for the board really. reshape their agenda and come up with a new strategy. tom: -- francine: thank you so much.

we will keep an eye on what happens. let's get straight to news with taylor riggs. taylor: the u.s. senate has to a make or break vote on brent kavanaugh earlier. they digest and in the get -- investigation into sexual assault. a single copy of the report was readingilable with some the contents. democrats say the white house restricted the inquiry while republicans claim the allegations have not been corroborated. set a senate should not fundamentally un-american precedent here. judge brent kavanaugh's right to fairness do not disappear just because some disagree with his judicial philosophy. taylor: beijing branded mike pence is allegations as unwarranted accusations.

in washington, pence said they were trying to play american public opinion using tariffs for a propaganda campaign. >> chinese security agencies of masterminded the theft of american technology, including military blueprints. technology,tolen the chinese communist party is turning plowshares into swords on a massive scale. saysr: the white house this validates the emphasis on extensive cyber operations of its own. that's after we reported they tapped american computer networks using a microchip. espionage shows the in america. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries, this is

bloomberg. prancing? francine: thank you so much. brazil has to the polls to elect a new president with investors hoping they can fix public debt and the economy. with the leading candidates fighting, there is a risk that a divided congress will struggle to implement policy. she has faith in brazil. team,very proud of my result is close to 20% this year. those are the objectives. we have an election coming up. the we need to remember is action on sunday is not the end or the beginning for result. i see it as a normalization of politics. i have huge faith in the country. francine: let's next for brazil?

still what this is simon french. i just don't know how you fix brazil. you have 13 candidates. then we get down to two candidates. that will probably be a far left and far right candidate. what do they need to do? what should the priorities be? simon: i think they have different views, but the common thread you are looking for is the corruption that is undermined the legacy of the administration. it has to be weeded out and it provides a confidence. people in the emerging markets are starting to differentiate between the basket. it's been under pressure for the last three or four months. you start to look

idiosyncratically at what countries are making progress. when you look at the brazilian economy, are they making progress? francine: what questions should you ask yourself? dollar debt is one. are the dependent on oil? simon: self commodities are a big part as well. when you look at the brazilian economy and how well diversified is it across asset classes? is it brazil -- dependent on a commodity? there are mixtures in that. there has been a diverse story in terms of price action this year. that has helped brazil with multiple export earnings. thing that ape of more discerning investor is looking for. it's the geographical

opportunity with some diversity in between. francine: they are a huge farming country. can they rival the u.s. because of the trade war? is that one of the effects? simon: one of the things we have not heard from the u.s. thenistration in respect to canada and dairy farmers. campaign inthe november does the trump administration shift to whether fair trade is taking place from the south. that will be very damaging for brazil. point, it's a component part of a diverse set of asset earnings. you could remain optimistic if it shifts temporarily on to another part of the market. francine: do you worry about contagion? you saw little bit on the

emerging markets. turkey is definitely a contagion on the emerging markets. will we be in this fluctuating anything can happen to affect emerging markets? simon: there is so much going on right now. how do you price this stuff? there is so much uncertainty, people are saying there is a critical mass of issues going on. you've got to pull out from abroad asset class and not be the discerning investor. i think that's right. if you get a very uncomfortable result in the brazilian elections, does that spread around the broader latin american space? it's entirely plausible. francine: thank you so much. simon is staying with us. coming up, brexit wrangling. we will ask negotiation specialists what theresa may needs to do. later on, it's jobs friday.

we will be joined by larry kudlow. this is bloomberg. ♪

francine: this is bloomberg surveillance. let's get straight to the business flash. city.to new york it taylor: unilever has abandoned plans to have headquarters in the netherlands. they will maintain a second base in britain. there was a revolt on u.k.

investors. the proposal did not receive support by a significant number of shareholders. in a chinese computer maker have sunk to the most in a decade. american computer networks using a microchip by spies. one pence criticized china diplomatic fronts in a speech. mocked the sec after settling a fraud lawsuit with the agency, imperiling the deal that makes him tesla ceo. he referred to the sec as the short seller enrichment commission. he said the regulators were doing incredible work. the agreement is not final, it could bar him from serving as

chairman for three years as punishment for a post he about taking tesla private. that your bloomberg business flash. francine: thank you so much. now to brexit and the bonds have climbed to the highest in two years. the pound is higher for a second day after sources in the you -- you see the deal is very close. we have two weeks of intense negotiations trying to wrap up a withdrawal agreement before the summit of political leaders. what should the prime minister do to ensure deal? now is leslie .eynolds they provide negotiations training for industries, including governments and finance. she is the author of a great book. we will talk about markets and how they should react.

i listened to you at a speech you gave. you were talking about negotiation skills and we transferred that to brexit. the prime minister has to do with in her own party divisions and the eu. how does she do it? how do you negotiate the deal of the century? leslie: this is really at the heart of her challenge. when you're negotiating, you need to be clear who you are negotiating with. she's not just negotiating with the eu, she is negotiating within her party and the people within the country who have invested interest in what happens with brexit. it makes it difficult to focus on getting the best result. she is trying to pander to conflicting interests. francine: is tone important? do we put too much emphasis on tone?

do people care about this when you are negotiating? napoli: i don't think we should underestimate tone and the importance of people at the table. i make it clear to people that only a small part of negotiations are facts and figures. a big part is how we feel about the people we are negotiating with and how they engage with us. this is about bullishness and bravado, it's not helping right now. francine: is that how deals are normally negotiated in the corporate world? is there too much i'm stronger than you are? natalie: a lot of professionals understand this is an old-fashioned way of doing business. this won't get you the best possible outcome. the best negotiators leave their egos at the door. i don't think we've seen this through the process. francine: it was a strong speech

by the prime minister. simon: and excellent dancing. perspective, the government hasn't agreed it position itself. that's essential when you are trickling -- triggering article 50. text,t the eu down in they have been the ones who suggest the text and the u.k. has had to respond to it. they are setting out legal text as a general rule. do they have a walkaway position that is credible. the point in a newspaper couple of years ago when we just triggered article 50, even if you think it's not necessarily your preferred position, you need to have a walkaway position

in order to ensure the negotiations go well. francine: isn't that cashing out? simon: sure. you may not want that. wto is not a single box you pick up and put on the table. do withe things you can this impact. process to move the the end-stage, if you haven't made those preparations, your fallback does look damaging. it doesn't have to be so. it has to be credible and you need to spend some money in order to do that. the treasury has been reluctant to do so. francine: was the biggest mistake people make a negotiations? ori'm asking for a raise coming back monday on air? natalie: there is such an

emphasis on what happens before we get around the table. this is discovery and establish phase. that has not happened here. there are thoughts as to why we did not go down that planning effectively. people never thought this was going to happen. once lacking now is we are when unit to a degree. -- winging it to a degree. we have some very global -- clever people working on brexit. francine: can you negotiate if you don't believe in the project? say you can.uld you can advocate for people of you do not agree with their position. ll of a lot more if you do. up, we have an exclusive

interview at 3:00. i'm sure they will talk about yields. this is bloomberg. ♪

francine: this is bloomberg surveillance, i'm francine lacqua in london. let's check in with the markets. sebastian: it's a downbeat day across the european region. negativeee the dax in territory. down .8%. this is the italian government growth figures that are considered to be optimistic. you can see the majority of the stocks lower. let's show you some of the moves. we are kicking off with efforts in denmark. more capital is needed it. they are taking a cautious approach, near a four-year low. this is after a deal was

released, they are looking at a bid for the company. they are focused on online shopping. that stock is jumping. they are moving their headquarters entirely to the netherlands. you have some difference between the dutch and london listings. francine: let's get back to the art of negotiation. natalie reynolds has an initiative. they provide one million women around the world of the skills to negotiate effectively and with confidence. she is helping empower women with a skill set to succeed in the business world. she is from advantage spring. she has a great book out. do women negotiate differently? dangerous think it's to say they negotiate

differently. men and women are perceived differently when they negotiate, that has the effect that women will hang back or ask for less because we are conscious of the social penalty. francine: what should you remind yourself? natalie: for me and the book i've written, it's all built around remembering active negotiation is fairly simple. if you can follow certain steps, you can be paired and confident and ready to navigate challenge. i have a five-step approach to never -- negotiation. you're going to have an easier ride. francine: you negotiate every day? simon: i'm interested in your view of the importance of positive discrimination and female representation.

i'm an economist. there is a debate on whether expectations are rational. adapt, you need symbols there in order for people to get used to it. you talk about people being used to what goes on in the workplace. are those things really important to getting confidence? natalie: what is really important in negotiation and business, outcomes are improved when we have diversity and women at the table. when it comes to negotiations, it is important to have women at the table. in terms of the outcome we get, we know that in peace negotiations, when women are involved in the process, not only is a deal more likely, it is also more sustainable. tois key that we start

recognize the talent that is there. francine: who is the best negotiator in the world? natalie: my child. he is six. francine: thank you to simon french. we continue in the next hour. tom keene joints me out of new york. we will focus on commodities and talk about glencore and oil. this is bloomberg. ♪

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infiltrated 30 u.s. companies. jobs friday, yields on the 10 year cover seven-year highs. they back down, from the plan to have a single base in the netherlands. hello, everyone. this is bloomberg surveillance in london. tom keene is in new york. happy friday. it's been a busy week and it will be a big friday. we look at jobs and emerging markets. we talk about what will happen in the brazil elections. we have breaking news out of india. tom: i have no idea what calibrated tightening is. we will let taylor riggs explain it to us. thatld suggest yesterday the idea of fuel subsidies for the people of india shows some of the challenges there.

prize. the nobel we saw chemistry earlier in the week. prize. the nobel peace can we listen in? dennis mcgregor has devoted his life to helping these victims. the abuses perpetrated against. tom: we will have much more on this. it is on war crimes. this is happening as we speak. we will continue right now. francine: i was unfamiliar with his work. treatmentized in the of women who have been gang rate

by rebel forces. we will get into this and find out who he is. the the biggest prize you can get if you devote your life to good work. let's get straight to the bloomberg. islor riggs: the senate it preparing for a vote on brett cavanagh today. holdouts saycan the investigation appears to be thorough. it does not back up allegations. rent cavanagh says that he may have been too emotional at the senate hearing. be secretary of state will lacking leverage when he returns to north korea. and has a push for nuclear disarmament. it has been undermined by calls for sanctions relief.

the pound is rallying today on report that an agreement may be near. sources say the divorced you with the u.k. is very close. the international trade secretary said he would accept an imperfect deal and try to fix it later. unilever has abandon his plans to consolidate headquarters in the netherlands. the plan was proposed early this year and opposition from british investors group. it would have blended -- and did there participation in british stock indices. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries, this is bloomberg. tom: thank you so much, taylor. we have oil as well. the yield curve is steepening

through the week. the euro is under 115. forequity is backed out 14.58 on a relative basis. the dow is still somewhat near record highs. looksw that the tenure like the old 30 and the 30 year bond is up to 3.36. that rolls into the american housing market. francine: i want to go back to breaking news. india. they keptxpected that rates unchanged. when you talk about that, they decided not to hike. they did two times in a row. they are going to be more careful with these hikes. i don't know if we haven't. tom: i've got it up here. we are doing this in real time. francine: this is a surprise

decision. the rupee is extending the decline. economists, they were expecting a third height in a row. ike in a row. tom: this is a huge deal. this is the four-day chart. thank you, anthony for that. it's perfect. they are going out over 74 rupees per dollar. i think of mark chandler another's. -- and others. i am going to go here in real time and go to a daily chart. this is how you do it on the bloomberg. you can see the linear erosion. there has been recent acceleration of devaluation.

this is the fragility. i will let you know if it is idiosyncratic or not. francine: let's get straight to that. we will delve deeper into emerging markets in figure out what behind this rate non-decision. thank you for joining us. if you look at india, they were expecting it. do to the fat? >> need to think about central bank independence. after the change at the r.b.i., the monetary stance has been more accommodating. despite the debt and the banking system, there has been a change from trying to curb leverage and accommodate this. they are relatively vulnerable to the rise in oil we've seen recently. hawkish, emerging

markets are going to be week. some of them are going to be swayed by governments that are trying to continue growth. think about turkey, they will eventually hike rates. bank hiked central prices as well. the ammunition is limited. if you include all the debt built up that has happened in the last 10 years, including corporate's, they are there. francine: you are saying oil is out, the dollar is higher. you have concerns it could spread contagions. you have structural reforms. could there be a perfect storm? anerto: we think that's important part of the financial system. at the sovereign level, there is some strengthening in the em

economy. there have been debt in the private sector. turkey has 40% sovereign debt. the banks and the corporate's have borrowed a lot every year. pay $200 billion of debt every year. this is more hidden, but they are there. tight, especially hard currency credit. real rates are rising, so are real rates in the u.s. we are still cautious about em. where we start to see opportunity, em is an area that is loved by investors. investors go back into emerging markets. tom: i think it's such an important question for the global lottery and's.

when you look at em, do you just assume you are going to hedge the currency exposure? is that a waste of time and money? alberto: roughly, you can take three positions. if you look at the currency, , youat the race, -- rates can look at the hard currency debt. countries that are a sovereign debt overhang. argentina for example. others have a private debt overhang. the hard currency bonds are not all verbal like turkey. the vulnerable area would be currency or local rates. it depends on the country. there looking at where years of gone the most. in russia, you have sanction

risk. that's an area where you have a crowded long debt with a small door to get out. in other countries like south thata or brazil, we think they are really expensive. idea, thise you an credit in europe. em are expensive. barclays, it gives you more yield than ecuador. rated in latin america. tom: i think it will be a continuing story as francine has kidded us. we should have a shot of tequila every time we say

"idiosyncratic." a timely conversation, a victory lap. lawrence kudlow is with jonathan ferro in the 9:00 hour. stay with us worldwide. this is bloomberg. ♪

taylor: let's get to the business flash. toyota is recalling more than 2 million hybrid cars, including the prius. the problem is a software malfunction that could end in a crash. half the cars are in japan. 800,000 are in north america. it's the second major recall in a month. in denmark, the financial

regulators need more capital in the wake of the money laundering scandal. the head of the financial supervisory authority tells us they must be prepared for fines and market fallout. they doubled the capital buffers to $1.5 billion. samsung has eased a drop in demand for easy -- memory chips. this is thanks to brazilian sales of circuits. samsung is struggling to boost sales. that is your bloomberg business flash. tom: thanks so much. a number of ideas to speak of in technology, you can do that with alex webb. i guess mr. musk is ramping up again. we need to speak about the reporting yesterday. what we saw on microchips, on motherboards, on amazon and apple computers. the zeitgeist on this last

evening was very strong denials from apple. incredibly strong denials. and we to martin shanker stand by our sources. ?our thoughts on this debate the level of denial versus what we reported. this is not affecting any consumer products directly. seems to me what other option do apple in amazon have? if they are going to give any sense of the affirmative affirmation that this might be true, it puts them at you risk -- huge risk in china. they have come under pressure in china. last month, they unveiled the latest iphone that came with virtual stems.

the chinese authorities would not allow them to be sold. they are treading a very tricky path between being under threat from chinese hackers, but also selling things in the chinese market. tom: is there a path of china to become more transparent, away from the bloomberg story, away from the realities of american it sit -- consumer products. is china set in its path? can it become a more liberal technology? >> no. if you look at the way china has approached technology and the way it interacts with the population, the way they are gathering data on chinese people and using that to give themselves social credit scores, that is increasing the role of

the state of the technology universe. product companies, the visionary characteristics of steve jobs, that financial success is entirely due to the complex but efficient supply change the tim cook was able to build in china. that is the case for many american tech companies. they cannot wean themselves off that approach. maybe over the course of a decade, this is not an easy thing to disentangle themselves from. francine: what do we know about the investigation? it's been going on for three years. does it usually take this long? >> it seems like a long time. i think a lot of it might be doing with communicating. it ratchets up tensions in a big way. the investigation extended

beyond the for trump was in power. the bloomberg investigation extended well back into last year. they have 17 direct sources. they conducted over 100 interviews. i find it hard to balance that with the statement from apple and amazon saying the opposite is the case. tom: alex, thank you so much with the update. we will monitor and move forward on this story from jordan robertson. alberto is with us. we are looking at wealth and fixed income. without question, the interview of the week on economic theory. john williams with michael mckee, this is must listen must watch for anyone in economics.

please stay with us from a yankees/red sox. ♪

tom: from london and from new york, we need to translate for our global audience here. it's not like my childhood. tear down this wall, that is the green monster in boston. for those of you on radio, good

morning in boston. are in aes and red sox three out of five game series. this is like religion. this is a huge deal for these two stadiums. don'tne: a lot of people know what you are talking about because we have a global audience. for the americans watching, we care. go yankees. tom: what do you mean go yankees? yesterday, the populist coalition said they expect gdp to rise by 1.5%. italian newspaper reported mario draghi may have discussed the budget with the president. manager is still with us.

the concern if you are on the market is italian bond yields is still a handsome return. will that be outweighed by losses? alberto: the budget is too optimistic. the growth assumptions are too optimistic. there are reforms they give money to the old and the younger generation more doubt -- debt. having said that, if you put numbers into perspective, the deficit is just higher than last year. italy has an account surplus. the real issue was long-term growth. we don't think italy is going to grow higher than 1.5. we don't know where the next recession will happen. there is a problem when that happens. that, the market is pricing immediate risk from the

eurozone. that is exaggerated. francine: what is that risk? will we see it three or four years down the line? when euro membership comes up as a campaign membership? alberto: this is a campaign instrument in european elections. if the northern league's it represents the northern industrialized part of italy, if ,t continues to gain ground what you could see is the northern league and the party allied together which represents more of the industrial base. that is much better from an economic perspective. we have to look through this six months of political theater remembering there are checks and balances and the president is

very much there. mariota draghi met him on wednesday. exitisk of a job to your is wider than spain. we are not in a recession. we have seen this risk of the death of the eurozone in the last 10 years. francine: thank you so much. meanwhile, the dollar is in the midst of a little bit of a route. stays whend if this china reopens on monday. this is bloomberg. ♪

bloombergthis is surveillance. tallman francine from london and new york. let us check what is trending.

has sweptcraze through the philippines, as people are lining up for a shot to win the $16 million jackpot. chinese spies infiltrated almost 30 u.s. companies by installing a microchip on hardware used in servers. musk mocksace, elon the sec with a tweet referring to its short seller enrichment commission. in second place, danske bank becomes the worst stock as the money laundering scandal grows. prepares to leave the u.k. for a spot in the netherlands. the chief executive of unilever but also to the prime minister of the netherlands. was trying to introduce a tax-free dividend. that was being pushed domestically. unilever is a success.

i would go to craft. mr. coleman has the fear of god in him from kraft. show the success that the former ceo of nestle has had with unilever. this is a great chart. procter & gamble down in flames with underperformance and unilever is out on top, with the swiss company nestle. this is normalized. i will tell you, this is a major story for the power of institutional wall street or institutional, the city as well. francine: i think it has different layers. implications for investors, for chief executives in the netherlands. was a big blow symbolically to the prime minister who was negotiating brexit. there are angles here. tom: do not bet against london.

in new york city, ready for new york city-red sox. the nobel peace prize has gone to two activists furtherwork against -- work for trying to end the use of sexual violence as a weapon in war. he may haveugh says been too emotional last week senate hearing. frustratedat he was at being accused of sexual assault. the senate will take a test vote on kavanaugh today. the final vote could take place over the weekend. one holdout republican, jeff report has noe information about misconduct. report in thejobs u.s. will be distorted by hurricane florence. the question is, how much has

the storm affected payroll, wages. it is expected any disruption will be temporary. the report is out at a: 30 a.m. new york. bonds in india rallied after the central bank left the key repurchase rate unchanged. forecast economists the action correctly. battles al bank sliding currency and rising bond yields. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is "bloomberg." francine: thank you. to global commodities. bond yields have emerged as a possible threat to the metals market, copper has waged a rebound. success demand could --

suggest demand could rise. is evy hambro, chief investment officer blackrock. alberto gallo is still with us. welcome to the program. what do i read into commodity prices? the trade story, the dollar story, the fed story, do you worry? evy: all the topics we think about the whole time. this year, we started strong. this consensual view around economic growth. the anxiety around trade heightened as the year has gone on. we saw material falling, commodities, commodity equity prices as well.

ance then, we have seen powerful rally. most commodity prices list, responding to individual supply and demand is theeristics, which dip german and a price through time, rather than news headlines around trade -- which is the time,inant price through rather than news headlines around trade. people are speculating, what is next? next week is going to be key all the top to the, mother the players in london to discuss how tight markets are. the commodity players in london to discuss how tight markets are. francine: what am i looking for? what are you looking for right now -- are there any that are under price? each commodity has its own

supply and demand. the aluminum refinery has tightened up trade in aluminum. elevated levels because there has been a prospect of a clothing and now we have the reality -- of it closing and now we have the reality it will be. we have seen the metal price respond a small amount. we have not seen it play out yet. copper, we have got uncertainty around the next phase of investment. the market is looking at this deficit. the under investment into new supply, which has been a change in the industry, to improve returns, building up to this strong case. the dynamic we have seen this year has been the liquidation of the net lengthen the speculative positioning across the space.

view of netgot a speculative short positions in gold and copper, just as the market is starting to be tighter. i wanted to where go which is to the elasticities of investment. it sounds like you and i are having a conversation from 40 years ago. where did that go in can we get it back? mary poppins, railways, india. when does mining get the romans back to build something -- get the romance back to build something? have got to rebuild investor confidence because the decisions made resulted in value destroyed. we have been through a healing. and we need investor confidence over the coming years.

the market does not need that material. investment decisions will be made over the next five years but they have to made in the context of the market being able to absorb supply. within the calculus of investment, has the labor model changed or is the labor model of a copper mine the same as it was? evy: that is an interesting point. we have been looking at this. if you think about the level of labor intensity for a unit of new production, it has declined. you have got higher automation, remote trucks operating in bigger mines. past, we have been concerned around inflation rates in labor detracting from profitability of margins for the companies. it does not appear that relationship is as strong as it was because of the reduced level. francine: let me bring you to my

chart. do copper bowls have to wait a few years before the global market flips? evy: this is a chart -- a similar chart with regards to pricing moves. see the longer-term copper pricing chart where we have had rebasing from the lows and we have stepped up into different bands. we are back to the level that most people tend to use, around three dollars a pound. today, we have been above it for the earlier part of the year. people areel, thinking these projects make sense. we need to see confidence around the capital side, confidence around the environmental side. water, power is a big issue. arepermitting delays

commonplace across the industry. it takes so long to get something into production. the market is not pricing that in. francine: thank you so much. evy hambro, alberto gallo, post a with us. i showed a chart -- both stay with us. i showed a chart. bloomberg users can interact with the charts using gtv . happy monday. francine: this is "bloomberg." ♪

francine: this is bloomberg surveillance. tom and francine from london and

new york. brazil heads to the polls on sunday to elect a new president. candidatesading disliked by many voters, there is risks -- there are risks that a divided congress will struggle to implement policies. we joined by bp or chief. what do the latest -- by our bureau chief. what do the latest polls suggest? it is the far right candidate that is ahead. >> that is it. we got a fresh bowl that sowed aropoll that showed bolsano was ahead. we will go into a runoff at the end of the month. francine: how does whoever wins actually fix the economy?

>> they have different solutions for that. privatro once to do ization. he does not talk too much about the economy. the other candidate wants to boost government spending. tom: how will the turnout be? is the public engaged or is this a vote of the elites and the rising middle class? voting turnout is higher than in the u.s. because voting is mandatory. you can vote blank. people usually go. the votes, the undecided, have come down but there are people that plan to vote. francine: thanks so much. ready for a pretty big weekend following the election. us turn to evy hambro and

alberto gallo for how investors are tracking the elections and sentiment in emerging markets. how much are the problems of brazil linked to brazil and some of the corruption there in the prost -- past? there are problems the brazil has been growing for the past 10 years. you can think of brazil as the greece. dead is in the private sector. people -- debt is in the private sector. lot of public spending in welfare and subsidies to housing through the bolsa familia. these things are hard to take away because they cost votes. a firstzil needs as

step after elections, whoever the winner is, is reform. not generous fiscal spending as it has done in the past. valuations, the reality weakened a lot in the past. had weakened a lot in the past. a glimmer of light pushes investors back in. we are neutral now. bullish onre you emerging markets? we saw this contagion early on. evy: i was going to make that point that we have seen specific events in countries that was wrapped together in a crisis. the title exaggerated it. what played out with regards to the currencies, if you get this ,omentum with macro funds

people want to reduce exposure, everything goes out at the same time. you're going to sell one basket of products and you get this withdrawal across the space. rand, all ofrican these currencies. we have had this recovery. we have been taking advantage of that. francine: thank you both. alberto gallo and evy hambro stay with us. our live question of the day for those of you unfamiliar with mlive. this is what we are asking, will the dollar rally died when china returns from holiday monday? ask the question and you give us your views. what everyone to do, we are here for you. this is "bloomberg." ♪

taylor: this is bloomberg surveillance. i'm taylor riggs. of costco are being hit by information technology problems. problemehouse says the

is tied to workers getting access to financial data after they should have been cut off. buto has found no breaches the issue may not be resolved for one year. the latest quarterly earnings matched estimates. lucky could face more problems for the worst weapons systems ever. saleess wants to block the of planes to turkey. if that happens, turkey could cut off the flow of parts to lucky. turkish companies will make about $12 billion worth of components for the f-35. the sale is on track and for now. another tweet storm for elon musk could cause more problems for tesla. about 15 tweets targeting the securities and exchange commission less than a week after settling a lawsuit, he referred to it as a short seller enrichment commission. deal held imperil the

sent over tweets about taking tesla private. it is with joy to speak with evy hambro about some of the broader economics, the price theory of mining. we have got to go back to first principles and that means iron ore inc. australia. -- in china. give us an update on the iron ore update. what does it look like? evy: this is an area we have been focused on. our focus within the space has been the pricing differential that has arisen over the past couple of years, the strategic moves within china to have a has resulted in the closure of a lot of low grade domestic production capacity and reduce demand for low-grade material from elsewhere. the differential between pricing

of different products has between thegaps highest grade trading at almost double the levels of the lowest grade material. isre we have allocated money into the companies producing premium product and that has served us well. this is an emerging trend, something we're trying to build into our portfolios. the green metals of the future, whether it is low carbon production of aluminium, components of recycling going into the global commodity supply chain. iss is a powerful trend that going to play out in an aggressive way. tom: will president xi be successful in a societal shift in polluting dirty steel

production? success to date is evidence of the trend that is going to play out. we see lots of closures of inefficient subscale capacity and concentration into best-performing units. that trend is going to be hard to reverse. if you make the environment better, you cannot allow the companies to come back because the people will not tolerate that. francine: you're working on a new energy fund. we have something called hyperdrive. what are you looking at -- is it oil?nd of the coil -- big evy: things have changed. i think the changes going to get bigger and it is going to start to happen faster. we will moveis, away from the combustion engine and towards hybrids.

the way we moved around is evolving, whether it is transportation as a service, how does that change the insurance model? what is inside a car in the future? got a driverless car, does the car become a space you can work in? that awayot to extend from light vehicles to have a loop vehicles -- to heavy vehicles into airlines. francine: does it mean consolidation? does it mean companies will go down? to see are going disruption to people who do not change. part of this is environmental driven but it is part of making things more efficient. the car's it still for 95% of its capacity. still for 95% of

its capacity. is that efficient? people have a lot of money tied up in their vehicle. if we can get productivity rising, we can lower the cost of transportation across the world. this is going to release value for investors. investing in this is going to be an area that is going to have a above average return. tom: thank you for the conversation on commodities. evy hambro of blackrock. coming up, howard ward. you are not an the market. he says, be in the market. ♪

tom: this morning, yields higher. dots.sider the

michael mckee with john williams. you do not own enough apple. in this hour, howard ward. writes an op-ed. he awaits the senate's judgment. good morning everyone. this is bloomberg surveillance. i'm tom keene in london. i want to go right to unilever. the mayorhuge win for of london, isn't it? francine: i do not know if it is a win for the mayor of london or if it a loss for the chief executive of unilever. it is humiliating for the prime minister of the netherlands. if you look at the u-turn, it will be humiliating. are different angles here and i will cover that in the next hour. tom: unilever to stay in london.

here is taylor riggs. taylor: the nobel peace prize has gone to activist for their work against sexual violence. crimesthe victim of war and another is a gynecologist from the democratic republican of condo. -- democratic republic of congo. --y are being honored to honored for their work for trying to end the use of sexual violence as a weapon in war. the senate is preparing for a test vote on supreme court nominee brett kavanaugh amid two republican holdouts. jeff flake and susan collins say an fbi investigation claims appear to be thorough. flake says it does not back up allegations. kavanaugh says he may have been too emotional at last week's senate hearing. the pound is rallying today on reports that they brexit agreement may be near. reuters cites sources saying a divorce deal is close. the u.k.'s international trade secretary said he would accept

an imperfect brexit deal and try to fix it later. unilever has abandoned plans to leave the u.k. and consolidate its headquarters in the netherlands. the plan was proposed early this year and opposition from british based investors was growing. leaving the u.k. would have ended unilever's membership in britain's benchmark stock indices. bonds in india rally today after the central bank left the key repurchase rate unchanged. only nine economists forecast the action correctly. the central bank battles a sliding currency and rising bond yields. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is "bloomberg." tom: thanks so much. jobs day data right now.

the higher yields is set by chairman powell. the curve steepening out to 32 basis points. that is a steeper, more normal curve. oil elevated. the vix equity backup. crisis. we will talk to howard ward about that. year, the 30he 10 year bond out to a 3.36%. francine: that is significant. that is the most significant market move. stocks to climbing, i am looking metale of the miners, as prices are falling, tech and bank shares slipping. i am also looking at danske bank, the biggest drop in seven years after the regular said it should hold more capital to prepare for potential fines. tom: we welcome you from london

and new york and we do that on a jobs day. we get briefed on the number one event of the last decade. you got it wrong. howard ward got it right. , courage, be in the market. we get an update. are you still in the market? howard: got to be. the economic fundamentals are good. we have had a backup and yields. -- backup in yields. that shall pass. there is a recession on the horizon, it is too far away to see. unilever, craft win after them. wind after them. -- went after them.

private money wants those companies, don't they? howard: the lack of growth. tom: you are buying growth. howard: and your financing is cheap. are low as a benchmark rate and financing is available. why not? this is what companies have to do. the world has almost no real growth in it. you have got to go out and acquire. francine: howard, what does that mean for, i do not know what the story of uni lever is, is it shareholders saying we do not understand the roles in the netherlands, what is it about? how humiliating is up for the chief executive and the prime minister of the netherlands? drama. that is the

here is the point i want to make regarding the consumer staples area. you are at companies that have topline growth of 2% to 3%. that is nominal, that is not even real. these companies are trying to restructure, divest, do what they have to to make their top and bottom lines grow and get a multiple, generate cash flow, reward shareholders. it is a grind for these companies. they have been underperforming the stock market all year. that is going to continue. is the valuation wrong? if you look at the valuation of a tech company and unilever that does thethpastes, valuation make sense? howard: i would argue tech

companies are more attractively valued than the toothpaste companies. it gets back to the real growth prospects currently and prospectively, where it is hard to grow your share in a slow growth world in a world where population growth in western europe and japan is shrinking. the u.s. is not doing that well either. tom: bring the terminal up. harder -- hard to read on television. -- here is the lever you the lever. ver -- -2%.unile that is unacceptable. do, what will american multinationals do given

this revenue? howard: it is similar and they are scrambling trying to find the next great thing, whether it drink, sort of non-soda or whether it is a new version -- tom: we going to do apple computer. bring up the screen. jason is going, this is too much camerawork. apple up 14% revenue growth. maybe a year, 16%. the streak that's conservative. 6%. -- gets conservative. 6%. back to economics. conversation, michael mckee stopped at the press conference with his talk -- stopped the press conference with his talk with john williams.

housing is cheaper here. this is "bloomberg." ♪

tom: bloomberg surveillance worldwide. francine lacqua in london. i'm tom keene in new york. we turn now to what has transfixed the beltway. the kavanaugh vote expected saturday. here is judge kavanaugh writing in today's wall street journal. i am not a pro-prosecution judge. i would always strive to be a team player. i have not changed. i would keep an open mind and strive to preserve the constitution and the role of

law. talked with our chief synthesizer of this moment, kevin cirilli. who advised the judge to write this? did he want to do this? the person briefing him has been tom again. the one paragraph in that op-ed that matters is when he said he realizes he might have been too emotional and he might have said ,hings during his confirmation that hearing last week, that he might not what have wish to have said. -- might not have wished to have said. would appear based on public comments, those republicans were moving toward voting for him. they praised the fbi

investigation as being thorough. has been moreski difficult to read. we are anticipating a procedural hurdle at about 10:30 a.m. this morning. cabinet, youhis have got axios just publish the vote. what happens after? if he becomes a judge, what is the next step? gets confirmed saturday, he would come into the supreme court. there is a case in the next couple of weeks pertaining to women's health. the grassroots protesters you have seen on capitol hill, there were several hundred yesterday, that is going to continue. i am struck by this poll that about the democratic enthusiasm gap evaporating

because of the re-ignition of the political base on the republicans. that has impact in terms of the republicans. that holds after kavanaugh is confirmed, that is what i'm going to be watching. the base of the republican party has been reactivated as a result of these proceedings, at least that is what the polls are saying. francine: which way is it impacting the midterms? kevin: the republicans -- the base -- have come to the defense of judge kavanaugh and they have back against chuck schumer. that was not what we had seen in the polls. it was that the democrats had the enthusiasm gap. the polls suggest the enthusiasm gap is now moot. holds untilot that

be midterms, i do not know. that is something a lot of folks are talking about. as you say, 30 plus days to the midterm. do we know what the president will focus on? trade is going to be a topic of conversation. the president is going to be visiting pennsylvania twice in eight days. ohio, have my eye on those house races there. wellis where nafta plays and makes it more difficult for democrats to drive a wedge against the president. fascinating developments. this vote on saturday is going to have the attention of the nation. tom: kevin cirilli, thank you so much. let me reset the date for

bloomberg. we are going to come back with a conversation with howard ward on apple. the day,view of without question, john williams of san francisco. there with john williams, lawrence kudlow and jonathan ferro in conversation. that will be a discussion of jobs day. this is "bloomberg." ♪

taylor: this is bloomberg surveillance. i'm taylor riggs. flash.get the business toyota is recalling more than 2 million hybrid cars, including the prius. the problem, a software malfunction, that could end in a crash. more than half of the cars are in japan. more than 800,000 are in north america. it is the second major recall in a month. in denmark, the financial needstors say danske bank to hold more capital in the wake of that money laundering scandal. the head of the financial supervisory authority tells bloomberg the bank must be prepared for fines and market fallout. the regulator ordered danske to toble its capital buffers $1.5 million. samsung has eased concerns about a drop in demand for memory chips. the company posted profits thanks to brazilian sales of its integrated circuits. samsung is struggling to boost smartphone sales.

that is your business flash. tom: thanks so much. funds onrd of gabeli the failure of apple. bring up the chart. it is a chart of failure. i think of your wonderful colleague, we are all going to die. here is the new toy and once xain, we have got the iphone is going to be a success. the iphone is a failure, right? howard: it is the most spectacular consumer product ever. tom: can you buy the persistency of cash flow? howard: until proven otherwise. not only is the company's surprising with rolling out even bigger screens, nobody expected asps to be rising.

they were supposed to be declining years ago and they are continuing to go up and sell out of the most expensive phones. this is not the latest iteration of the apple. my fancy swiss mechanical --ches sitting on my bureau watch is sitting on my bureau and this is my baby. tom: i want to talk about the people that are not howard ward. we had an article about the novemberin october, in , i've got to catch up to the benchmark, which means you must buy apple to readjust. is that going to happen? are people going to be forced to buy apple? howard: some people will be forced. and buying some of the other big stocks as well. these up in the big money makers

in the market. there is no sense that is going to end anytime soon. when it comes to wearables, apple watch is the best-selling. is there going to be something coming from china that will hurt apple sales? howard: china, because of the current trade negotiations, on a short-term basis, that is uncertain. let me talk about the trade situation. canada and mexico, we have got a new deal. china is a different animal. the trade situation, that negotiation is going to take longer. it is going to stretch in the next year. let us go back to the principle that is driving the , which is that china needs the united states more than the united states needs china.

our exports are 13% of gdp. that makes us one of the smallest export driven countries in the world. all of these countries needed us more than we needed them. a trade war is likely to hurt them more than us. any trade war is likely to hurt everybody. we can outlast china and gain concessions and china does need to change its policy. it has been taking advantage. we have this disclosure this week that there is evidence that china has been implanting chips and hacking into technology companies. francine: that is a bloomberg this was a bloomberg businessweek scoop. let me remind our viewers and listeners on how china used a chip to infiltrate 30 u.s. companies. does it make a difference to the

supply chain of apple and others and does it mean that if they do change supply chains, their costs will go up? is, there wills be changes at the margin over time. the cost issue is interesting because the cost advantage that manufacturers had in china five years ago is gone now. but wages have risen in china, the cost of doing business in the united states has gone down. you have that transportation costs to bring goods from china. the united states has become fertile ground for new manufacturing plants. be an adjustment even without this news of what china did or did not do. the incentive for companies to build plant and equipment here in the united states is greater

than it has been in years. francine: howard ward of gabeli funds stays with us. coming up, bill gross, janice henderson capital fund manager. tom will ask him about yields, dollar dynamics after the volatile markets we saw on wednesday, folks will be on what the jobs mean for the fed. that interview coming up at 11:00 a.m. in new york. this is "bloomberg." ♪

francine: this is bloomberg surveillance. tom and francine. we likely or interaction, radio listener interaction.

if you have a question, you can ask questions to the guests. we are trying to get a conversation started and we have log and this-- b is the question of the day, will the dollar rally die when china returns from holiday monday? you can join the conversation. you click on ask the guest a question. tom: right now, here is taylor riggs. taylor: brett kavanaugh says he may have been too emotional in last week's senate hearing. kavanaugh wrote in the wall street journal that he was frustrated at being accused of sexual assault. the senate will take a test vote on kavanaugh today. the final confirmation vote could take place over the weekend. one holdout republican, jeff flake, says the report has no information about misconduct.

economists agree that the september jobs report in the u.s. will be distorted by hurricane florence. the question is, how much has the storm affected payroll, wages. it is expected any disruption will prove temporary. the report is out at 8:30 a.m. new york. the pound is rallying today on reports that a brexit agreement may be near. sources within the european union are saying a divorce deal is close. the u.k.'s international trade secretary said he would accept an imperfect brexit deal and try to fix it later. it has been a year since the new york times reported allegations of sexual predation against harvey weinstein. in that time, 425 other people have been accused of sexual misconduct, ranging from serial rape to comments. this is according to data compiled by bloomberg.

hundreds have been fired, most of them men. many have denied wrongdoing or question the motives of accusers. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is "bloomberg." francine: thank you. a surprise decision, indy's central bank cap rates unchanged. itcap to rates unchanged as tries -- kept rates unchanged. ward.g us now is howard when you look at what is happening in india. the market was pricing in a third tightening and what the bank is saying we want to see what the impact of taking rounds is going to be. is this a smart move? ester: we think there is a small

holde they have kept it on because the inflation has not gone over the inflation forecasts. they are being careful and trying to adjust the balance between the growth and what is going on. while i am surprised by the reaction, we have assigned the small probability. francine: should the markets have been better guided? i think the communication problem is less pronounced this time, where is the market was led to price in a hike because what has been happening in other central banks. you have got the indonesian central banks have been more hawkish. statement, they have been as clear as they could. listen to the you

governor, they are not done. when will the next one be? forecast is for another 25 to 50 basis points in the coming months. it is hard to pinpoint. tom: wonderful to have you on with this. matter is the growth of india, different from china. give us an update on modi capitalism. how is it doing? esther: the elections are coming. having seen the expected growth numbers, indian growth is , on all counts, compared with china and other countries. tom: within that and within the improvements we have seen over corruption,d less

is a linkage of the legislative body the will of the elites? on the an update legislative part of the government. doing asbi is independently as they can. it can be judged by their statement as orthodox. aing faced with such difficult situation with growth and now, the higher oil prices, i think they are faring well. francine: talk to me about the defaults we have seen. there were defaults by systemically important financial called the infrastructure financial and leasing services. the r.b.i. has pushed to inject liquidity. it is still early to

call. it is clearly an interest to protect the stakeholders, like in the case of china. it will be facing increasing headwinds because we know that is not a long-term solution. tom: thank you so much. a story where trying to focus on here on india. we are going to continue with our discussion. jobs day is here. alan krueger will join bloomberg surveillance later. catherine mann, on the american labor economy in the 7:00 hour. this is "bloomberg." ♪

taylor: this is bloomberg surveillance. let us get the business flash. shares of cosco are being hit by an information technology problem. waswarehouse is a problem tied to workers getting access to financial data after they should have been cut off. no breaches but the issue may not be resolved for one year. the latest quarterly earnings matched estimates. lockheed could face more problems with the most expensive weapon system ever. congress wants to block the sale of planes to turkey. if that happens, turkey could cut off the flow of parts to lucky. turkish companies will make components for the f-35. the sale to turkey is on track for now.

another tweet storm from elon musk has caused problems for tesla. sent out tweets targeting the securities and exchange commission less than one week after settling a lawsuit. he referred to it as the short seller enrichment commission. that could imperil the deal musk read over tweets he sent over taking tesla -- reached over tweets he sent over taking tesla private. tom: it is jobs day. we focus on jobs as we will through the morning. alan krueger is scheduled from princeton university. right now, carl riccadonna to get us started. chart which isa the most stunning social and optimistic chart on the bloomberg. this is weekly claims as compared to the employed of america.

, how it wasng to me a beautiful, wonderful market anomaly.we have this there are no claims. we are perfectly employed. carl: we are close to the perfect point and one would not guess that given the handle on the unemployment rate. dynamics have changed in the labor market. 3.8% unemployment does not mean what it used to. the number one mail i get the question, we are not fully employed. carl riccadonna is wrong, john williams is wrong. we are fully employed because we start to get more wage pressures in the economy. it did not happen at 4.5%.

it seems to be happening now that we are crossing below 4%. we have to look at a broader array of indicators, including wage pressures and full employment is something you can recognize in the rearview mirror. if we look at the course of wage pressures, we can say it is weak relative to past cycles. the vector is up sloping and that gives us confidence we are hitting the sweet spot. francine: what does that mean for the fed? will have more confidence that the economy is on a sturdy footing and can handle a few more rate increases. we see that in the treasury market. a came in much stronger than expected. that is a good signal that growth will be solid, not as solid as we saw in the second quarter, but it will be firm.

the market is having fewer doubts about what the fed is looking for a more robust outlook in the longer run. we see the long end of the curve moving up more than the short end. if you look at the significant repricing of treasuries, what do you think that?d made of fed has been tightening and it is not being reflected in commissions. traction,etting whether it is the backup in treasury yields or the pullback -- the fed has come about in a smooth and orderly fashion. the pace of asset purchases this week and the fed opened these a get further in terms of balance sheet -- opened

further in terms of balance sheet unwind. tom: we are below 200,000. i am hearing howard ward whisper numbers that are higher than what carl riccadonna is used to. say, we areou looking at equities, do we sustain that? i think we are still enjoying the surge the economy has enjoyed from the tax reform, which has resulted in gains in earnings and has helped the employment picture. and a labor pool shrinks skilled labor becomes more difficult to find, wages are up. that is going to go through 3% soon. we are not going to be

sustaining -- that number is more like 175 for the next 12 months. tom: you can hardly see this on the chart. we have got the moving averages clustered in. in 2010, is a blowout number. are we going to see a blowout today? 350, 340? that number was related to all of these flips higher to conduct the senses. of people are higher for the playoffs, right? howard: the wages were low. with faster gdp, you get faster hiring. we are having constraints in the labor market. even if you're having a fast quarter, you might not have those robust payroll gains. workers are not available or if you have to join your firm, you x them to- have to coa

join your firm. francine: there you go. you get extra points for that. when you look at dollar dynamics, what does the dollar do? howard: it continues to be in an upturn. we have the strong interest rate differential and the fed is still tightening. the dollar continues to trend higher. in addition, when central banks moved from unconventional toward tightening, they have move more slowly than expected. if that is true for the ecb, whether it is interest rate differentials or tightening of normalization a policy, the fed is out ahead of everyone else.

that argues for a stronger dollar. does the fed need to look at the dollar dynamics? any contagion from emerging markets, because the countries are dollar denominated debt rich , do they need to watch out because of the dollar gets high, this goes against what the fed is trying to do? howard: they are not going to admit they care about that. slowed this year in europe, japan, and china. the u.s. was the only region that had an acceleration. next year, we are going to be slowing. in a world where global growth is slowing, where there are issues about dollar denominated debt in emerging markets, the fed is going to take that into consideration.

it is not a priority but they cannot ignore it. francine: thank you. carl riccadonna. howard ward stays with us. willg up, larry kudlow, we ask him about the jobs number. we will ask him about trade atween the u.s. and china 9:30 a.m. in new york. this is "bloomberg." ♪

tom: single best chart, you do that on bloomberg surveillance. are joined by howard ward, who is seen history provide the temple to stock election. i have shown this a lot. normalize members back to the beginning of the crisis. apple, visa, and the bundle. everybody putting their money in the bundle? why is everybody buying the dow

instead of trying to pick out these and not the group out here, including ge? howard: there is safety in what is perceived to be less risky stocks. icy and performers are they have setbacks. when you look at apple and visa, those are not what anybody would characterize as crazy stocks. i have not done a survey. we are in a price to sales zero, aren't we? howard: certainly for the younger companies. at appleke apple, look as an enterprise value. generate abouto $65 billion in free cash flow this year.

your multiple of free cash flow and free cash flow has advanced about 20%. even when revenues slow in another year, they're going to be five plus percent. revenue at this year is 4.5%. applehe free cash flow of is almost back to where it was before their new dividend cash policy. it is remarkable. francine: i like your charts today. if you want to steal tom's charts, go into gtv . as long ass is fine there is not a downturn, as long as there is not a storm hitting equities. where do you see the biggest risk? howard: in terms of some of these stocks, not necessarily apple, i see the risk is

government regulation. this is something going on in the background, talk about how to regulate these. that poses a risk to those companies. i'm going to go back to that monetary tightening. interest rates have doubled. has declined this year, just over 52 right now. that has been correlated to growth and the stock market here. i would focus on that and with the fed, raising rates, they are going to do that in december. you have got quantitative tightening. the lag time between raising rates and hitting the economy is 18 months to two years. oilincrease in the price of since june of 2017. that is starting to hit. the rise in the dollar up about

7%, trending higher. we are moving into a slower growth period. the fed has the risk of over tightening, telegraphing two hikes next year. so far, we are eight tightening's. you do not see that when you look at the s&p 500 but you do see it when you look at sub indices. you look at the interest rate sensitive groups, experiencing pressure in the stock market and the economy. francine: how do you protect yourself? do you go to the yen? howard: defensive growth companies which have led the market this year and which everyone thinks have exhausted what they can do. i disagree. as long as the fed is tightening, i want to stay away from cyclical names. what has worked will continue to work. us and wed ward with

will continue this conversation on the radio. we thank you for watching out on twitter. lot within the a news flow coming up next week. across bloomberg, we go beneath the headline numbers. the american labor economy, the jobs growth, he focus on wage growth. -- the focus on wage growth. what are we doing this weekend? the games start at 8:15. they should start at 7:00. yankees-red sox baseball. ♪

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the heat is on. numbers suggest the recent bond selloff, hiking above neutral. tech meltdown. since has the worst day june. china has chosen economic aggression. as relationship deteriorates mike pence accuses china of election meddling and being worse than russia. david: welcome to bloomberg daybreak: europe it is jobs day. -- bloomberg daybreak. mr. elon musk is back in the spotlight. , "the short seller enrichment commission is doing incredible work." he agreed not to do this. he goes