francine: chinese assets drop and the yuan falls. far right candidate joe euro bolsonaro dominates yesterday's polls, but fall shy of an outright victory. it's a month until the u.s. midterm elections. how will brett kavanaugh's nomination play at the polls? ♪ francine: hello everyone and welcome to bloomberg surveillance. i'm francine lacqua in london. these are the markets seeing

pressure on the stoxx 600. markets are trying to figure out exactly what the impact will be on extra easing out of china. you can see remain the at exploit own i know. 90. central bank -- at 6.0 tightening.bank was the 10 year yield is trying to transfigure the fallout from the populace government that doesn't always speak to investors like they want to be spoken to. coming up on bloomberg surveillance, we hear exclusively from rio tinto's chief executive. will be on about the metals out there and the glut and copper. will go with you in just a second. let's get straight to the bloomberg first word news with taylor riggs. taylor: as you were mentioning the former army captain stormed a huge lead in

the first round of the country's presidential election. -- years ofters corruption and crime rallied around his message. he's on track for victory in a decisive second round vote in october 28, when he will face his closest challenger. that's the workers party candidate, fernando head-on. north korean officials, a tight term for their discussions in pyongyang with the u.s. secretary of state. his team could join him in meetings with kim jong-un, but u.s. this surges -- u.s. officials said this visit went better. italy's luigi demaio shrugged off attacks on his government's fiscal plan and said his anti-austerity view go stronger across the country. the deputy prime minister said next year's eu parliament

elections will usher in new lawmakers ready to robotics -- rules.x ukip prime minister theresa may has a pile of work on her desk, having put the conservative party behind her as a threat to the leadership. did get a positive feedback she hoped for at the last summit of european. leaders she has very little time to turn things around by november. she's in a rush to get it through parliament. the south african finance a president asked to be dismissed from his position. that came after political parties rejected his apology for -- on disclosing members of the family from 2010-2014.

the finance minister spokesman referred queries to the president's office. turkey's president personally involved in the case of the missing saudi journalist. president erdogan said he's holding out hope for him even know another official said the washington post columnist was killed inside the kingdom's consulate in istanbul. the political fallout may further strained ties between saudi arabia and turkey. interpol said his missing president has resigned as chinese authorities announce he's under investigation for illegal conduct. the international policing agency said -- yesterday, effective immediately. according to south china morning post, he was taken into custody immediately upon his arrival in china for questioning by

authorities. deliveredcket company welcome news, launching a satellite for argentina. it was spacex is 17th mission of the year and the news was further burnished when it it's first stage booster successfully landed back at the air base eight minutes later. to $28valuation climbed billion as it racks up successful launches. global news, 24 hours a day on air and at tic-toc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries.. i'm taylor riggs. this is bloomberg. francine? francine: thank you so much, taylor. chinese stocks plunged as markets resumed trading, their worst performance since the week long october holiday in 2008. tech companies were the worst performers. china banks cut the cash lenders they must hold.

policymakers seek to shore up the faltering domestic economy amid a worsening trade war. joining us is enda curran. this seems to be pretty significant and the market is reacting. it's beingine, described as a defensive move on the central bank and authorities. there has been signs the economy is slowing. some of that is for domestic reasons. policymakers have been trying to broadly. if we can get a handle of the level of debt in the economy, that's when you get a grip of credit flowing. at the same time, we have a trade war with the u.s. showing signs of hitting the economy. we can see that in the indexes for export orders on the pmi readings. oil indications are that there's pressure on the chinese economy. they make this step they have,

encourages banks to lend more. we're not yet at a hard landing. it's more about managing moderation. francine: so investors, just to make sure i'm clear, investors are assessing efforts by the central banks. are they worried the economy is slowing more than expected? are we going to see loosening of monetary policy? enda: i think all of the questions when it comes to the veracity of chinese data, and the debate about how steep is the slow down, is the full picture getting out. there's no question the data shows moderation. going forward, that's expected to go under further pressure as trade war accelerates. that's why most economists and market analysts say policymakers will take more steps. it will take a while to flow through the economy. the banks have to respond and lend the money.

that's why you'll see more getting done on the fiscal side of things. the government has signaled they're shifting to a progrowth strategy. the broad message coming out of china, in terms of what it means for the role economy, is that they are on alert and seem to be on a stimulus path. so far, the overall slowdown is moderate. the stimulus is nowhere near what we saw a decade ago during the crisis. francine: thank you so much. enda curran. what's next for the markets and the pboc? we're joined by the emerging markets portfolio manager at his lumbar. thank you for joining us. how do you read china? is this china facing a bleak or 2018, and will he get worse for the economy from here? our direction is further

weakness. what was seen over the weekend, for the loosening of the policymakers, there's a soft landing. the economy is slowing down. and there still a threat of further tariffs by the u.s. administration and escalation of the trade war. it's a matter of further weakness in the chinese economy. not a hard landing, but nonetheless for the weakening. we have to think of their neighbors, korea and taiwan, relying on the u.s.-china supply chain. the threat of trade war escalation, those countries remain in the crosshairs and remain quite vulnerable. as a result, time in his dollar and korean won remain vulnerable in this escalation. francine: do you agree with that? let me go to my charts. fixingly, china weakens

and its weaker since may 2017. if the tradehat war is taken by the united states to the full extremity of what it would envisage, covering the entire imports at 25% tariffs, the yuan will need to devaluation by another 10-15%, which would take you soaring through the level. francine: what does that mean for the world economy? >> it's going to be that news for the world economy if it transpires like this. the question therefore becomes how much gets done? we've already been told the tencent on $200 billion goes to 25% on the first of january. remaining $250 billion of imports from china will be liable at 10% tariffs if the chinese retaliate, which they are a have.

-- already have. that's quite set. , clearly the only weapon the chinese have is not more tariffs because they don't import much from the note states. i'm that's suggesting they are going to deliberately devalue. they don't need to. is loosenave to do the controls on exports of capital and the yuan will go down, and all the consequences mentioned for the yen, the one, the taiwan dollar, and ultimately the euro will follow. francine: let me show you my other chart, u.s. and chinese yields. what does that mean, is becoming more convergent quite significantly? --i think it's a manager matter things are moving in different directions. robust data, but the feather is

bent on continuing to hike. we've seen a rapid repricing of u.s. treasuries of the past three or four weeks. weak pmi's in china, concerns of trade war in mainland china. i wouldn't read too much into that. i think it's just very distinct direction of have this of the two countries. and it bears watching. to charles' point, china does not import commodities a lot else. when we think about the impact of the trade war and china versus the u.s., in general, the standard theories, tariffs tend to be inflationary. we think it will have an inflationary impact on the u.s., growth impact in china. francine: thank you for joining us. both stay with us. coming up, ready for round two for brazil.

the leader falls shy of the majority. the runoff is set for the end of the month. details next. this is bloomberg. ♪

francine: economics, finance, politics. this is bloomberg surveillance. i'm francine lacqua. taylor: bigger huge has a 5% stake. the deal values the oil unit at around $11 billion, including $1 billion of net cap. couldn't be happier that we found a like-minded partner, such as adnoc, that wanted to get adnoc drilling to the next

level. how do you become more competitive? how do you drive cost lower? what we are providing now is technology equipment and services to make that happen. haver: lloyds banking talked about working together in the banking sector. they are planning to combine their wealth management unit, according to sky news. they own 51% of the venture. australian business management software company jumped the most on record after kkr offered to buy the shares for $1.6 billion. the buyout firm offered three aussie dollars a share, a 24% premium from the closing price friday. kkr bought about 18% of the company from bain capital. that's your bloomberg business flash. francine? francine: thank you, taylor.

brazil's presidential race goes to round two. -- main character candidate to just short of the majority of votes. a former army captain who pledge to rid the nation of corruption will face the workers party on october 28. how will the markets react? both for sticking around. give me a sense of whether it's a done deal, and will markets rally because they are expecting reform? there'say first of all, a sense now that the election is his to lose because of the strong showing. but it's not a done deal. we lori had some of the other candidates, such as the far left candidate, throw his support behind the other one.

you do have consolidation now, a lot to see. with regards to market reaction, the anticipation the knee-jerk reaction is going to be positive for risk assets cousins less of a need to hike rates. people are less worried about the brazilian riau. still a lot of questions in the air. one of them, over the next few weeks, will boss narrow sound even more populous? almost left wing, something he's issued to date. looking further down the road, we have to ask ourselves what about governor ability? it's highly unlikely he will get 60% of parliament. enforcing needed reforms and introducing reforms will be tough. not to mention that his team, including his economic advisor, will see cracks in that team. francine: i guess those three

priorities, crime, finding jobs. the unemployment level is very high. the third is the fiscal deficit. will he be able to deliver if he's elected? >> i think on the crime side, he sounds filipino. very aggressive. that's probably easier for an -- a progressive to address. we'll see if he's successful. the toughest part is the economy. this is back to, do we have sufficient support in congress? the party is second, up from one. really quite a sweep. however, pt, the traditional left-wing party, still has 57 seats. they are still the dominant party in congress. what sort of coalitions will they or won't they be able to form?

and what will he be able to pass? how long does the honeymoon last in regards to the markets? francine: are you adding to brazilian assets at the moment? >> i think the next three weeks will be really crucial. it will be about the message from bolsonaro. is it consistent? and do we believe the economic team will stick together? whether he's there for the long-term. francine: when you look at brazil, of course it's wider emerging markets, one of the countries that has a huge dollar-denominated count deficit. what does it mean for what the fed should do or shouldn't do? >> i don't think it means anything for the fed. they have to run the united states and that's difficult for itself. if the u.s. government is going to tighten up on the trade war, than the dollar is likely to be stronger than it is already. and a strong dollar and tighter overseas dollar, credit

conditions, combining to make life pretty tough for emerging markets in general. which, outside of the oil countries, do have substantial deficits as you say. these deficits have got to be funded and they arty have central debts in dollars. as the dollar goes up, this gets tougher. as you was interest rates go up, this gets tougher. we've seen turkey, followed by argentina. job is to run the united states economy properly. the fed, it's a very difficult judgment call for the fed. if the dollar is really strong, than that will exercise some restrictive affect on the united states economy, which may cause the fed to hold his fire after the next hike. but that's assuming the dollar is strong and its arty happened.

-- already happened. francine: they stay with us. speaking of the u.s., it's a month until the elections. all 35 seats in the house of representatives are up for grabs, and a third of the senate. brett kavanaugh was confirmed to the supreme court and a final vote of 50-48, the smallest margin for justice since 1881. both democrats and republicans say a supreme court fight could energize the bases ahead of the vote november 6. >> our energy and enthusiasm was lagging behind there's until this. i think this gave us the motivation and opportunity to have a turnout in this off year election that will help us in the senate. >> with all the angry men and women who listen, with the credible accounts of sexual harassment and sexual assault, which is underreported, that

will be of focus on the elections because there are people that they've elected making these decisions. they are going to go to the polls and vote differently. francine: joining us for more on this is our senior writer, stephanie baker. how is the kavanaugh battle affecting the outcome of the midterms? stephanie: i think it's really difficult these days to predict electoral outcomes. we're a month away from the midterms, which the trump universe, is an attorney. anything can happen between now and then. what most people are looking at, the polls are indicating it energizes both basis, both democratic base and republican base. chanceeases the democrats taking control of the house, because more of the race, more races up for grabs that would depend on sort of suburban

swing voters. whereas the senate races that are up for grabs this election more are in red states, likely in red states that trump has won by a large margin. and that has increased the enthusiasm, anger, affected a kind of brett bounce as they are calling it. francine: they still see it as the democrats trying to get their candidates not confirmed? stephanie: i think what many people have said, this is the one thing that has unified the republican party like no other issue, getting a conservative justice on the supreme court. and that has, even for never increasedhas support for the republicans going into the midterms, especially since we have noise from the democrats side, saying they would launch an investigation if they had control of the house, with

possible impeachment of kavanaugh as a justice, which has never been attempted before. francine: what does this mean for donald trump if the democrats win the house? stephanie: increased investigation, kavanaugh and fbi probe into the sexual assault allegations, as well as an increased investigation into trump, his finances. everything from his finances, his business, to the russia probe. i think you'll see definite momentum on that side. and i think it will be gridlocked in terms of getting anything past, because of the democrats control the house and the republicans control the senate, nothing will get through. francine: thank you, stephanie baker. both of you stay with us. up next, crisis? what crisis? emmanuel macron sees

opportunity. we'll bring you the latest from paris. this is what elsewhere looking at. a lot going on when it comes to markets. we talk about china. we're also looking at brazil. stocks are falling, down in asia today. u.s. futures retreating treasuries, trading taking a break after debt sales today. it is columbus day. looking at china's shares. investors trying to assess efforts are the central bank to loosen monetary policy. this is bloomberg. ♪

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launched a commercial satellite for argentina on saturday. head to twitter for more on that. -- our most read stories on the bloomberg terminal, in third place, the u.s. department of homeland security has backed tech firms denying that china had their systems. mike pompeo won't meet with chinese premier xi jinping on monday. let's get straight to the bloomberg first word news in new york city. china's a central bank -- cut the amount of money

of cut will really a total $175 billion that comes as policymakers look to shore up the faltering domestic economy. the divisive far right army captain has stormed into a huge lead in the first round of the country's presidential elections. that is as voters enraged by years of recession and historic crime rallied around his message. on the the congressman round for victory. north korean officials have set tight terms for their discussions with mike pompeo. he was told only three of his team could join him in the meeting with kim jong-un. u.s. officials said this visit

went better than his previous trip which ended with north korea accusing him of making gangster-like demands. theresa may has a pilot work on her desk having put the conservative party conference behind her. jaime task is happening behind the scenes after her brexit blue the positiveget feedback she hoped for at the last summit of european leaders. she has very little time to turn things around if a deal is to get done by november. turkey's president has said he is personally involved in the case of the missing saudi journalist. he also said he is holding out hope for him even though another at the washington post was killed. further blankde

ties between saudi arabia and turkey. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. francine: thank you so much. the controversy surrounding the italian government spending plans has lead to continued nervousness in the financial markets. the cost of for italy has been dramatically rising over the past few months. there are no growing concerns the populist coalitions plans means the country is heading for a standoff with the european commission. the french prime minister could resign as early as this morning. the shocking resignation of the interior minister last week. from get straight to greg our government team in paris. why would the prime minister

resign? greg: let's not get too excited. his resignation is simply because that is the way things are done in france when you do a government reshuffle. instead of doing it one-for-one replacement of the interior minister, he once to do a wider change. it is just done that way in france. they named a new government. there will be officially another government. massive changes, you still have a prime minister. that must be a big deal, right? greg: there won't be a new prime minister. francine: he resigns and then he gets renamed? the whole cabinet resigns.

interior minister has to be changed because it was his resignation at set this whole thing off. the culture minister, the agricultural minister, the regional development minister. .here are wider rumors i'm reading bloomberg copy that tells me that the readi for an important reboundng. -- ready for an important rebound. the reason he is down in the polls is because he has policies some people think 10 to right,t; -- tend to go the other is just his manner.

he has made these will publicized comments and which he suggested the french are lazy or resistant to change or complain too much. that is why he is unpopular. it is not because of his ministers. this can do above that of a show that he is taking things back to control. not -- the covenant is not the reason for his troubles. francine: what are we expecting in italy? i didn't understand the question. francine: in italy, what are we expecting? quite the little bit of trouble over the weekend with the government. basicallyy hard words saying that he sees the next european election sweeping out the european parliament.

if you look at the reaction on the markets this morning, i think you might be a little bit deluded on the. it is quite interesting that we saw the government backing down a little bit in a clash with the european union. it seems like this weekend, demaio is backing down. francine: thank you so much. let's focus on europe. charles, when you look at europe, what is most significant? ins is still a president france that is trying to gain popularity. charles: since the consequences are unlikely to be great, i commentur colleague's from paris are perfectly correct. it is just par for the course in a midterm situation for macron.

no doubt the economy will be stocked seasonably for the elections when they come around again. that is five years from last year. francine: how does he regain popularity? they with do and elections come around in the economy will be recovering again. the main point here is italy because the italian situation is less satisfactory. the italian output in real terms per person is less than it was 20 years ago. income, they are even worse off. the government is not unreasonably trying to stimulate the economy. the problem is that it is very difficult to do with the exchange rate they have got, which is largely set by the

linkage between italy and germany, which is a very strong economy. that is the difference. francine: we are getting live pictures the day after the italian elections. what is clear is that the populist are representing something very real in terms of people's welfare and feelings, and they will have their adopted andextend stolen right of center parties throughout europe. francine: what does it mean for euro? are we going to test the resolve of european leaders to keep it together? charles: on the one hand, you have got the risks of the type i

described. in principle, euro is grossly undervalued. is european current account about $500 billion and rising fast. that economy kind of has to be strong. rates inevitably interest start to move up by the end of this year and also by the end of also the bond yields go up in the peripheral countries, you are going to be in a position where the euro will not have so many capitalized. as always, contrary forces in each direction. which is going to be stronger over time? i think the euro will probably not strengthen much against the dollar, but will be strong on a trade rated basis. francine: this is our question

of the day. could a brexit announcement this week set the tone for sterling for the rest of the year? you can also be are questions and by going to tv and the bloomberg terminal.what is your take ? charles: my take is that it be.t the sterling position is going to be dictated by the parliamentary situation in britain, which will arise after ms. may has achieved some sort brussels.nt in we don't know what that agreement is going to be and we don't know how the tory party is going to react. thank you so much. with surveillance, plenty coming up.

coming up a little bit later, saudi arabia's crown prince says it is plan in aramco will go ahead. we bring you our exclusive interview. this is bloomberg. ♪

francine: this is "bloomberg surveillance." let's talk commodities. tintoief executive of rio is saying the trade war has no impact on his business whatsoever. we are still pushing our

extension program in the u.s. we have plenty of options and beyond that, we are spending $200 million every year. due we need to do m&a in the context of copper? the answer is no. we are very patient. att: i have to point out chart. more the demand side than the supply side, are hedge funds or very long throughout 2017 in the beginning of this year. they dropped down to net shorts for a bit, but now they have turned back to net long. i think hedge funds were concerned about the chinese economy in the trade war. the effect of that on the demand side for copper, how do you feel about the trade war in the chinese economy right now? considering how important that

is for dr. copeper? china, the mining industry is very important. to china accounts for more than 50% of all the trades we are doing. no.oncern, the answer is we have multiple entry points into china. the chinese economy is -- at the same time, it is clear that the chinese government has decided to put more stimulus into their system. if i look at the infrastructure in china, -- are we concerned? absolutely not. there has been no impact in our business. between canada and the u.s. and re;lation to nafta.

anna: no impact. what worries the boss of a big mining business? are there worries? >> i have lots of worries. we just mak -- need to make sure that these are will run. we provide technology. anna: what is a big threat? >> i think the real threat for us is making sure we have a reasonable business. with knowledge of reasonable attitude and making sure that our 40,000 people are working to make sure we have the right relationship with our customers and a strong balance sheet. francine: that was the chief

executive of rio tinto speaking to bloomberg. i'm still trying to get a chart that you asked for, but overall, commodities are extremely linked to emerging markets. can you decide which are going to do well or badly depending on whether their commodities are importers or exporters? >> that is something we follow closely, also focusing on the type of commodities. the metals and mining complex has underperformed. in the meantime, oil has stayed resilient. we think about russia or the gcc and gulf countries, that had it popular run. they so it was happening and bond markets as oil prices declined. we anticipate a much lower issue . the point is all of a sudden

with oil at $80, their budget balance is much closer to being closer to surplus or deficit to shrinking. a lot of the haves and have-nots at the end. the general census is oil is ing the markets. francine: do you have to be country specific? yacov: i say we are trying to figure out who are the winners with the current oil strengths, and at the same time who is suffering? i think turkey has been in the crosshairs for a long time. example.ther when of the reasons we have seen under performance of the indian rupee is very much the same. oil prices have been robust and gone through the roof.

that has certainly shaped our more cautious view on india due to oil prices. arecine: commodities inflationary for the world, is a good or bad? think good for the whole. in principle, what yacov says about india is right. the energy and commodity importers are all made difficult. the current account deficit is probably in the region of $500 billion or $600 billion. coming on top of substantially existing dollar debt. the dollar strong and prices strong in dollars. it's a big burden. there is worst to come for the

emerging markets, even as there has been a bounce recently. francine: do you see anything in the bubble right now? yacov: i would say bubble is not the right word. there has been significant pricing and the general backdrop is solid. at the same time, we still have headwinds. we still have the fed and rising dollar. you have had issues in some markets such as argentina and turkey. at 70d say if we look plus countries, there are plenty of those to go along. there have been trouble spots and i think this trouble spots have affected sentiment towards the entire em complex. francine: thank you both for joining us. we are just getting breaking news out of mattel's albini -- matteo salvini.

saying the enemies of europe are in the bunker. i don't know what that does to investors, -- saudi arabia's crown prince has insisted the plan to sell shares in aramco will go ahead. by 2021 andan ipo has an ambitious view that the state-run company is worth $1 trillion or more. great to have you on the program. this ipo has been delayed before. is this time any different? not.obably he set a new target for the ipo. there is a change and he has given an explanation of why

there is a delay. in 20d when he sat down to analyze the future of the industry, especially the future of aramco, they decided they wanted to go down straight because that is where the future is. for them to have aramco competing, they said it would damage the other too much, so they are bringing them together and that is going to happen next year. they want one year of full financial results and then they still want to ipo aramco. will it happen? we have talked to some analysts that express some skepticism that it would be -- they would be able to do it as soon as that. the princess of a target for his advisers and ministry for them to work off of. francine: when you look at what else he told you, what did you learn from the interview?

softbank, he had investors in one of the funds. he said it is been so successful he is going to put another $45 billion in the next $100 billion that softbank wants to raise. he seemed extremely pleased about that. he also talked about his relationship with trump. we know president trump came out and basically said that saudi arabia would and last for two weeks without u.s. support and they should pay more. it is more harshly presented by trump. his reaction was quite mixed. on the one hand, he says he really enjoys working with trump. he very much sees himself in line with trump. what he doing exactly

wants the u.s. to do, but at the same time he said when it comes to the demands that they should increase oil, he said they have done it. he said they have more than replaced the barrels missing from the iran side. he also said this idea that saudi arabia would disappear in two weeks, he said we lasted for 2000 years without any support. any weapons we buy we pay for. francine: thank you so much. let's get straight to the bloomberg business flash. baker hughes has agreed to buy a 5% stake in adnoc drilling. lloyd banking group confirmed they are in talks in the wealth sector. the statement came as a result

that their combining the wealth management units. the deal would see the lloyds are owning 50.1% of the venture. that is your bloomberg business flash. francine: thank you so much. "bloomberg surveillance. continues in the next hour. we will have a full roundup on what is going on in china with easing.a will talk about banks and brazil and a second round of elections coming up in a few weeks. this is bloomberg. ♪

francine: chinese assets have slumped and stocks drop as pboc easesume in the

again. will brazil's far right --didate how it will justice kavanaugh's confirmation plant the polls? hello, everyone. this is "bloomberg surveillance." i'm francine lacqua in london. tom keene in new york. we look at emerging markets because of what is happening in brazil and overlaying that is the move in u.s. treasuries and any market moves that would be on the back of the price of oil. would say the u.s. treasury market is making things happen. the china news overnight will be front and center. would point out, columbus day in the united states, so many people off. francine: u.s. treasuries not trading.

i have one board. tom: equities, bonds, currencies commodities right now. we capitulate the follow-on from u.s. higher yields. futures decidedly negative. bond dynamics are not going to be shown in the data check today. weaker euro. oil weaker as well. let me go to this screen. out.it really blows that is a huge equity move in the vix from a 14 level up to 16.51. bond markets closed. as you noted, brazil front and center. renminbi, we are really getting there quickly. let me go over to the bloomberg. this chart breaks six surveillance chart rules.

a way to forget about the axis. this is the chinese reserve ratio rate. notice how they brought it in as they were economy is weekend. here is the fed funds target rate. separately, the fed funds target rate moves up. this shows chairman powell raising rates. at the same time, china making their system a little more liquefied to protect against those international affects. i think of broke for chart rules there. francine: i almost had a similar chart and i thought, break the chart rules on a monday. on a monday, i was trying to be nice. i'm glad to do the same chart i had. this is basically the yield spread between china and u.s. sovereign bonds. you can to the narrowing of the spread is that the smallest since 2011. the people's bank

of china lower their required reserve ratio for some lenders by one percentage point. let's stick with china where stocks plunge as nations market resumed trading, capping their worst performance since 2008. tech companies were the worst performers. i like talking about china because it underpins the whole story when it comes to the fed. it underpins everything. i have another great chart that breaks the rules, but as. important today we do that when china eases. again.at is so important blinked andndia they provided fuel support for their people because of the reality of higher oil prices. the fact is in the monday in china, china blinked and they really put five their economy with the reserve ratio move.

i'm sorry, i don't care what the guests say, all of it is interrelated and enter trying to -- intertwined around a discrete u.s. policy. francine: i think you are right. that i am looking at how much international investors have sold off china. the numbers are staggering. we did have a weeklong china golden week.a lot of the markets were off last week . time stocks were the worst october in a decade. i think they don't $1.4 billion on assets. we are joined by the jpmorgan .sset chief management thank you so much for joining us. let me start with you, how do you read china? is it that the economy is

getting much worse than expected? ck: it is a deliberate attempt to ease the economy and part of the reaction against slowing global trade and trade tensions. it is the right policy they are doing in china. >> the chinese economy has been slowing. the risk is the u.s.-china trade war. we have been arguing for some period of time that the right would be to ease policy. this is another step in that direction and i think they will carry on because they need to get stability in the market as we get into 2019. francine: what does that mean for renminbi and the trade? buyers, the strategy is to go down. it's not manipulation of the currency. it is actually just the currency responding to a necessary easing of motion. tom: good morning.

i really want to flow in here to how everything is interlinked right now.what other correlations within a market ? is everything circled around term in powell policy? nick: that does have a very big impact on a place like china. the other thing to keep in the back of her mind with china is as we get into next year, china enters bond indices. there is this big appetite to buy chinese a government debt. tom: take us back to real investment. it can be cross asset or the other thing.there are all of these international relations.what does it mean for placement of assets in the equity markets in

the american and european bond markets? james: i think investors have been hiding in the u.s. equity markets of our this year because it has been the one market rate have seen strong earnings go through. what i think we saw last week was that it failed to break new highs, and then we had the bond market starting to selloff. a bit like a january and feb -- february. i think what we are looking at here is a modest pullback in equity markets until bond yields start going up. francine: what can change? it was a pretty rapid changing market sentiment. will it continue along that? james: i think equity markets are blindsided because we were

looking at everything else. we were worried about the u.s.-china trade war, italy, brexit, and suddenly the fixed markets creep up and give us something else to worry about. my view is that the level of bond yields is not so much of an issue. it is more the speed and amount of change. i think it was the fact that we did 40 basis points in four weeks. until the bond market settles down, it is difficult to see the equity markets catching up. see bondhink we need markets on target, we are got a quarter to get there. it will be a slower rise in yields. when you think of bonds, yield is king. tom: do you look for more instability? it has been a hell of a ride and bull market, and all of a sudden yields are competitive. does that mean it is more unstable from your? does.it

it mean volatility probably shoots up from here. at is a consequence of central banks globally exiting quantitative easing. the index volatility back into market. compete.ond your close with 3% rate in terms of cash in the u.s. that is a competitor, a decent competitor for other asset classes. tom: thank you so much. much more to talk about to tie in these moves, particularly on china. morning. we are thrilled to string out on twitter. this is bloomberg. ♪

francine: "bloomberg surveillance." this is "bloomberg surveillance." there are quite a lot of market moves going on. but get to bloomberg first word news with taylor riggs. taylor: starting in brazil, the far right strongman is closing in on the presidency after dominating the first round of voting. he brought up at 46% of the vote. he will face the workers party candidate in the runoff on october 28. brett kavanaugh will be at the end of the supreme court spence tomorrow when he hears his first argument. the newest justice will still be the center of attention. the senate ended one of the most contentious confirmation battles over the weekend, narrowly voting to have an eight --

elevate cap not to the high court. he will now have to earn the trust of his colleagues. president trump says he hopes to see kim jong-un in the near future. mike pompeo reported progress about a second potential summit. his brief visit was not expected to resolve critical issues. interpol says it's missing chinaent has resigned oil is investigating him for bribery and other crimes. he was taken into custody when he arrived in china last month. his wife is said to believe her health is in danger. louis a fed president has not seen a recession in the near future. he spoke to bloomberg in singapore. cycle.re late in the

think you have to be aware that recessions occur and you have to be careful on that side. you take that risk into account, but i don't see anything on the horizon right now. taylor: global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. tom: thanks so much. messages were spun yesterday. with cbs face the nation, here is the senate majority leader. >> everybody knows i energized -- how energized the democrat side is. our energy and enthusiasm was lagging behind there's until this. i think this gave us the motivation an opportunity to have the kind of turnout that would help us hold the senate. tom: working eight days a week, is kevin, our chief washington

correspondent. i saw you working on a historic saturday. let us begin with the moment at the supreme court today. how will judge cap not be greeted by the other judges? justiceso of those talks on friday at princeton and the said they feel that court might be perceived as being a bit more political. later today, there will be a swearing-in ceremony for president trump. the president trying to have primetime. there is no question now that the perception of being more political. i would anticipate protests. the first case he could rule on comes tomorrow. we are now into 29 days until the election. what are we going to hear this morning?

kevin: the big question is whether or not the republican enthusiasm holds. you heard that from the senate majority leader and top surrogates saying the republican base is motivated to get to the polls. we focus so much on the different politics of the last, but look at the democrats. these are democrats up for reelection in red states, in states that president trump carried by double digits. the question for them is, are they going to get on the campaign trail and push for impeachment of judge kavanagh because one congressman is set to take over the house judiciary committee as a progressive democrat. senator lindsey graham would hold the senate judiciary committee.

for the base of the republican party, this fight is not over. look for republicans to use that. francine: you are saying that if the house goes to the democrats, there is going to be more investigations including the threat of removing kavanaugh? kevin: they could vote to impeach him. it would be an uphill battle. i don't want to hypothesize or buttoo far ahead of myself, congressman nadler has said he was to have investigations on justice kavanagh. if there is a split government, republicans will use that argument to help motivate the base. francine: at 30 days until the we heard you saying the republicans are trying to keep momentum. what does that mean? president trump is going to be in upstate pennsylvania this week. he also has another series of

rallies.he will be heading that trail hard . the map for the congressional races is very different. look for the president to try and keep that enthusiasm, but also look for him to try to close the gap in suburban districts as well. tom: the change last week was even a possibility that the democrats would not take just the house, but also the senate. that is a remarkable statement that was last week. is it still there? kevin yes. the palpable frustration from democrats with senate minority leader chuck schumer as well as senator dime -- dianne feinstein. , is new wave of democrats think that frustration with democratic leadership for how this entire situation was handled is palpable. they have different criticisms

them at the right is critical -- criticizing, but they lost big, and i could be a big problem for come november 7. tom: thank you for the morning briefing. he will join us in the 6:00 hour as well. much more to talk about. coming up, we will drive a forward the conversation with isaac of compass point. very smart on the linkage of policy into american politics. we will do that in the 7:00 hour. this is bloomberg. ♪

francine: brazil's presidential race goes to round two. the former army captain who pledged to rid the nation of corruption will face the workers party on october 28. let's get straight to bloomberg's bureau chief. he was very close to getting 50%, which is something we have not seen for decades. is it now a done deal? this he become the new brazilian president? >> it was very close to call. it when it first came out, he had 49% of the vote. he ended with 46%.

it is very unlikely from what we have been hearing since yesterday evening that he will lose. what we basically here is his this is his to lose. he needs to make a big mistake in order to turn this around. francine: give me a sense of what his priorities will be. i guess there are three, reducing crime, dealing with the deficit and also dealing with unemployment. julia: exactly. he talks a lot about violence. that was a big part of his campaign, fighting violence which surged in brazil. we had 64,000 murders last year which is pretty impressive. that.italized a lot on on the economics front, he has a very liberal economics advisor who wants to privatize pretty much everything. he was sitting next to him last on a facebook live that he did after the results were called. that is the hope from the investors side that he will deal with them deficit through

reforms and privatization, diminishing the size of the brazilian state. we don't know what exactly is going to happen yet. tom: not to get you in trouble with the brazilian government or journalists, but how big a nightmare is this guy for the bankers, professionals of the brazilian labor class? julia: the banks and investors are pretty happy with him. we have seen that in the rally in the past two weeks. we have seen that continuing overnight with the rally in european assets and some asian assets. 6%.ything is up they are happy with him. he has fewer regulations. let's open up the markets. investors are pretty happy with him. tom: thank you so much. paulo.n sao

chart.how you a here is that rally of the elites and what we saw yesterday. francine: it's a good chart, we the been trying to track outcome of him being elected president. it now stands at around 75%. monica, we will be talking to her. fellow.that is coming up at 7:30 a.m. in new york. this is bloomberg. ♪

tom: good morning everyone. francine lacqua in london and i'm tom keene in new york. and james barty of merrill lynch.

it is a latin america of distraction. we heard it is a distraction. -- we heard it is idiosyncratic. do you buy it? as brazil is concerned, it got oversold on the summer on all these concerns about the election. that felt like a rough ride. saying isarkets are that whatever your view of the candidate, from a market perspective, here is someone who is going to deal with the deficit, deal with the public ownership issues in brazil and it takes away that downside risk for brazilian assets. means is you have to find opportunities in em. of latin america the mother those opportunities? nicholas: absolutely.

when you look at latin american assets, they are some of the assets today. a lot of those are cheap now. brazil, a lotat more in terms of economic clarity. that is a plus. a lot less uncertainty. markets hate uncertainty. in three weeks, that is likely to disappear. francine: do you look at the social consequences of the election of bolsonaro and what that could mean for the markets longer-term? are the markets too much focused economicsanding the without understanding the social implications? the issue was, are you going to get a leftist candidate or someone who is trying to deal with the deficit which has been a problem. francine: how can you do it? james: there is privatization.

they can start to get public spending down. control the things which allowed it to get out of control. that is the hope. whether he can deliver is different. is have one candidate who trying to deal with that and another candidate saying we are going to carry on the way we are going. how much do we know about the new president support in the houses which make a difference in how he can govern? nicholas: that is the key. policy butnot just a the ability to push those policies through. whatwe have seen is that are seen as radical are enacted. francine: thank you both. nicholas gartside and james barty stay with us. let us check what is trending. musk's rocket company launched a commercial satellite

for argentina sunday evening, making it the 17th mission of 2018. offi di maio shrugged attacks on his government's fiscal it -- fiscal plan. stories, in third place, the department of homeland security has back the tech firms denying that china hacked their firms. in second place, pompeo will not meet with president xi jinping on monday in beijing. our top story, chinese stocks have tumbled as markets reopen after a holiday. let us get to first word news. here is taylor. u.s. secretary of state mike pompeo had what was described as a testy exchange in beijing. pompeo says fundamental disagreements. of meddlingthe u.s.

in china positivist domestic affairs. in south africa, the finance minister has asked to be relieved of his duties. nene asked the president to replace them. he is under pressure after exposing he met with members of the zuma family. they up and implicated in a scandal. it is the deadliest accident since 2009. federal officials are investigating the crash in upstate new york that killed 20 people. the limo was speeding on the way to a birthday celebration when a loss control. all 18 people in the limo were killed, along with pedestrians. spacex is having the type of success that eluded him at tesla. the 17th launch of the year inserted an argentine satellite

into orbit. the first stage landed at california. completed 18 missions last year and is on track to exceed that in 2018. 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 so much. controversy surrounding the italian government spending plan has led to nervousness in governmente cost of borrowing has been rising over the past months and there are concerns that the plan mean the country is heading for a standup with the european commission. one of the architects for the e .u. weighed in on bloomberg. >> the fiscal targets announced by the new government are out of

line with the agreed fiscal framework that countries have given themselves. iny have adjusted a bit response to the criticism. we have to wait and see but there is the potential for conflict. francine: still with us, nicholas gartside and james barty. james, what do you do with italian bond yields? there seems to be the standoff getting worse. i do not know if it is salvini ad demaio speaking to domestic audience being interpreted by international investors. james: i think they are speaking to a domestic audience. our economies look to the details of the plan, it looks like more weakening than we previously anticipated. standoff in the problem is, if you are in the international investor, are you

going to buy italian assets now? we have of research done, if we look at where italian retail investors come in , the danger for the italian government is they are playing with fire. by widening the deficit, they are meeting their promises to the elect are a. -- the electorate. it is dangerous to push bond yields up. francine: is there a bigger question that the market is testing whether they want to stay in the euro or not. we keep there is no secret plan to take italy out. suddenly talks about all of the troubles are due to the e.u. it is clear italy once tuesday in the euro. yields, itok at that

has already replies -- reap priced a lot. -- reap priced a lot. , i'm going toaly bring up this chart. it is like francine's 10 year yield. we are extending out with the difference between yield between italy and germany gets back to crisis levels. how close to crisis are we? long way fromre a crisis when you think of italy. that spread is about 3%, maybe it goes wider from here. when you look at italian assets, a lot of the bad news is priced already. within italy and germany, there has got to be an opportunity on an allocation

basis. is it an equity market play? james: that is a good question. it is a bit of each. the italian bond market going lockstep during this crisis. btp and german btp starts to stabilize, that is not going to affect markets. at the moment, we do not know where this finishes. to get to more interesting levels but there is a danger the markets will continue to press the italians and if we continue to get the standoff between the commission and the italians, that the only way the e.u. can put pressure on the government is to let the spreads widen. francine: michel barnier will present the future relationship to commissioners on wednesday. this is our question of the day.

let me bring you to my chart looking at sterling. sterling -- will sterling's trend be decided wednesday? nicholas: sterling will be stronger by the year-end. this is going to perfectly. untiler, we have got march. there is likely to be more volatility. james: i would agree but there are hurdles. can get aeresa may deal with the europeans, can she get it through parliament? we saw there are a whole bunch of brexit on the right of for party. to get a solution to the border, you have got to get something which continues for a time. side, there are concerns about how far they can go.

what we've got is volatility. i agree, the end of the year is likely it is higher. there are risks around that. tom: james, thank you so much. nicholas gartside as well. there is more to look at. let us do a data check. bonds are closed but you would not know it. the ramifications of higher yields assist -- substantial. now 16.26.ht the euro weaker on new dollar strength. crude weaker this morning. this is "bloomberg." ♪

taylor: this is bloomberg

surveillance. i'm taylor riggs. let's get your business flash. u.s. prosecutors may take a step of turning individuals in the sanctions violation case. to bringpreparing criminal charges against two former employees over sanctions breaches involving iran. the british bank may face $1.5 billion in fines. these bendsf mercy is looking for a high-level departures since naming a new ceo. the daimler ceo will not seek to us send his contract. month, they elected someone else to take over as ceo next year. the chilean copper miner is downplaying the impact of a trade fight. the bloomberg spoke with the ceo. >> the outlook for copper is positive. on the demand side, emerging

markets continue to drive physical demand. demand is expected to grow about 4%. in other parts of the world, demand is strong. on the supply side, copper is in shortage. you have declining grades and it is a commodity which is supply constrained. the outlook for price is positive. taylor: that is your business flash. francine: thanks. let us talk commodities. toe chief executive of rio tin says he is not concerned about the markets for aluminum and he says the trade war is not having an effect. he spoke with matt miller. we asked him where it is going to find access to more copper. >> we are balanced globally. there is an issue in terms of geography.

are we concerned? absolutely not. we are self-sufficient. >> just to ask one more question on the supply issue. you buy a lot of it from russo. that company could have sanctions imposed on it again. supplier,e another what does that do to prices and how do you prepare? >> we will not have any issue in relation to rusal. we are on both sides of the trade. one side anding bringing the aluminum from the refinery. we have contingency plans in place. ,n addition to that discussion we are confident we can find a solution to ensure this refinery will not be stopped.

we are covered in terms of supply in the future. no worries. me ask you about copper and what is going on there. you like copper. >> i love aluminum as well. >> plenty of love. andus talk about copper where you're going to find access to more copper. it does not look like anybody wants to sell it now. where are you looking? >> as far as copper is concerned, we want to grow in copper. it is an attractive market. supply is tight for the next 10 years. we keep a watch on copper. it is about trading value for shareholders and it is safe to say when you look at the valuation, it was good for the sellers. we have a strong balance sheet. we have no debt.

we look at opportunities and we will be there. waiting for the nobel prize announcements in economics out of sweden. we will see if we get those at any moment. we call it the nobel prize in economics although the phrase is more formal. nicholas gartside and james barty. how about a chart as we wait? let us bring it up. it is the inflation-adjusted commodity index back 25 years. glimmer, weere any saw a little bit out of 2008, a little bit of a china boom and back to deflation. can we get a lifting commodities? james: -- a list in commodities?

up in thewe end worst-case scenario, and extended trade war, week chinese growth, you're not going to get rebounding prices. if we do see progress on the , you can be more optimistic about global growth and that will help. concerned,opper is you need the demand to come through as well. commodities remain geared into global growth and that is going to be the driver. tom: with in commodities, the opportunity in mining, in investment, is that something we should look at? nicholas: you very much look at that. when you look at growth, the risk is it is stronger. got central banks easing policy if they can.

those central banks tightening policy, there is a shift from monetary to fiscal. we are seeing that in the u.s., in italy, with the french deficit your it -- deficit. commodities are a bright spot. francine: tom, i think we are getting breaking news. i am not sure. are waiting for the nobel prize in economics. you have been following this closely. been guests and friends of bloomberg surveillance that have gotten it. tom: let us listen. this prize is financed by the central bank of sweden and included in the nobel prize ceremony. in first prize was awarded 1969 and it is now being awarded for the 50th time.

we are celebrating an anniversary. the secretary-general of the academy and with me here at the podium is, the chairman of the prize committee and on my , a member of the prize committee and who will tell us more about the research awarded today. is about's prize innovation, climate, and economic growth. [speaking in swedish]

the royal soonish academy of sciences has decided to award the prize in economic s liam de nordhaus for integrating climate change into long-run economic analysis and the other half to paul romer . tom: this is a wonderful announcement that we hear here and particularly first stanford university on innovation and the mysteries of growth.

what is so wonderful about this award and both of these gentlemen have appeared with us over the years on bloomberg surveillance, is this word innovation and what technology is doing to our modern society. they have been way out front of trying to go beyond growth, to what doesrom technology do to our processes? francine: you are right. goes to research on climate and development. it was interesting to put it against what we saw last year. last year, the prize went to richard tyler, part of the team which talked about how people can be persuaded to make decisions which leaves them

happier. i remember how much focus was on that research. spotlight on an important work that still needs to be done on climate change and development. rumer is now at the world bank, advising on innovation. a good day for the massachusetts institute of technology. both of these winners a darkening the door of the m.i.t. over the years. rumer outed chicago. what is so great is the technology overlay and we have seen this and everything we talk about. let us go back to our guests. this goes to something that the bank has talked about.

i look at the idea of a technology overlay and it is a mystery, isn't it? james: it has been. we have had all this technology advancement and you cannot see it in the productivity numbers. are we measuring it incorrectly? is it in the pipeline? these are the things we do not know. is important.at let us face it. we are on the cusp of this industrial age and it recognizes that interplay between innovation, technology, and climate change. in terms of unlocking that key, this work is critical. tom: very good. i love that phrase, i'm going to steal it.

nicholas gartside and james barty. we inform you of the winners of the nobel prize. aus studied under solo. with paul romer, both of these individuals associated with m.i.t. to give us perspective on the nobel prize winners, to give us perspective on growth, we are thrilled to bring you willem buiter of citigroup to speak to us about this new idea, this new technology, a new industrial age.

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"all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. tom: china responds to the reality of higher u.s. interest rates, a faltering economy.

on chairmanr powell, central banker to the world. this morning, china response to trump policy. the secretary of state says we have a disagreement. the chinese foreign minister says there is damaged trust. the trump administration is "out of line." it is a conservative supreme court. what comes after kavanaugh? good morning. this is bloomberg surveillance, live from new york, i'm tom keene. francine lacqua in london. on the heard from sweden awarding of the nobel prize on economics. this is breaking news for the idea of economics and technology. there are any number of ways to take this. romer are good candidates on innovation and technology. francine: what i love is this

always puts a spotlight, it brings the research to the world. we need to focus on it as we have on surveillance and the public will find out more about them. breaking news is also from italy. we heard mr. salvini talking in rome and italian bonds tumbled, stocks tumbled. there is a market move on anxiousness from italian investors. tom: let us get to first word news. here is taylor. taylor: starting in brazil, jair bolsonaro is closing in on the presidency after dominating the first round of voting. bolsonaro wound up with 46% of the vote, just short of the majority needed to win outright. bolsonaro will face fernando had dad in a runoff october 28. brett kavanaugh will be at the

end of the supreme court bench tomorrow when he hears his first argument. the newest justice will still be the center of attention. the senate ended one of the most contentious battles over the weekend, narrowly voting to elevate kavanaugh to the high court. he will have to define himself there and win the trust of his colleagues. president trump says he hopes to see kim jong-un in the near future. mike pompeo reported progress in a meeting with kim in pyongyang about a second summit. pompeo's visit was not expected to resolve issues over getting north korea to give up its nuclear weapons. interpol says it's missing president meng hongwei has resigned, while china is investigating him for bribery and other crimes. the south china morning post reports he was taken into custody when he arrived in china last month. his wife in france is said to believe her husband is in danger. st. louis fed president james bullard is not seeing a

recession in the near future. bullard spoke to bloomberg in singapore. >> we are late in the cycle. you have to be aware recessions do occur and we have to be careful on that side and take that risk into account. i do not see anything now. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is "bloomberg." tom: thank you. bonds, the ramifications of high yields come in, the curve steepening, not much movement given the closure in the u.s. oil finally weaker off that move we saw in brent. equities up. 30 year bond, a big 3.40%.

mortgage changing decisions of their. francine: if you look at european stocks, they are following as there are concerns about italy's defiance of e.u. officials, adding to a gloomy picture across equities. i am looking at chinese shares, they are leading declines lower. i am also looking at the euro and it is moving on the back of this italian movement. tom: before i get to willem buiter of citigroup and the idea of the nobel prize winners and before we get to a discussion of economics, we must look at the politics of the weekend in the united states. on saturday, with

mr. cavanaugh becoming a supreme court judge. on cbs face the nation, here is mcconnell. everybody knows i energized the democratic side for a variety of reasons. our energy and enthusiasm was behind there's until this. gave us the motivation and opportunity to have the turnout that will help us hold the senate. tom: mitch mcconnell of kentucky. joining us is kevin cirilli, after an event for weekend. an open question, what are you focused on in terms of an election? does the enthusiasm gap nowthe republicans hold that just kavanaugh is on the bench? the president is in florida

campaigning and he is going to end his stay in the white house to have a formal ceremony for justice kavanaugh. that enthusiasm and chen's evaporated for democrats. who arewith democrats fired up and believe the enthusiasm is going to bounce back to respond to republicans. state democrats, they are going to have to walk this tight rope because these are states the president carried. the nuance we are seeing with these democrat senators struggling with a trump state? having they're going to have to say theyether they can would support more investigations into justice capital, whether he should have

impeachment proceedings. these are states of that are conservative and the impeachment issue is something that republicans are rallying around, the same way we saw in pennsylvania with the election of conor lamb. they are arguing that if democrats take control, there would be more impeachment proceedings now, not just for president trump but for justice kavanaugh. francine: what are you watching out for on the road to the midterms? polls,o not believe the what will be the indication for what happens? kevin: you have to look at the enthusiasm. you have to look at suburban women. how the base of the republican party could be impacted by justice kavanagh. suburban women voters, how are

they going to respond? those are the constituencies i have my eye on as we head into this week. what type of democrat is going to be elected in the house? will it be more centrist or progressive? we do not know. that thereats argue should be a party. we do not know yet if nancy pelosi agrees. francine: when president trump with hindsight people said we should not have trusted the polls because there were voters that did not want to say they voted for president trump. are the midterms different? can you have republicans voting for democrats? kevin: that is a great question. what we have seen is that the party that is not empower as a

has a greatwer bounce back. there are no rules anymore. the president has hit the campaign trail. he is in florida today, pennsylvania later this week. idea that republicans do not want him on the campaign trail is false. i do think you're going to see democrats trying to mobilize on the issue of judge kavanaugh and i do not think we have heard the last on this, particularly if congressman nadler takes over. tom: i look forward to your first day off. i believe it is the first thursday of november. thank you. boston, gregory valliere eight joins us. , how do you game it now? >> you and i have said this a

lot. you underestimate donald trump at your peril. he is on a roll. he has got a labor market, the economy looks good. that makes his supporters less energized. the angriest voters are on the left. tom: it is not a presidential election. what is the number one distinction of why this first tuesday of november is different in terms of the dynamics of elections? gregory: you have got health insurance. pre-existing conditions is going to be a big deal. the economy will be a big deal. the american bode her attention span is short. we have a month to go and i think people will have forgotten about kavanaugh.

i question the idea that the republicans are motivated. what will they focus on? if the memory of an american voter is short-term, is it only on the economy that they bow? -- that they vote? the president is trying to make the election about him. i am not sure that is wise. he generates opposition. we have got a month ago. to knows what is going happen, whether it is geopolitical, economic, what ever. where still in a period an event could make a difference. francine: does it matter about tax returns? do voters care about the trade war? gregory: i read the new york times expose of trump's tax

returns. he is shady, slippery. didn't we know that already? i did not see anything that changed the narrative. i would not say people do not care but i do not think the piece was surprising. francine: so people do not care, what do they care about? think they care about the economy and i have been saying this is not a title wave. a heavy surf advisory for the republicans. you are going to lose the house. the senate is a tough call. the republicans are expected to lose. suffers houset losses of about 25 seats. 23 is the magic number. i do not see a title wave because the economy is hot. francine: thank you so much. we will get back to the markets, we will talk about brazil, we will be joined by willem buiter.

this is "bloomberg." ♪

taylor: this is bloomberg surveillance. i'm taylor riggs. let us get the business flash. airbus will designate commercial eric graf chief -- commercial aircraft chief to be the next ceo. -- company's board will make will meet today. he is the heir apparent who announced he will be leaving in 2019. in the u.k., investment manager schroders confirms it is an talk

with lloyds banking group about collaborating in the wealth management sector. they are near a deal for a joint venture. it is unclear if schroders will win the prize, $143 million investment management contract from lloyds. blackrock is said to still be in the running for that. miners is notgest worried about the effects of global trade disputes. bloomberg spoke to the ceo of rio tinto. >> there has been no impact whatsoever on our business. trade wars have no impact. taylor: that is your bloomberg business flash. tom: thank you. we have always taken pride in our economics and bloomberg surveillance. we have always covered the nobel prize winners with a certain

care. my interview years ago and familiar guests, including michael spence, robert shiller, and paul krugman. it is where we have somebody on who has a direct connection, so direct is bill about her with mr. norton house -- willem buiter with william nordhaus. it -- andn and it is is it correct to say he jumpstarted your career? i had forgotten to take my sats. tom: some of our staff did as well. willem: you blow it. here he is, he has written the book.

what was the nobel prize winner like 40 years ago? willem: he was a great teacher. he taught macro economics and i was first. he was inspiring. back 60, 70, 80 years. michael spence worked with john hicks years ago. you wrote the definitive remembrance of james tobin. to bringhat they did economic growth forward? nordhaus andway, tobin started modern environmental economics, integrated with growth theory. .t is interesting to have romer

aus showed constraints on growth from the environmental side. tom: so much of this comes back to solo. from the london school of economics with kenzie and limitations. is the nobel committee trying to say something to the elites and academics about the immediacy of our limits and environment? willem: it could be interpreted that way. --is no quinces and's that no quinces dense that at a time that at a timece . extraordinary. it goes back to these linkages of academics to the schools. francine: we follow it closely.

people follow it closely. translate what this means for the public at large. will they have a better understanding of the crosshairs of environment and economics? does winning a prize mean you can educate the world to some of the things you discovered? willem: it gives you a platform. substancet change the but it giveswrote them a platform on which to address the public. from the point of view of environmental economics, it is important. being spokennse is in this country about environmental issues that it is important that someone has done the work, the analysis, studied the facts as well is trying to put together coherent theories

that should be listened to. francine: thank you so much. bolle,up, monica de peterson institute senior fellow. we will talk to her about the elections of that happened yesterday and what a win for mr. bolster narrow means for -- what meansfor mr. bolsonaro for the economy. this is "bloomberg." ♪

tom: good morning, everyone. to quick question as we look the annual meetings of the imf. the presumption in this world's economic outlook is first lowe slowing economic growth. is that what citigroup sees? willem: most likely, yes. it is clear they are concerned about some of the leading emerging markets that would be adversely affected by the monetary tightening and the rising long yields and the strength of the dollar. indonesia is part of that. difference in that there are so many floating exchange rates? compensate to because we have more flexibility? willem: it helps but flexibility

can be a source of vulnerability if you have a lot of foreign-currency debt. if the dollar goes through the roof, you're not happy. tom: is that something we can talk about? zation, a primer for all attending meetings in the imf. bloomberg will be there to report on those events. willem buiter with us. nathan hager on bloomberg radio, bloomberg daybreak. this is "bloomberg." ♪

francine: this is bloomberg surveillance. tom and francine from london and new york. we will talk about brazilian elections, market angst because

of italy. here is taylor. taylor: americans have been awarded the nobel prize in economics. william nordhaus was honored for integrating climate change and economic analysis. paul romer was cited for his role in innovation in economic growth. -- had whathad was was described as a testy exchange in beijing today. pompeo said his fundamental disagreements between the two countries. the china accused the u.s. of escalating trade disputes, interfering on taiwan and meddling in china's domestic affairs. elon musk's spacex is having the type of success that eluded him at tesla. the 17th launch of the year inserted an argentine satellite into orbit. the first stage landed at california. spacex completed 18 missions last year and is on track to

exceed that in 2018. in brazil, voters unhappy over years of recession have flocked to jair bolsonaro. the strongmen stormed a huge lead in the first round of presidential elections. --sonaro took 40% percent 46% of the vote. haddad. -- he will face fernando hideout on october 28. in south africa, the finance minister has asked to be relieved of his duties. nene asked the president to replace him. nene is under pressure after disclosing he met with members a family.pt they are friends of the zuma family, implicated in a scandal.

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 so much. let us get more on brazil. we are joined by the bureau chief. is clear that mr. bolsonaro has a strong chance of becoming president in a couple of weeks. what will his priorities be? for now, what he has said, prioritizing a lot of things and fixing brazil's fiscal accounts. this is what his economic advisor pledges. get thesee if he can through congress and that this is how he is going to conduct his plan. francine: he is divisive in the country. he is a far right former army captain. why is he so appealing? >> as you were saying earlier, brazilians are tired.

there have been years of recession, violence, unemployment is at 13 million. people were tired of the workers party who world 13 years. -- who ruled 13 years. he presents himself as something different. his campaign was on violence, also, i violence and will change the way politics are done. if heow does he do crime does not want to be the leader of the philippines? how does he do it across brazil? who wouldre analysts tell you his proposals are to conan. he wants to give bonuses to police officers who shoot people. he wants to free up gun laws not

just for rural workers but for every people. he wants to overrule that and make it easier. he has a strongmen approach to and he does a gun sign as his campaign symbol. not want you to be a foreign exchange strategist. lula and ms. hall on he started a decade rally on the strength in real. >> i am mortgaged. did have a great run and he was backed by a great run in commodities. brazil was surfing that a few years. right now, the forecast for bolsonaro are good in terms of currency.

360.ve people saying we are closer to 390. if he does win, it should continue to rally. we will see how far it will go. francine: thank you so much. in charge of our brazilian election coverage. how much are the troubles of to brazil because of crime, corruption, and unemployment? willem: i did not hear that question? francine: are the concerns we have on brazil due to brazilian politics or is it an emerging markets story? willem: it is mostly brazil on politics. in terms of the indicators of vulnerability, like having a large current account deficit, brazil does not have a surplus. dimensions that

are healthy. uncertainty question about the next political leader and what policies he will adopt ,o address the urgent problems the need for pension reform, and open up the economy. it is a closed economy. they need to engage with the international economy more aggressively. francine: if you look at the popularity of bolsonaro, can you link the u.s., brexit, italian populism? willem: not really. traditional,quite hard right politician. he is not the usual

anti-immigrant populism driven anti-globalization strain. he is quite different. his popularity is due to the crime that violent plagues the country. francine: what should his priority be? the threet priorities, it is dealing with crime, unemployment, and the deficit? willem: those three. francine: what is number one? to get his popularity back dealing with crime. the easiest one is the one dealing with the deficit, at least from the technical perspective. untriedwith crime is and we will have to see if he

has the solution to this problem. tom: you are a special advisor to citigroup with their global platform, dealing with market realities. do higher interest rates in the united states affect brazil? willem: of course but not especially. marketsange of emerging we think of as vulnerable includes countries like argentina, turkey, indonesia, countries with large current and questionsts about central bank independence. brazil, ticks one of these boxes. tom: we are going to come back on this. paul romer and william nordhaus are announced as nobel prize winners. coming up, to drive for the , monication on brazil

de bolle joins from the peterson institute. this is "bloomberg." ♪

bloombergis is surveillance. i'm taylor riggs. let us get the business flash. u.s. prosecutors may take the step up targeting individuals in a sanctions violation case. they told standard chartered they are preparing to bring criminal charges against two former employees over sanctions breaches involving iran. the british bank may face $1.5 billion in fines.

the parent of mercedes-benz has announced the first high-level departures since naming a new ceo. the daimler ceo will not seek to extend his contract which ends in last month, they elected 2019. someone else to take over as ceo next year. the chilean copper mine is downplaying the impact of a trade fight. bloomberg spoke with the ceo. >> the outlook for copper is positive. on the demand side, emerging markets continue to drive physical demand. china's demand is expected to grow about 4%. in other parts of the world, demand is strong. on the supply side, copper is in shortage. generally, you have declining grades and it is a commodity which is supply constrained. the outlook for price is positive.

taylor: that is your bloomberg business flash. francine: thank you. the controversy surrounding the italian government spending plan has led to continued nervousness in markets. there are concerns of that the plan is heading for a standup with the european commission. the deputy prime minister spoke earlier added press conferences earlier at press conferences. the enemies of europe are locked inside the brussels bunker. the enemies of the happiness of the european people are the jun ckers who have brought uncertainty and fear to europe and refused to leave their posts. joining us now is the rome bureau chief. you, when you look at what mr. salvini has said, he is

attacking europe, attacking the austerity plans and he says he does not want to take italy out of the euro. alessandra: he wants to take the europe over. populists int the win the european elections and then they can decide how they want europe manage. they do not want to leave because it could be tragic and they want to change the rules of the game so they can play their own way. francine: italian bonds and stocks tumbled. does he care? does not because the thing is, long-term he does, but he is hoping there is not much to go until european elections and he is hoping the commission is a lame duck.

he cares more about what the market says but he is trying to play this game where if he manages, he wins it all. he is watching the market but he is trying to keep going and 300 for the spread is high but not high enough to make him stop. hearing ofe're also a cabinet reshuffle in france. will be president put in place to make sure his popularity increases? macron, whatanuel happened with the environment minister, he was popular who quit a few weeks ago, saying he was not doing enough to fight climate change. now you have the interior so ofer quit last week, course the question among the french people, among the

politicians is do we question his governance style? that there iside this question about his style. , nots to make this signal just replacing the minister. we could see musical chairs. thebig question is whether french finance minister will take on the job as foreign minister if the current foreign minister becomes interior minister. we should know that in the next few hours. that would send strong signals and a change of governance. .rancine: thank you so much still with us is bill about her.

--willem buiter. worry about populism taking over, leading to an anti- euro sentiment coming from italy? willem: there is some risk of that. we should not overestimate the result of elections. populists get the a majority. the real power lies with the heads of state. that you see a majority of populists taking over. yes, the european parliamentary elections are a concern but it is not as significant as some would argue. professor i can green talked about the immediacy of europe getting its house in , given the migration

immigration debate. how do countries deal with this? what does the netherlands do? willem: one needs to things. a common policy for the external border. funding of programs in the countries of origin to reduce the flow and attention paid to the integration of migrants into those countries. they have gone easy on that in europe. tom: conrad adenauer would not want the lazy man's out. the lazyey get beyond man out? willem: they have to start spending on integrating new

migrants in the economy, not just in terms of education qualifications but in terms of knowledge, the local culture. ghettoiot have this zation. will be: willem buiter staying with us. you can also use some of the charts tom has been talking about. log onto gtv . you can use them, you can send them back. this is "bloomberg." ♪

tom: bloomberg surveillance, francine lacqua in london, i'm tom keene in new york. bond markets closed in america. we have the distraction of paul nordhaus william winning the nobel prize for contributions to innovation, technology and the mystery of

economic growth. day forchart of the paul romer and william nordhaus. we are honored to do this with willem buiter. it is nothing more than american solow and thebert rest, i took it to logs. this is the mystery. everybody on all sides of the debate and in china, has the ,ystery of economic growth including the pullback we saw in the financial crisis. and heugman is skeptical has a great phrase, " the unmeasurable." we are trying to think about growth with lots of unmeasurable things. can we measure growth in the things that go into it? willem: we have approximate

approximatowth -- ions to growth. change is in the consumption spear. there are also changes in quality. overnight, wews have a china struggling for economic growth. working on a modern developed country model or is china working on a model before romer. movem: china is trying to to a consumption driven model from goods to services and to green growth and that is a transition. it will be accompanied by a slowdown because they grew at

10% for so long because they were a huge distance from the frontier. it was pre-romer. it was not an endogenous growth. this was getting up to the frontier, which is easier. francine: how bad will growth be for china? global be enough to her growth or will they be able to deal with it domestically -- to hurt global growth or will they be able to deal with it domestically? willem: they are trying. they relaxed monetary policy by oneing the reserve ratio by point. whenever the economy slows down ,ecause of structural changes they say we did not mean that and they unleash a credit or

fiscal stimulus. they are of two minds. this is not a happy world. concerned there will be a bigger slowdown than we have seen thus far. tom: we are going to radio and continue to talk. what an honor to have willem buiter with us on this day of nobel prize winners. we continue, including the ramifications in washington over judge kavanaugh. this is "bloomberg." ♪

♪ francine: foreign money.

overseas investment thinks in the worst start for chinese equities in a decade. trade talks get testy and there's more liquidity pumped into the market. equity investors take cover. risk off spreads, volatility picks off, italy take center stage as brussels and rome battle it out. in brazil's right-wing wave. the country's far right candidate catapults to a largely after the first round. this year, the anti-establishment vote. >> welcome to "bloomberg daybreak." the big story was bank season. the $1.4 million picture getting shredded. >> and if you had been for that, what were you thinking? my investment is worth more now? or are you crying? david: i wonder how big a secret it was. >> either they had no