markets pause, euro-dollar volatility jumps. china won't be bullied. while henry kissinger is fairly optimistic a trade deal can get leaders speak out at bloomberg's new economy form. an almost certain hard brexit, liberal politician peter mandelson brexit some form of hard brexit while theresa may's cabinet meets in secrecy us a dust to look at options for the brexit deal. david: it's election day, finally. i'm david westin with alix steel. polls are open and just remind seats in the35 house, all the house of representatives and then 36 seats -- 35 senate seats, 33 which is one third plus two special elections and then 36 governorships that are up. alix: there are two numbers you care about. david: the democrats need to

take 23 additional seats in the --se and two in the magenta two in the senate. production asng they will take the house and not the senate. alix: president trump talking about voter fraud. he waslate in the thing saying they're going to start to steal this election. it was out yesterday saying all you have to do is take a look around at what's happened over the years we will see there are , lot of people, based on proof there is water fraud going on. last time they had a big investigation it couldn't find any. alix: it didn't matter, he still got elected. david: is setting up for months of questions about whether these elections are legitimate. alix: it didn't work for al gore. there is that. nevertheless, i will be watching you this evening, have to be awake tomorrow. watch all the

election coverage right here on bloomberg and join us for special coverage for seminar :00 p.m. new york time we'll bring you all the latest from the key races. in the markets, no movements, as if you futures are five the euro-dollar pretty much flat with a 10 year yield at $3.19 and direct bidders did not show up to three rocks yesterday and crude oil was off by .6%, but how the hedging will go and how the volatility will play out is the key overnight. you know they are staffing for overnight and a lot of clarity by 11:00. david: bloomberg first take, joined by marty schenker and -- kule kawa. -- luke kawa. this is a different one, we saw

in 2016, national even hopeful little something that statement dated the by district, it can come out differently. marty: they are won and lost on the charisma of the local candidate and the connection with their local district. is going to be record turnout for this midterm and you can go the polls out because they are not set up to capture a huge record turnout. david: the thing we have right now is early voting. something like 50% above what was two to four years ago at the same time, youngsters are coming out. some of these get is more than 200% or 300%, then last time. a new classer it is of voters are stealing from election day voters is pivotal for how this will play out. how are banks raters staffed overnight? luke: some of my colleagues have

been doing a piece that essentially runs through that and it should be on the terminal. after 2016, there's a feeling that you have to be there, you have to be prepared. i think we are going to be on over correct for decades because of a couple of shock elections, we got in the past three years. in terms of fireworks, people aren't willing to put their neck on the line saying this outcome means this for markets, last time people were free strong and had some strong feelings and it was invalidated within three to six hours trade heading people will be a lot more cautious about trading think we will certainly be more cautious about reading into the some of those intraday swings we get when the polls come out. it was easy to interpret before then we were wrong. overnight fall taking higher, traders are now net long the vix. and they have not been for a while. on the margin, we're prepping

for a little more volatility. i think we're prepping for more volatility but also comes mainly as a side effect of what's been happening in markets. in early october before we had any selloff in stocks is a pretty big election risk premium built in. expected to move 2.5% on the vol of an because we gotten the board.ross it's tough to disentangle other people think this is a midterm risk or my -- more us reading into what is the state of the global economy and how long as the cycle? going into the 2016 election, all the go surprise indexes around the globe role in positive territory and now they are negative territory so you can put whatever narrative you want on this election and use it to explain the price action after. alix: celtic a great idea. the other big story we have today is trade. with the bloomberg in economy singapore and these are

some of the guidelines the came across from it. chinese vice president wang saying china will not be bullish and oppressed by imperialist powers as we have in the past and he says it's a fundamental shift towards a more assertive china policy and henry kissinger says failure would destroy hope for world order. what struck me about some of these comments overnight was that it was a fundamental shift in how china needs to view the u.s. and the u.s. needs to china. we know ceos are going to come out and say we want free trade with us a different conversation. been: donald trump has making noises that he really wants to make a trade deal and it sounds like the chinese are open to that but not at any cost. and xiting between trump this month is going to be critical to see where this all plays out. it strikes a we will be talking about midterms all day long but in fact, where china goes may be much more important investors in the longer term. trying to ascertain the

spillovers from attorney -- aown and ascertain chinese slowdown in ascertain when does fiscal stimulus kick weand is it mainly domestic, watch south korea exports. they sank into negative territory and they are now up 23% year-over-year. industrial connection and south korea is down, so it's tough to guess the signals and there may be more data filtering out on who stands to benefit and what reflationary forces that might awaken. that could be more important for certain commodity prices so that divergence conversions trade over the next months. david: brexit, continuing to negotiate with for mr. theresa may briefing her cabinet. -- prime minister theresa may reisinger cabinet. we have a very prominent liberal politician saying not very good things about what's going to happen with brexit. >> i think it's almost certain to have someing

sort of hard brexit. if we were going to really manage this in the interest of our own economy, investors, businesses, millions of employees that we have, then what you would be doing is leaving the european union but staying close to it. david: i remained confused about london, nigel in farage was saying we are not going to have any brexit at all, they are just caving. is everyone talking their book? marty: they are there real impact in the marketplace. bloomberg is a story about a schroders real estate fund that has its investors wanted to pull the money out and threaten the fund. happening, there real implications for the market on this confused situation. alix: talking about hedging and what's priced in, i swear to god, every time i read a report

that is totally different. the one consistent thing is pounds all relative to your -- pound voleuro growing higher. mazen issa see tremors and financial markets and you see worries about commercial real estate getting closer to the , it should to question of how much do i want to be involved in how much do i want to be long with this kind of tail risk? alix: marty schenker and luke -- thanknk you very you. david: general electric announced that you have a proposed agreement to sell their commercial lighting business to aip. it's not a huge surprise, they reported on working on it and they now have a proposal agreement subject to a closing

conditions and you can see general electric stock of about .5% in the premarket. this continues to be general electric selling things off and winnowing things down. alix: cvs up by 2.5%. third quarter comp sales slowing for estimates and also reaffirmed the 2018 forecast overnight on interesting as they still say they have five states that he to improve doesn't prove the cvs at a deal closing before a steering coming up on the more on the elections in the markets, stock futures a little over here and libby cantrell and jeffrey solomon will be joining us next. this is bloomberg. ♪

taylor: this is "bloomberg i'm taylor riggs. cvs posted third-quarter earnings that beat estimates and comparable sales were better-than-expected. cvs as an expected $60 billion merger with another close before thanksgiving. general electric is agreed to sell its commercial lighting business to american industrial partners, terms of the deal were not disclosed in the unit is called current powered by ge and will continue using the ge brand under a licensing agreement. ge agreed to sell leased $10 billion in assets over the last year. smith saysred companies are shipping goods quicker to try to avoid upcoming increases in tariffs. smith spoke about the trade war between the u.s. and china the bloomberg new economy form in singapore. >> china is a huge and important market for us, but in terms of our overall sort of tariffs eligible revenue, it's about

2.4%. the we take things to and from china from a lot of different places, europe, southeast asia, australia, japan. >> you'll just make that up somewhere else. >> hopefully. taylor: that's your bloomberg business flash. david: polls are no open in the east and the midterm elections have begun. with political analysts and better saying in all likelihood the democrats will take back the house republicans will hold on to their majority in the senate. is the congress would likely mean washington gridlock with that does not mean revenue stops for investors. welcome libby cantrell and jeffrey solomon. because it took us through for fold both are if they split or the democrats hold both, what does it really mean and by and large, it doesn't mean a lot. there might be something on infrastructure and there might be something about ratifying the

usmca, the successor to nafta. nafta 2.0.l: the big lunch line the market perspective is that the two big policy risks out of washington facing markets are pretty much unchanged independent of the midterm elections. meaning that trade policy risk is basically independence. it is sort of divorced from the midterm election outcomes trade and that's because of democrats take back the house or both chambers, their strange bedfellows with the president on trade, in some ways the democratic caucus agrees with thepresident on trade, really anticipate a lot of pushback on trade policy and then fed policy of course, hawkishness from the fed and that's independent from tomorrow's outcome as well. if the republicans took both in that seems unlikely at this point, could we have a lot more fiscal stimulus? they would be tax cuts 2.0, a lot more stimulus and i do think much more aggressive on things like trade policy, i do think that would

happen, no question about it. if the republican state will the will be business as usual and we continue to have the regular and probablys accelerates and probably accelerates into 2020. alix: in terms of sectors and what industries it will affect, we've a chart that shows sector performance and it was telecom, discretionary as well as financials that have really outperformed, no surprise. does this kind of scenario changed based on tomorrow? or are we so going to be in the era of softening regulations, etc.? in terms of the beginnings of deregulation and the government spending bill that are it is spending levels for this year and next year, those things are baked into law. in terms of the derogatory think there is this narrative the democrats take back chambers, that was stop, it's not going to stop, the executive branch has an immense amount of discretion.

the tail was that have been driving the market will presumably continue to drive the market, however, we will see this fiscal stimulus fading and we could see trade tensions increase and then become a headwind to 2019 and the fed mistake. there is some obstacles in the way of economic growth for the tailwinds that have been driving the market today will continue regardless of the election area. david: what about a specific sector content pharmaceutical trade that assembly is that president trump to be aligned with democrats on prescription drug prices very -- great prices. -- drug prices. mr. solomon: one of the first things we will see is drug pricing policy being discussed. it will be difficult to have a national drug rising policy, but there will be a lot of hearings and big pharma executives will be dragged onto the floor in their the present has a pretty clearly would like to try to do something. i also think the farm is ready for this. a strategy, thank you are already starting to see the industry began to take matters into its own hands in

anticipation of something like this because it is something the industry has been talking about and wrestling with for a long time. alix: how are you position for 2019? what is the risk you are looking for? is solomon: we think there the movement behind biotech. even with the drug pricing exhibition, we think there's a lot of movement. we have been involved in the area.is if you look at statehouses in the national polling, i think there's a real push by the populace to figure out a way to have a national cannabis policy and we would expect at some point over the next two years that comes into play, certainly of both houses flip democratic and you a lot of statehouses that flip, there will be a lot more of that. david: you think they could repeal the federal statute on cannabis? ms. cantrill: -- mr. solomon: i think it's on the table. the trump administration about

that hard line on this, i think the attorney general has been hard line on this but i'm not sure how much longer he stays around after the turn, if that happens. there's a possibility. i would just say it opens it up and certainly if you watch with happening in canada and globally, this is a real business and they are continuing to think that over the next few years this plays out in a positive way. we are notl: invested in cannabis so jeff is more of the authority. i think politically years when we hard to see the federal government really do anything, especially under this of administration, but you never know. david: let's talk about financial the maxine waters. the most likely thing that happens is the democrats take the house, maxine waters has that she wants a lot of investigations, starting with wells fargo. ms. cantrill:we hard to see thel that's right. however, the democrats, when i'm talking to them on the hill, there is really this need in this sort of incumbency upon them to show the voters they can govern and so i think that right

out of the gates, you are actually going to see more even at the financial services level think your excellency maxine waters be more conciliatory, trying to reach across the aisle, try to work on a bipartisan basis, and housing finance reform is one of those unicorns, a lot of people talk about it and actually never comes to fruition. but it is one of those areas where there is more commonality between the parties and so i would not be surprised if she exit tries to focus on that right out of the gate. middle ofi think then next year we could start seeing investigations really ramp up and wells fargo is presumably would be a target of those. i agree.on: there's a big dichotomy between big banks and the rest of us and i think if you are in the big bank game, you have a lot more to worry about from her guilt standpoint and i think if you are in big tex, yet a lot to worry about. i think big tex has a lot to worry about both are democrats and republicans i would say regardless of the outcome here,

i would expect to see more investigations or more hearings around privacy is cybersecurity and all these things that i think are impacting average americans. there are think maxine waters has been pretty clear that is often she wants to do and i think they won't you a lot of pushback from republicans on that either. ,avid: with respect to midterms come see our special coverage of the midterm elections beginning at 7:00 p.m. this evening eastern time. it's not all about the u.s. midterms though, brexit talks continue in europe with prime minister theresa may briefing her cabinet and those outside the process continue declared -- to criticize. peter mandelson said a hard brexit is all but inevitable. certain that we are going to end up with some form of hard brexit, if we were going to really manage this in a way in the interests of both our own economy, investors, businesses, the millions of

employees that we have, then what you would do you doing is leaving the european union is staying close to it. time, we had same nigel farage in london saying there's not going to be right at all because they are really caving in. how does this affect your business? you're running a business, you have to consider a hard brexit. that's our default. if that happens, you have to be repaired for that. it's hard to probable lies it. if it happens, if there's a 1% or 2% or 5% chance it happens, you have to be prepared for that. a lot of folks i know are really saying we have to prepare for a hard brexit of backs away from that, we can adjust veto prepare for hard brexit i think you will probably be making a big mistake. alix: how they prepare for hard brexit? is solomon: a lot of it moving people into areas you can engage with the european union and a lot of folks are looking at places where there is already financial infrastructure and

luxembourg,king at the republic of ireland in places that are likely to end up in a much more favorable engagement. and then you have to luxembourg, have london, you would be running as you would any other place in the world, london and the world, w k will be one set of regimes and the eu will be another and you have to have multiple offices in order to handle that. alix: i feel like the narrative when brings up happened is if it's a hard brexit, everything is often the world is going to go to hell and it's going to be awful. it seems like lanzarote working towards a hard brexit and is not breaking the system. mr. solomon: it depends on what businesses you are in. we cover europe out of london but is that really going to change? it will be harder for people to move and we have most of our people in london: european clients the same way we have people in new york called on european clients so that doesn't change much. but i think things like funding slows, there's a lot more challenges around that and we are on the side of the little that more, we're not really in

the pause are taking mode. it's much more obligated. known it's been coming for some time and normally businesses and markets adapt and yet have they been able to adapt into they don't know what's going to be? very --rill: we're for we are preparing for hard brexit as well. there's been some at uncertainty about what even a deal would look like from our perspective, in terms of asset managers, we trade derivatives on behalf of our clients to hedge positions to replicate exposures and it's unclear where you're are going to be a liquid are delivered as -- be able to clear derivatives. big entities like pimco and colin can adapt they really do feel like it's a disadvantage the smaller players. there is a lot of uncertainty and we would be surprised of the deadline is pushed out even further. look what happened with mifid ii. people that their head in the sand until it was absolute

certainty and then all of a sudden people are struggling to figure out how to do mifid ii and the regulators ended up backing away in terms of implementation of penalties and things like that so people can get their act together. but for a long time people ignored it like it wasn't going to happen. don't want to equate the two, because i think brexit is a much more complicated saying the mifid ii, but will adjusted to mifid ii and we had contingency plans ready to go, i think that was maybe a dry run. narrative in the market of those on the financial pressure on the u.k. or the eu to make a deal and we heard the same thing with italy in terms of their budget at a to your point, you are not going to make a deal until your feet are literally in the fire. mr. solomon: that is true. if you look at what's really driving brexit, it's not economic in many instances. it's immigration and social. flow, thegs ebb and impetus may be to bring about brexit and to get the vote out a couple of years ago was really at the height of this immigration crisis that was

happening, this migration is happening for the middle east. as the moderates and people adjust to the new normal, does britain take a step back and say maybe it's not as bad as we thought it was going to be and i think the border with ireland is the really -- there and a lot of people want to go back to a hard border with ireland and so i'm taking a look at the social aspects of this and try to take my cues there rather than economic because the technology, it's way better for britain and way better in the eu from the gothic standpoint, to stay as is. it's just the social issues and how you can bridge that gap. is cantrill: the point here the political issues are going to continue to be a headwind on the markets. alix: much more coming with libby control of pimco and jeffrey solomon of callan. this is bloomberg. ♪ [ phone rings ] what?!

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see the grinch in theaters by saying "get grinch tickets" into your xfinity x1 voice remote. a guy just dropped this off. he-he-he-he. ♪ alix: this is "bloomberg daybreak." the election gets underway here in the u.s. faang stocks got absolutely

pummeled yesterday. you did have european confidence hit its lowest level since 2016. that margin weighing on the index. tech, u.s.bout big big tech come and regulation from vincent oh-fer brussels today. it is a mixed dollar story heading into the election. euro-dollar now a little stronger. $27 billion is the number you need to know. that is the auction network for this afternoon for the 10 year. were nowhere to be found yesterday in the three-year. what will happen today hard to say, especially when you have the fed meeting in the midterm. vixfix finally -- the finally positive for the first time in a while. for what is going on in

the business world, we turn to taylor riggs with the first word news. taylor: today's midterm elections are about the president. donald trump made a final pitch for republican votes in ohio, indiana and missouri yesterday. he warned republican successes could be wiped out by democrats in congress. democrats are widely expected to regain control of the house of representatives. republicans are likely to hold on to their advantage in the senate and possibly gain a few seats. federal district courts have blocked the government from abolishing the program known as daca. mcgee isgy banker skip teaming up with lehman brothers

to help energy firms cap capital markets. cowen co. president larry wozniak is a lehman alum. global news 24 hours a day, on air and on tictoc, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. david, aleix? have,and look who we jeffrey solomon of cowen. what kind of opportunities did you see their? >> is tremendous opportunity. what we are seeing here is to try and re-create the kind of financial advice that skip mcgee can do. it would be really hard for us to do that. we are excellent at capital raising and research and sales and trading. for us, this is a natural place

where we can align with them to really address the total needs of clients in that space. it is a great cultural fit. skip and chris and team, and our copresident, we are co-pitching and doing things where we can work collectively to solve problems for clients across financing and strategic advice. it just makes sense to do that. alix: debt is still a concern for a lot of them. is it m&a? day --it could be in a it could be m&a. in thatre a manager business, you've got to look at strategic as well as financing concurrently. we provide a full range of services collectively between both of our organizations. of course, most of those folks want research coverage. at a something we have an excellent footprint in already come and we can bring that to bear for a lot of clients.

david: for energy now, we turn to china. a central topic overnight has been the future of china's relations with the united states. chinese vice president holding out hope for resolution of current disputes. >> it is our firm belief that china and the u.s. will both gain from cooperation and lose from confrontation. i relationship will have a direct impact on global stability and development. the chinese side is ready to have discussions with the u.s. on issues of mutual concern and work for a solution on trade acceptable to both sides. same time, he went on to say the chinese will not bullied." -- not the " in addition to jeffrey solomon, libby control of pimco is with

us. is this getting better or worse? even last just say week when there was some optimism in the marketplace, we were a little more skeptical. the reason is because the thing we are asking from china are so inherent in their industrial policy in china 2025. we are really asking them to change their state run capitalism, not subsidize their state run enterprises. to stop forcing technology transfer. it is not just about buying more soybeans and airplanes. in that we could have had a deal with china back in may. but the american administration wants, both democrats and republicans on the hill want, is really to reset the economic relationship with china. are not expecting a grand bargain out of the g20 summit. there might be a deal to make a deal, but i would be skeptical of this.

i think this gets worse before it gets better. ourd: if we are resetting relationship, china on its own is resetting its economy. they were trying to deleverage. what is the risk to global growth overall? jeffrey: i think it is pretty significant. when you have the two largest world economies at odds, that is not good for gdp growth. if you think about the amount of capital china has spent in eastern europe come i don't know how that is sustainable if the home economy isn't working that well. whether you are a planned capitalist economy or a market capitalist economy, it is hard to spend money both domestically to fix the method problems and invest globally to protect your interests. that is what the u.s. has been facing over the last few decades. certainly after the financial crisis, it is harder to do packs americana when we have financial issues here. the same issues

because you have to take care of the home front before you can begin up the rest of the world. david: china again and again has over performed, done better than what we thought they would do. jeffrey: four so they would like you to think. i think it is hard for us to know -- or so they would like you to think. it is hard for us to know. we do this. it is funny to me, when we had a financial crisis we propped up steel. we propped up autos. we propped up the financial system. we did it because we needed to. and they will do it because they may need to. i actually don't think there's a tremendous out the difference between the way we approach our businesses in times of stress and the way they approach their businesses in times of economic stress. i think it is actually pretty similar. david: so jeffrey's view on china is potentially disturbing for global growth because if china is in danger of being overextended, and the united states is entrenching in its

ways, but does that mean for global growth overall? agree that what they are trying to do is really thread the needle between reforming and we leverage and their economy, be incredible on the world stage while also making sure that on the home stage things are ok. our view is that they probably will resort to more stimulus. we wouldn't be surprised if they did that. china slowing does have reverberations across the world. right now the united states is looking a great in terms of fundamentals. however, coming from the bond people, fiscal stimulus is likely to fade in the u.s. in 2019. this headwind from trade tensions from a gdp perspective. the u.s. right now is the thatest dirty shirt, but may change in 2019, and would be exacerbated if china were to begin to slow. alix: what does that mean for businesses? if you asked anyone two years

, they would say china buying within the u.s. and elsewhere is the thing. we had a deal that was going to give us a window into china as a strategic partner. today we can't even find that guy, to be really clear. they are literally dismantling his empire, huge amounts of money spent in eastern europe with all the old eastern bloc nations as part of the one belt, one road strategy. what we heard 18 months ago and what is actually happening are two very different things. we are super thankful that ultimately we didn't do that deal. i'm not sure how we would have been able to approach doing business in china given the bipolar nature of it. libby: i think that the

interesting thing is, obviously there's been tariffs tit-for-tat. when you look at the nontariff retaliations, they have been pretty extensive. one is making it harder for american companies to invest. we actually haven't seen that yet. mayber point, china -- your situation aside -- actually needs this foreign investment. they need foreign investment to come into the country. the last thing you want to do in terms of their reform effort is really to block investment. it is not to say they won't necessarily boycott american companies, but at this point they haven't pulled on that letter yet. jeffrey: i don't disagree with that. i think it is better if we have more friendly engagement with china, particularly given our current account deficit. we have to figure out how to create the new balance. is a blunt force

instrument to bring people to the table. if you are the trump, you are trying to reset the table for global trade. tariffs is a way to bring everybody to the table. but let's face it. if we can figure out what the new normal looks like and create better trade and balance between the two countries, everybody wins. how do we get from here to there? that's the big question. david: if we can. of pimco andl jeffrey solomon of cowen, thank you for being with us. spokeexxon mobil's ceo exclusively with bloomberg in singapore on dealing with international pressures. we find overtimes that those tensions, you see things move up and down across the has alwaysstrategy been to have a fairly diversified portfolio and basically manage the business for the long term. we pay a lot of attention to that.

we are engaged with the opportunities we see in each country and make sure we are focused on the fundamental to manage through the ups and downs. we are meeting basic requirements in the countries where they need products we supply to make their life better. reporter: do you not worry about the potential downside? i think about the joint venture you announced a few months ago at the lng terminal in southern china. things changed in the months since that agreement was announced. into: i think when we went have that conversation with the chinese, we had a pretty good understanding of where things are at. we are consistent with where we are at today. we think there's an opportunity there. there's a growing demand in china. there's an opportunity for us to invest in china and meet that demand. reporter: do you see any change thus far in sanctions and

tariffs and the tensions we have been talking about, any change in the flow of products? you expect that to happen over time? guest: we put constraints into the system. the markets we deal in our global. if you have constraint in one spot, it will move to another. typically what we see in our markets is this optimization of the supply chain. we are not changing demand, per se. we are changing where that demand is being met. that gets moved around. reporter: is that changing? guest: absolutely. and moving tariffs things around from different places at additional cost. reporter: diva you expect to see the chinese buy more from iran -- do you expect to see the chinese buy more from iran? guest: i couldn't tell you what the chinese are thinking, quite honestly. [laughter]

our business depends on free trade. we are a big believer that economies are best served by having open, free and fair trade. anytime you start to put restrictions on that, it has an impact on our business. we would like to thank our company is robust and competitively positioned versus our competitors. optimizationis dis- in that supply chain, we feel like we do very well compared to our competition, and that is what we focus on. reporter: we can take a bit of a global tour. i'm going to move from asia-pacific and ask you about the gulf. how closely are you monitoring developments in saudi arabia, and in the gulf more broadly? do you worry about the potential for some kind of disorderly fallout from the khashoggi scandal? guest: we have significant businesses in the middle east. we've been in saudi arabia for many years. very successful business there

and very good relationships with many of the businesspeople. we have a good presence there. we stay plugged in with what is happening in the middle east. i think that region has seen its ups and downs, like every other part of the world. we try to stay diversified and take a high-level perspective on it and make sure we meet the needs of society more broadly, and stay focused on that in the long-term. reporter: do you think it is going to relieve some of the pressure on qatar, where you have some business? guest: i don't know how you would equate those two things, frankly. we haven't tried to get mixed into that business. we see that more is a government to government deal. we will see how that will manifest itself with respect to that. reporter: whether it is because of china, saudi arabia, russia even, the rising tide of populism, hearing what some of the people here have been discussing today, there's a lot

of concern over geopolitical stability. you've been at exxon for more than 25 years. how would you characterize the operating environment today relative to everything you've seen since then? guest: i think there's always, when you have a business like ours that spreads countries all around the world, you are always seeing this tension at different places at different times. we, again, keep thinking about the longer-term of how we want to run the business, how we meet the needs around the world, and stay focused on the long-term of doing what's right for the country, for the people of that country. most of the host countries will , someoneppreciate that who things about the long-term. alix: don't miss an exclusive interview we will have for you tomorrow come alive from bloomberg's new economy in singapore, with the ceo of

goldman sachs. beat. turn to wall street outs its ceo after a series of mishaps. under armour's me too reckoning, they ban strip club expenses. and realty meets reality. one manhattan penthouse slashes 15% of its asking price as it comes to terms with the buyers market. david: joining us now is investment u.s. coverage head. first up, gam. reporter: this committee went into a tailspin in july,

particularly related to one manager of its funds. one of the things that came out last month is what we got in the third-quarter earnings. there were questions about whether the ceo was able to stabilize it. this is finally a move a long time coming because it has been several months since a been dealing with questions about whether or not they could get the company back on its feet. david: as they look for a new ceo, do they want a deal guy? as a practical matter, they may have to sell the company. reporter: that's right. reporting shows today the person they put in the interim ceo position does have experience at deals. one of the things that jumped up to me as we are seeing a lot of asset managers look for deals in consolidation. if you are a company tainted by some of these issues, you have a lot of competition out there. you may not be the first one people are looking to consolidate with. alix: it is not necessarily a sellers market.

let's turn to another risk management issue. did you know that expensing a strip club is not ok? now it is not ok at under armour. this is a staggering story yesterday "the wall street journal" broke. apparently there was a lot of other stuff going on not conducive to a female workforce. reporter: i think the me too movement has made companies and workers be more intentional about what they are doing and what you are expensing and how that might make other people uncomfortable. alix: in what world do you expense a strip club and that makes sense? [laughter] david: years and years ago a i fire the guy for it showing up on his amex. that was way before me too. you don't need that movement to say you shouldn't be doing that. alix: this isn't unusual to

under armour. attractivenviting executives to their meetings, stocking the pond. david: are you familiar with this? alix: i feel at we talked about this. david: there was a situation where they hired models in silicon valley. alix: that was it, right. but amongst your own employees, it does seem out of bounds. alix: welcome to 2018, people. david: now for some good news. prices come down for a million-dollar penthouse in the lower fifth avenue. it is a beautiful place that has been on the market for over a year. friend of mine a in the real estate business in manhattan was just telling me there really is a market where people are waiting for the

prices to come down. it really is a buyer's market. reporter: it seems like especially so in the luxury market, as well as new developments. i also think people are taking pause because of interest rates rising. people are thinking there's a lot of supply out there, a lot of buildings, particularly in manhattan. people are taking a pause in the sense that interest rates are starting to rise and they see a bargain at potentially the lower price of $62 million. david: it is pretty. you would look good in that apartment. alix: it is so pretty. just keep showing the pictures. [laughter] reporter: i was surprised at the amount of white furniture and carpets. i think that is a bold move. alix: also looking at the bass 70 bathroom. what is that -- the bathtub and the bathroom. what is that? who needs that? can afford an apartment for $62 million, you are not worried about the

cleaning or the interest rate. it may say something about where the market is. alix: there are other opportunities elsewhere commodity -- elsewhere, maybe. david: thanks very much to peggy collins. coming up, a record 255 women are running for congress in the 2018 midterm elections. more on that next. this is bloomberg.

♪ midterms, ofng the course, but specifically the number of women running for congress, senate, governor's positions, it is a record. 255 women running for congress right now that's running in the elections right now -- running in the elections right now. it is real progress. there are 12 women democrats and four women republicans run for

governor as well. we could see a different congress, no matter who wins and loses. alix: regardless of your party, if you get more diversity, whether gender or ethnicity, that is going to change conversations. it might not change things in the next 365 days, but it will change conversations, and hopefully that trend will continue. david: you would certainly hope. the thing i like is putting that together with veterans. we have not one, but two women combat fighter pilots running. alix: that is awesome. david: marinemax alley -- martha lly, they -- martha mcsa first in the iraq war, and we have two. alix: that is so cool. in terms of the issues, i'm curious. for womenues vary compared to men? david: surely.

we also have the first african-american female who might get to be governor of georgia, stacy abrams. it is going to be a long shot, but she might do it. this would be revolutionary in the state of georgia. alix: unbelievable. definitely makes a whole other headline. david: one thing i think we are sure to have, no matter what happens today, is some more women. it can't be bad. alix: no. cat 2 tonight, 7:00. alld westin will be here night. coming up, we will talk to mike swell, goldman sachs asset management managing director and cohead of global fixed income portfolio management. this is bloomberg.

i am a family man. i am a techie dad. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience.

my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. ♪ america's head to the

polls while markets take a wait-and-see approach. bullied a while henry kissinger is competent a trade deal can be done. almost certain hard brexit. theresa may's cabinet meets in secrecy to look at the latest option for a brexit deal. david: welcome to "bloomberg: daybreak." i'm david westin, here with alix steel. we look at the capitol. .35 congress in up for election 36 governors. polls have opened in the east. , everybody has been debating what this election is really about.

president trump decided yesterday it is all about me. he said, "in a sense, i am on the ticket. the midterm elections used to be boring, didn't they? people say midterms, what is that? what is this? now it is the hottest thing." david: is it -- alix: is it? david: i think it may well be. former president barack obama was on the stump yesterday saying some very similar. saying who we are is on the ballot. character is on the ballot. it was pretty clear who he was talking about. i think president trump commence more than a normal midterm, will be front and center. think that is the case, and certainly how it sets him up for 2020. we beime tomorrow, will talking about 2020 or will we be talking about the midterms getting fleshed out? david: the question, will they

be -- will there be enough undecided that we don't know what will happen in the house? alix: so you want to know exactly what is going to happen in terms of the congress and how it affects the economy? tune in, david, tonight at 7:00. david: covering the national election at 7:00 eastern time here in new york. i will be here. alix: on the markets it is very much a wait-and-see approach. of 1%. off by about 2/10 factory orders rising for a second straight month. a little bit of hard data. $27 billion is the number i am watching. that is how much we are going to get in issuance from the tenure market on the long end. crude taking a backseat today into the midterm. david: polls are now open in the

east. midterm elections have begun, th political analysts and experts saying democrats will likely take the house, but republicans will hold on to the senate. that likely means gridlock in washington. no one expects the sort of markets we got after trump's elections, but that doesn't mean investors can look for opportunities. >> the working assumption does seem to be democrats will take the house and republicans will retain the senate. if that doesn't happen i would expect it to be a shock on either end. >> the question becomes, is it priced in? the markets are focused on the fact that if democrats gain control, you are going to have a lot of issues. and those issues are not good for the economy. ,f republicans retain the house i think that would be a moderate positive for markets in this environment. >> if the democrats take the house, with that, we neither go forward nor back.

we don't go forward on further tax cuts, but neither do we go back on what has been done. i think the market has priced that in and understands it. would be theree are swings in the market. david: mike swell is with us of goldman sachs asset management and fixed income portfolio management. guest: i think the election is clearly very big for our country. it should for markets are particularly equity markets. the expected outcome is democrats winning the house and republicans retaining the senate. i think the only market really in play is the treasury market. in the event of a republican

sweep, there is going to be concern around escalating inflation and continued spending that could potentially lead the deficit to worsen pretty significantly. alix: things i would never associate with a republican sweep of congress. if we have a split congress, could you make the same argument? that infrastructure could come on board and he would see more spending? mike: i think in the event of a split congress, you have more of the same of right now, which is gridlock. small probability of infrastructure, but the idea of republicans and democrats working closely together right now, pretty low probability going into the 2020 election. david: talk about what is going on right now with treasury issuance. every week it seems like we have a new record amount of treasury issuance. mike: in general, we still

expect with the strength of the u.s. economy the fed to be on a pretty consistent path of hiking. we expect two to three hikes next year. i think what is interesting is the market end of the curve, where he hit -- where you have seen foreign investors dominating that part of the market. it is high-yielding relative to what is going on in europe and asia. that couldhing potentially change what is happening with pension funds in the u.s., pension funds have had a lot of incentive to move into longer duration fixed income as . result of their status you have seen that move in a very significant way. to also had the opportunity deduct. ?ho is going to buy that supply it could lead to higher rates in the u.s..

this is the low duration bond etf. is that going to be the play? mike: that is the play right now. the bottom line is you as an investor don't need to own 10 years of duration. ad is down about 3.5% this year. a lot ofaking on credit risk. short given the flatness of the u.s. yield curve. 3.5%an earn 3%, 3.25%, without taking on duration risk. particularly if you are very short and continue to see the hikes we expect out of the fed, you will be able to get that yield is rates go up. , where isthe 10 year the top going to be, and when is the top going to hit that hurts? mike: i think we are a ways out

until we had that top. you still have a u.s. market that stands out as the high-yielding market. the demand factor from outside the u.s. is still going to be very significant. to the extent we see equities rally come we expect to see pension funds rallying. i think it will be until next year that we have more guidance around the inflation picture. if we really expect to see inflation consistently at the 2.5% area and wages growing north of that, i expect the 10 to increase pretty significantly into the high 3%, maybe 4%. alix: before we go, looking at the data, we had a really strong economy in the u.s. the other is liquidity withdrawal. which one do you sit on? mike: in terms of u.s. only or u.s. and europe? alix: globally, what the market is contending with. mike: the market is contending with how long will u.s. exceptionalism continue. there are some warning signs outside the u.s.

we have seen emerging market growth slow. we have seen european growth slowed significantly. the gap between the u.s. and other countries has widened significantly. expect withdrawal out of the u.s. and continuing easy monetary policy outside of the u.s. the big market that is not pricing in this dynamic is europe and the european bond market. in general they are pricing in at the ecb is going to be removing accommodation over time. we don't think that is going to be the case. and weay be one hike think they will likely stop. the slowdown in china, the concern around trade is having a bigger impact on europe than the u.s. as a result, we expect to see growth trend down to the low 1% area in europe. inflation is likely to be well below 1%. rates are not going up in the near future in europe.

you have an environment where you can borrow at negative yields. that is actually a very good total return for investors. david: let's go through london. i am not sure if we still count britain as being in europe or not. [laughter] david: we spoke at the bloomberg new economy foreign overnight in singapore to a prominent labor politician. labour politician. this is what he had to say on a hard brexit, which he thinks is almost certain. got to manage both the interests of our own economy, investors, businesses, and employees that we have. then what you would be doing is leaving the european union, but staying close to it. david: mike, how does the uncertainty, to put it mildly, over brexit affects the bond market, if at all? what does a british

politician know about brexit manager?w york i will give my opinion anyway. i think on the side of the u.k. and the european union, there is very little incentive for a hard brexit, particularly going into march. we expect to see the can down the road at a much smoother process towards brexit. we don't think brexit is likely to be a big macro event. we think as the brexit noise gets priced out of the u.k., we will start to see growth continued to improve in the u.k. we think markets will be relatively well and the bond market is poised to selloff in a pretty decent way as we see decent signs of inflation. had a note out yesterday talking about 2018 come a basically saying we think stimulus will shift from

being u.s. centric to be in broadly based across developing and emerging markets in 2019. how long can you sustain a short come along in bid in the u.s. -- u.s.? long end bid in the how long can that continuously change in global growth continues? mike: europe is in a pretty difficult position. europe has the challenges of italy, which is not going away. they have the challenges of slow growth out of china and being disproportionately hit by trade concerns, and that impacting corporate confidence. i think you could have a situation where europe continues to dislocate from the rest of the global economy given their challenges. thatagree with the view the fiscal cliff is going to have an impact. we've had this benefit of stimulus that has occurred this year and likely the first half

of next year. we are going to see growth slow in the second half of next year. i don't think a recession is in the mix, and likely not in the mix in 2020. but as you move more towards the 2.5% area, we are going to start talking about recessionary risk. i do think we are in the clear for 2019. david: mike swell of goldman sachs, asset management, will be staying with us. alix: default risks on the rise in china. what is the outlook for global corporate credit? that is next. this is bloomberg.

♪ alix: with a rough october for equity investors, is it less bad if you are -- high-yield down

1.6%. by 1.7%.p, totals down with us is mike swell of goldman sachs fixed income portfolio management. what does that tell us? mike: number one, interest rates are rising. that is impacting fixed income investments. secondly, in general, particularly high-yield, you have seen this incredible run. people are taking profits, and i don't think there's a ton of concern around credit quality. i think it is more around rates and the fact that it has been a very good performing asset class. is selles that mean it some winners? mike: i don't think it is forecasting a turning the credit cycle. i think it is much more about taking gains and much more around rates rising given a fixed income rates look attractive for investors.

they get a little scared. they don't want to take losses. they end up selling into weakness instead of buying into weakness, and in look at their asset allocation at the end of the year and say, wow, i can invest in the u.s., hedge it back to my currency, and make money. result of the significant selloff we've seen in credit, there is some buying opportunity. david: why is the credit market still healthy? we've had abnormally low interest rates, increasing leverage, and higher leverage right now in nonfinancial debt and we had historically. normally when that happens you have people borrowing money that should not be. mike: it depends which market you are looking at. high-yield leverage has come down, and high-yield supply is actually in negative supply territory. you are actually seeing the market shrink. when markets shrink, that is typically a good thing. two areasere's been with increasing leverage.

in the investment grade space, a lot of lbo and m&a activity. but it is an increase in leverage at a time when debt is extremely easy to make. it is not a significant risk factor. the debt market is the one seeing weakness over the entire year, we think that is an opportunity for companies after they have done their m&a activity, they moved to deleverage their balance sheet. the areas where there are some concerns is the loan market and private credit market. everybody talks about banks in the u.s. and europe not increasing lending, not reducing standards. that is very true. they've been regulated and they are not big in the loan business anymore. but the leverage loan market and credit markets have picked up on it. i think you see some crack's in the credit system likely in those markets. alix: fair point. come inside the bloomberg.

you can get a good sense of how much leverage loans have outperformed. where is the opportunity? mike: i think the opportunity mainly is in the investment grade credit market. i think there are questions over the course of the next couple of years in the credit cycle. high-yield, there is a little bit of opportunity. you had a supply shock in the first half of the year in investment grade and the opposite in the second half of the year, where supply has declined. gins are great, debts are really low. assetsmand for u.s. where investors can hedge back to their currency and make a return, particularly in japan and different parts of asia and europe, the u.s. ig market is the best market for it. i think as we go to year-end we are likely to see spreads tighten.

i would say across the board, there is opportunity particularly in the sectors were you have seen a leverage event. a lot of things that on the news would cause you to be concerned. leveraging and the telecom sector, the pharma sector. two or three years ago we would have talked about trying to avoid. occurs,everaging event if you're confident in that sector from an economic perspective that they are going to deliver on the deleveraging plan, a lot of opportunity for spread tightening, as well as financials. david: mike's well of goldman sachs -- mike swell of goldman sachs is staying with us. coming up, apple canceling a production boost for its apple xr line. this is bloomberg.

♪ david: time now for the bottom line, where we look at three companies worth watching this morning. one has got to be apple. they have really been taking on the chin, with their earnings

release and news they told some of their suppliers that they want need as many of those xr phones as they thought. apple is really having a hard time of it. alix: i didn't buy the phone. i am looking at halliburton. i spoke to the ceo jeff miller yesterday. here's what he had to say about oil prices. guest: i think the range for it at $70 looks pretty strong to me. -- you know, i never try to protect the price of oil, but certainly it feels like that is the number where everything seems to work. alix: this is all about oil services, praying the pricing bottom has happened and they can actually wind up making more money. david: they've been doing pretty well, haven't they? been no, they have just destroyed. cannot keep up with the oil price. can't get their pricing power back. david: now to our third story,

ge. we are joined by brooke sutherland come our ge specialist bloomberg columnist. reporter: everything must go. go.ust [laughter] reporter: no, i'm joking. they're light bulb business has been on the block for quite some time now. just a few years ago they were saying commercial lighting would not be part of that, and that is what they are selling today. we don't have a price on this. i don't imagine it is a particularly huge deal given the revenue and profit in this business is about $1.9 billion of revenue that also includes the consumer lightbulb division in 2019. i don't think this is a game changer for ge, but every little bit of cash in the door right now does help. david: why is it worth more to aip than to ge? reporter: this is a division

were ge really saw a digital strategy. in reinventing the way we do streetlights and for ge to develop new traffic patterns. this requires investments and a lot of research. that is not something ge is going to necessarily be in a position to do over the next couple of years as it focuses on cutting costs, restructuring, paying off that massive debt load. when you look at a business like this, in order for it to thrive in these to be in a position where someone can spend the money on it. this is probably one of those situations. alix: what is next to sell? reporter: they have said they are looking still to spin off their health care business. there's a lot of questions on whether they go through with that or potentially look at selling the life sciences piece of ge health care. there was a report a while ago that there was interest in that division of ge. it will be interesting to see if

that comes about. the other big question is what do they do with that baker hughes stake? it is difficult. it is difficult to sell because shares.large portion of they put out there that they want to sell us, which is keeping price suppressed. the other asset people are watching is the aircraft. it would bring in a pretty big chunk of cash if they were to sell it, but it is also kind of a crown jewel. alix: and as i mentioned, pricing power. brooke sutherland come a thank you so much. coming up, we speak with erin and us -- erin ennis. this is bloomberg.

>> this is bloomberg daybreak. the midterm election today. futures are up and i am watching text futures. nasdaq futures off by .4%.

faang stocks got hammered yesterday. part of that was apple. techex companies -- companies and bigger tax potential from europe. those conversations in brussels continuing. technology stocks in europe off by .3%. our other asset classes, i am watching zero dollars. eking out a gain. manufacturing for the eurozone weakest in two years. undo toiment winds down trade and global growth issues. a 10 year yield, 27 billion coming at 1 p.m.. director nowhere to be seen yesterday in the three-year so what about the tenure? the vix is elevated and crude is flat. >> time to find out what is going on inside the business world. bute is not on the ballot

the midterm elections are about the president. he made a final pitch for republican votes in ohio, indiana and missouri. he warned republican successes could be wiped out by democratic gains in congress. democrats are expected to regain control of the house of representatives. republicans are likely to hold onto the senate and increase their it vantage there. police have arrested six people in an investigation into a planned attack on the president. a person familiar with the matter tells bloomberg the plot was not precise or well-defined. and news agency says the suspects are links to the far right. billionaire bill gates wants to reinvent the toilet. he is betting he can save half a million lives and deliver savings. 20 new toiletd and flush designs in beijing to convert bodily waste into clean water and fertilizer.

news 24 hours a day on air and on tictoc on twitter. powered by more than 2700 journalists and analysts in more than 27 countries. >> the midterms may be taking much of the attention in the u.s. today but in the long-term china will be a driving or for business and financials. the bloomberg new economy forum in singapore overnight heard from two global leaders about the future of china and its relationship with the u.s.. henry kissinger and former australian prime minister kevin read. -- kevin rudd. >> the objective needs to be that both countries recognize that i fundamental conflict between them will destroy hope and lead toorder conflict.

i am fairly optimistic that it -- >> there is a deep realization in beijing that there is a fundamental shift in the american take on china. they see china no longer as a but changingwer international realities and in a washington no longer sees as compatible with its interests and values. we are in new terrain this year. >> we welcome from washington erin ennis, she is the u.s. china business council senior president. i have heard two different takes there. henry kissinger saying these two great powers have to recognize they are bound to one another in fate whereas kevin rollins is saying there -- kevin rudd is saying there is a shift in china. where do we stand? are you moving towards each other or away from each other? remarks thek at the

vice president of china made in which he said china would not be bullied by outside powers but that china was ready to do a deal with the u.s. on trade issues. i think you can have both realities and have them come to the outcome dr. kissinger was talking about. >> we just had this conference in shanghai where the president of china got up and said we are going to buy more things in imports. a lot of people said there were a few specifics. the chinese are good at talking a good game, unlike our president who is aggressive, talking a good game and saying nice things but nothing gets done. thingse have been some done but obviously more needs to be done. in the lead up to the conference in shanghai china reduced tariffs on 1500 items coming into the market. they have been moving forward on this. there are a lot more things that can be covered. with trade tensions between the

u.s. and china american companies will benefit from that until those tensions are resolved. >> this is about more than tariffs? it is about technology transfers and things like that. is there a realistic prospect that the chinese are willing to make a change on that? it seems almost existential to president xi and the future. >> they have talked about improving copyright relations. this will require some very detailed work. i think it is possible to move forward on it. china has been signaling for several months they were willing to talk about these issues. the key is to have people talk about the very specific details protectionter ip looks like and what bars on technology transfer looks like. economy,of the chinese supporting it, that is what we seen from the governments. does that make it an attractive investment? say thatd hesitate to

there are great investment opportunities yet in china. i would also say that i don't think that the bottom is falling out of the chinese economy. i don't think that trade issues that we are seeing that are obvious very significant now are going to lead china to growing at 2, 3, 4%. the chinese government has the resources to support the economy. you have huge demographic and huge amount of growth going on in the country. is 5, 5 .5 percent or 6%, it will be in that area. from an investment opportunity there has been a little opportunity. the property market, there has been a huge amount of debt issuance in the property market. a lot of concern among participants. there has been significant repricing there. trying to find opportunity in chinese property companies that have not gone to excessive levels in terms of underwriting.

we think there is opportunity there. >> if there is a good investment to be made can you make it? going back a year or two it was about liberalizing financial markets, access to the bond market and others. i haven't heard about that, is that a place you can make an investment if it is a good investment? >> yes. in the private market you would be very concerned but in the public market i think there is a greater degree of confidence. there is a big event people are not talking about. next year chinese government bonds will be entering the global aggregate index. that will bring an enormous amount of investment interest into china. i don't think in the public markets there needs to be confidence concerns. itfor the public market when comes to investing what about when it comes to companies investing? exxon spoke exclusively to bloomberg overnight in singapore. here's what he had to say. have --nk we wouldn't

when we had that conversation with the chinese we had a good understanding of where things were at. that is a 100% exxon mobil venture we are looking at. we think there is an opportunity and growing demand in china. there is an opportunity for investment in china. i think the chinese are supported. >> it seems like it is bigness as usual -- business as usual for these companies, when does that stop? >> it will depend on how things play out between the u.s. and china. priorities for the administration has been dealing with equity caps. what mr. woods was talking about with his ability to own hundred percent of what he is doing. when there are more of those opportunities and china is signaling it is willing to look at more liberalization. if that stalls or if key sectors that remain are not open or if

regulations make it impossible for you to genuinely realize the opportunity that is when you see company looking elsewhere. you look at this trade dispute with the u.s. and china do you see evidence the chinese might be pulling back on purchases of u.s. treasuries as part of that? tell in markets if that is occurring. ,he bottom line is we have seen so often in the u.s., but don't think it has purchased -- precipitated. i think that is the bigger driver. the areas you are seeing in effect of the trade dispute is in europe where you have an enormous amount of trade that goes on between europe and china and you're seeing companies cut back significantly on investment as a result of concerns this is likely to be protracted. you are seeing growth expectations decline in europe. >> erin ennis of the u.s. china business council. mike swell staying with us.

don't miss our interview with the goldman sachs ceo, joining -- bloomberg. new economy forum. coming up, it is midterm day in america. the polls are open. you are seeing a shot of voters in the brooklyn museum. going to be joined by former senator joe lieberman of connecticut. this is bloomberg. ♪

>> this is bloomberg daybreak. i am taylor riggs. coming up on bloomberg markets balance of power. , formerrbour governor of mississippi.

now let's get your bloomberg business flash. amazon's year-long search for its second headquarters might be coming to an end. the world's largest online retailer is close to an agreement that would split the new headquarters between two places. one would be arlington, virginia the other would be long island city in queens. amazon is scheduled to make an announcement by the end of the year. under armor is trying to adjust to the me too era. the athletic brand has barred employees from expensing visits to strip clubs on the corporate credit card. under armour announced the policy change in at email to employees. the journal says executives and employees went with athletes to the strip clubs after some corporate events. pandorailver maker shares plunged today. they have abandoned their long-term revenue goal and are still looking for a ceo. they published a report that analysts criticize is

terrible. >> midterm elections are underway in the u.s.. you can see live shot from the book and -- brooklyn museum. we are told by experts that they most likely result will be a split congress with democrats taking the house and republicans holding onto the senate. we have someone who has spent his career waiting for election results and helping lead the congress as part of the majority and the minority from time to time. joe lieberman served as senator of connecticut for 22 years and ran for vice president along with then vice president al gore. he is now independent and we welcome him back to bloomberg. mike swell from goldman sachs as the asset managers here. >> good to be with you. i should say you want everyone of those except for one for the supreme court. you are so familiar with these election days.

give us some insight into what you're looking at today, what do you expect? >> it is unpredictable. partyon history the out -- it certainly looks like the democrats are favored to win the house. the senate is harder for the democrats because of 36 senators up, 26 are incumbent democrats. a bunch of them are in so-called red states that president trump carried a couple years ago. if you look at the polling the most likely result is a democratic house tomorrow morning, republican senate. it could be both chambers are republican. i still think the democrats could take the senate. it could be both chambers are democratic. most likely a split government. ,> if we get split government

does that just mean gridlock? gridlock is not inevitable. it is a choice. andrtunately both parties the white house and congress in recent years have been doing things -- they are choosing gridlock. that is why the public is so frustrated and often votes for change. they voted for a change when the elected obama and they voted for change when they elected trump and they may vote for a change today in voting for democrats. if president trump and the democratic leaders of one house or both decide they want to compromise they can get a lot of good things done. there is a certain extra pressure when there is a split to congress. nothing happens including the budget unless there is some agreement. >> you see a lot of partisanship in washington. do you see any movement towards the center?

particularly in democratic candidates for the house we have seen more centrists in some districts. >> this gives me an opportunity to say a word about no labels, a group i am a cochair of, a bipartisan group. we are doing something different and not much attention has been paid to it. everyone is red blue, democrat, republican, liberal, conservative. we support democrats and republicans but we think our problem solvers -- who we think are problem solvers. we are supporting 17 candidates for house seats. an equal number of both parties. i am proud to say we have raised over $15 million this year. we put it in the primaries and we're putting it into these elections. we hope our candidates win today. >> one thing to add. one area from a policy standpoint that could happen if you have a split congress is around infrastructure. i think a lot of people saw the supreme court hearings and saw

the tension that existed between the members of the senate and assume that is what exists across both houses. in general there is a little more stability than people give congress credit for. event thaty in the you see a split they will start talking about infrastructure. >> if you ask me in a split congress what is the number one i wouldhey could choose say infrastructure. have acally both parties vested interest in infrastructure. it makes construction companies happy.makes union trade whether you are a tea party republican or a resistant democrat you still like bringing home a bridge or a highway. or some other infrastructure, and airport or a seaport in your home district.

the mindset we have to fight is that after tomorrow everyone starts to think immediately about 2020. they will fight each other as if the campaign began. america needs them to take a break and get some things done for the country. >> let me ask you about something else, foreign policy and the iran sanctions that just went into effect. as a practical matter we are hearing increasingly from members of both parties about sanctions. whether it is saudi arabia or iran, what role will the new congress play in sanctions against iran and saudi arabia? >> for iran i was there for the time, we adopted those sanctions as a way to influence iranian behavior and stop their nuclear program without going to war. i think the deal with the obama administration along with our

allies in europe was a bad deal for us. we gave too much and got too little in return. all of that changed as a result of president trump including the sanctions that were back on iran this week. i think they have got to affect iranian behavior. are going to we cut the purchase of iranian oil by about a million barrels a day. that is a real body blow to iran. i would say that particularly if the house goes democratic you will find the house trying to assert itself on foreign policy. the question is whether they can find common ground with the president. in washington you need three to tango, the house come of the senate and the white house. >> let's talk about financial regulation. you are senate from connecticut and there are a lot of financial in additions up there. -- institutions up there. what do you expect from this

congress, let's assume it is divided. what should be done and not done? >> one of the significant changes president trump has brought is deregulation. i believe it with a general statement. i think it is part of why the economy is doing well. if there is a changeover in the house i would expect there would be an attempt to reregulate the financial industry. it will not make it to the senate or through a signature at the white house. the question is are there any areas of common ground? my guess is you won't find much actually done from congress on financial regulations. the present deregulation will stand. >> to quote the great senator lieberman it takes three to tango. even though we are likely to see a split congress the odds of a significant move towards reregulation is very low.

i think even if you saw two houses the odds of significant reregulation of the financial sector is low. the moves post financial crisis were very significant and a lot of systemic risk. i think the deregulation that has occurred has helped the financial sector and the economy. >> 2018, what is the thing that worries you most? >> in terms of the economy what worries the most -- >> whatever worries you. >> what worries me most generally is that resident and congress and whoever controls the house will continue not to deal with each other and some significant problems will go unsolved and opportunities will go untaken. inthe other hand, the energy the economy is quite remarkable. that the congress and the president stay out of the way. and let the private sector go.

what worries me overall is what you just talked about before which is some split, real breaks in china and the u.s. on trade and economic regulations. it makes no sense for either country or the world. we have two strong leaders now. they're kind of stubborn. we have to decide when to stop negotiating and start dealing and let's hope they do it in time. >> former senator joe lieberman thank you so much. mike's well of goldman sachs asset management -- mike swell of goldman sachs asset management. this is bloomberg. ♪

>> what i am watching is markets . i like spending much to happen, maybe some hedging of the margins. i am not expecting much to

happen, maybe some hedging of the margins. >> people can breathe a sigh of relief, it is over. hedging any kind of political risk has not paid off and less you were trading in the two hours after the fact. some liquidity overnight. we have 20, the presidential election and brexit. >> watch all the election coverage that unfolds here. you can join david at 7:00 your new york time. coming up on bloomberg markets, the open, more election with terry haines of ever core.

jonathan: from new york city i am jonathan ferro. the countdown to the open starts now. ♪

it is election day in america. investors conference and uncomfortable sentiments. a chinese official telling bloomberg china remains ready to talk but will not be bullied by the u.s.. chairman powell facing criticism from wall street to the white house. bellnutes from the opening in new york city with futures negative six points on the s&p 500. down by .2%. the price action muted and foreign exchange and treasury yields low by a single basis point on a 10 year to 3.19%. that is your market set up ahead of a big boat later today. investors confronting and uncomfortable consensus yet again. flips twohouse democrat that is largely what is expected by markets. >> the working assumption does seem to be democrats. >> a democrat house. >>