francine: divided government. democrats make big gains in the house of representatives, taking the chamber back for the first time since 2010. >> today is about more than democrats and republicans. it's about restoring the constitution of checks and balances to the trump administration. francine: a different story in the senate. republicans pick up seats to keep battlegrounds like indiana and missouri. traders mull the implications of a split congress. david solomon speaks out in an exclusive interview.

the goldman sachs executive says the big risk to the u.s. economy is overheating. hello, everyone. this is "bloomberg surveillance." i'm francine lacqua in singapore where we just wrapped up the economy forum. tom keene as always in new york. what we see as a result of the midterms playing on the markets. tom: really playing out on the markets. a lot of what was predicted to happen, but a lot of it was unpredictable. i have focused on the state legislature elections, the governorships.

still being decided at this hour. francine: for our global audience, if you put that into context, a lot of the talk here, executives want to know what it means for global trade. if president trump in certain cases feels empowered because he won some seats in the senate and what it means for the mueller investigation. let's get to the bloomberg first word news with taylor riggs. taylor: the democrats have won a majority in the u.s. house for the first time in eight years. republicans, meanwhile, have maintained control of the u.s. senate after gop candidates unseated incumbent democrats and -- and north dakota. the dollar retreated against most of their major peers as traders weigh the prospect of a split congress. the results dim the chances of any fiscal initiative from president donald trump's administration, while leaving the white house with the upper hand on getting key appointments approved in the senate. the ceo of goldman sachs says overheating is the biggest risk to the u.s. economy. in an exclusive interview with erik schatzker, david solomon also downplayed the market impacts of the midterm election. david: i think the biggest risk

right now is actually in overheating, and so the question is, can the fed in the context of how it marches forward monetary policy, can it continue to normalize rates in a way where they strike the right balance and we have a softer landing? and they may a may not. theor: we will bring you best of the conversation from the second day of the economy forum in singapore here on bloomberg television. largest banksn's have soared after the country's supreme court said they should not be liable for mortgage stamps to be payments, saving them billions of euros in back taxes. the news triggered a backlash on social media, with the antiestablishment party tweeting the people have won, have lost." global news 24 hours a day, powered by more than 2700 journalists and analysts in more

than 120 countries. i am taylor riggs. this is bloomberg. francine, tom? tom: equities, bonds, currencies, commodities. let's go to the data. not much of a move after the election results. .1311.n 1 euro-dollar down and we are looking at foreign-exchange with renminbi is a bit weaker. -- a little bit weaker. francine: european stocks were kind of following the u.s. futures and overall i think it is a dollar story. dollar and yields dropping as traders trying to figure out what the u.s. gridlock actually means, for them, for their position, and what it means to trade. look at the election coverage now with all of the other global news of bloomberg and there's no better place to start than with the revolution in american politics. not 1994, but 1974. he is a charter member of the

watergate class of 1974, the former united states senator from connecticut, christopher dodd joins us. his father in the senate back into the eisenhower 1950's. wonderful to catch up with you on this shift for the democratic party. how do you identify your democratic party now? how is the new democratic party different from what you knew over the years? question and great thank you for having me on. when i was elected to the united states senate in 1980 and sworn in in january of 1981 there was not a single woman in the senate of the united states. women who ran for congress, durant for governorships in the selection. 215 people of color for the first time in many cases were

seeking positions in the congress of the united states or governorships across the country. people were fascinated by the numerical changes, whether or , andemocrats won or lost so forth, i understand that, but the real changes will result in my view because of the makeup of the individual members of the congress and the senate. that is where the debate is, how will they affect policy debates, outcomes, defense spending. that's the real news. tom: in the final days of the campaign the nation was riveted by this debate of immigration. i would point out, folks, that dd grandparents came off the boat from ireland. how will we move forward on the immigration debate? chris: we are not alone in this. obviously we are watching in europe and elsewhere.

change, a lot of factors are contributing to mass migrations coming up. historically, i wish i could tell you otherwise, despite being a nation that has benefited tremendously from immigration, historically we have always found ourselves hostile to new arrivals. there's nothing really new about that but i am optimistic about this. the president almost came close a year or so ago on developing a bipartisan policy on immigration. i know today the feeling is this is going to be the great gridlock. the results of the election last night. i am a bit more optimistic about the ability of both this president and the democrats in the house to reach some agreements on some of these very difficult issues, including immigration. the president is not ideological. he was a democrat most of his life. he only recently became a republican and has rejected the orthodoxy of the republican years,he last 30, 40, 50

so you will not surprise me at all that the president will try and come more to the center. democrats in the house while initially will be hostile to any movie makes will ultimately see the value in him getting things done as well. i'm a little bit more optimistic about a number of issues where i think we might actually see some progress. francine: but senator, what does this result actually mean? who does it embolden, the president or the democrats? chris: well, initially there will be those with pent-up emotions and you will see a number of hearings and investigations going into the president's taxes, obviously looking at a number of other issues that come along, and they should do that. that's the responsible thing to do. there has been a total lack of that over the last two years. i think democrats would make a mistake if that's the only message. i think democrats have to begin to work on some of the issues that affect the very constituencies that have rallied

to president trump side. on issues of health care, on minimum wage, on creating more jobs for people that have been dislocated as a result of the innovation and new technologies emerging. if they do not do that, if the only thing that they do is to focus on president trump, then i think this could be a very short-lived victory that we witnessed last evening. so i'm not going to be surprised. i know that nancy pelosi will. they are going to be smart, in my view, by not only during the first thing. there are also going to be working on the substantive issues. francine: ok, senator, what does this mean for the election in two years? how does it change? after the democrats need to regroup and rethink? today -- do they need to change narrative or do they just stay as they are? chris: it's a little early to make any absolute predictions about that. ofhink one of the results last evening, i mentioned not only a lot of women and minorities running for public office and winning, but also we

had a number of women who were veterans of the iraq conflict or afghanistan, people who won elections or narrowly lost them seem to have more of a moderate tilt to the. progressives just to them -- to them. progresses, but mock test progressives, but -- progressives, but moderate in some ways. i think democrats searching for a candidate in 2020 will shift more towards the moderate side of politics. they are going to look for someone who can get votes in the heartland of america, in the midwest. florida, but id think to win the election

generation of moving up and leadership. f moving up and leadership.

tom: good morning, everyone. francine lacqua in singapore and on tom keene in new york.

how do we get to the gentleman from indiana as president? charles: i think it will still be a long road but one of the biggest changes last night as a result of the election is you're going to have some of the most important committees in the take over by individuals who have already said publicly they would do everything possible to .nvestigate the president when you look at the outcome of the muir investigation and the house investigation, by late spring and early summer there could be enough evidence on collusion, obstruction, and financial crimes, where we actually in this discussion will be discussing their actively a procedural process to remove the president, whether through impeachment or his resignation. francine: at the same time, president trump or at least the onpublicans seem to have w

pretty big in ohio and florida. what does it mean for the presidential race? as expected, democrats took the house but the republicans did better in the senate, which i think is a victory for the president. in the end, the most important -- g i think what you will see is a initially, as we just heard from senator dodd, an attempt out of the gate to be moderate and to try to work together with the republicans, but the democratic membership, especially the is populated house with a number of folks that are very extreme. they are going to want to not

move with impeachment initially, but by spring i think there will be articles of it peach meant that will come out of the house -- articles of impeachment that will come out of the house. tom: one of the interesting things about this was four ballot initiatives on gerrymandering that we saw yesterday. i have not even had time to look at the gerrymandering results. we have this odd think of a popular vote in a nascent democratic party buttressed up against the advantages the republicans have but joggers he and by the senate and such. where will that be in five years? how do you presume these two opposing popular vote and gerrymandering? how does that play out over five years? gerrymanderingk happens when both parties are in control. tom: right. charles: so it's very hard to predict the exact outcome because we do not know who will

win in five years. seeing inat we are this country and we saw play out in 2016 and we saw yesterday, is that increasingly there is a real sense of minority rule on the part of republicans both through their winning in the electoral college and also the number of senators they have that represents states with fewer people. so i think it is a very big issue, because in the end what we are finding across the is that the majority of americans actually are moving further away from an number of the key sort of central tenets of the republican party. francine: all right, charles -- global advisors stays with us. next we sit down with the former chief executive of wpp. it's not his first midterm or first election in the u.s. dual after him about that. this is bloomberg. ♪

francine: this is "bloomberg surveillance." , am joined by martin sorrell the founder of -- and former and theecutive of wpp chairman of s4 capital. how are the last six months? surprising exit from wpp. >> they have been interesting. we have been our ups and downs. francine: any regrets? >> you always have regrets,

whatever you do. it's natural. francine: do you have regrets over the last six months? >> obviously onset at what happened with wpp but we have made strides with s4 capital. embracing digital content, digital media, planning and buying. we have made our first initiative and we will be taking another initiative in digital media planning buying the recent -- very soon. francine: there are concerns about wpp in terms of revenue. you don't fill any responsibility? >> i was at it for 33 years, francine. it was one of our million shell products. we started with galveston, which we know -- the terrorist in -- we started the company, which we renamed s4 capital.

i always feel responsible for everything, francine. when you build long-term brands and i believe in building long-term brands. wpp.nk back, 33 years at these tend to be long-term assignments. we were discussing today at the new economy for them, we were saying the average life of a ceo is about 4.5 years. so we opted the average of the. francine: how do you want -- upped the average of that. francine: how big do you want s4 capital to be? >> i will not give an answer to that question because when we started wpp we did not know how big it would get. we want to embed the three core

functions that i talked about, so content, media planning, and by digital, and last but not least, first party data. i think there will be major restructuring in the industry. francine: acquisitions? >> would have been at it for three months -- we have been at it for three months. when you fall off the horse you get back on the horse is quick as possible. francine: are you looking to buy things? it, whichtent side of is growing significantly. we received very good third-quarter growth, but from a small base. that's going very well. we want to add digital media planning and buying. that will be the second move. i want to do something more in the content area. first party data on more difficult because the assets are highly valued and difficult to acquire. our clients across the

platforms, i mean, what s4 capital really is, the growth of the tech companies, the software companies, the platform companies, and the hardware and software companies. it's not just google, facebook, and amazon, but it's apple and microsoft, and in addition tencent and alibaba in this part of the world, then companies like adobe, or salesforce, or oracle. francine: with the impact of the midterms? martin golan -- what's the impact of the midterms? martin: the fear is that there will be gridlock. your founder at the session was rather worried about gridlock. francine: were you worried? martin: yes, one worries whether the politicians will stop on the history and investigations rather than get on with the business of governing. thetime between now and

next general election in america, the market probably will have a correction, i would say. we will run into maybe some inflationary pressure and we will test people will get more nervous -- people will get more nervous. francine: our trade wars here to trade wars her to stay? martin: it's not a full-fledged war. it feels a little bit warlike to me. the very stark warning that hank paulson gave this morning about a potential cold war is very concerning. my only experience in shanghai a few weeks ago, a couple of weeks ago would go along with that, in the sense that i think the offended,re deeply wrongly or rightly, by the american action on tariffs. both sides of it have to be dealt with. the chinese and the level playing field, dimwit intellectual property rights. the chinese have established, whether we like it or not,

technological leadership at this stage in a number of categories. ate howly underestim powerful and -- i think we underestimate how powerful and strong they are with technology. maybe president trump and president xi will come to some sort of agreement. francine: you will have to come back and talk about brexit. martin, thank you so much for joining us. now, executive chairman of us for capital.let's get to bloomberg first word news . won a: the democrats have majority in the u.s. house for the first time in eight years. have regained control of the u.s. senate as a gop candidates unseated incumbent democrats in indiana

and north dakota. u.s. treasury yields declined and the dollar retreated against most major peers as traders by the prospect of congress. the ceo of goldman sachs is overheating -- says overheating is the biggest rest of the u.s. economy. in an exclusive interview in singapore, david solomon downplayed the market impact of the midterm elections. >> after the biggest risk right now is overheating. fed, intion is, can the the context of how it marches forward with monetary policy, can it continue to monitor rates in a way that they strike the right balance and we have a softer balance?

the former u.s. secretary has warned of an iron curtain dividing the world if the u.s. and china failed to strengthen differences. there are diverging interests in critical areas that go beyond trade. 17 years after china entered the wto, and the still not open. 's president trump former top economic advisor sounded cautious notes -- president trump's former top economic advisers sounded cautious. >> i wish i could sit here and say after the midterm elections, the white house, the administration understand they have to solve trade issues. i think time and would like to solve the trade issue. taylor: we will bring you the best of the conversations from the second day in singapore throughout the day here.

italy's populist government has called a vote of confidence in parliament today as tensions rise. the deputy midtier of the anti-immigration leg wants curbs on the right for asylum-seekers. some members of the antiestablishment are against the idea. italy continues to spar with the eu over 2019 budget. 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. now to our top story of the morning, the u.s. midterms. let's hear from some of the winners and losers. humbled toonored and share both of the ballot and stage with the many visionary, bold women who will raise their hand to run for public office.

i earlier this evening, called mr. ron desantis and congratulated him on what we expect will be him at the next governor of the great state of florida. wase saw assaults that unprecedented. we sought a $100 million race with hollywood coming against us, with of the national media coming against the state, but all the money in the world was no match for the good people of texas, and the hard-working men and women across our state. >> thank you. tomorrow will be a new day in america. know thethis feeling, power to win. almost all congratulations to dynamic, diverse, and

credible candidates have taken back the house for the american people. let us salute all of our candidates. >> we had some good results tonight. the democrats that the house of representatives. -- took the house of representatives. we have governors that are democrats now in both illinois and kansas. there were some bright spots. obviously, we fell short, and that is disappointing. tom: terrific images there of some of the emotion of last night. we have resulted in from of nevada and the governor's race in wisconsin as well. mr. walker house in wisconsin. -- out in wisconsin. they're still waiting on arizona, california, montana. right now, we selectively look forward and i want to focus on

infrastructure. ing. joins us from economist,t we need to have dug logistics to we need to have logistics to do trade. h: i think infrastructure is going to be a big priority for president trump maybe in the next two years. therene of the few areas is some scope for agreement between the president and democrats who control congress now. i think that might be something, one of the few potential upside of this result. if you force the two sides to work together, i think there is

a fairly narrow window before the 2020 election takes over. tom: i'm glad you mentioned that. there is a narrow window to get infrastructure finally done in america. how do we do it? i think one of the things we could see out of this result israel progress on infrastructure. -- is real progress on infrastructure. you have to get the bill out of the house. the only reason it hasn't is because of the increasingly smaller number. still enough fiscal conservatives on the republican side that had been blocking this. with democratic control of the house, there will be a bill out of the house to the senate with the white house pushing very hard to get it done. we are going to have bipartisan support and a white house that once a done. -- wants it done. it is going to be $300 billio

n-$350 billion. the other big thing i think that happens next year is drug pricing. i don't than the markets are focused enough on this issue. with democratic control of the house, a nancy pelosi was very clear on this, there is going to be a huge effort starting in january to bring down drug prices in this country. it will be the democrats in the house, but most of poorly the president white house really pushing on this issue. francine: i was going to ask you about business. you talked about pharmaceuticals and some of the drug prices. what else can we expect? if you are a manufacturer, what does this midterm mean for you? charles: for a lot of sectors in the economy, they're going to see a lot of the same, with the exception of those that would benefit from an infrastructure package and also drug prices and

big pharma companies will be affected. across most sectors, there is not going to be much change, which is why everybody likes gridlock. there are a couple of things i would focus on. in the end, we're not going to see any further tax cuts. the democrats will try to roll back the trump tax cuts, but it will fail because the votes are not there in the senate. will try to do that mainly to score political points going into 2020. we will see a very big effort to protect obamacare. it means that people with pre-existing conditions will actually still have access to health care. not a big change because that is what we have today. drug pricing is a major issue. i do think we are going to see a negative surprise on that issue starting in january. francine: do you agree with that?

what does it mean for infrastructure? does it mean the end of infrastructure spending because you have a divided house? jonas: i'm not sure i agree with charles. if there is potential agreement, it is really on the republican side in congress. i don't think there is a great chance of it, but i wouldn't rule it out. you have seen some of the democrats talk about it as well. president would be in favor of more tax cuts.if you focus it more on lower income , middle income brackets, there is some scope maybe for an agreement there. i think infrastructure comes first. tax cuts, i wouldn't rule it out completely. tom: i think an important question that i haven't heard an answer to. how short is the window here to get anything done over the next

two years? jonas: i don't think it is even 12 months. the campaign probably kicks off today. 2019, i think that is the sort of window we are talking about. tom: are we talking about the third week of april or six week of july? charles: i think there is a six-month window, but i think the democrats want a major legislative when. tom: -- win. tom: why does this president nancy pelosi a major legislative win?

charles: either way, i think all parties will take victory on infrastructure. the democratic leadership will argue made the decision that y want to run on something positive in 2020. infrastructure is that. it will be cast dispersed. there is more stimulus coming as a result. francine: thank you. jonas and charles stay with us. don't miss our exclusive interview with goldman sachs's new chief executive. he had a thing or two to say about the u.s. economy. this is bloomberg. ♪

francine: this is "bloomberg surveillance." it is all about the midterms, but it is the implication it has on the economy and what it could mean for big business. david solomon has big shoes to fill at the top of goldman sachs. predecessors, his established a dynasty. delivering annual average returns of more than 4% while competitors were bought up or went bankrupt. quarter,epid first reports came that he was plenty eventually, it he

did -- .e has wasted no time his reward, an unexpected revenue beat. the investment banking he once led. shares are up more than 1% six october -- since october. here he is. >> we kind of landed in a place where the polls were kind of right republicans are picking up a couple of seats in the senate. i think you are seeing a little .it of a shift i think from a market perspective and expectation perspective, not to unexpected.

as you look forward from here, i'm not a big believer that those is going to have a big impact on policy or action or washington or where we are for the next two years as we moved to the 2020 elections. some people have said the democrats, not that they run the house and committees, begin a never-ending series of investigations with subpoena ,fter subpoena into things maybe even the republican party have been billing for the last couple of years that would probably slow down the business. and makes me wonder whether it would be bad for the economy and maybe bad for the business climate. >> when there is balance, both sides have to work harder to get things done. what i say is, i don't think it would be an effective strategy

for the democrats to go down that road. but if they do go down that road, think that would be a missed opportunity. candidly, i would hope the past and process forward from here is given balance and shared responsibility in government for the next two on whereere is a focus we can move forward. the economic environment of the united states continues to be quite positive. we can talk about that, but in the context, let's take advantage of that and see if we can move forward. >> is that sustainable? the fed seems quite committed to raising rates. whether one wonder there is nowhere to go down from here or things can continue at this pace. >> i think things can continue for a period of time. i would say we are certainly later in the cycle. it up and take a rocket

scientist to notice. >> people want to know how late. >> i think the biggest risk right now is actually an overheating. fed, intion is, can the the context of how it marches policy, can ity continue to normalize rates in away with a strike the right balance and have a softer landing? tom: the gentleman from goldman sachs dodging. david solomon of goldman sachs. we are with jonas of ing bank in london and charles myers of sigmund advisors. i want to go to wall street of these elections. diamond, mr. solomon,, the other big hitters how do they play gridlock?

what do you do? cycle, we think this saw a huge the switch from wall street contributing more to republicans, to this time or two democrats. the increase was about a 60% more two democrat then than republicans from people in financial services. wall street always wants to back the winner. in this case, there were a number of folks who believe wanted to see change. having a check on the executive would be a positive. we did see a number of very high profile people from wall street for the first time really contribute to democrats. they do play both sides, but democrats right now are taking in a lot more money. francine: what does it all mean for foreign policy, trade? that goes back to what it means

for businesses. charles: one of the things that perhaps the markets might be underestimating with these election results is the fact that the democrats are very much on balance behind the president in his trade war with china. we are in a trade war with china. i don't think we should call it anything other than what it is. it is a full-blown trade war that will get much worse. the democrats have been a party that has been anti-free trade for a long time. they are on board with the president on this issue. i think there will be almost no effort at all from congress to stand in the way or try to get the president to change his position. i think it gets much worse from here because the trade war is only one small part of a broader strategy to do everything possible to weaken china economically and militarily. i think the president is very serious about it. tom: good conversation.

we will continue. francine: thank you. charles stay with us. let's take a look at what the markets are doing. i am seeing a little bit of movement when it comes to dollar and treasury yields. the dollar is dropping. u.s. equity futures drop. treasuries climbing as investors begin to figure out the fallout from the midterms. this is bloomberg. ♪

tom: "bloomberg surveillance." good morning, everyone. singapore,cqua in i'm tom keene in new york. we're still getting result in from last night. the important senate race in nevada, widely followed, also the governor's race in wisconsin where mr. walker went down in defeat to an educator out of madison. francine: what we are focusing on is the markets and the impact this could have on your business.

what we are trying to figure out is what it needs more -- means for trade. how the trump administration and the white house will position itself when it comes to foreign policy. we will try and discover that with a number of guests coming up. tom: we will continue. bremmer with francine. cirilli with perspective not only on the headline races, but the races of the legislature level. please stay with us through the morning. this is bloomberg. ♪

governments.ided

democrats make big gains in the house of representatives, taking the chamber back for the first time since 2010. republicans pick up seats in the senate to show up the majority and keep battlegrounds like indiana. in ansolomon speaks out exclusive interview at the bloomberg new economy forum. the u.s.he big risk to economy is now overheating. good afternoon or morning depending on which part of the world you are watching us. this is "bloomberg surveillance." we look at the applications of the midterms of business, markets. we are trying to figure out whether this emboldens the trump administration for a trade war with china or not. we have great guests coming up. tom: they will be changing the curtains and the capital. fascinating about this election are some of the back stories.they don't make the headlines in the newspapers . it is the kind of minutia only

kevin cirilli looks at. there are some really interesting nuances within this historic midterm election. of course, we will get tax cuts. here's taylor riggs. taylor: the democrats have ended two years of republican control of houses of congress. they every take in the house of representatives. republicans held onto the senate. the final figures are not in, but democrats will end up with more than the 23 seats they needed to flip the house. house minority whip leader -- minority leader, nancy pelosi is expected to become the next speaker. about checks and balances to the trump administration. tookr: republicans

democratic senate seat in several states. republican incumbent ted cruz of texas barely beat his opponent. >> it is my hope that with the bitterness and division we see nationally, that texas can be a model for how we can come butther, disagree, yes, with civility and respect each other's decency and humanity. taylor: democrats picked up at least six governor seats. those are crucial for districts seeing battles that will take place after 2020. abrams trailsacey the republican, but she is waiting for provisional ballots to be counted. the new ceo of goldman sachs says he does not think the election results will have a big impact on policy over the next two years. he is concerned about the direction of the economy. he

spoke at the bloomberg new economy forum in singapore. >> i think the biggest risk right now is in overheating. fed, intion is, can the the context of how it marches forward with monetary policy, can it continue to mod ernize rates so we have a softer landing? they may or may not. 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. riggs, this is bloomberg. tom: thanks so much. we are beginning to see a move in the market.this is different than what we saw last night with futures up a substantial amount. dow futures up 201 points as well. the fix coming in with a vengeance. 17.23. it's non-correlated. election. francine: they are lifting in

europe. at, this isking definitely what has been driving these markets. gaining.u.s.en equity features have been jumping a little bit . treasuries climbed as investors try to figure out what the midterm elections in america mean for the rest of the world and their investments. , a chance that might have triggered yield gains. a stronger dollar now. for those of you that try , thet sleep last night governor loses in wisconsin. a new governor. let me look at one thought of the many people writing. democrats also gained ground in governor races and state

legislatures, albeit, not to the degree they hoped. a divided america shows the democrats with a clearly larger half. two goes on to say the death of the gop legislative agenda could even be good news for trump politically since much of that agenda was toxic leon popular. allyw that -- toxic unpopular. can the president be more moderate and nudge forward to a new trump with a new congress? kevin: democrats will say absolutely not. i think it depends on what congressional district you look at in terms of the targets. the big takeaway so far is that if you go into the suburbs, this was where the democrats were able to pick up most of their significant gains in the house.

they were able to win back white, affluent voters. look no further than virginia. cruz won. is a great night for mitch mcconnell, where he was able to hold onto taxes and avoid an upset. if you go into illinois, peter lost. this was suburban chicago. this is where he ran on the issue of republican tax. tom: does the president really care about the legislatures? he is rather doing a presidential thing. he is up and moving forward legislation. thehis an advantage to president because not a can ignore the house. ryan, butre's no paul

i think he was ignoring him for quite some time. the big question now is nancy pelosi. does she become a negotiator in chief or investigator in chief? hour, i want to talk about some of the state legislative wins. i want to go out to the undecided races right now. what are you going to look for in the next few hours? kevin: arizona, there is a dead heat. this is immigration ground zero. a key battleground in terms of the open jeff flake see. in terms of california, are democrats going to get over 30? they got what they needed to get back to control of the house of representatives, now, it is how much of a majority will they have? maxine waters will wonder by today. well you ask her?

issue forst of all, sure going to get this gavel? second, issue good to focus on the taxes or compromise in terms of reforms. bad news for mick mulvaney if she gets the gavel because she is good to push for oversight. we are trying to figure out exactly what the midterms mean for business, the markets, and what it means for the trump agenda and whether he feels emboldened by this or whether it really just shows the divide -- rural divide. you make us smarter and no history -- know history. thisis the implication on for world leaders? is it on trade? i think the president doesn't

feel that emboldened. think china is really the place you have to look out because they were the people watching this result closest from the rest of the world. there has always been this but in china between two groups of people. one group says it is all just trump. if we can deal with trump, we move on. another group saying, we think america has changed. america is necessarily certainly more worried about china and wants to contain us. what i think has happened this time is that there was not enough there for people to say trump was in difficulty. he will be fine. there isn't but to be a change which would alter that location. francine: does he change rhetoric because he is ok and he is going to have to deal with possible more investigations instigated by the democrats? john: my instinct is not.

he feels quite strongly. it is very difficult to be an america first president when you end up with china first in the world economy. although he has a huge personal hisect for xi jinping, media staying is that he will keep pushing china. i don't think there's going to be a deal relatively soon. if there is, it is great to be a very good deal for donald trump. francine: what does that mean for the u.s. economy? john: kevin would be much better at telling exactly which bit. my instinct is it must be it on tax cuts. it doesn't seem like something what's the democrats would want to get in on. easy, if you're a democratic congress present to agree on infrastructure. you can claim a you bullied donald trump it to doing it.

francine: does his presidential campaign for 2020 start now? john: yes. that has always been part of his psychology. enjoys being president and i don't think he is in any hurry to give it up. we have the story of him sitting there with steve and declaring victory in the back of a slightly better senate. these things are always a matter of expectations and how you spin it. overall, it is quite hard to say that the democrats succeeded in expectations. republicans did. i want to come back to talk to you about the world order. he is the gentleman from philadelphia. a wonderful time to speak to a more ancient democrat about those new younger democrats. who would that be out of philadelphia?

it can only be mr. rendell, the former governor of pennsylvania, coming up in the 6:00 hour. please stay with us worldwide. this is bloomberg. ♪

francine: this is "bloomberg surveillance." tom and francine from singapore and new york today. the trump administration has sought to distract the global a trade warparking with china. >> we are not in a cold war now.people who say it is a cold war , it's overblown. we have the very real threat of a cold war if we continue down this trajectory.

it's a dangerous trajectory. john,ne: we're back with our editor-in-chief. we were also listening to president xi, who you have met, opening the chinese emperor forum. how difficult is that transition from export to import? john: i went to shanghai to go to the import forum. interesting. there wasn't a vast number of business people that went to it. i think this shows the difficulty the chinese are having and persuading business to support them. one of the issues for the chinese is they expected when a trade war began, that a large amount of businessmen would come out and say this is ridiculous and support them against trump. what has happened, which we should have all expected was that american business on the whole book to this and said it's good if donald trump manages to

open up china a bit or a lot, as long as he knows when to stop. at the moment, american business is happy with the idea of trump. you heard it throughout the corridors this week. business people still think that china doesn't give them a good enough deal. francine: there is a vacuum being left by the u.s. how much space chemchina fill? fill?-- can china john: china is playing very well. they are saying, we are the people doing this. the only bit is that there is a degree to its business is saying, if you are the great multilateralist, open the door. rhetoric is much more important than what is coming out of the trump administration. you need to do things. tom: i talked about

trump-lateral, and i thought your conversation with dr. kissinger was exceptionally important about the many different nations -- definitions of bilateral. what exactly does it mean to the u.s.? john: that actually goes right to the heart of it. you have an america now which looks at the world through a series of bilateral relationships. he can get a slightly better deal, but you could argue doesn't think about the longer-term prospects. i was talking to the senior finance person who is heavily involved in these things for a long time. the point being made was very simple. whole, ifight on the america tries to do a deal with germany, america will get a better deal. because america is a more powerful place you can go around picking people off.

america also has this longer-term, bigger investment in the multilateral system. by the fact that the system works, everyone gradually gets richer. that also does help america. on any individual country, is quite difficult to argue that you could get a better deal. the question is, whether in the course of negotiating, all of those bigger deals. tom: the moving force is the south china sea. soldier, what did you learn about the new geopolitics of the south china sea? john: i think it's still heavily contested. everything, in some sense comes down to borders, history. it is a place where china is geographychange the

in a way that makes a difference. also have so many other competing emotions here. i member talking to a korean business about what exactly the difficulties to do with north korea and japan. he pointed out that if north korea was silly enough to lob a rocket into japan, that would tose many south koreans choose. deep emotions in this region, which you tend to forget when you're not here. a lot of it is back to things, what is actually taught in schools and what isn't? what the japanese are not taught about what happened in mentoring -- manchuria. you have two people living and parallel universes. that is very difficult. francine: you have traveled

extensively in the region. our chief executive taking action are largely ignoring it? john: so far, they're putting things a little bit on hold. people are a little bit nervous about investing things longer-term. it is a little bit like early stage brexit. are extremely nervous about trade war's. they are all hopeful that they may be a will to get something inter china, in terms of national gains. longer-term, they face this advantage. they don't want to make a decision. as long as the thing is over in six months or nine months, they think they can continue. francine: thank you so much.

on 55 panels. john: i do whatever tom keene tells me. tom: right now, someone with a ,reat geopolitical perspective here is ian bremmer. on the election festivities of last night, here is dr. bremmer tweeting out. and resting to see so many seats --t after president wonderful to have you with us today. what is so interesting is the great divide, the cultural divide and some would say the economic inequalities of this nation. we be in two years? >> more divided than we are now. the fact that we are this divided in an economy doing this

well with extremely low unemployment, a tax break a benefit that has made most americans more optimistic about the economy than they were two years ago, implies he should be doing a lot better than low 40's in his approval. he is massively devices. that is the reason why he decided to go on immigration in race for hisnd election bid for the midterms, as opposed to running on a solid economy. when the economy turns downward, as it most certainly well as we head toward the 2020 race, you have to ask yourself, what is that campaign cycle going to be like? it is clearly going to be much more challenging domestically. you write a morning memo that is global in nature. the reaction and news of nation to nation to nation. how will they react to the new america or is it business as

usual for our foreign policy? ian: it's business as usual in terms of the democrats taking the house. i don't think that matters much for people from around the world. what youers more is see in terms of policy from trump on foreign issues. he has been able to do that fairly independently of the foreign-policy elite. let's be clear that whether you are democrat or republican, they do not like trump. he has been going after the globalists, and that is true whether you talk about him pulling out of the paris climate accord pulling out of tpp. the arabian nuclear deal -- iranian nuclear deal. running up to the g20 meeting at the end of this month will by far be the most important of the

international meetings trump has had since he became president. it is all about the u.s. and china and trade and have president xi and president trump look at each other. the pickup of republican seats in the senate matters very much for that. you don't think this would embolden president trump to be more aggressive with china? ian: i think not. this meeting is being set up to go relatively well, at least tactically in the near term. you get the two adults in the room and only they can show that they can make some meaningful progress. they come up with some kind of framework for their teams to start working. they probably put some suspension on further escalation of tariffs for a period of time. i don't think that the electoral

results in the u.s. will impact that. i do think that once you have the democrats seated in the house they start seeing major investigations going down against trump. they start calling for his taxes to be reviewed. they start looking into his family business and the rest. then you'll start to see a more erotic trump. i don't see that in the run-up to this meeting at the end of november. i don't. francine: what does it mean for u.s. gdp? saw this divide that we had seen in the presidential election between urban and rural votes. what does it tell you about the strength of the u.s. overall. >> i don't think it tells you much short-term about the

strength of the u.s. economy. all of the ceos i have met with in the last couple of days feel almost as good about the u.s. economy as they did a year ago. 3.7% global growth. i don't think the economists are comfortable with where growth is right now. i think they feel that the fiscal to sing in the u.s. with low unemployment is dangerous. there.n, got to leave it coming up, formally with the seventh congressional district, -- worldwide, this is bloomberg. ♪

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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. comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers. "activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. tom: good morning, everyone. bloomberg "surveillance." much on the american elections. right now your first word news in new york. ere is tail riggs.

taylor: the election will alter president trump's next two years in office. the republicans held on to the senate and the temperatures took the house. the final figures are not yet in but democrats will end up with more than the 23 seats they needed to get the house. nancy pelosi is expected to become the next speaker. >> today is more than about democrats and republicans. it is about restoring the constitution's checks and balances to the trump administration. taylor: republicans took democratic seats in north dakota and missouri. republican incumbent ted cruz of texas narrowly beat democrat beto o'rourke. >> it is my hope with the bitterness and division we see nationally that texas can be a model for how we can come

together. disagree, yes, but with civility, respecting each other's decency and humanity. taylor: democrats picked up at least six governors seats. and in georgia, democrat gubernatorial candidate stacey abrams trails republican brian kemp but that he is waiting for absentee and provisional ballots to be counted. janet yell season concerned the pendulum might swing back too far. she spoke at the new economy forum in singapore. >> i do think the sent and the push is now going very much in the direction of deregulation. reducing authorities and i am worried about where this is going and it is really only been

a decade since the financial crisis and it is really too soon o be moving in that direction. taylor: global news 24 hours a day on air and on tick tock and in more than 120 countries. i'm taylor riggs. this is bloomberg. tom: thanks. watching for selected results still not in on the election. now a look at the equity markets. looking at the bloomberg futures advancing, dow futures up. peter, you got a single terse line where you are underweight the united states of america. are you underweight political gridlock? >> i think i'm underweight u.s. equities primarily as i spoke to

you a month ago primarily icause of evaluation, i think think the gridlock could be seen as a positive. i don't think we see much regulation. otherwise i think trump's two years have been two years of very little regulation in a pro business environment. ver all, i think it is quite neutral. i think the main thing is the u.s.-china relationship. we will get a more clear confirmation of in late november and then it is the soaring u.s. debt costs. tom: is the idea of american corporations showing good performance but giving tepid guidance as we see obviously linked in some form of economic slowdown. do you just assume reduced

revenues, reduced operating incomes? >> i see headwinds for corporate profitabilities. we have a lot of industries globalized with global supply chains. you have earnings from b.m.w. saying that tariffs and the trade war between u.s. and china is putting pressure on and you have the semiconductor industry that has been through a boom in the past two years in terms of earnings growth and i think that will come to a halt very soon. it is a strategic industry between china and the u.s. it will make it difficult for companies to navigate this environment. francine: what does this all mean for you? i know you said it was neutral. a lot of this outcome was

pressed in the markets. the results -- any chance for fiscal initiatives that might have triggered yields gains. is that right? > i think if the democrats and republicans can find a common ground and tackle the healthcare system in the u.s. which will be a big theme for 2019. the democrats have moved toward the trump viewpoint that china is the emissary for the u.s. in terms of being a dominant power and i think that will not change after this midterm election and that means there will be a constant friction between the u.s. and china. budget projections are quite dire. the annualize costs of u.s. debt $550 looning out to

billion u.s. dollars. we have over a trillion dollars maturing . it is 16.5% of the u.s. budget. this is clearly an unsustainable path and could be maybe a major theme in 2019 where the markets begin to discount this situation. francine: will it have an impact -- i know you were talking about some of the industries this impact on.an will it have an impact on the pharmaceuticals because of drug prices? >> let's say you have a form of reimbursement system. you don't see a change unless they change the competitive framework for how they set drug prices. i'm more concerned about the health insurers. those could be the real

casualties in healthcare reform. tom: very good. we now go to hong kong. looking forward to these comments and this conversation with timothe o'brien. an executive editor of bloomberg opinion. i love your essay. i love how you go back to president clinton chagrinned in 1994. he changed and said i need to do my dead level best. this morning what is the dead level best for president trump? >> well, i think president trump is going to remain defiant. that's who he is. he campaigned during the last few weeks of the midterms essentially expressing vitriol and racism. that is not really a recipe for somebody who is going to

collaborate with a house that is controlled by democrats. the best thing for him to do would be whether it is to work with the democrats or against them, but at the end of the day i don't think he will be a collaborator for the most part. tom: is your second round of scooling, the idea that the democrat -- schooling. can the democrats do enough schooling to extrickate his tax returns? >> they will have a very good chance. as you know, the president has spent a lot of time ignoring calls that he make those documents public. on a number of fronts the democrats are going to make his life quite hard. they are not going to let him get a second tax cut through. he will not be able to increase

the defense budget with any kind of speed and he won't be able to repeal obama care. those were all goals that he prized and i don't think he understands yet because he is new to the ways of washington, how important it is for him to rely on veteran politicians that he has largely disparaged. that is true of republicans too. he could not have gotten through the two supreme court appointments without help from the republicans and the tax cut without republicans' help. the democrats are going to introduce him to how miserable it can be when the other team in town has power. francine: do you believe the democrats will actually go after president trump with fresh investigations or just pushing current investigations on russia and the president and if yes, does that change the president's foreign policyy?

>> i think he is still going to have a lot of latitude on trade policies and foreign affairs. the presidency is designed that way and there is probably little that the house can do to disrupt the things that trump is pursuing on those fronts. it is going to be more on domestic policy issues that they are going to make his life hard. i think you'll see a wave of subpoenas from this house targeting trump an other members of the cabinet on things like potential conflict of interest. francine: when does it end? or do we have to clue? >> i have no idea. it will go for as long as they think it needs to go. if for example, during that long theod when scott pruett and

scandal as an administrator of the e.p.a. the house never called him to account. there are certain questions around ryan zeinke. this house could very well call those folks up to the hill on a regular basis to testify about how they are performing their duties. it is going to be a thorn in the side of this white house and i hink you'll probably see a significantexodus of figures from the white house in the coming weeks. tom: there is a lot of people thinking about the future of america, looking at the future of the trump administration and even on to a second term. what is the single thread you see within bloomberg opinion talking about the next two years. what is the thing that gets your attention among our many writers? >> i think everyone, you know, we have writers with a wide

variety of political vupets. -- viewpoints. i think one thing that united states us is we believe in problem solving. the government thinks it should be about problem solving. i don't think you're going to have a congress oriented towards problem solving. tom: we thank all of you for watching on twitter and streaming on twitter. 'll butt out mr. o'brien's essay later today. michael r. bloomberg has donated millions to democrat candidates in the bid to change control of congress. now let's turn to opec. opec countries to discuss oil output cuts. price moves, headlines ensue. we see that there. this will be at the abu dhabi

meetings coming up. please stay with us. francine? francine: yes, we understand of course with the latest news on opec that they have really done a couple of u turns. one of the most head spinning years because every time the price moves they try to figure out whether they stick with their agreement. what happened in the last week or so is the iranians' actions came into effect on monday. with the waivers, the oil price sank which is now we're expecting opec to eye another u turn as the oil slump -- there is talk of new cuts. we're back in a couple of minutes. this is bloomberg. ♪

francine: this is bloomberg "surveillance." tom and francine from singapore and new york today. the results of the u.s. midterm elections are coming in largely in line with expectations. democrats taking control of the house of representatives and republicans maintaining control of the senate. earlier we spoke with the chief goldman sachs and asked his opinion on the results. >> we kind of landed in a place where the polls were kind of right. democrats took back the house. republicans picked up a couple of seats in the senate. i think you're seeing a little bit of a shift in some of the governorships. i think from a market perspective and expectation perspective, not too unexpected. as you look forward from here,

eem not a big believer this is going to have a big impact on policy or action or washington or where we are for the next two years as we move to the 2020 elections. >> what if, some people have said the democrats now that they run the house and the committees and the never ending series of investigations with subpoena after subpoena into things that the trump administration and perhaps the trump family and maybe the republican party have been doing for the past couple of years that would probably slow down business -- it makes me wonder whether it would be bad for the economy or maybe bad for the business climate. >> i think balance can be good. in government. when there is balance, both sides actually have to work harder to get some things done. so what i say is i don't think it would be an effective strategy for the democrats to go down that road but if they do go down that road, i think that

would be a missed opportunity. i think candidly, i would hope that the path or the process forward from here is one where given balance and shared responsibility in government for the next two year, focus on where we can find compromise and get things done and continue to move things forward. s in the united states are good. >> is that sustainable? you know markets have been shaky for the past several weeks. the fed seems quite committed to raising rates. makes one wonder if there is nowhere to go but down from here or whether things can continue at this pace or perhaps even faster? >> i think things can continue for a period of time although i would say that we're certainly -- at the end of the cycle, not the beginning. doesn't take a rocket scientist to notice that. >> people want to know how late.

>> i think the biggest risk, our u.s. economists have echoed this a number of times. i think the risk is actually in overheating. the question is can the fed in the context of how it marches forward with monetary policy, can it continue to normalize rates in a way where they strike the right balance? tom: mr. solomon of goldman sachs. he took a few phone calls on goldman sachs' challenges out of malaysia with our eric shatzker. aybe the interview of the day. david weston. former governor of virginia. well time pd. stay with us. with more on the election. this is bloomberg.

♪ oomberg. ♪

tom: good morning. bloomberg "surveillance." we welcome all of you around the world and across america. francine lacqua in singapore.

tom keene in new york. all you need to know is toto, i don't think we're in kansas anymore. what an historic republican crucible kansas has been and we saw a democrat take over as governor. laura kelly will take over her leadership as a new kansas forward. these changes in the american landscape. granularity here of extraordinary moments was historic. what captured your attention in those results? >> we have seen division across america for the last two years and you in government. the governmentships slipped to the democrats. we have a divide congress. if you're sitting in europe you're looking back saying game not over for 2020. what should our dominant strategy be? should it be to wait it out now?

to play lowball, kick the can down the road when it comes to dealing with the united states? we don't know what things are going to look like in a couple of years. that is one sign i think these elections are going to throw up to the europeans and the rest of the world. tom: do you and other experts at chatham house feel that you will see an adjustment, an amendment by secretary of state pompeo? he knows the legislative process unlike his boss. are we going to see an adaptation within the state department? >> there is clearly some concern that what president trump will do and those like pompeo who support him will be to look to foreign policy. they are going to be frustrated by their inability to move legislation through that is not entirely new but it will get worse. foreign policy becomes a do main where there is more latitude for the president and his team to effect change. not entirely clear how that will

play out of course. there are some issues that americans are mobilized around as a result of this election have significant international implications whether it is immigration, to a lesser degree, trade. that would be the obvious turn for this president to make. francine: what kind of foreign policy? you mentioned trade. is he ratcheting up tensions with china hor will he -- or will he focus on something else? >> china has gotten bipartisan support. we are likely to see an increased pressure on china. there will be a question mark as how that plays out in terms of domestic consequences. despite a very strong american economy it wasn't the number one issue for voters in this election. that could change if the egative implications and distribution ahl costs get more tense and the effects are positive.

a number of things on the agenda. i do think increased pressure on china is very much likely to be what we'll see. tom: thank you so much. too short a visit with the chatham house in london. we're going to move forward. the conversation, kevin cerilli will join us. i want to talk about state legislatures and the change there. he will have a most interesting interview. i believe she will be chairman of the house financial services committee. maxine waters. she and the president have really gone at it. look for that at 4:00 p.m. new york time. this is bloomberg. stay with us. ♪ ♪

pelosi,s morning, nancy

president trump declare victory. a nation divided stays divided. democrats take the house and governorships, but the gop wins big in florida and texas. battles, theture synthesis of 2020 upon us. s of gridlock, good for america, and perhaps for the president of this united states. good morning everyone. this is "bloomberg surveillance." i am tom keene. francine lacqua in singapore. how were the midterms perceived in singapore? francine: a lot of ceos were trying to figure out what it means for them. some of the angles they were trying to figure out, does this in bolden president trump when

it comes to trade tensions with china, fiscal stimulus and what it means for treasuries. tom: we have a wonderful hour. kevin cirilli joins us in moments. here is taylor riggs. the democrats have ended two years of republican control of both houses of congress. they have retaken the house of representatives thanks to voter discontent. yetfinal figures are not in, but democrats will end up than they needed with the house. nancy pelosi is expected to become the next speaker. >> today is more than democrats and republicans, it is restoring the constitution's checks and balances to the administration. taylor: republicans took democratic senate seats in ted cruz oftes, and

texas narrowly beat the democratic candidate. that with thepe bitterness and division we see can be ay that texas model for how we can come together, disagree, yes, but with civility come and respecting each other's decency, humanity. taylor: democrats picked up six governor seats, crucial for redistricting battles. abrams trailsacey republican brian kemp, but is waiting on absentee, provisional ballots to be counted. thed solomon does not think election results will have a big impact on policy in the next two years. he is concerned about the direction of the economy. he spoke at the bloomberg new economy form in singapore. >> the biggest risk is an overheating. can the fed in,

the context of how it marches for with monetary policy continue to normalize rates in a way where they strike the right balance and we have a soft landing? we may or may not. taylor: global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. tom: thanks so much. how about a day to check equities, bonds, currencies, commodities? lift in theem -- a markets. francine, what do you have? francine: a mixed session in asia. european stocks of, dollar retreating. treasuries is where the real story is. a lot of investors are saying the results hurt the chances for any major fiscal an

initiatives -- fiscal initiatives. tom: futures up 25 in the u.s., 189, a hugeup uptick off these midterm elections. there are so many crosscurrents to address, results still coming in, nevada, wisconsin, but what we will see is the conversation for it. with watersi speaks about the anger and process to come. what will it be? kevin: the markets want to know if she will focus on getting the president's tax releases or areas of deregulation.

or she hase do both a vendetta against the president? kevin: as nancy pelosi becomes speaker, she will need people like maxine waters to be the face in the democratic party, but also to reach across the aisle on policy issues. tom: you will be in the core ridors of that marble palace. , the gorge eosd -- is senator mcconnell. he won earlier. kevin: he picks up seats in missouri, north dakota, indiana. have a path for the

president in terms of judicial appointees, emboldens republican , but say goodbye to comprehensive reform on obama care, taxes him up but on infrastructure, look to see if republicans and democrats will work together. outside philadelphia, the swing districts, so important -- tom: are they going to fix the pennsylvania turnpike? kevin: my god. ,epublicans and democrats alike it's terrible. terrible. francine: for a global audience, what does it mean for any initiative? kevin: republicans that wanted out,e tax reforms to point it is done. on trade, trade, trade, this is where it will get interesting. i would argue with bigger gains in the republican senate that is

more likely than before. that this popular street runs on the left also runs on the right. night. brown one last cortes one last night. i'm hearing the same thing. tom: enough about the horse race. i'm going to talk about a change to america. our next guest tried to fix the pennsylvania turnpike, dnc chairman, governor of former governor of pennsylvania joins us this morning. he has led with the debate and solution of gerrymandering. we saw michigan's proposal last night, 61% of the people going after gerrymandering. is gerrymandering done? gottenstates that have rid of gerrymandering have winding referendums.

we did it by court decision because democrats three judges up for a election in 2015. that led to have fair redistricting plan. in a lot ofwon districts, so it shows the plan was fair, balanced, and competitive. gerrymandering is on the way out, but will not be gone by 2020 or 2022. tom: the democratic party wants blood. known for your grace. how do the democrats up grace in the coming months and years? as i said, we have to legislate, legislate, legislate, not just investigate, investigate, investigate. if all we do is investigate the trump administration, do things ory, wee duplicat

will pay the price at the ballot box. i believe there are republican votes in the house and senate to pass a bill. i believe the president will sign one. i think there is an avenue for immigration reform. there is enough bipartisan support in the senate and house to pass a comprehensive immigration reform. the if we have to pay for stupid wall to get the president signature, i think we can do it. if we protect pre-existing and legislate in a positive way and show the american people we can govern, we will get the benefit of that in 2020. tom: do the democrats have to wait and aging republican party? relentless matter

of time before the democrats become the majority in america? tom: more and more -- >> more and more voters are registering independent. statesecond in some ahead of one of the major parties, so we can get control , but swingtorate republicans and democrats are located in the suburbs. they want to see people trying to get things done. if we become a party bent on vengeance, we will lose, even with the shift. governor, what does it mean for fiscal initiatives? what do democrats want? wei think democrats, look, assed throughngs ps the senate. the first thing i would do is

get rid of that tax break for real estate developers over the next 10 years. the real estate developer tax break benefits 2000 real estate developers. use that money to give america a real tax cut. if we do that, with the president sign it? it would be hard to vote against a significant tax cut just for class, nothing for the top 5%, but the middle-class tax cut paid for by getting rid of the tax giveaway in the last tax reform bill. tom: it would be weird if i did not let kevin cirilli ask a question. kevin: what does this mean for the chances of infrastructure? this is something that has been a dream outside of philadelphia

for quite some time. >> i think it has been a dream of president trump's. he talked about a massive infrastructure revitalization program. we need that. we need that at the federal level. 33 states have passed increases in their gas taxes, but we need federal participation. if the president leads on the issue with the democrats in the house, we can get real infrastructure reform, but we can't get it on the cheap. it has to be paid for. tom: this has been wonderful. what is -- question mark kevin: it's like -- kevin: it's like the greatest coffee ever. >> it is like a high-class 7-eleven. kevin: yes, oh my gosh.

governor, thank you so much for joining us. kevin cirilli, educating me on coffee. is our know for certain next guest is from horizon investments. not only focused on the election , focused on the exodus from the white house. we will be back. stay with us. this is bloomberg. ♪ is is bloomberg. ♪

tom: thank you for being with us. "bloomberg surveillance" in singapore and new york this morning. it is good to speak to greg valliere, sometimes from new

hampshire, sometimes washington, but he had to consider the degree of claire mccaskill in missouri. just oneiere was concession speech last night, but claire mccaskill is all of missouri politics. what did she show us last night? >> that in state after state where trump campaigned, the republicans did pretty well. tom: they did pretty well. yes, the democrats took the house as well. how will that change policy? is mr. trump advantage by gridlock? >> the most important part is the trump economic agenda, deregulation and tax cuts, will stay in place. he may not get a lot of new stuff done, but his existing agenda will not change. tom: i loved your morning note published moments ago, horizon investments.

not only the shifting of claire mccaskill or the stunning governor race in kansas, but an the executive branch. how will this exodus be different? >> some big names, not just sarah huckabee sanders. wilbur ross may go. a lot of people are burned out or don't agree with this president. businesseshat should take away from this? made the economy turned quicker than otherwise? market canink the live with gridlock. the democrats will pass things that might annoy the markets like a minimum wage hike, but it will get defeated. the ultimate firewall is trump's veto.

need 67 votes in the senate to overturn it. that will not happen. divided is the u.s. right now? the outcome of the midterm dividen highlighted this . does the administration want to bridge the divide, or does it help them for the presidental elections? >> i say the most disturbing thing is the halloween out of the center. the center is virtually nonexistent. moderates have been driven out of both parties. sununu the younger wanders into public service again. are the dynasty families doing better in this political cycle, or is that something from the past? in thet it funny that

last week we have virtually not seen or heard from bill or hillary clinton? tom: thank you for the comments this morning. much more coming up. an important conversation with the former secretary of the summers. lawrence he will join us to pick up the economic and debris of this election in the 7:00 hour. worldwide this is bloomberg. ♪ -- worldwide, this is bloomberg. ♪ berg. ♪

francine: amidst the midterm results, we forget to talk about italy. the italian government has one confidence on the security decree. factions, thetwo other.ar and the to get through this gridlock, they decided to get a confidence in parliament. that has passed, which means we will have maybe more coalition tension, but not a new decree when it comes to migration. tom: very good. the president tweaking last night, two minutes ago as well. can we bring this up? so many congratulations on our big victory last night,

including from foreign nations, friends. now we can all get back to work and get things done. the president of the united states. on the equity markets and the left in the markets, no one better than gina martin adams. i'm in the cash fund. i'm wrong, aren't i? week, we have had a reconditioned of more optimism in the equity market. one level we are watching is the 50-week moving average, the demarcation line between bull and bear markets. we have been below that average for several weeks, but have popped above it again. if we can close above that average, it will give technicians confidence the corrective process in october is coming to a close. move?ne: what equities all are, yields?

>> a combination of both. two things we have watched our the pace of earnings revision trends, related to the dollar and rates, and real interest rates. what happened in late september is real interest rates pop into positive territory at the same time earnings revisions turned over and companies announced they were contending with margin compression for the first time in a long time. that created nervousness on the parts of the markets. now that we have moved past this whattainty, we go back to is happening with rates and monetary policy. that is one of the most important things that drives equities. where are earnings headed? can we see earnings growth power through in the year ahead? getting the back of the equity market. tom: futures up 24, dow futures up 171, a substantial equity

reaction not correlated with the bond market risk on yields, and equity-only phenomenon this morning. we will have a political-only phenomenon, analysis and conversation around these election results. you do that with the gentleman from the seventh district, eric cantor later. eric cantor a republican of for certain vintage in the 3:00 p.m. hour this afternoon. please stay with us. worldwide, this is bloomberg. ♪

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"all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. am tom keene in new york. our team looking at the continued results. some close races out of last

night's election. right now, first word news. taylor: the results of the midterm elections will alter president trump's next two years in office. democrats recapture the house, republicans hang on to the senate, making it more difficult to govern. democrats will end up with more than the 23 seats they needed to flip the house. nancy pelosi is expected to become the next speaker. >> today is more than about democrats and republicans, it is about restoring the constitution's checks and balances to the trump administration. taylor: republicans took senate seats in florida, indiana, north dakota, and missouri. -- texasof taxes never beat out the democratic

candidate. >> with the bitterness and division we see nationally, i hope taxes can be a model on how we can come together with that civility, respecting each other's decency and humanity. democrats picked up six governor seeds, crucial for redistricting battles that will take place after 2020. in georgia, cc abrams trails brian kemp, but is waiting for provisional ballots to be counted. yellen says she is sympathetic to the financial industry's concerns it is being overregulated. yellen spoke at the bloomberg new economy form in singapore. >> icp sentiment and push is going very much in the direction of deregulation. i am worried about where this is

going. it has only been a decade since the financial crisis. it is too soon to be moving in that direction. taylor: global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. francine: back to our top story, divided government as a result of the midterms. let's hear from the winners and losers. toi am honored and humbled share of the ballot and the stage with the visionary, bold women who raise their hand to run for public office. >> i called mr. ron desantis and congratulated him on what we expect will be him as the next

governor of the great state of florida. >> we saw an assault that was on precedented. race, with00 million hollywood coming in against the state, with the national media coming in against the state, but all the money in the world was no match for the good people of xas and the hard-working men and women across our state. >> tomorrow will be a new day in america. [applause] , no theber this feeling the powerin -- know to win. congratulations to those candidates who have taken back the house for the american people. let's salute all of our candidates. >> we had some good results tonight.

the democrats took the house of representatives. [applause] we have governors that are democrats in illinois and kansas. [applause] >> so there were some bright spots. obviously we fell short, and that is disappointing. tom: theory good. fascinating to see those images. david mcintosh with us now in washington. congressman from the second district of his indiana, david mcintosh. what a victory for republicans. the signal that mr. connolly was defeated in indiana? evidence that the trump influence in a state like indiana is very powerful still. -- most of the races in which the campaign. what you are seeing in the senate is a republican pickup of

four, possibly five, seats. that will allow the president to have more leeway in picking supreme court justices, help get his cabinet confirmed as the changes take place, but legislation will be deadlocked because the democratic house will pick up his agenda. go, that's where i want to gridlock, and what it means for david mcintosh, lawrence kudlow, you want growth to help us with our expanded fiscal policy. does this gridlock threaten the economic growth you need to pay the nations debt and deficit? >> that is crucial for the problem we see on the deficit side. bad news. the good news is they will not be able to undo the tax cuts. those will stay. they won't reverse the regulatory relief that has been put in place.

in fact, the trump administration can do more regulatory relief. it will be harder because they will be hauled up to the house of representatives for a hearing every time a new regulation the democrats don't like is put in place, so continued growth, but at a slower pace is my prediction. david, when you look at the senate, the republicans did pretty well. , hisis the trump effect rhetoric, or the economy and the tax cuts? >> i think it is mostly the trump effect. the pickups were in state the they had ton, but defend themselves in that state. theink the senate ran on economy, more than the house did, and indicated it is a winning issue for republicans.

house really the dropped the ball in this election. but passed a lot of bills, did not show the base they were ready to push and fight for the next wave. president trump keyed it up for them, and they all looked at each other and said, we don't know what is going on there. that sent a signal to the american people that the house republicans are not with it, and that gave nancy pelosi and the democrats opportunities to win in suburban districts. francine: what does this mean for growth, gdp, and therefore for u.s. businesses? continue, led out of the executive branch. it will be deregulation. hopefully it means fewer because a -- tariffs, republican senate will push back on that. that is positive for growth.

everything for the next presidential election if we want to see certainty in policies like the tax bill. growth is at said risk. now you are going to blame the republicans in the house because two,did not do tax cut three, whatever it is. we have a growing deficit to gdp. have more2%, we will deficit. when does the club for growth blink? >> you are right. neither party has done a good job on the spending side. the deficits are the result of overspending. that problem will not be solved by this election. gridlock is going to give us more spending than what we have party just had? >> no, it will keep that high pace. what is needed are spending cuts

. you need to have one party, and the republican party is traditionally the one that goes out and campaigns on a mandate to balance the budget. you did not hear that from anybody. about it.did not talk mitch ryan did not talk about it . president trump did not talk about it. somebody has to pick up the ball. we are looking for those types of leaders. one person that might do it is the new senator from indiana. he knows the deficits are a big problem and is an intellectual on economic issues, but he is new, so it will take a new momentum and focus on spending cuts to get to that. how he got in a plug for the newly minted senator of indiana? francine: i saw. i saw how you spoke french. tom: i nailed it. that's the extent of it.

francine: well done. david mcintosh there. thank you. and gina martin adams is still with us. i want to ask you about dollar and dollar dynamics. midterms, whate are you looking at? i don't know if it is fiscal we look on the fed and monetary policy because you have a gridlock in politics. >> the net result is the gridlock results in no increase in spending. also no decrease in spending. the result is probably dollar , whichs going forward shifts around investment opportunities in the s&p 500, but monetary policy plays a key part. u.s. monetary policy relative to playsst of the world a key part as well.

we may see the upward momentum dollar formed on the basis of u.s. policy skyrocketing and tightening relative to the rest of the world, growth skyrocketing to the rest of the world come and those are a 2018 story that fades into 2019, which weakens the dollar and the dynamics of investment opportunities in the s&p 500 and u.s. stocks relative to the rest of the world. 2019 net-net will look different than 2018, and dollar is one of those reasons. francine: we have more debt created because of the infrastructure plan? >> it depends on whether we get an infrastructure plan passed through. .ny detail is still hazy there is not a lot to digest with infrastructure. everyone is focused on it because it is the one source of commonality between the administration and the new

house. get it, it could be an investment theme and 2019, but it is early to make that call. tom: gina martin adams on the stock market. the vix backhander 20. we will drive for that conversation in a moment. a well-time conversation, david westin speaks with the governor of virginia at 12:00. leon panetta, the former white house chief of staff, cia director, mr. panetta in the 3:00 hour this afternoon. stay with us. worldwide, this is bloomberg. ♪ a beautiful new york. ♪

puttingdish network pressure on the chairman to inve there is a rich payoff airway licenses. many subscribers to new online services. loyal set for its longest losing streak since 2014. futures headed for an 8.4 percent drop. concerns of the supplies crunch east on forecasts of rising production. the u.s. granted eight countries waivers allowing them to import iranian oil. tok of america trying bolster its franchise by recruiting 50 dealmakers. has not set a timetable for the hires. revenue fell 18% in the third

quarter from investment banking. that is your bloomberg business flash. francine: thank you so much. in,idterm results come investors are looking ahead to have changes will affect markets. spoker, david rubenstein cohn and larry fink in singapore. >> it appears the house will go to the democrats, senate more so youran than before, former boss, what will he say about this? >> which one? [laughter] >> all right, how about donald trump? take full donald will credit for the pickup of seats in the senate. it looks like this and it could somewhere in that

area, to mainstream incumbent democrats losing, at a minimum. donald trump will point out he campaigned in those states hard. he will say it is a complete ratification of his policies, and his policies are working. >> if you were there, would you advise him to say that? is,ell, my personal opinion look, you have an election that results, the senate going in one direction, a house going in another direction , and the makeup of the house is getting more diverse, many more women. women voters came out and voted, and they voted for women, which is a good thing. the suburban population voted. i think you have more of a mixed

,essage in their, but -- there but it does look that the economic issue played into the election, and the fact the u.s. economy is strong did play into the election. >> the markets open in new york in the morning. markets up or down? [laughter] >> you need a coin? >> i don't think the outcome is a big surprise. the markets had a big setback. the market is reassessing itself. be part of that re-stabilizing process. the big narrative will be women. women voted for women. we have a much more diverse house. it is not just women voting. it is millennials. that will shape the elections in

the next two years and many years before. even ted cruz, it was very narrow. i believe you are starting to see demographics play into it. the underlying thing in the election was the power of the economy. when the economy is doing well with 3.7% unemployment, except demographics are playing in, the power of women and millennials will shape u.s. politics. fink in singapore with david rubenstein. i can't say enough about the conversations david rubenstein has had. right now, gina martin adams, the equity markets. let me tell you first about gtv very important. this is a set of charts that will get you going. you can steal them from your

terminal, which is very cool. gtv , don't leave home without it. this is bloomberg. ♪ is is bloomberg. ♪

tom: it is a tradition, francine. the white house announcing the president of the united states will hold a post-election press conference in the vicinity of 11:30 this morning. no doubt that will be informative and nuanced by the president. talkinged an hour ago, about "a big victory." single best chart right now. all politics today. gina is like, enough politics. february, the vix ugly. up we went with massive amplitude. this time around, a little --st, but which is harder not to lose

money in? there is a triple negative. >> people are losing money in either situation. the nature of the corrections is very different. february's correction was about an excess of optimism. we corrected it quickly. we also had the market led by an excess ofo a nex volatility and optimism was key. some of these are fundamental. february was not a fundamental reset. it was a technical reset. this process is about as shifting fundamental landscape with that margin component to it. it is not just excess optimism. in september, we did not know we had an excess, but it was not for january peak. resettingis

expectations and looking forward ,o a decelerating environment less margins, and tighter fed policy, so it is more difficult for investors to go through. tom: francine? francine: gina, does this mean more cost cuts? it will have an impact on dividend paybacks? >> yes. it means whether or not we get a pass-through of inflationary conditions on to the consumer ultimately, and how much we can absorb in an economy where we are at peak economic growth. the vast majority of corporate earnings that have produced earnings so far this season said they will test the waters on price increases. at the same time, they are spending more themselves, which will keep economic a float into the next several quarters.

moreare spending on security, more marketing. they will also test the waters on price past through. how much can the consumer absorb? how strong is the consumer? how much will they take in terms of prices? tom: nobody cares. it is all political. >> come on. someone cares. tom: i care. the president with the press conference at 11:30 across all our bloomberg platforms. i want to bring to your attention maxine waters in conversation with kevin cirilli at the 4:00 hour. ♪

♪ >> thank you. tomorrow will be a new day in

america. alix: democrats take the house, republicans increase majority, washington faces gridlock. markets like that gridlock. the fed gets priced out. warning signs. warning of an economic iron curtain between china and the u.s.. david solomon says the biggest risk is an overheating economy. david: i am david westin. the white house is having a good time of it this morning. sarah sanders saying she will have a press conference. president trump will have a news conference at 11:30. he already tweeted this out. the president feeling good about himself. alix: trade deals. let's go back to work. this will be business as usual for him.