francine: done deal, theresa may strikes a brexit agreement with the eu, but the question is can she get it through? declines.s its testing tencent, traders get ready for volatility with $243 billion in market cap wiped out this year. we will discuss the results. welcome to "bloomberg surveillance." i'm francine lacqua in london. getting breaking news out of the iea, welcoming a surplus return,

saying it is insurance. down 1.18%.xx 600, crude, 55.41 on the back of the trade from president trump -- tweet from president trump. treasuries, also steady. this is pound, 1.2963. we will track whether the deal can get through parliament and whether we will see the support of the cabinet of theresa may. coming up, the transport secretary. more recently, a vocal opponent of brexit and campaigner for a second referendum. we will talk with him at 9:30 a.m. london time. first, let's get to the first word news in new york city with taylor riggs. taylor: the white house says u.s. and china have resumed contact at all level and they

will talk trade when the meeting argentina at the end of the month. larry kudlow says it is better to talk them to not. he warned there is no certainty china will agree to u.s. demands. >> the president reopened the china talks, which had slowed down. and he called president xi, it is pretty clear that at the g20 meeting in argentina, there will be talks between the two leaders. mariano rajoy -- taylor: the u.s. is said to have put plans to impose new tariffs on car tariffs on hold as officials way revisions on report of the national security implications of the measures. according to sources, the administration is not yet ready to act on the threat of tariffs of up to 25% on foreign cars. oil showed little signs of recovering from its unprecedented decline as investors saw a market hammered by swelling supplies and a darkening outlook. wti crude plunged 7.1%

yesterday, the biggest in more -- one-day drop in more than three years. that is after opec sees demand for crude falling even faster than expected next year. over in italy and the eu, they remain on a collision course with the populist government in rome determined to defy brussels over at spending plans. the coalition says it will stick with its growth and deficit targets, despite the budget being rejected by the commission for breaking eu rules. brussels may trigger disciplinary action, which could lead to fines were the billions of euros. melania trump has demanded the removal of the national security advisor, john bolton's top deputy. an imminent shakeup of the administration, melania trump's spokeswoman released a statement that she no longer deserves the honor of serving in this white house. she had clashed with the first lady's staff during a trip to africa last month.

global news 24 hours a day, on-air and 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, taylor carried back to the top story. after more than a year of negotiations, theresa may has clinched a brexit deal with the european union. the pound rose on the news, but the more challenging part of the process may be to come. getting the deal past eurosceptics in her own party, with many on both sides of the debate reported to be unhappy. they will meet on downing street where they will decide to back it or resign. joins us outside number 10 providing further insights. it is a very divided cabinet that theresa may needs to get on this side. who will be really against this? very divided and

again, the document, this technical deal being cut between the european union and the u.k., very few have seen it. andre told it is 400 pages one of the sticking points is stay in thet the eu customs union to get around the irish border. she wants to get a sense of whether this will clear parliament or not. theresa may will argue this is all we have. we will not get a better deal. at this point, we have to make a decision and it is a binary one. , there willf a deal be a special summit. now, time is running out for theresa may. francine: are there any chances that brussels give them a better deal? but are we hearing from the other side? you webrussels will tell

just want to wait and see the focus point as the cabinet meets. the european union don't want to say or do anything that could make it more difficult. this is a touchy subject. they know this is a political story in the u k. they need to settle -- let that several. would get thee handshake, the optics of a deal. at this point, this is a binary choice. do you back it, crash out, tell theresa may we don't like it? we are not going to support you? she will argue this is the only option we have at this point. francine: maria tadeo, on the ground outside downing street. joining us for more, the editor of bloomberg opinions. we are focused so much on the

arithmetic of whether she can get it through parliament. if ministers resigned from theresa may's parliament -- cabinet today, does she stay online and put it to parliament? >> it depends on which ministers resign. ither brexit secretary packs in, that would be pretty terminal for her government. i don't think that will happen. i think his mandate is to get a deal and he will want to see it through, but it is nearly impossible reading those. the story we are missing here is, what exactly is being agreed. what is being agreed is not the future relationship. what is agreed is a blueprint for the next couple of weeks. francine: will the conservatives saying we needed to be behind theresa may or are they each trying to be party leader?

a big threat if they bring down made, as would andbe able to agree kenneth have a chance to form a new government. it is almost impossible that they would get a candidate that would somehow heal those divisions. may has mission impossible. francine: what is in the deal and what is the objective? do you have clarity? guest bank take that apart. the deal is the divorce payment that britain will pay for the eu is of the right of eu citizens and it will settle a transition period. if i were the u.k. executive, i would be looking at one thing and that is how long is the transition? if it is 21 month as the draft

agreement, it tells me the cliff edge has moved from march 2019 to 21 months down the road. that is not a big change. i would hit my contingency plan. makes things more comfortable. francine: we all understand, 21 months, we could have a hard brexit? that is right. it is nonbinding and have no and there is very little clarity in that it, dotion and without not know what to plan for it will be planning for hard brexit. francine: is it a sludge or kicking a further? fudge on has to be a the key issues. there is no agreement that the cabinet can abide or the

parliament will agree. there has to be a degree of fuge in here. if you could agree to the forced, in terms of a meaningful indication of what the future trading bullish of will see, i do not think we will get it in francine: therese raphael who writes for bloomberg appeared. thank you. it is the overnight volatility for pounds and we will look at it on a 10 minute basis. it is up on the initial deal. coming up, the outlook for strong after theresa may reached a divorce deal. we will get on market of you on the brexit. this is bloomberg. ♪

>> they surrendered to brussels and will get whatever they want and try to frustrate brexit. will give them the nature of negotiations, highly unlikely for britain. we have made it clear that we will be voting against it. >> it is not with theresa may but the conservative party. to decide whether they wish to keep the agreement. francine: those were some members of parliament speaking about the brexit deal. andconversation of brexit what it means for markets. joining us is political economist and george. thank you both for joining us.

let me start with you, jordan. when you look at the pound, you look at the volatility. are you going to see more volatility as a deal is extension? >> we have several steps. overnight volatility where it makes complete sense, over the next 24 hours, the cabinet makes of deal. it could make it extremely difficult for this government to strong chance of getting it done. which is-term vault overnight, sterling could move in the next couple of hours. what is frustrating for all of range, it has the not moved on in the last two months. was pretty much there and a cabinet will agree or you would've had a

reservation. we do not know if it passes parliament. if you do not get the parliamentary vote, maybe, probably the first week of december. tohave three wakes -- weeks wait. my view is we get a deal done and parliament votes it through. referendum oft what they do not like, they can change later. francine: does it go to 110 or 115 and when do we find out? in cable,hester: 110 how do we get there them? not clear what happens. no deal. agree withdeal -- i it. parliament would stop it. the chance for general election. and cable is lower. let me jump in quickly so we can get to stephanie.

depending of the vote, do you december? when it does parliament vote? : if for someter reason, they are negotiating and we go back to the table and delay, that would frustrate many investors. and more likely on the downside. until december, short-term, the market reacts. francine: are we looking for people to resign today? do we care? ofi think there are a couple key people. dominique, we will be looking for. i do not think it is necessarily in the cabinet. or twoget one resignations. the signals have been positive. the real issue is getting through parliament. the back edge of conservative mps.

80 member stroke and you only need 10 or 15 members to say it is not good enough and i will take a stand to put theresa in difficult situation. deal?ne: what is in the we are going to have a deal or in 18-21 months? stephanie kelly: this is the divorce agreement. we know the u.k. wants to leave the eu. it is no less early the future relationship. the devil will be in the details. -- key factor that key conservatives are looking for is the indication is the u.k. will basically fulfill the backstop criteria. concerned you do not have the opportunity to make free trade which is key. francine: is this temporary? increase volatility for the next 21 months and when

you finally get the deal, we know what kind of relationship we will have? : it is achester stage-managed delay of what brexit is to minimize the costs. massivehad a devaluation of sterling. the uncertainty part in lower investment and also the market was pricing friction and trade, higher prices on the goods. which all ofent those negatives play over a slower period pre-eu do not need in that cushion. that is why sterling should go higher. is another three years pretty slow brexit. francine: i am weary of back channel deals. if theresa may manages to keep today,g cabinet today -- will she have promised to them? it isnie kelly: i think

possible. you have seen this financial element to the agreement and that is what we see carried through. that should help solidify them supporting the government. question, can she convince them on brexit, it is of the best deal? i am not sure is necessarily the best deal. you either go with this or risk another general election. other conservative mps want of the labour party -- what does it mean? jordan rochester: dp comes back on site. maybe she gives at the right assurances. if the dp is not, there is a way, the majority needs to get brexit done. labour. relied more on that is risky. -- she has to rely more on the labour.

the futurer relationship, we need to get it done. it will be a pre-our campaign. i think it goes through. first the bank jordan rochester -- francine: jordan rochester, thank you and stephanie kelly, thank you. it's melodia -- melania meddling. we will discuss at that. this is bloomberg. ♪

francine: this is "bloomberg surveillance." the first lady melania trump has bolton'sthe removal of top aide. melania trump's spokesperson said mira ricardel no longer deserves the honor of serving the white house. mira ricardel had clash with the first lady's staff of the trip to africa. mark, when you look at the conundrum here, not only with mira ricardel, also the chief of staff. >> there have been rumors before the midterm election, right after, he wouldn't clean house

with a jeff sessions and that came immediately. rumors.ve been lows of the only thing we know for sure is the first lady does not like mira ricardel. -- and issuedthey a statement which is unprecedented that she should no longer have the honor of serving. francine: the deputy of john bolton, who has of the biggest impact? as john bolton stays, it doesn't matter. mira ricardel is unpopular. if john kelly goes, it would be more important pretty he is at the last, two of the original adults and the room remaining and really important one, jim mattis. john kelly, people have expected him to go for some time. who really matters is mattis. francine: if john kelly goes,

what does it have an impact on? : she organizes. the gatekeeping. he has not done a really good job. anybody a question if can do a good job in the trump administration. he has not done a particularly good job. francine: thank you. mark champion. jordan rochester and stephanie kelly both stay with us. and deafening demand. we will look at a tweet the president trump did on opec. what does it mean for opec and his allies? we will discuss that next. this is bloomberg. ♪

francine: economic and politics, this is "bloomberg surveillance ." brexit in the balance. theresa may facing her toughest

test yet. of how the a look papers are covering the story. "the daily express." it is leading with the theresa may's claim that the deal is the best for britain. negotiators have settled on the divorce settlement. that is what they put on the front page. "the guardian" put for two mentors that needs to back her -- 14 miniter -- ministers that need to back her. one calls theresa may's days as prime minister number. and a little bit of breaking news out of the u.k., it is interesting. a simple u.k. october inflation rate at 2.4%, pretty much in line with expectations.

let us go story to the bloomberg first word news. prime minister theresa deal.s clinched a brexit the pound rolls on the breakthrough with plans for the whole of the u.k. to remain indefinitely to prevent a border emerging and ireland. a deal past skeptics in her own party with many on both sides reported to be unhappy. ministers meet later where they will have to decide whether to back it or resign. back in the u.s., the white contact. resumed national economic adviser larry kudlow said it is better to talk the not but warned there is no certainty china will agree to u.s. demand. to u.s. may impose plans

impose new tariffs on cars. a report on the national security implications of the measure. according to bloomberg sources, the administration is not ready to act on threatened tariffs on foreign cars. has lostparty leader the first round to become sweden's prime minister. vote goes back to the speaker as of the country and has a problem after the inconclusive election. and the german economy shrunk for the first time after the auto industry took a hit. gdp fell 0.2%, more than expected and of the biggest drop in a more than five years. show thathe data

production in the september plunged 24% compared to a year earlier. french one is the latest target of president trump's twitter account. he tweeted that france and the u.s. makes a good one is but tariffs a makes it hard for you as seniors to cross the -- for you as the vineyards to cross -- four u.s. vineyards across the atlantic. global news 24 hours a day and on air and tic toc powered by more than 2700 journalists and analysts. francine? francine: crude oil is showing little signs of recovering from record declines after it plunged yesterday, the biggest one-day drop in three years. crude ised that

falling faster than expected following saudi arabia and other partners are signaling output cuts. stewart, executive, what is the meeting? >> i think the speed is driven by money coming out. if you look at a measure of how many contracts are outstanding in futures, that has been falling off a cliff and accelerating the move. it seems to be flat line on that measure and maybe the volatility comes out a bit. it is hard to see from the point of view of opec, especially saudi arabia and, what did you do when it seems that have lost control of the narrative? and it seems there is little they can do about it other than react. you have the white house fiercely tweeting at them every time they say they will cut

production. francine: how much are they willing to cut by? one million or 5 million? how fast could they put in place? : on a sunday, they were talking about one million barrels a day. i think the number will be larger. how often can they put it in place? we know half a million barrels coming out next month is baked in. i think of the odds of them getting consensus in december are improving and that's largely a function of iran slightly less unhappy because when we saw sanctions were reimposed were much more generous than anybody would have anticipated. they are more likely to go along with it. fundamentally, what it comes down to is what is russian prepared to do?

who are the winners and losers? stuart wallace: anyone who went mininges, airlines and probably will not see much. those were slightly braver and operate should be reaping enormous benefits. think about it emerging-market economies, the biggest drivers of growth, deflationary. in some cases, not so welcome but in some place, a boost where everybody was worried if they would sustain that growth. francine: thank you. stuart wallace for bloomberg news. let us talk trade and the white house as the u.s. and china have resumed contact at all levels. president trump and president xi jinping will talk at the end of the month. the national economic adviser

larry kudlow said it is better to talk than not what no certainty that china will agree. stephanie and jordan. how do you see it working? will we find a resolution? : i think after last week's midterm results, what we should expect is a u.s. administration that is more aggressive on trade and not less. our take is the u.s. and china will negotiate. the fact that if you go to peopleton and speak to in the republican party, they say what a lot of voters do not like what trump is saying but they like how he talked tough on china. they kind of constraint in congress with democrats and may be limited on domestic policy. what will the u.s. president do?

they go abroad. we know he was elected on this anyway. if anything, that reinforces the view you will see volatility as there are improvements. expect a dramatic improvement in u.s.-china relations. francine: if you look at it next step, it is similar to nafta. heyou look at the tariffs could put on carmakers, would he go that far? stephanie kelly: the relationship with other partners , they are different. trade protectionism is part of trump's political stance. area where he gets the most support from his voter base. automakers, there has been a lot of pushback because of the importance of getting those parts in from other trading partners. i think china is an obvious weight where it could continue where auto tariffs is more of a

lever to get what you want. the u.s. gets what it wants and say we need something from you. francine: if you look at the markets, how to look at the trade war escalating? jordan rochester: it affects the broader dollar. if i want to go along for you, i needed the dollar to be stable. if it weakens, the inflows into europe slow. i completely agree with the outlook. i agree so much, i am on the side, what is wrong, how could i be running? we will have the meeting between both sides. there seem to be talks, it is see themicult to actually coming to an agreement. the demand is so big, it is for action. one example is tesla. they have a factory in shanghai.

--ically, automator's automakers have to team up with a china automaker and share the profits. action.erhaps more that could at best lead to all pause on the tariffs on january. the markets care. --there is a policy, the pause, there is an olive branch. francine: thank you for joining us. jordan rochester in stephanie kelly. stay with "surveillance." china's take giant has experienced a massive wipe out since january. we will preview the company's third-quarter earnings. of controversial budget leaving the eu, how will of the commission respond? we will talk about that next. this is bloomberg.

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francine: this is "bloomberg surveillance." i am francine lacqua. this is what oil is doing. a lot of pressure on oil. i think i have the price, it appears magically. this is what we does on bloomberg. it comes up. it is a freefall. when will it end? 66.64. the company is having the worst trading since it started. it's a lost value, almost a quarter of a trillion dollars has broke all kind of records. our bloomberg

writer. jim, what are we expecting from tencent? cannot a lot of good news. so many headwinds in the face of $.10. anything they say is positive will be greeted with a joy. let me go through some of them. the macro economy in china, a lot of headwinds. a lot of companies are facing difficult getting revenue out of china. they are growing but at a slower pace. they have to keep that growth going. cent is inthing is ten the game of business. it is a the bread and butter of where they get their money. they have new titles and hard to leverage new titles and they are trying to do that and trying to get people to pay money for old games. people get bored.

of tencent'stside control is the most frustrating for executives. no new game titles and now much they can do that find revenue elsewhere. francine: thank you. tim culpan of bloomberg opinion. our top story, theresa may giving her divided candidate an ultimatum. back her brexit deal or quit. negotiators have agreed on a deal. theresa will try to persuade her cabinet it is not a sellout and will try to get the deal through parliament. details have been made public. a number of politicians have called it a but trail of the 20's -- a betrayal of the 2016 referendum. of -- mores one andntly, he has been voted

has asked for a second referendum. always great to speak to you. when you look at this brexit deal, it helps to lock the u.k. in a customs union and that is what the eu always wanted. why would you sign up to this? well, we are moving into a no man's land. we have a period the boxes into the existing single market for a period. we do not have the details but it looks like three years. everything is up for grabs after three years. it is close to me and those who want a referendum that the right is theresa may got turned deal and put their proposal to the people and say, look at this. will be no idea what happening to the country at that time. your whole future is it at stake. you can see these terms.

we are paying 40 billion pounds for this. is it the best thing to stay in the eu? theresa may has people like me saying that. she has a whole lot of her party does not like that because it does not hold relationship with the eu. this deal is not going anywhere. lineine: why not fall in except -- instead of asking for a second referendum? : the right thing for the country is to stay in the eu. what we should not do, we are one of the powerhouses, an idea we should settle for second base likee in the antechamber norway. i love norway very much, but britain is not norway. we are not a small country.

that would be a terrible future for us as a country. we are a great european nation and should be at the center and should be making rules and not following rules. if you look at where public opinion is an parliamentary opinion, it looks as if there is a majority to stay in the eu waiting to get out. parliament voting for referendum and that will go to the people. first citibank haven't we been over this? -- francine: haven't we been over this? why go back to a public vote? we had a referendum. atrew adonis: that is not the case 32 years ago, we did not know what we were voting on. we told people take a stay in a single market and have all the benefits with the eu while leaving it. that is crucial why there was a majority to leave. my argument and we are a

weocracy in the best deal could have is to stay. the reality of the parliamentary theresa may does not have a majority. i would be astonished if it was not voted down in the house of commons. will be two schools of thought. one we should basically go for a wto's.exit with and one as a centrist and have aic position, referendum and put option in the referendum of staying in the eu. francine: you are absolutely certain that the hots are -- that the odds are stacked against theresa may. andrew adonis: we know what she is going to do is going to be agreed to the deal is a

implementation. oh. a backstop that logs northern -- comeinto the eu, may. negotiation of what happened at the end of the implementation period. everything will be up for grabs. that is not a satisfactory deal for this country. francine: are you expecting resignations from the cabinet? : i don't know. i don't know what the balance of opinion is. i would be surprise if she gets through the next phase without resignations from both sides. pro-european, people like the joe johnson who resigned last weekend. the right thing to do is to have the people's vote and to stay in the eu. there is a powerful anti-european lobby in the cabinet led by dominic, who is tasked with the negotiations. i think it is quite possible

there will be resignations. what happens in the government, it it doesn't matter. the big battle will be in parliament in about three weeks time. as of now, no parliamentary majority. what happens after that? thankne: andrew adonis, you for joining us. we will have more from people on both sides of the spectrum. no back down. the controversial budget. how will the european commission respond and what does it mean for a italian assets? this is bloomberg. ♪

francine: this is "bloomberg surveillance." standinge populists firm on their budget. we are waiting for the response theye eu after they said are not budging. still with us is stephanie kelly of aberdeen. brexits repercussions on and repercussions on the european parliament elections in

may. how do you see it going? it is like a problem child of europe. stephanie kelly: it is probably the biggest challenge that the eurozone faces. learned that and the centrist prime minister and centrist finance minister were driving. what we are seeing party leadership is in the driver's seat. there are 2 populist parties. one was to increase spending. we should see that continued. how does the eu response in a balanced way so you do not end up with a situation where they are too hard on italy and cause market upset. also, they are not so light on italy that it appears that it means nothing in the eu, which is negative for the overall appearance. riskine: and there is a that you are a skeptic. stephanie kelly: if you push

harder this of populist government and they say there theyoing asked what is -- are doing what is best for their people, the risk for the eu is a push so hard they push more of italians toward skepticism. , they areare to think pushed to a point where they are forced to leave. francine: stephanie kelly at aberdeen standard investment. "bloomberg surveillance continues. tom keene joins me out of new york area we will be talking to ahead at goldman sachs at 10:30 a.m. london time. we look at the brexit. one saying there isn't a majority in parliament. ♪ [ phone rings ] what?!

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theresa may strikes a brexit deal. can she get it through parliament? extends string of the clients, opec warns it is falling faster than expected. billiard or hedge fund manager steve co -- a billionaire hedge fund manager steve cohen said that a bear market is coming. youbiggest story outside of as markets is brexit to. a deal extending the deal. -- u.s. markets is brexit. it depends on whether theresa may guess of old through. we met -- theresa may gets votes through. sounds -- tom: it sounds very brexit-y. amazon was going to come out with one or two headquarters.

we will see. great news in u.s. flow. francine: straight to first word news. taylor: starting with one of the stories. dividedmay given card cabinet a deal, back her deal or quit. negotiators have agreed on a deal and theresa may will try to convince her cabinet and will try to get the deal through parliament. details have not yet been made public. a number of politicians have called it a betrayal of the referendum. agencyernational energy has welcomed the oil market return to surplus. increasedge has global surplus. report surplus has increased freight likely to receive a five-year average for the first time since march.

the death toll has risen in california's deadliest wildfire every. at least 48 people died in the northern part of the state and 200 people are missing. about 30 5% contained and have stored more than 8000 buildings and homes. -- he served as federal reserve chairman under four presidents, alan greenspan. of was on the latest episode david rubenstein show. and you can watch all of that interview with alan greenspan tonight on the david rubenstein show at 9:00 p.m.. global news 24 hours a day and on tictoc powered by more than 20 72 journalists and analysts in more than 120 countries and this is bloomberg. commoditiess and

are the real focus on oil this morning. the 600 point drop. futures up and then down. euro, 112 .16. oil, $55 a barrel when i walked in the door. bond, really captures the bond state of affairs for you there is brent crude pretty going to $100 a barrel. mexico, it is weaker. francine: it is weaker. the dollar's pretty much a steady. we had pound movement. stocks are dropping oil and turning higher and the pound, the best way to describe it as it is fluctuating. tom: the breaking news banner. is global themes growth. isn't, more eu growth

there, is it? francine: no. the concern is it is political vacuum. angela merkel will not seek reelection. this is the story because of the budget for the we go back to brexit. tom: maybe we go to mr. draghi. charts on the market right now. i thought i would never see this. barrel and this is u.s. these averages, up we go. toare going to $100 and down $55. the perspective on the plunge 50 five dollars a barrel. francine: perspective is a great and beautiful thing. let us bring it up. it goes to brexit.

for cabinetwaiting meetings will start at 2:00 london time to sit ministers sign off. we are not taking too much about cabinet resignations of if parliament will get it through. prime minister theresa may has finally crunched a deal, a brexit deal with the european union. the prime minister will have to get it passed skeptics in her own party. many reported to be unhappy. where theyt later will decide to back it or resign it. our reporter joins us from outside of downing street. know if we do we will get resignations or not? maria: it has been two years u.k. voted to leave the eu and we have a deal. it will be a difficult one.

political, very toxic for theresa may. they are meeting at 2:00 p.m. will she get the cabinet to approve the plan? we do not know because everybody has kept quiet. they do not want any leaks the want to keep it quiet. the point here is she will what we argue this is have. brexit is a binary choice. either get a deal or we do not. theresa may, i am sure she will say so of you like as some of you hate it. tom: senators, what is their biggest headache? who is prime minister may's biggest headache? : the biggest compromise here would be the irish border. the big question of mark, will they have any sovereignty with the european union? yesterday, we heard a theresa may that they would leave the

single market. they will have to stay to get around the irish border. bigger name, everybody is on the lookout for resignation. we do not know. very quiet. everybody is in wait and see mode. francine: therese raphael thank you. -- maria tadeo thank you. joined by our reporter and head of strategy. james, what do we know about the deal? they have seen the deal. is it of the deal or an extension? >> we know it is very long. 300, maybe 500 pages. the devils are in the detail. they want to see it and will go to see ifn ireland they can screwed over. that is the question. like what isit

going to happen in 21 months or march? flavia: it is conditional. and then they will say it is ok and they go to 21 months. we have -- we are scratching our heads. we want it to end. there are plenty more hurdles. tom: we do not want it to end. is this really an end or are you going to begin fully employed well into 2020? flavia krause-jordan: i hope the latter. i think there is pretty more mileage. putting thely horses before. when will a they vote and when is the date? we think if all goes well, if may can get it passed the cabinet, looking at december.

we hope christmas will not be canceled. also with those is james. i believe theresa may if she does not get it over, she will give out tax rebates and abatements. maybe bank of america will move to europe. what is the state of london right now from where you sit at the major american buying, what is -- bank, what is the spirit of london? the problem is even if theresa may guess the deal it doesn't not cover financial services. the u.k. is going to lose its power, if you want to trade in the eu after brexit, you need to do it outside of london. we have offices in paris a many in frankfurt.

think that does not really change what were talking about. if only way it changes if brexit does not happen. going back to the discussions of making a deal to the cabinet, will you get resignations? they estimate -- survived she has worse. unless they all resign, does it make a difference? james barty: you can argue to lose one brexit secretary is a lot to lose 2. the real thing at the moment is not just losing cabinet members, the parliamentary arithmetic. we know there are probably, anywhere from 14, maybe 50 brexiteers who might vote

against it. we lost joe johnson last week who said they were going against it. and somebody comment out and saying, we do not like it. it parliamentary matter, does not look very good. parliamentary is at the sticking point. if she does not get it through, what are we looking at? flacia: options like a second referendum. tom: thank you. flavia krause-jackson helping us. james barty with us from bank of america-merrill lynch. oil, will will have that in a moment. the supply, the tone, his colleague at the 6:00 hour. this is bloomberg.

♪

taylor: your bloomberg business flash. the german economy shore up for the first time since 2015. gdp fell 0.2% in the third quarter. speculation it is related to new emission tests. the statistics office did not give a detailed reading but said at and private consumption dropped. the world's largest containment -- container shipping line has lowered its estimates. they said revenue is increasing. we spoke with the danish company ceo. the picture for the global trade is one of slow but

reasonable growth. at the same time, moderate growth in the capacity. the supply demand to whatand that leads is positive for the industry. the trump administration is holding off on imposing new tariffs on the auto industry. president trump has threatened ofiffs as is much 24% foreign cars. shares of japanese cars arose on the news. that is your bloomberg business flash. francine: thank you. china's economy is showing tentative signs of stabilization. better than expected 5.9% from a

year earlier. back to james barty. is it is a trade war story when it comes to china or trying to get stimulus? : it is a bit of each. what is caught people by surprise is how quickly the chinese economy slowed down. a lot of jurat from china. drag from china. the policy has bitten on the economy. and the u.s.-china trade war. one person said he has never seen as little confidence about the future of visibility in at the last decade of going to china and a lot of is linked to trade. you have weakened domestic economy. you have companies facing a tariff a you have people putting things on hold. i meeting couldx

have a lot of implication. that the stimulus coming through, you may get some confidence on the trade aside. trump wants to be reelected. he was elected on the first time on this kind of rhetoric. : this is what the argument becomes. is it good for him to face it down the chinese? yes, it does. if you try a trade war with china, eventually it will rebound on the u.s. the octoberon earnings wasn't the first sign those tariffs were impacting u.s. companies and the weakness in the markets. if your president trump, the one thing you want next year is a stronger economy. i think he is stretching that any it but comes up big problem.

it destroyed to shift toward the u.s. wanting to do a deal. tom: what is the new year plan for you and allocation -- and allocation? delicatety: it is a balancing act. the market has priced a lot of bad news. the lowest we have seen in the last five years in the bottom quintile. you look at asian equities, almost in bear market valuation. we have this deceleration. that is why it is so important of what happens at the end of the month. if you get a trade agreement or lifting of tariffs, you are more positive about the world. the way we set ourselves up for are cautiously running into that probe risk. japanese chinese --

equities last week. we have done so against a backdrop, you cannot go into that meeting at the end of the month with no protection. investors are calling it something -- tom: james barty. much more coming up on bloomberg radio. jon ferro will speak to a guest on international investment. the volatility of international with david. ♪

francine: this is "bloomberg surveillance." tom, the united states first lady has demanded the ouster for bolton's top deputy, mira ricardel. spokesman said "a position of the office of the first lady that she no longer deserves the honor of serving in the white house." joining us is marc champion. if the devotee john bolton leaves or there is a shakeup couple what does it mean for foreign policy? marc champion: what it will tell us first of all more about the administration and how it works. leaves, i dodel

not think it means a great deal unless john bolton were to go. that would be very important. it would be weakening for him if she were to leave. she was his choice. just been a difficult, squeaky will within the administration. it can play either way. if kelly were to go, the important inc. is of the rate -- inc. is of the original team of adults in the room, surrounding trump, people who would check his most radical impulses, there are only 2 left. kelly is one of them and jim mattis, the defense secretary, is at the other, much more important. while kelly would have some impact, we do not know who the next person would be. the chief of staff would be less important than the big one, jim mattis.

am i right to say there is unusually high level of turnover in this administration? will it be more difficult to recruit good people? marc champion: can you repeat? francine: i was asking about the level of turnover among white house staff. is it higher than other administrations and is it harder to get people? marc champion: it is higher turn over. white house administrations are always difficult. staff, theief of coordinating jobs, these are always difficult. i do not think there's ever been an administration in memory where the job has been that hard. may or mayt as kelly not to be, he has not really

been able to keep order in the white house. there's a great deal of turnover now. there are questions about whether it will be possible to find qualified people. jeff sessions, generally people do want it to work in the white house. it is the president, after all. francine: thank you, marc champion. of bank of america will be with us. as were heading to break, earnings out of tencent. a guest earlier said there is nothing good that can come out of it. beating estimates, revenue in line. this is bloomberg. ♪

♪ other story ino new york. everything you see in the distance will be owned by amazon

in 10 years. or at least that is some of the worries of people in new york. extraordinary study yesterday, enthusiasm on some and real fears on others about amazon intoing 25,000 employees greater new york. this view down 3rd avenue and amazon wille where plant itself in long island city . in new york, here is our first word news with taylor riggs. taylor: the u.k.'s divorce from the european union is entering the most dangerous phase yet. theresa may will ask the cabinet to either support her brexit plan or quit. she may have to convince her cabinet it is not a sellout and she will face near impossible odds trying to get the deal approved by parliament. in northern california, one fire official warned more than 100 people have died in the deadliest wildfire in the state ever. -- the death toll has

climbed to 48 and about 200 people are missing. the fire destroyed -- a fire that raced through malibu is being described as 40% contained. that blaze has killed two people. congressional report warns the u.s. faces expanding risk from china on a number of fronts, threats to the technology supply chain, military expansion, and efforts to undermine sanctions on north korea. the report urges the government wireless network and focus on equipment designed to build in china. a painting in new york went for almost $92 million last night. the price for the 1929 cap silly a record for the

painter. global news --global news 24 hours a day, on air and tictoc at twitter, powered by more 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. francine: thank you so much. brent taking a touch higher after seeing years of unprecedented declines. among the problems are threatening supplies and president donald trump's tweet critiquing of the biggest crude exporter. all these issues will be discussed. joining us now is goldman sachs head of energy research who will be leading the conference and still with us is james barty. thank you both for being here. when you look at the price of oil, is it impossible to predict? we have waivers and no waivers and basically what saudi wants to do and how many

barrels will be taken off the market. >> i think there is a lot of moving parts and the thing to focus on is this is a politically driven market. the interesting thing is i believe the industry is very much building a structurally bullish market for the next decade through a complete lack of investment across particularly the oil meikle product -- oil maker product partially led by the carbon financinga lack of for any independent player trying to make a project. francine: going back to the price of oil more short-term, if they take one million barrels outside the supply or 1.5, what does that mean for demand? downle: there is no doubt $1 million -- one million barrels a day can get us up $70. demand remains robust. not strong because the global

economy is not where it was at .he end of last year we see no sharks shift in the way the u.s. consumes oil. we are going to start to see a slowdown in the rest of non-opec as well. and takests together away barrels from the market, we whicho back to about $70, will be an extraordinarily positive environment for the industry as a whole. tom: what is so important to me is the experts i respect, they don't panic. and yet we cannot find a bid. what will be the catalyst to find a bid? michele: i think the catalyst to find a bid would be to see opec agreeing on taking away some of the supply they brought back

into the market and also, i think we need to find some toength in the oil spread, see effectively the big inventory buildup the market is speculating about and hasn't happened yet. tom: what will the companies do -- david signaling had a superb article today. let's bring up this article. writing brilliantly on the microeconomics of oil. consumers in emerging markets at risk of going on a demand strike. desperation to get rid of heavier crudes is now trading at a premium to light wti. don't count out the cheaper pump prices thanks to the past month's selloff finally get people driving again. that is just an example of the

of oil.oeconomics how does exxon or total react to that? michele: it was never in the interest of opec to push oil prices above $80 at a time when a strong dollar and rising rates were putting pressure on the emerging market economy and really making up -- making affordability difficult. i think now they have an interest in bringing the oil to $70 because that is what they need to balance the budget and make sure they don't need to go back into another austerity period, which was tough on local populations. francine: do you change your portfolio based on where the price of oil is? ises: where the oil price is important. if we were at $100 a barrel next

year, we would shave growth off your -- shave off your global growth. this is good news for global growth. i completely agree. there has been some supply that has come back into the market, but you now have the ability of saudi arabia and russia to pull a few barrels from the market and stabilize it. if we are in a 60 and 70 -- $60 and $70 range next year, people will be happy. francine: what will convince big oil companies to start giving back in terms of dividends or buying back shares and investing? michele: i think the change to capital efficiency is here to stay because the transition mechanism between higher prices has broken down and what broke it down is the shift to low carbon. they are aware they need to show a strategy consistent with the

two degrees of global warming scenario. less oil investments, more gas lnvestment and more petro fuels. banks have also committed to their shareholders to move away from carbon businesses and i think the low carbon shift is creating a very tight physical market for years to come and has made the market not demand stranded. much.ne: thank you so coming up next, carsten brzeski. we will ask him about brexit and about angela merkel. this is bloomberg. ♪

francine: this is "bloomberg surveillance." to our top story after more than a year of negotiations, theresa may has clinched a brexit deal with the european union. now the prime minister must get the deal passed eurosceptics with many on both sides of the debate reported to be unhappy predict joining us is carsten brzeski. if you put this into context, we had figures out of the eurozone and a weekend angela merkel and the italian budget. do these guys really care about the u.k.? are they going to give a better deal than we have on the table now or is this it? i don't think they

really do care and when you listen to anyone in brussels, hardly anyone talks about brexit. the ball is with the british and they will wait and what will happen in british parliament. i do not see that the europeans will give any further leeway so far. francine: what are you hearing in brussels on brexit? you said people don't talk about it much. if we get a parliament saying no to this brexit deal and if the u.k. gets plunged into a constitutional crisis, what will brexit say -- brussels say? carsten: brussels is not interested in an existential crisis of the e.u. they have always stressed this point that a country can not be better placed outside the e.u. then inside the e.u. the deal on the paper we have right now maybe came slightly

too early. people were thinking this would be a last-minute agreement. i think europe will focus more on all the other things and actually how the economy will continue to grow on whether we could get more steps toward integration of the eurozone. armyve this european story. i think the e.u. and brussels is really hoping they can focus on other stuff than brexit right now. tom: good luck with that. that hasn't worked out for two years. the headline in the telegraph, the times, the guardian is united kingdom close to a deal. is brussels close to a deal with the united kingdom? carsten: listen, we have had this headline so often, as often as the headline there is no deal. i think people are really waiting and i think they also start -- they don't want to talk or label this a deal.

they are going to wait with what is happening in british parliament and i think you need to take a step back because apparently we were so close to a deal so often in the past, -- francine: i don't mean to -- tom: i don't mean to interrupt. this is critical pre-to francine, from where you sit with all your sources, is this really a deal we are talking about? francine: there are 300 pages we need to get through. we need to read it as soon as we have it. we have been briefed on officials. tom is right, we don't know if a deal ofe deal or the deal that gives us 18 to 21 months. the fact that angela merkel, which you could argue has a similar economy, market just like the u.k., the fact that she is weakened, what does that mean for brexit negotiations? carsten: i think brexit is maybe

the last thing merkel really not soo achieve because much the economy or open markets, but more of the mobility of labor and the freedom of people, that is what angela merkel wants to get brexit to a close, to a deal. that is interesting to look over the last two years, no single country has been outstanding in these negotiations. the biggest achievement of the e.u. is they have always stood close to each other. no one really kind of diverging views and i think that is the interesting thing and merkel will stick to this european view. i don't think the brits should hope a single country or government leader would give them more leeway than the other. francine: thank you so much. carsten brzeski, ing germany chief economist joining us from

brussels pre-let's get back to james barty. when you look at european investments, do you worry about brexit impacting the german car market or would you simply worry about italy? the level of banks and fighting between milan and roman brussels is quite high. -- rome, and brussels is quite high. james: i worry about both. i've not sure what is going on in italy is a big threat, but it is at the margin because you are pushing peripheral interest rates up. brexit is a bigger risk because if this deal fails and this is a deal, the first deal that has properly made -- properly been put to the british cabinet. if this fails, my guess is the e.u. economy goes into a recession. you could see a 20% drop in european exports to the u.k.

actually europe has other fish to fry, the fact is europe does not want a no deal brexit. on oil todayrty, -- we continue that discussion in a moment. bloomberg radio, pimm fox, jon ferro, and myself. always interesting to talk to kevin logan. kevin logan with hsbc. we will do that in the 8:00 hour. this is bloomberg. ♪

taylor: this is "bloomberg surveillance." let's get the bloomberg business flash. knowing and u.s. regulators are deciding whether to issue -- borrowing and u.s. regulators are deciding whether to issue a software fix. they want to and sure the plane will not dive aggressively without pilot commands. says itnt of snapchat

is being investigated over allegations it misled investors before last year's ipo. says they are cooperating with the securities and exchange commission and the justice department. snap investors complained the company did not explain how competition from instagram hurt growth. bob iger may have missed his shot at a $60 million bonus. it was tied to a five-year segment operating income at the world's largest entertainment company of the numbers came up short. the disney board has the right to adjust a total. contracttract -- iger calls for him to get another $100 million of restricted stock. tom: how would you like to make a 10% return per year trailing the last 10 years? how would you like a 6% cash dividend? how would you like some shared by back and solid dividend

growth? with us, james barty, who is michele dellad vigna. are the biggest cash making machines east of apple computer. can they sustain those dividends? can they sustain that all in cash returned to shareholders? michele: yes, i think they can and the reason is the structure of the industry has completely changed. we are headed into a low carbon environment where there are -- where the small players do not get financed anymore and the national companies have the dignity to their own countries start an big oil needs to to think about a low carbon future with more gas, more petrol chemical and less oil and less refining.

, intal discipline holds some way we are getting more of a bull market on the oil price and a bear market in the industry structure and capex, which sustains higher returns and the dividend you are talking about. tom: the fear of institutional and retail oil people is the malaise. , there was ahell five or six year you are the stock traded at a boring range. in do you avoid the malaise this area? michele: i think the malaise was driven by the terry a rating popular returns as the company was investing too much and you had competition from 50 different entities trying to make a project. we have returned to the season of dominating energy and global megaproject and that will drive higher returns. with higher corporate returns,

you get a re-rating and we will not be stuck in the trading range. francine: you like some of these -- do you like some of these big names in the industry? james: some of these stocks look a bit like taco -- tobacco stocks. they had cash flows, dividend year -- yield. it's all about the rise point -- price -- it's all about the right price and entry point. if you are comfortable your price will be in a $60 or $70 barrel range. francine: are we ready for the renewable energy era? michele: i think we are. they are expanding down streaming power in a way they have done for a century. in oil, they are expanding into petrol chemicals. i think big oil is becoming big energy. it is ready to drive the shift necessary to stay within the two

degrees scenario with higher corporate returns. francine: if you want to invest in the renewable space, do you look at china? china component makers? here? is it too soon to look at companies or is now the time to do it? michele: i don't think it is too soon. renewables are clearly profitable and the u.k. is one of the leaders. i think big oil's would not be part of the cap goods value change, but they start with the customers. then move upstream from their using the -- from there using the unique capabilities of dominating through energy. tom: must listen and must watch on global wall street. james barty and on oil and oil companies, michele della vigna of goldman sachs.

we will drive forward to the conversation on a weaker europe and all going on in international economics. you know brexit, grexit, maybe there is surveillance-it, what ever. a liftthe screen and now in the market with s&p futures back to flat. osi,ashington, speaker pel a vote i believe, today. this is bloomberg. ♪

tom: this morning, a true $55,ing oil from $76 to

too little supply. where will oil find a bid to? the election is over. for nancy pelosi, an office with a view. house republicans need not app ly. , the 2019l slowdown challenges for mario draghi, the future of europe. good morning. this is "bloomberg surveillance." we are live from our headquarters in new york. francine, give us an update. is the cat in the room with the prime minister and cabinet members? francine: he doesn't get a phone. there may be resignations. the is divided. divided.

if we are going to get resignations, it is after the .abinet meeting hour was quite good on that deal between the u.k. and continental europe. with the briefing, first word news. taylor: let me recap that deal. aeresa may giving her cabinet choice, back brexit or quit. negotiators have agreed. may will try to persuade her it is not a sellout. then she will try to get the deal through parliament. been madeve not public. it is already being called a betrayal of the referendum. the iaea has a welcome oil's return to surplus.

the monthly report says inventories have increased for four straight months and likely to exceed the average for the first time since march. the death toll has risen in the deadliest wildfire in california ever. 200 people are still missing. 35 percents contained and has destroyed 8800 buildings, most of them homes. greenspan still has plenty to say about the economy. david rubenstein spoke with him in peer-to-peer conversations. once famously said that conventional wisdom is almost always wrong. if conventional wisdom today is the u.s. economy is strong, your view is that might not be

accurate? is a different form of stagflation. it has some of the characteristics of buoyancy, but underneath it is an erosion the ultimately will disable the economy unless it is corrected. you can watch that interview tonight, 9:00 p.m. here on bloomberg tv. 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: thank you so much. equities, bonds, currencies, commodities, oil. oil front and center. hourter tape in the last with s&p futures flat. curve flattening. the bond market moving. euro, a little bit there.

oil $55 a barrel. the vix was over 20. , 3.35%.bond mexican peso with oil and flexion there. if you look at dollar, treasuries, pretty much steady. pound fluctuating, crude reversing an early drop. a mixed bag when it comes to the european equities. we had data on china's economy and the latest trade development giving hope things will get better. very good. it is important if an economist changes language. the global head of content and g10 fx literally formulated our

peripheral feeling of europe with the idea of brexit, following on from his work in germany and spain. we are thrilled he joins us today in new york. draghi, and francine an update on the european slowdown. is it for real? >> yes. the european slowdown is real. it is not just developments in europe. it is china. we saw confirmation of that. affects your profoundly? >> absolutely. europe still has its own homegrown problems. today, budget developments in italy. tom: i look at the markets right now. supply. down, there is

you are definitive on international global power structures of oil, this mix of stabilityll lead to and a higher oil price? >> there is a difference between the short-term and medium-term. adamantague has been the supply picture will be pushing the price downwards. it seems like some of these factors have come to bear earlier than he thought. francine: what do you need to get right in the next 12 months? willere one thing that make or break your calls for the next 12 months? >> the critical issue for the next 12 months is what will happen in china. in china, three major developments now. how deep is that slow down? second, what is the response of chinese policy and how effective

will easing the? the third is around trade issues in the context of the g20. stabilize,he economy which is my expectation, we will see the dollar peak sometime next year. outcine: do you have any that if something ugly were to happen in china, shadow banking come up more debt, the policymakers would make a mistake or would have the tools to deal with it? >> there are still a lot of lovers and tools. -- levers and tools. even if we see incremental weakness and damage, we will seek further easing. at the end of the day, tools are not limitless. is some degree of concern that is fallin given all the leverage. concern given all of the

leverage. tom: you have a great phrase, this smells like late cycle. to an economist, does that mean go to cash?or do you participate in the markets ? moveentually you have to away from credit. credit is the area most vulnerable to late cycle issues. we will see these spurts of volatility. the problem of going to cash his you still have all of these performance pressures. performance has been poor. many investors are pushed back into markets even when the outlook looks unpredictable. contagion toef upper asset classes? to dollar, butge can it follow on to other classes? >> it is a potential big market

driver. ,hen we see these huge moves the potential for oil to become a directo disruptive forces comg back. we talked about europe, the one thing helping europe is oil is falling. there is a silver lining in there as well. francine: what is the ideal price of oil? >> well, that is a good question. my guess at this stage is we have technical and financial factors pushing down the price of oil. i think it will be higher than now for the time being. we heard the word capitulation over the last day or so in oil markets. prettyntals the challenging right now, so there is risk to the downside.

tom: we will come back. i want to talk about oil. i want to talk about trade and the dynamics of international economics. we are thrilled to have our guest with us today. another important international conversation, when is the international bear market in stocks over? i promise we will bring up the green bay packers. worldwide, this is bloomberg. ♪

>> this is "bloomberg surveillance." let's get the bloomberg business flash. the german economy has shrunk for the first time since 2015.

gdp fell in the third quarter. there is speculation it is related to commission tests that disrupted production. the statistics office did not give a detailed reading, but said consumption dropped. and tenor shipping line has raised its forecast. is improvingue despite trade tensions. we spoke with the ceo. forhe overall picture global trade is slow but reasonable growth. at the same time, very moderate growth in capacity, so a slight supply talentse and slightly higher freight rates for the industry. , the trump administration is holding off on new tariffs on automobile imports. consider revision

to report on the national security implications. president trump has threatened tariffs of 25% on foreign-made cars. japanese automakers shares rose on the news. that is your bloomberg business flash. tom: thanks so much. , brexit in a moment, but right now on washington, kevin cirilli. how does an indictment served cbs, that report imminent. what happens when he does an indictment? what happens? will know who will be wrapped up in this investigation. it feels in washington as if these indictments would be imminent any time. honesty, it has not been

forecast when that will come. in washington, it is the talk of the town. tom: it has subsumed everything else as well. i mention this to you yesterday, kevin, how alone is the president in washington right now? it is tough to decipher that. we live in two difference fears. he is in lockstep with the keyblican party, including in the house of representatives. clearly gearing up to issue subpoenas in the house and have their own investigations. reportedly the president's legal

of writingthe midst their responses to bob mueller's questions. francine: are we going to see an overhaul of, the people surrounding president trump? what would that mean for foreign policy if the chief of staff were to leave or the deputy to john bolton? kevin: melania trump intervening report ofr this withholding resources during her recent trip to africa. that follows a long line of first ladies intervening with staffers. there is that front. in terms of the musical chairs shakeups, that is fully expected. in washington, it is almost built into the expectations that

musical chairse semicircl and shakeup in the. i will be interested to see who president trump nominates on dhs, particularly if this person is more centrist or the president doubles down and takes a hard-line approach. tom: kevin cirilli, thank you so much. many themes in washington. we will talk brexit coming up. the u.s. economy later. , their chief u.s. economist joins us. 3%in logan on the mystery of to 2% economic growth. this is bloomberg. ♪ ♪

francine: this is "bloomberg surveillance." get back to our top story. aeresa may has clinched brexit deal. now she must get the deal past skeptics in her own party. ministers meet today, where they will have to back it or resign. , as you werel explaining, a divorce deal. we don't know what the

relationship between the u.k. and eu will look like at a later stage. >> that's right. the final trade deal won't be settled for years to come. necessarily -- didn't necessarily expect it at the beginning of this process. the tricky issue of a border with ireland has created a good idea of what the future relationship will look like. the trade deal won't be done for years to come, but we have an agreement that once the transition is over, if a better idea has not emerged, the u.k. will remain in what is essentially a customs union. that was decided to fix the irish border. it is meant to be temporary.

u.k.oks very much like the will stay in some kind of customs union indefinitely. it provides a bit of clarity to course the but of key thing is will it get past the cabinet? and will it get past parliament? the numbers look terrible. moment toms. this my put up or shut -- is this my moment to put up or shut up? >> i suppose ministers have until the parliamentary vote to decide, if they want to vote against it. it will probably be early december. resume a bleak they could -- presumably they could. said fine, then we got the resignation of david davis and born johnson -- force

johnson. -- boris johnson. twos important to note that brexiteers are said to be backing theresa may. they are the heavyweights, if you like. tom: i listened to you carefully. clearestthe explanation of this madness i have heard. i think what i took out of it it is a hobbesian double negative. i have no idea with the incentives are to come to agreement. isn't there incentives to wait and wait and wait for this foolishness to be figured out in london? >> i think you are hitting on .he point the backstop that was organized

to prevent a border with ireland , depending on how you look at it, and we still have to see the legal text, but yes, that is why the brexiteers are cross, because the u.k. will be trapped in this customs union limbo forever and will not be able to do their deals with china and the u.s. francine: thank you, as always. i would urge everyone to go to our website, the terminal, we have some pretty good coverage. we will talk more about the pound, look at volatility. whether parliament says yes or no to this deal. bloomberg users can interact with the charts shown in gtv . i have a good one. pound volatility. this is bloomberg. ♪

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my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. francine: this is "bloomberg surveillance." it --e talking about rags brexit.

some concerns about cabinet ministers resigning and not getting enough votes to get this deal through. let's get back to our guest. what does this mean for pound? , 1.10 or 1.40, depending on whether it goes to parliament or not? >> it is the defining issue. the spread of outcomes is a wide. i don't think the issue will be settled in the next few days. sterling would react violently, but it will be down to vote in multiplet, or possibly votes in parliament. we think this volatility and eventually toct be some drift upwards in sterling. run rate of u.k. gdp

the same as continental europe? if we talk about a euro slow down. issues have been a major adverse shock to the u.k. economy. the u.k. was the best g-7 economy ahead of the referendum. it has been a race to the bottom. now the outlook is pretty somber. we will have to see. the slowdown in the united kingdom economic growth. certainly, we will have what is going on at 10 downing street. here is taylor riggs. taylor: one fire official warns more than 100 may have died in the deadliest wildfire ever in the state. the death toll is 48, 200 missing.

contained. 35% it has destroyed 8800 buildings, most of them homes. the fire that has raised through malibu is 40% contained. risks in china on a number of fronts. threats to the technology supply chain, chinese military expansion in the indo pacific region, and efforts to undermine sanctions on north korea. the government is urged to rapidly develop a five g network -- 5g network. a painting for edward hopper 1929 "chop suey" is a new record for the painter. sitting two women across from each other in a chinese restaurant. 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, francine. francine: thank you so much. --nt higher after the kleins declines. joining us now in london is the executive editor for combined energy and commodities. next?appens will receive supply cuts from opec and allies? >> it is pretty much inevitable now. they came out at the weekend and offered this will number of one million barrels a day. the traders said that is clearly not enough, drove the price down. you saw the drop in wti. the is extraordinary, biggest drop in three years, and

we are now in a record losing streak. we have those same ministers meeting in abu dhabi. price, a pic up in the but it has come right back. ? we is that telling you need a bigger number and much firmer commitments and sooner than december, i would suggest. francine: what will it take to stop the freefall in oil? >> i think it will be some strong rhetoric. i would argue public rhetoric. the opec members need to convince the market they are prepared to act and prepared to reassert their role as a swing producer and not let the narrative it away from them. you have iran, and we don't know how many barrels out of iran. you have u.s. production. no one was predicting the scale

of that production. how can you react to a country that can add one million barrels in three or four months. on top of that, they have budgets the balance and i white house that tweets. tom: i am as guilty as anybody going brent, west texas and brent west texas. you have adults running out commodities teams that look at the complexities of global oil. this is agony for justin trudeau in canada. oil, a western canada heavy oil. nobody wants it. down we go. thank you, david, for this with bloomberg opinion. we are beneath where we were at that $29 equivalent price of 2016. what are the urgencies for the heavy oil reducers? it is difficult to say, other

than you need to cut production. no one wants it. that is not far off reality. what do you do with that much of the oil? no one appears to want to give it a home. it is difficult. to trimt scenario is the supply and hope for the best. tom: very good. stewart wallace, thank you very much. our guest is still with us come out of london business school, out of oxford. it still works, doesn't it? >> you mentioned these canadians read spirit there are a lot of factors that affect oil price. economics,entional we downplay frictions, pipeline frictions in this case. there may not be enough pipeline capacity to get the oil where it

needs to go, so these are exacerbating the underlying supply and demand action. francine: where do you see dollars going? , when oiltingly prices were going up, they were among the factors helping the u.s. economy relative to the rest of the world given the energy revolution in north america. it is clearly going in the opposite direction. we see the dollar with short-term upward pressure despite the oil market. we still think global development overall is dollar positive into year-end and for a couple of more months to come. oil does not play a big part in that. francine: if you look at the dollar dynamics, does a higher dollar hurt the fed's chances of hiking rates as much as the market is pricing in? >> we have seen that has an

interesting debate. for the fed right now, the dollar features on the list of factors, but by no means the most important one. the biggest question for the fed in the december meeting is where is neutral? how restrictive do we need to be next year? is there pressure for inflation to go up? are there are developments and financial conditions we need to take seriously? for now, they will stay neutral, but chairman powell will present that isent picture, and enough to continue tightening. tom: we will dive further into the study when we come back. there is a lot going on. bloomberg surveillance on radio, i look at retail into the holiday season. where do you start?

in london, there is a meeting at 10 downing street. here is the evening standard with a message to their readers. stay with us. from new york and prime minister may's london, this is bloomberg. ♪

>> this is "bloomberg surveillance." let's get the bloomberg's newsflash. areng and u.s. regulators

deciding whether to issue a stop work order. the planeto ensure will not dive aggressively. it has been implicated in a recent crash. the parent of snapchat is being investigated over allegation that it misled investors. snape said it is cooperating with the sec and the doj. investors have claimed in a lawsuit that the company did not disclose how competition from instagram heard its growth in 2016. snap has denied any wrongdoing. bob iger may have missed out on a 60 million dollar bonus. the numbers came up short. the disney board has the right to adjust the total, so he could get a part of the bonus.

his contract calls for him to get another $100 million of restricted stock. that is your bloomberg business flash. francine: italy's populous are calling the bluff on the eu enforcers. 2.4%have stuck to the budget deficit target for next year. european commissioners have to decide whether to kickstart a complex process that could lead to billions in fines. the economy shrank for the first time since 2015. let's get back to new york with our guest of citigroup. when you look at the concerns surrounding italy, whether it escalates, whether brussels is too hard on italy and will turn italian citizens eurosceptics, what does this mean for euro? >> a series of factors is

weighing on the euro now. about the italian politics and the interactions with the eu, it is a weaker economy with a high level of public sector debt that is probably contracting again. even if we saw political issues, italy will be a major concern for the european outlook. it is adding to the issues weighing on the euro, which include what is going on in global capex. the trends in the world looked determinedly dovish. francine: will italy test the eurozone resolve like greece did? >> of course. there are these parallels between italy and greece, including that the government a think it has more leverage and , butes relative to the eu

it is a very different animal, simply by virtue of its size and the level of integration with europe. don't know howwe this interaction will eventually unfold. with greece we always knew the eurozone withstand firm. they are clearly more uncertain. tom: your work was brilliant. i put it up there with others. your core theory is germany won't let this troubled debt extend into delayed lower interest rate. are we anywhere closer to that 1990 solution that always works? i think we are closer to a point where that decision needs to be made. the world has become more complicated than it was back then.

german politics is evolving. we don't know who will be in charge next year at the heart of some of these european decisions , so i don't have a whole lot of confidence we can resolve these issues. tom: go ahead, francine. francine: let me jump in. what does this mean? the eurozone will split apart? , ifime and again in europe things get pushed to the edge, they find a way to hold them just before the edge, so no, i don't think eurozone breakup should be the main expectation, but we are back in a center where it probably gets -- scenario where it probably gets worse before it gets better. tom: when we come back, we will look at an important essay and trade as well. on radio, you're morning briefing coast-to-coast. bloomberg daybreak, bloomberg radio.

this is bloomberg. ♪

francine: this is "bloomberg surveillance."

there is a headline from sky saying the u.k. government is seeing support on the back of a deal between the u.k. and the eu , but this deal has a couple of hurdles. first, it has to go through parliament. first, the. they meet at 2:00 p.m.. for themore important market is whether it can go through parliament. it is crucial theresa may get p, whichfrom du according to sky she does have that support, because that means they are ok with the irish question. tom: let's move on. here is the chief executive officer of citigroup on our international economics.

on services and are surplus in theica, year after year united states runs significant trade surpluses with its trade the ceo says the following. look for that today off the speech at the economic club of new york. did you write this essay for him? >> i did not. about have conversation these issues over the last two years. we know the administration is focused on goods and manufacturing, but when it comes

to trade, services are an important part of these interactions. that is where the picture for the u.s. looks very different. -- wene: where do you see talked about the biggest downfalls and the currency pairs , is there a currency pair unknown or unloved that you like? >> i think the ones that are unloved right now, and i come back to the euro for good reason. we agree with that. is aniss situation, it obvious counterweight, so there is good reason to be more optimistic about the help look there relative to the euro. in general, we support the view that the dollar outlook is positive to a range of economies, which is with

the mainstream right now. tom: on the trade front, single best chart today. i have not looked at the trade balance in a while. here is the ugliness. the president is screaming. he wants it up here. he wants the trade deficit to lesson. a little trumpian improvement. we have rolled over again. it is amazing. are we speaking within a neo-mercantilist america? >> we are seeing in this chart two major trends in the trade balance. one is the u.s. economy is doing better than the rest, and that is driving imports. it will probably push the trade deficit wider. , there is a hand lot of frontloading and back

loading of trade. tom: do you believe china frontloaded off the dynamics of a real trade war? was a fair amount of frontloading in asia. it probably means we have more weakness to come. francine: how much more weakness? can you quantify that in terms of percentages? >> in china, import growth is andl in double-digit terms will slow sharply over the next couple of months. we have seen order slow quite a bit. we have not seen it in the hard data at all, so a 5% to 10% downside. tom: i want to rip up the script. you wrote a 15-page report, greece was falling off the cliff, and you said look, here are the odds. help me with this friday's doom

and gloom europe report. ,he world is coming to an end and yet on and on. can it be a resilient europe? >> europe fundamentally is still resilient. we will not see breakup or europe to send into recession. at the same time, we have moved on from the honeymoon. we are in mixed waters. from a financial market perspective, the near-term looks pessimistic, but we will see that stabilize. tom: can europe clear markets? have the europeans learned how to clear markets? >> i think markets in europe or differently than over here. eventually they will come up but it always takes longer and is more complicated. tom: this is fancy native. -- is fascinating.

we have been advantage by speaking with citigroup. . lot more coming up we will look at oriole and the ramifications. one of them is international investment. worldwide, stay with us through the day, let me do a quick data check. ago,ike it was two hours but just below that mark, futures at negative four. the curve flattening in the last hour, the dollar finally a little bit weaker. stay with us. this is bloomberg. ♪

♪ alix: oriole's train wreck --

oil's train wreck. contagion spreads to high-yield markets. brexit breakthrough, the moment of truth for theresa may has she has to sell the divorce deal. ,repped for lower returns returns aren't going to be any good over the next two years, echoing a call for a u.s. recession. david: welcome. i am david westin. we have a new neighbor. can i tell you how grateful i am i don't live in queens. can you imagine getting across the midtown bridge once amazon comes? no. maybe they will fix the subways. man whovid come a crazy clearly does not live in manhattan.