>> yesterday, theresa may said she won brexit support, but this morning things are looking different. the next hurdle, eu leaders will meet to sign off on the agreement. chief negotiator warns about a long road ahead. 's 2019 plan, he says that american economy is strong. good morning. welcome to "bloomberg surveillance." i am francine lacqua in london outside parliament after theresa

may's cabinet agreed to a brexit deal. we will try to figure out what this means for your business. morning, we are seeing a reaction in cable. we were saying it higher, it is a leg lower since we heard that news about the secretary resigning. we have dropped below the 129 handle. yesterday, we saw a lot of volatility and turbulence throughout the day on sterling. it ended the session where it started, then it started higher that, but lower now on latest news. the stoxx 600 earlier while 0.2%,g is now moving down after we saw gains in asia. down two basisld points.

we are seeing a little risk off theseent coming into markets. brent crude on a second day of gains, snapping the record losing streak. let's get the bloomberg first word news. few minutes, last the u.k. brexit secretary has resigned. in a blow to theresa may, he could not in good conscience support the terms imposed for the deal with the eu. the u.s. economy is strong but could face headwinds. powell listed challenges, including slowing growth abroad, he also warned of the u.s. trade disputes with china. >> we see a rising chorus of concern largely through business contacts to the reserve banks, and our own contacts.

it has not shown up in the data, it will be hard to see in the data because you would know -- you would not know what the data would be without trade issues. in theory, you can see slower growth to the extent that more products are subject to tariffs, you could see higher inflation and lower growth. >> changes after the midterm elections could pose problems for trump's trade deals. musts said the agreement see changes if the ministration want support. china has outlined potential concessions to the u.s. say talks have been constructive, but the ideas fall short of the reform washington is demanding. oil snap its record losing streak. the cartel says all

sides are discussing details on restrictions. in an industry report, stockpiles rose 8.8 million barrels last week, more than double the forecast. shares plummeted after the company admitted it has exhausted its revolving credit line. damages from the northern california fires may be $15 billion, that is more than pg&e has on tap. the world's largest cryptocurrency dropped as much as 15% with most of the loss coming.

down 70% from its record in december. will leave the white house after melania trump called for her to leave. she clashed with the first lady's staff over melania's africa trip. it is unusual for the first lady to demand an official's removal. global news, 24 hours a day on air and at tic-toc on twitter, powered by 2700 journalists and analysts in more than 120 countries. this is bloomberg. sebastian, thank you. the brexit secretary has resigned in a blow to theresa may. he tweeted he could not in good conscience support the terms imposed for the deal with the eu. in the london studio, simon derrick, managing director,

chief currency strategist, bank of new york mellon corp. welcome to the program. of the key ministers for theresa may, how did she take this resignation? >> quite awkward, saying he could not in good conscience support the treaty. it leaves her in a difficulty. we knew she was up against this but they sitment, in a room and say they will go along with it, and then they get beaten up by their friends and that they resign. i am of the opinion the most likely thing is that the first vote does not go well, and after that is the question. if it looks difficult to get it through parliament on the first vote. francine: doesn't mean other ministers will walk? >> he will provide more cover for other people. brexit,ople are hard on

if he cannot deal with it, why can you? most interesting is michael may, and he backed theresa and he is part of another faction of the eurosceptics. deal and let's do a get out of the union and plan from their. it remains to be seen how much are against the headbangers who just want to get out, and people like michael gove who wants to get to the first states. then you have the remainders were dreaming about options. francine: we do not know about the labour party. to whateal seems close they say they wanted, but they are also condemning it completely. francine: what are people worried about? does this make the market think that it is likely we get a no deal or hard brexit? i think it is hard to

work out what happens next at all. we had a leadership challenge and there has been discussion on the blogs about the possibility, and that will cause complications going into the vote. you noted already there will be some difficulty. mean we will go for a hard brexit? that is one option. equally, the possibility you could end up with a referendum, and an election. all those uncertainties are there. the possibility you will get a leadership challenge. that is what the market is reacting to now. simon, how long can the pound go? it really depends on how

this plays out. if you were to talk about hard brexit, could you see 110? yes, considering the way sterling has performed, you can have that kind of move. at the moment, the market is trying to work out what kind of deal, or if there will be a deal. it is just as possible that we ended up in a situation where we are talking about a second referendum, and people take sterling higher. we simply do not know. francine: everything is open, a second referendum, what are the possibilities? >> the problem is with the terms, ities, in broad think the most likely option is some version of a vote that goes

down, and then there is a panic, because they do not want a no-confidence vote, or a general election. maybe there is a second deal, but we do not know what the europeans will do. that will increase the likelihood, people will say, we had a choice when we did brexit between staying in the european union, and this wonderful country that boris johnson described that is imaginary. maybe the choice is between staying in the european union, this version of the deal, or getting out with a hard brexit which will be interesting. if you think there is a possible parliamentary vote that gets voted down, if you are a chief executive, -- at the reaction last night, a little groveling from finance that it was not as good as they hoped.

every business will start from the starting point that it will be worse, but it seems a little bit worse. the idea of two years of transition they could go along with. hard brexit frightens everyone. people are beginning to store things thinking about it. with short-term uncertainty, but not this link. francine: what will it take for the euro pound to break away? on cable, but it is in a tight range? simon: i think it is one of the more fascinating bits. what is happening with the u.k. is not happening in isolation. the weakness of the euro has to do with what is developing at the same time. if we were to see a move towards an election where we would see the failure of a first vote in ,arliament in early december

assuming that is when it would take place, they could do in a thin december market, you could see sterling challenging against the euro over the course of the last year. absolutely it could. we do not have that many days when sterling is trading below 9 6 against the euro. that is the point to get interesting. francine: thank you to john mickelthwait for covering. simon derrick, managing director, chief currency strategist, bank of new york mellon corp. stays with us. we will talk more about what the brexit deal means for the markets. later on we will see gina miller. this is bloomberg. ♪

>> this is "bloomberg surveillance." the swiss competition authority has started a probe against credit suisse and three other companies. the regulator is investigating if they colluded in payment services such as apple pay. uber are slowing, particularly in its food delivery business. that was a most half the rate of growth. the company which plans an ipo next year lost $1.1 billion in the last three months. the california utility pg&e on

the possibility that equipment started one of the wildfires. shares plummeted after the company announced it exhausted its credit line. damages from the fire make up over $15 billion, far more than pg&e has. that is the bloomberg business flash. francine: welcome back to "bloomberg surveillance." we are here in westminster. in the last 20 minutes, the brexit secretary resign. it could have implications for theresa may. , noays on twitter democratic nation has signed up to be bound by such an extensive regime. without any democratic control, nor the ability to decide the arrangement. we will have more on that, the

pound is trading down sharply. resigned.nic raab that's get back to simon derrick . we are talking about the pound and how it can go below if the first vote in parliament does not go through. does it have implications for other currencies? simon: i think it does. i think one of the interesting things we have seen in the last 24 hours what is happening in u.k. politics is having a broader impact. yesterday evening, the announcement that the cabinet was supporting the brexit deal. it was not just sterling that recovered. stocks in the u.s. came up. treasury yields rose higher. all of that took place in the

aftermath. what that tells you is this is a situation that could have broader implications. if you have something that is negative to sterling, could it impact others, it could. francine nejra: is this just the timing at year-end, and there are other respects to italy midterm elections? simon: i think it is exactly that. this has been a tough year for investors. remember the discussion about peak earnings. people going back in remembering ,hat was happening 18 years ago back in november of 2000, and similar concerns coming in. at the end of a multi-year bull rally. all those concerns kicked in. people decided to retreat to the hills. sterling and all these other

issues are there. that is why it is a bad time of year, and bad for markets overall. francine: let's bring in roland dacre rudd, chairman, rlm finsbury. you believe it increases the chance? roland: absolutely it does. the choice between this deal and no deal, the choice is between things, and with the option to remain must be the natural conclusion from this. this huge division in political andies and in westminster, the country and the business community, the only way you solve this is going back to the people. now they know what the outline of the deal is, do they still want to leave the eu? francine: they may not have the appetite for a second referendum. ?ow do you see it panning out

before the vote in parliament or after? roland: no, you have to have the vote first. if that deal does not get to the house of commons, and if they cannot agree on a way forward, the obvious to do is go to a people's vote. changesve been many over the last two years. there could easily be another one. >> i believe he is right. another referendum is more likely now. you have a strong possibility it will be voted down.

there is not as much enthusiasm as in other parties. you also have a problem in labour. politics is more than mixed up. francine: if we get a second referendum, would it be any different? aland: we have noticed disturbing shift in many areas, in the north where people know they are worse off not better off. it may come out eight to 10 points in favor of remain. you would have a different kind of campaign, and this time around it would be based on knowing what leave means, and not on the fantasies that were put forward last time. that is what got us into this intractable mess.

he was asked if this was a good --l, and saying surely [indiscernible] labour is all over the place on this. >> it shows the difficulty of getting this deal through the house. the deal is not a perfect deal. it is the process of trying to leave and pretending you can leave with the economic advantages of being in. i do not think you can blame her for that, what i am more confident about where labour is.

they have eight clear conference about voting against the deal. i highly suspect that will not happen. then we go to the next option which is the people's vote. >> what would you have on the people's vote? roland: you would have to have the option, do you want to leave the eu with a government deal, or do you want to stay? i think that is a fair option. means, know what leaving where before it was an aspiration, and we were told all sorts of things that turned out to be untrue. francine: [indiscernible] simon: there is no certainty. this is not a deal in the sense of what a deal normally means. this is an arrangement to leave the eu, and we will have years of negotiations of thousands of

agreements that still have to be worked out. you have financial services, and this agreement there are 100 words on financial services. contributes 120 billion pounds to the u.k. economy, and there are many more things to be worked out. there is uncertainty which ever way you go. the only issue is do you want the option of being able to remain in the eu now that you know what leave means. francine: what are the chances of it crashing out? simon: -- roland: i think it is almost absolutely negligible. i do not think parliament would allow that. there are a huge number of mps will not allow that to happen while they are in the house of commons because it would be hugely irresponsible. >> [indiscernible] is a 20% chance of

crashing out because fundamentally there is a group of people who pushed very hard. i do not see that they will be accommodating. down, theyvote goes would be keen on a people's vote. back tothey will come get her deal through and that will push people to let's get out. roland: i agree with that. chance that we will not do that, i do not think people should be frightened into saying we cannot order a people's vote because we will crash out, the likelihood is low. >> [indiscernible] i will say it is less

than bank 20%. we both agree it is highly unlikely. it take: when does place? vote will benk the in december, and if that does not get through, there will be a range of options. the parliament will take control of the process, and drive it forward. francine: thank you for joining us, roland dacre rudd, roland: managing director, chief currency strategist, bank of new york mellon corp. and john micklethwait. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." is looking at our

markets. standard have seen to deviation move in cable. sterling dropping 1.3%. a big move in sterling. seeing the ftse 100 rally. the 10-year gilt yield down. a 2019arkets pricing out rate hike from the boe as well following the news about dominic raab. some risk off sentiment coming to european equities as well. meanwhile, we have u.k. retail sales crossing the bloomberg. auto feel month on month, we are seeing a drop of 0.4%. a gain.ctation was for

year on year, we are seeing a gain, but less than expected. fuel month on month, seeing an unexpected drop in retail sales. softer retail sales numbers and sterling extending declines. much.ne: thank you so mitch mcconnell block two senators from bringing up legislation that would protect special counsel robert mueller's investigation. this comes as a released a filing that set the former trump aide is cooperating on several ongoing investigations. will he prevail? stephanie: yes. i think it is crunch time for those republican senators who said they would protect the special counsel. now that trump has fired jeff

sessions and appointed a loyalist, matthew whitaker to take over, who has question some actions, senator jeff flake is really calling out the senators by pushing forward with this legislation. senator flake is retiring. he has nothing to lose. there is a lame duck session of congress before the new congress comes in in january. he is saying he will hold up any nominees from moving out of the senate judiciary committee to the full floor. that is his main leverage. there are 11 republican senators on the judiciary committee versus 10 democrats. he really can hold things up. chuck schumer has said he would look to attach the legislation protecting the special counsel to any budget move that needs to by this autumn to

stop the government from shutting down. there are definite forces working against mcconnell, but i think it is forcing those republican senators who said they would protect the special counsel, forcing them to choose sides. francine: thank you so much. covering all the white house administration. u.k.'s brexit secretary has resigned and upload to prime minister theresa may. he said he could not a good conscience support the terms proposed. he says he cannot reconcile the terms of the deal with promises made to the country. the eu call the summit for november the 25th to sign off on the u.k. divorce plan. draft of brexit l was agreed after a massive five hours of talks. -- she now needs

to persuade a rebellious parliament. >> these documents were the results of many meetings which i another ministers held with our eu counterpart. i firmly believe the draft agreement is the best that could be negotiated and it was for the cabinet to decide whether to move on in the talks. our work is not finished. we still have a long road ahead of us on both sides. days,y side, the next few we will all work on the withical declaration member states as well as the european parliament. financial services are weighing what the deal will mean for their services. negotiations on a new financial

rulebook will continue well into 2020. it is in mind with what the city of london has been expecting. powell says the u.s. economy is strong but could face headwinds next year as policymakers way how far and fast to raise interest rates. slowing growth abroad, fading affecting thes rate rises. >> we see a rising chorus of concern, largely through business context through the reserve banks, but also through our own context. it hasn't shown up yet in the data. it would be hard to see because you don't know what it would have been without the trade issues. in theory, you could see slower that morethe extent and more products are subject to

tariffs. you could see higher inflation and lower growth. sebastian: mira ricardel, number has been removed. 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 sebastian salek, this is bloomberg. francine: thank you so much. let's go back to brexit after we had news that brexit secretary dominic raab resigned. you were instrumental in time to get people's votes. do you think we are going to get a second referendum? >> i think it is vital that the opposition stands up today and

backs a vote because this is diabolic. nothing is going together parliament. this deal doesn't deliver to any side at all. we found that 70% of the people in britain do not believe this represents there will and do not believe the government is doing a good job. it should be handed back to them because this is a complete impasse. an impassehy is it because they have a deal? gina: this is an agreement that is a very poor agreement. those people that voted to take back control, it actually gives up all of our control because they cannot leave the transition.

is such a fine mind between where we think we are and where we would be in a future. this doesn't resolve anything. this is just the end of the beginning. hugeimportantly, there are space missing. there is no agreement on road transport, agriculture. this is a terrible deal. francine: what do you think about this agreement? 586 pages. of the prime minister have gotten -- could the prime minister have gotten any better? >> i found myself agreeing with gina. it is an awful deal. we're going to pay approximately half the money that we were committed to pay in a transition period. we will lose our leverage, or part of our leverage. we won't be able to withdraw from the deal unilaterally.

agree.n agreement to we are stuck in the customs union so we lose all of the economicfrom an standpoint of leaving the eu in terms of free trade deals with the rest of the world, deregulation, supporting the industry's women want to support such as bioscience and pharmaceuticals. it is an absolute disaster. francine: do you think that any person that wanted a clean brexit, that was pro-brexit should vote against what the prime minister is putting in front of parliament? howard: i don't think it is a question of clean or not, but being able to negotiate. it wouldn't have taken bobby fischer to work out that if you agree, the irish backstop agreement in advance of the trade deal, you are going to get stuck in the customs union.

bobby is a very clever negotiator. we have had civil servants on our side. they have just had rings run around them. raab took on a very noble challenge and has done exactly the right thing this morning by resigning. francine: he was instrumental in negotiating the deal. why do you negotiate the deal then resigned the next day? i think he was undermined and overruled by the prime minister and her chief negotiator, ollie robbins. guy.ic is a very capable he came into the negotiation and a very late stage and i don't think he was able to control the process. francine: what do you think are

the chances of the u.k. crashing out? a lot of uncertainty. it may be voted down in parliament. is that 20% or higher? gina: i don't think there is a chance of a crash out. apart from a small suicide squad, the consensus is on one thing, no deal would be a disaster for the country. anncine: it could be unintended crash. ina: when i started all this, thought brexit is going to be a constitutional issue. the problem with that is while cmp's are going to be in control to some degree, there is a legal process that will start very soon, probably in december. at that point, i think minds will be concentrated that there is a way we go toward the 29th of march. at that point, i believe the only rational thing to do for the good of the country is to

offer an extension to article 50 the prime minister can either go back and carry on negotiating or we can back another vote. francine: what do you think this all means for business? do you stop from investing in the u.k. until this is resolved? howard: no. athink everybody exaggerates, lot of commentators exaggerate the impact of leaving or not leaving. the economy will be robust. i don't see a disaster, if there were a cliff edge. but i think we are better off to do a deal then not do a deal, but not any deal. we need to think about the future of the u.k. over the next decades, not the next six months. we need to think about the impact and implications for future generations. when you to get the right deal

for the u.k. the eu always plays the time. they have a track record of conducting negotiations in a way they have here. many times before and we should have seen it coming. we now need above it more time. we need someone who understands what is at stake in the negotiation and what cards we can play. we haven't played any of our cards. we have and explain what the consequences are for the eu about leaving without a deal. if you are a u.s. investor, i do hope that negotiations, at some point, the u.k. would have said this is not great for you. if you are an american investor and you say something is on the table, and you see raab resign, the still of money in

this country? yes, but you take advantage of volatility. you think the u.k. is a strong country with stable laws. it is a very attractive place to invest in a long-term. we have some of the best universities in the world. it is political volatility and instability. they take advantage of short-term adversity. this is short-term. francine: do you agree? gina: absolutely don't agree. we know many investors are sitting on their hands. they're not going to invest. they haven't been and i don't see how they are going to carry on. francine: thank you both for joining us. howard joining us. throughhis just coming

that the mp marie morris has submitted a letter of no confidence in may. this being reported by sky that she has submitted a letter of no confidence in may. mean for moret letters of no confidence being submitted, what is being commented on the blog that there could be an increased risk of that. let's take a check on the markets. we have seen a move of more than two standard deviations and starling. big moves in some of the u.k. equities as well. homebuilders taking a hit, also u.k. banks. rbs dropping the most since august 2016. barclays hitting a september 2016 low. this is bloomberg. ♪

nejra: we heard this mind that brexit secretary dominic raab has resigned. sterling down more than 1.4%, hitting a 128 handle.the ftse 100 trading a little bit higher . european equities at reversing earlier gains to trade lower now. outy markets also pricing and boe rate hike for 2019. in terms of u.k. equities, it is banks and home builders that have been hit the most to the

downside. let's get another perspective on the brexit deal. for more, we are joined by our .sland bureau chief in dublin also a government reporter from brussels. what sort of reaction are we getting from where you are to the news of the resignation of dominic raab? think the papers some did up quite well this morning. victory for dublin, chaos in westminster. i think that feeling has been strength of this morning. an official last week that said they concerns were chances on what would geither the house of commons. i think the resignation this morning looks like strengthening those fears.

nejra: in terms of the eu, michel barnier's comments yesterday were taken us quite positive. we also heard from donald to thismorning -- toosk morning. we have the summit coming up on november 25. does the question of rubberstamping get more complicated at all? ian: of course it does. it is very easy to be positive when everything that can possibly go wrong has nothing to do with you. they are very positive because they have a deal. negotiators were in a public is not because they have a deal. that means nothing if the politics don't catch up with that. i think people in brussels now, the morning has broken and they see this news of the dominic raab has left and realize that what they are witnessing is a political british earthquake. this time it is really about the

steel and they have no idea what is going to happen, and that is really worrying them. at the end of the day, if they can't pass the house of commons, a deal means absolutely nothing. francine: thank you so much to wishart.e and ian more out of our brexit coverage, next. sterling has dropped the most today since june 2017. i move of two standard deviations, down as much as 1.6%, dropping below 128. this is bloomberg. ♪

nejra: let's take a deep dive into the markets following all this brexit news. what are the money market showing. : let's kick it off with the u.k. money market, pricing out a rate hike in 2019 after brexit minister dominic raab

resigned. getting absolutely rocked this morning. the currency dropped 1% against the dollar after the resignation. we are seeing a more than 2% standard deviation move in the currency. finally, let's look over at the gilt, rallied on the news of the yield dropping. as you can see, it has been steadily ticking higher. today, that is dropping. nejra: thank you so much. let's talk about the equity markets a little bit.we are seeing the ftse 100 up some .3%. ftse 100 higher even the european equities margot robbie are down digging into the industry groups, you're really seeing the banks and home builders being particularly hit. some of the worst performers, you're looking at barclays hitting a september 2016 low.

royal bank of scotland down. rbs dropping the most since 2016. rbsrds the end of october, was one of the first banks to talk about setting aside 100 million pounds to prepare for brexit. banks and home builders taking a big hit. lower. on the upside, some of the commodity producers are in a green on the ftse 100. that is what we are seeing across the markets. sterling back to 128 on the nose. this is bloomberg. ♪

francine: raab resigns.

the u.k. brexit secretary quit saying he cannot support the terms of may's deal. michel barnier warns of a long road ahead. powell's 2019 talks. fed chairman says the american economy is strong but could face headwinds next year. this is bloomberg surveillance. i'm francine lacqua in london, here at westminster. tom keene in new york. we're looking at the market fallout. looking at what this agreement could mean for the future relationship between the u.k. and eu, but also the resignation of dominic raab. it, he isnk about actually one of the key negotiators in this agreement. yesterday, we understand he supported it, and today, he resigns.

tom: the cabinet minister resigning. also, further breaking news, marie morris has submitted a letter of no confidence in may. my question to you, far more able on this them and edwards anna edwardsthan , if we see these, how does it change prime minister may's speech in 30 minutes? francine: that is all about the numbers. to go forward a motion of confidence, it means you need 48 letters. you need 48 in peace saying i don't have confidence in our prime minister. then you go to a confidence vote. that means they need 158 mps to vote against theresa may.

it is all about the arithmetic. it is unlikely at this point that we think she needs to step down. of course, we're looking at the fallout of her position and how it impacts the markets. tom: there a good. right now, -- very good. right now, much more going on. edwards joining us later on. let us go to a data check right now. with ag leads the way way to the tape. interesting, euro weaker with oil still trying to find a bid. the vix elevates out a little bit of risk. important.s is very

the two quotes should be read on the screen as lower yield by three basis points. ,hat is an extraordinary number really beginning to migrate 10 basis points away from the 299 level. a sterling now, breaching 128-127. francine: within the last few minutes, the u.k. work and pensions secretary begin the second senior cabinet minister to resign. the eu has called a brexit summit for november 25. let me start with you, mike, because i want to talk to you about pound. what are traders so worried about right now? mike: i think they are pricing in a higher risk of a no deal

brexit. i think despite all of the resignations you are seeing, the likelihood is that we are still going to get this deal approved by parliament. it might be a choppy ride to get there. not saying it is going to be volatile, but i think probably by january, you're going to see this deal approved and sterling will trade quite a bit higher from here. exactly is in this agreement? if you look at the customs union, it doesn't really locked down the u.k. in a customs union, but it would be more difficult to get rid of it. is that right? >> basically. it is an indeterminate customs union. it is basically what you negotiators have been pushing for. last night, they were very happy that preserved their goals. they preserved the internal there and made sure that was as little damage as possible going out.

now, they're basically holding their breath waiting to see what is going to happen next in london. tom: i want to go to an important as they published. essaya very eurocentric . right now, some sovereignty iteers might say that a mutually a short recession would precipitate an internal political bloodbath in a string of countries. no nation would normally except such terms unless a very small, or bankrupt, or first defeated war. he then goes out to point out a small idea that 80% of europe's capital markets are in london. i know the focus is on prime minister may, on the collapse of this government, but there has got to be a direct story in

europe as well.what is it ? jones: they are basically trying to make sure that there is as little damage as possible. like you were just saying, the consequences, the impact is way to be massive either way. in just this week, the eu put out more statements, more documents in terms of how they are preparing for brexit with or without a deal. they are bracing for it. even with this agreement that they have been trumpeting in the last 12 hours, they still have to be prepared it is not going to make it. tom: within the idea that they will not make it, is the idea of response., eu, merkel who are you listening to and watching today across the continent? jones: basically, throughout this whole process, they have

been 100% behind michel barnier. it doesn't matter who you listen to, except maybe a few on the edges. together.ll it has been this remarkable show of unity throughout the negotiations. you can hear it from merkel and macron. they have individual country things they need to get straight, but in general, they are there and want to preserve their single market, and want to limit the damage. last night, they thought they had done that. this morning, it doesn't look so clear. what does it mean for u.k. assets overall? are we going to see much more in a holding pattern or less investments coming into the u.k. until we at least get the parliamentary vote? mike: i think it is what to be very uncertain until you get that vote. i think the vote will pass for the simple reason that there is not really an alternative to this.

if you are going to have some form of brexit, i think this is the best deal available because it is the only solution to solving the irish border issue. there simply isn't another way around that issue. if you look at it from a brexiteer perspective and the conservative party, what alternative do they have other than backing down and backing this deal? if they create a gridlock in parliament, it really leaves theresa may and a very difficult position, or any politician who was leading. whoever is in charge of been a very difficult position of this doesn't get voted through. the options are, go to a general election or have a referendum. you don't want a general election because there is a risk of the opposition could get in and you end up with a deal which looks very similar to what we have on the table now, but under the opposition government. on the other hand, if it goes to

referendum, the polls suggest you might not get a brexit at all. francine: thank you so much. coming up, -- he really understands the intricacies. in 10 or 20 minutes, theresa may talks to parliament.how will she address the latest resignations from her cabinet? this is bloomberg. ♪

francine: this is "bloomberg surveillance." where we arenster trying to figure out the fallout from resignations of ministers in theresa may's cabinet. i spoke to the shadow brexit secretary. may's brusselssa deal a miserable failure of a negotiation. i spoke to him a short while ago. what is your message to investors? >> we are in a very serious situation. this morning, it is obvious and she does not have the backing of her cabinet. what she now needs to do is to say, i'm going to reflect on the seriousness of the situation i find myself in, and i'm going to listen to what parliament says ought to happen next. well it be wrong is her simply go on as if nothing

has changed. it is a bad agreement. it feels the conditions we set out. as for the future relationship, there is just seven pages. why should any mp sign up to something when we have no idea what the destination is? francine: what is the way forward? keir: at the moment, it is for the prime minister to say, i will reflect a listen to parliament and give us a better opportunity to have our say on what happens next. at the moment, this deal is clearly losing the confidence of her own in peace by the hour -- mp's by the hour. with each resignation, there's instability. there is another vote for somebody who is not going to vote for the deal. we have analyzed the deal. if it falls, they will offer a general election.

if that doesn't happen, other options it should be on the table, including the option of a public vote. francine: if there is no parliament vote or if it doesn't get a parliament, you support a second referendum? keir: if it doesn't get their parliament, there ought to be a second election. if that doesn't happen, there has to be other options. actually think that if they were a customs union, there would be a consensus in parliament for that. withf the options we dealt was the option of a public vote. let's get to our guest . he joins me here at westminster. how do you look at this? the politics are really taking over. we are seeing this huge clash between labour and conservatives.

if you are a chief executive this morning, what do you do? >> if you can afford to stay away from places like this, you stay away. if not, your time to find the asymmetric payoffs here. i think there are two sticking out. one of them have to do with the currency. the upside to the pound is fairly limited. in the event that harder solutions come about, obviously, the upside and eurosterling is significant. that is one asymmetry. the other has to do with domestic stocks in the u.k. reached stages of valuation that are particularly attractive. because not everything is settled in the course of the next few weeks, it makes sense to have some positive exposure in domestically geared stocks in time,k., and at the same

having some exposure negatively against the sterling. francine: when will this be scheduled? even if theresa may it's this deal through parliament, we still have 21 negotiations trying to figure out what the relationship between the u.k. and eu is. think you have to be a similar question four or five months ago. this is a drama. dramas typically get a resolution at the very end. in my mind, we're going to get a lot of ups and downs. until we get to the very last minute, which is the end of march, i think we have to assume there is a high likely scenario things get settled a bit later. whether it is not a very good strategy, people always gleam to hope. i think the history of the european union negotiating with others has pointed to that type of pattern. francine: should investors assume it will sort itself out or do they need to start looking

at possibilities to a crashing out? >> i think they have to and assume that things will not necessarily be sorted out today. that is more of a hope as opposed to a reality. francine: what is the chance of a crashing out? 20%? investor, these a 35%? >> i think the market can actually give you some chances here in terms of pricing options at the far end of the distribution. let's call it something less than 20%. the problem is that something less than that is not zero. there is a good chance. the market has taken that into account, but don't forget there are positive scenarios, too. i think that is what the market

is trying to grapple with today. we aree of movements seeing today are indistinguishable. there is nothing special about today. tom: there may be nothing special about today, but terrific news flow as well. sterling making out new lows. 127. 59. kevin cirilli will join us next out of washington. headlines now out of saudi arabia. no other way to put it, the saudi prosecutor is seeking the death penalty for the khashoggi killers. 21 people are being held in the murder. very importantly, 11 people are charged in that murder. we don't at this time have those names and we certainly don't understand how this ties into the saudi family as well.

these are the headlines of the continuing story out of turkey and saudi arabia. again, as francine is at westminster, anna edwards will join us here in a bit. we're thrilled to have michael dell with us of jpmorgan asset management. if we look at the news flow from even aarabia, political storm of the united kingdom or washington, there is a risk off feel in the last number of days. all sorts of treatments, including weaker oil. is it an opportunity or is my new asset class of choice, cash? michael: i think risk at the moment is high. hold a littlen bit of cash in portfolios, but i do think it makes sense to be holding some resilience and portfolios.

treasuries are acting at the moment as a good risk hedge. i think treasuries have a place in portfolios for the sort of yields. it is also looking at the kind of strategy that can hedge out risk. try to balance your portfolio. having a more balanced portfolio and being less overweight, equities. francine: thank you both. this is what we are hearing from the do yoc. dup saying they think theresa may will face a confidence vote. what that means a for the markets is uncertain because the

way is laid out here in the u.k.. letters48 mps to write saying we are no longer confident in our prime minister, then she faces a vote. 32 b 158 people voting against her. we will look at the arithmetic -- there needs to be 158 people voting against her. we will look at the arithmetic coming up. this is bloomberg. ♪

francine: this is "bloomberg surveillance." today, we're live from westminster. we were just looking at pictures of theresa may, the prime minister of the u.k. leaving 10 downing street to make a way to parliament. it would take about 12 or 13 minutes.for security reasons, they have put her in a car . she is expected to arrive a parliament shortly, and expected to give a speech and about four or five minutes from now. it will be interesting to see

how she addresses the market reaction. you wonder how she will also react to these resignations. dominic raab, a key person in her cabinet resigned about an hour ago. other cabinet members resigning. most extraordinary when we see what is going on now in the house of commons. we await this most important speech by the prime minister of the united kingdom. we will have the for you and a moment. this is bloomberg. ♪ [ phone rings ] what?!

ready for christmas? no, it's way too early to be annoyed by christmas. you just need some holiday spirit! that's it! this feud just went mobile. with xfinity xfi you get the best wifi experience at home. and with xfinity mobile, you get the best wireless coverage for your phone. ...you're about to find out! you don't even know where i live...

hello! 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. ♪ francine: this is bloomberg "surveillance." as always, tom and francine. today from westminster and new york. theresa may expected to make a

statement about her brexit deal. we're hoping to hear from her about the resignation of dominic raab. yesterday we spoke to investors who said it is only a concern if you have many resignations from her cabinet. it was only dominic raab who resigned. he did that very thing today. first of all thank you for sticking around. when you look at the resignation of dominic raab, does this mean we'll see a lot more volatility? it is very clear the conservative party is just not stable. >> i'm not a political analyst but i think it was evident to most people when you a situation and a majority in the parliament is small, some volatility should be part of our baseline scenario. this is the time for -- people will take sides but also realize

they have options in terms of maybe withholding final djustment. >> delivering brexit involves difficult choices for all of us. we do not agree on all of those choices but i respect their views and i would like to think them sincerely. we agreed on official interprets in our exit from the european union. we agreed to broad terms of our future relationship in an utlined political declaration. they have recommended the progress being made in the negotiation. a council will be called for november 25. this puts us close to a brexit deal. mr. speaker, what we agreed to yesterday was not the final deal. it was a draft.

it is a draft treaty that means will leave the e.u. in a -- and respect the framework for a future relationship thats in our national interest. it takes back control of our borders, law and money. it protects -- it protects jobs, security and the integrity of the united kingdom and it delivers in ways that many said could simply not be done. we were told that we had a binary choice, between the model of norway or canada. that we could not have -- deal. the outlined political declaration set out in arrangement better for our country than both of these. a more ambitious free trade grem than the e.u. has with any other

country the outlined political declarations set out with cooperation beyond anything the e.u. has agreed with any other country. let me take the house through the details. first on the withdrawal agreement, the legal text has been agreed in principle. it sets out the terms on which he u.k. will leave the e.u. on march 29, 2019. we have secured the rights of the citizens living in the u.k. and nationals living in the e.u. we have agreed to time limited implementation period. only one set of changes. we have agreed protocol. we have agreed a fair financial settlement far lower than mentioned at the start of this process. mr. speaker, since the start of

this process, i am committed to ensuring our exit from the e.u. deals with the border of northern ireland and ireland. the withdrawal agreement sets out an insurance policy should that relationship not be ready at the time of the implementation period. i do not pretend this has been a comfortable process. either we or the e.u. are entirely happy with all of the arrangements that have been included in it, but of course this is the case. this is an arrangement we both said we never want to have to use. but while some people might pretend otherwise, there is no deal which delivers the brexit the british people voted for which does not involve this insurance policy. not canada plus, plus, plus. not norway for now.

not our own white paper. the e.u. will not negotiate any future partnership without it. as the house knows, the original proposal for the e.u. was not acceptable. it would have meant creating a customs border down irish sea united k up the kingdom's integrity. we have seen the e.u. make a number of concessions towards our position. first the professional for a northern ireland customs solution has been dropped. we have created an option for a single time-limited extension of the implementation period as an alternative to bringing in the backstop. as i have said many times i do not want to extend the implementation period. this is about an insurance

policy. but if it happens at the end of 2020 our future relationship is not quite ready, the u.k. will be able to make a choice between the u.k. temporary customs arrangement or implementation period. commits both parties to use best endeavors to ensure this policy is never used. if we choose the back strop the withdrawal agreement is explicit and temporary and it cannot provide for a permanent relationship. there is also a mechanism by which the backstop can be terminated. finally we have ensured full continued access to the full u.k. internal market. the brexit talks are about acting in the national interest. and that means -- and that means making what i believe to be the right choices, not the easy one.

i know there are some who said i should simply rip up the u.k.'s commitment to a backstop but this would have been an entirely irresponsible call for action. it would have meant reneging on a promise made to the people of northern ireland during the referendum campaign and afterward that under no circumstances would brexit lead to a return to the borders of the past and it would have made it impossible to deliver a withdrawal agreement. as prime minister of the united responsibility a to every person in every part of our country. we are now able to move on the finalizing the details of an ambitious future partnership. the declaration we have agreed sets out the basis for these negotiations and we will negotiate ahead of european council to turn it into a full future framework. it will end free movement once

and for all. instead, we will have our own immigration system based not on the country people come from but what they can contribute to the u.k. the declaration of a free trade area. no fees, charges or restrictions across all good sectors. no other major advanced economy has such an arrangement with the e.u. and at the same time we will also be free to strike new trade deals with other partners around the world. we have also reached common ground on a close relationship on services and investment including financial services this go well beyond w.t.o. commitments. the declaration ensures we will be leaving the common agriculture policy and common fisheries policy. how to best sustain and support our farms and environment and the u.k. will become an independent coastal state once

again. we have also reached agreements on key elements of our future partnership to keep our people safe. this includes swift and effective extradition arrangements and passenger name records d.n.a. and fingerprints and vehicle registration data. mr. speaker, when i first became prime minister in 2016, there was no blueprint for brexit. many people said it could simply not be done. i have never accepted that. i've been committed to delivering on the result of the referendum and ensuring the u.k. leaves the e.u. absolutely and on time. but i also said at the very start that withdrawing from e.u. membership after 40 years and establishing a wholly new relationship that would for decades to come would be complex

and require hard work. i know it has been a frustrating process. it has forced us to confront some very difficult issues, but a good brexit, a brexit in the national interest is possible. we have persevered and made a decisive breakthrough. once a final deal is agreed, i will bring it to parliament and i will ask to consider the national interest and give it air backing. voting against a deal would take us all back to square one. it would mean more uncertainty and the failure to deliver on the decision of the british people that we should leave the e.u. if we get behind the deal, we can bring our country back together and seize the opportunities that lie ahead. the british people want us to get this done and get on with addressing the other issues they care about.

more good jobs in every part of u.k. doing more to help families with the cost of living. helping provide fist class care and giving every child a great start in life and focusing every ounce of our energy on building a brighter future for our country. so mr. speaker, the choice is clear. we can choose to leave with no deal. we can risk no brexit at all or or we can e -- choose support the best deal that has been negotiated. this deal that takes back control of our borders, laws and money and delivers a free trade area for good and zero tariffs. delivers an independent foreign and defense policy while retaining the security cooperation to keep our people

safe. maintained shared commitments to high standards, protects jobs and honors the integrity of our united kingdom and delivers the brexit the british people voted for. i choose to do what is in our national interest and i commend this statement from the house. >> thank you, mr. speaker and i want to thank the prime minister for advance copy of her statements. the withdrawal agreements and the outline -- francine: that was theresa may, the prime minister of the u.k. speaking in the house of commons. following day-to-day, i was surprised she got so much heckling or cheering when she said you may not get a brexit. is it more likely we get a second referendum? >> i still don't think it is going the happen.

it is noticeable it is the second time in two days now that she held up the prospect of no brexit at all. that is her message to the brexiteers. it is a real risk they will lose everything if they don't. francine: what does the resignation of dominic raab mean for the conservative party and theresa may? >> it is the most serious of the resignations. we have had five and counting. two of them in the cabinet. dominic raab is the biggest. she can probably survive that but if more resignations come in, her position becomes harder and harder. every resignation is someone who is going to vote against her deal in parliament. francine: this was person i was surprised because he is probably the one that negotiated this deal in first place. >> the negotiation was carried ut by the civil service.

clearly raab is distancing himself from it saying i don't have ownership of this. this is the prime minister's deal. i don't want this. francine: thank you so much. of course he is part of our u.k. politics team. let's get straight off to ann aedwards in london who were listening to the speech with us. do you have to increase the probability of the u.k. crashing out? anna: this is a big question. you look at market reaction to dominic raab's resignation. that's where we saw a lot of the negative sentiment hitting markets. we saw barclays, r.b.s., lloyds and the like trading lower. we also saw banks across europe trading lower. not by the same margin at all but down 1.5% to 2%. earlier mike was saying the marks are increasing the

likelihood of a no-deal brexit. before get to that, it is all about whether she survives the depasme interesting to see some of the other potential resignation names at least sitting behind her in the house of commons as she gave that speech. tom: as a foreigner watching the pageantry of your mass, what i would note is mr. corbyn is speaking, i'm flabbergasted and curious of the position of labor in this debate and in this moment for the nation. how does mr. corbyn and how does labor fit into this moment? >> yes, theresa may used the phrase in the national interest, i think i counted five times, maybe more. that's what she is going to need. support across the aisle from this man's party if she is to get this through. how many rebels there will be in his party is crucial.

they have said this morning they will not back her in this deal. does that mean voting for no or will they allow for another option here? i hear varying comments on that. that is crucial. tom: i was looking at the bookers and i should say and i was looking at the bookees and the odds and they are flipping around and all of that. what is the framework within the nation that prime minister corbyn could be greeted by the queen? is that in the realm of possibly? anna: there would be a number of hurdles. we could see another conservative taking leadership. that would be big change enough, wouldn't it? essentially to get rid of the conservative party there has to be a vote of no confidence in the party as a whole and that would have to be brought by 2/3 to have house of commons.

it does seem very difficult to work out how it is possible for jeremy corbyn and his party to bring about something that unseat her unless she calls a general election. we have seen her do that in the past. maybe she has learned because that didn't go the direction she wanted it to. francine: i'm sure you were listening to the same speech that we were. does it make it more likely get a second referendum? i feel like we're back to square one where there are a lot of options. one we crash out. two a deal, three there is no brexit. >> i think may has laid it out very clearly now. she is saying to parliament that this is the only deal on the table stand you don't back this deal either you're going to end up with a no-deal brexit scenario. i think that happening is very low. the hit to the economy would be

significant. also putting a border between northern ireland and the republic, i don't know the majority in parliament are in favor of that. the alternative she suggests, if you don't back this deal, we may end up with no brexit at all. you're going to be faced with those three options and you may really not like this deal that she is putting forward but you probably view it as the least bad of the options. i think that's why this will go through by the end of the year. tom: how do you use sterling as the litmus paper? how do you actually derpt that? >> i think clearly the mark at the moment is pricing the fact that there is now a higher risk of a no-deal brexit. as i have said, i think that is wrong. the probably of there being a no-deal brexit is very low. i don't believe there is a majority in parliament in favor of putting a border between

northern ireland and the republic of ireland and causing severe economic druppings. we're talking about just looking at good. 8% of u.k. g.d.p. is exported to the rest of the e.u. in terms of exports,s the 44% of exports. to me a no-deal brexit is not vieable that leaves with us the choice of this deal or no brexit at all. given those choices i think you'll see particle get behind this deal. tom: this has been wonderful. thank you so much for being with us today. jpmorgan asset manager. anna edwards is following the comments of mr. corbyn, leader of the minority in the united kingdom. we just heard from the prime minister of the united kingdom. a fiery speech. to give us further perspective and particularly this perspective of the continent of

joins us from brussels. we talked about europe and their response to all of this. has europe overreached at this critical moment for the united kingdom? >> well, i think at the end of the day, the deal that has been struck has been struck in a negotiation between barnier and the representative of the u.k. which is the prime minister and it seems to me that this deal is basically the only possible deal that respects the various red lines on the two sides, in particular, the irish question of course had to be respected. and theresa may herself said that very clearly that there is a commitment not to let northern ireland be separated from the

republic with a border. so if you accept that, then very quickly, you end up in the solution like to current one and so it seems to me indeed theresa may is making a bet here but basically that is the deal that is on the table and i doubt they can drop it. francine: let me jump in because we're going back to theresa may who is speaking in the house over the parliament. >> he complained that the grem does not refer to the implementation period. it does refer to the transition period which is exactly the same point of time. he talks about -- he then talked about the whole question of the decision on the back stock and the implementation period coming at the end of december 2020. if he knocks again the documents that have been produced he will see the decision will be taken in june 2020 whether it is likely that the future relationship will not be put in place in january of 2021 and it

will be up to the u.k. to decide whether it wishes to extend the implementation period for a limited period or whether it wishes to go into the back stock. he is wrong in saying we have wrong olutely -- he is dealting that we will not with the issue of the border issue. it took some considerable time to persuade the european union move from its proposal to a u.k. custom territory but we have achieved that. in relation to the question of workers' rights, there is reference to nonregression in relation to workers' rights. he said that the property colorados does not have references to what we were proposing in terms of a free trade area for the future.

in fact that is what it does reference in the protocol. it sets out very clearly that we will be creating a free trade area between the united kingdom and the european union. i really am not sure what document the honorable gentleman read. he said there were not references to extraditions. there were indeed references to extraditions. he said also there was nothing about europe -- where there was a reference that we will be included in the future documents rms for the united kingdom's cooperation. i say to the honorable gentleman, there is indeed a choice for the members of this house. it is a choice of whether or not we go ahead with a deal that does deliver on the vote while protecting jobs and our security and while protecting our union.

of course what the right honorable gentleman wants is for us to stay in the customs market and union which will not deliver on the vote of the referendum. we are delivering a movement coming out of the common agricultural policy and taking back control of our money, borders and law. that is the right deal for britain and the deal that we will be putting forward before this house. can . speaker, the country leave the treaties, the european union treaties while selecting o retain all of the -- francine: so that was theresa may talking right behind us here at westminster. we were just talking to you about what this deal means and what is in the deal. do you see theresa may surviving

this? >> yes, i mean, i think at the end of the day, it is really this deal that is on the table and the notion, the illusion that there are still some in the u.k. they will go back and negotiate a different deal is just an illusion. this is the deal that is on the table that has been negotiated in a very long and painful process and that addresses all the issues particularly the ireland issue. i cannot see any other solution than that except of course for which is not acceptable. i think the e.u. has given a very strong indication that it does want a close relation and it does not want the backstop to be the permanent relation. the e.u. is conceding actually on this and is saying well, we

do want a different relationship. also quite frankly speaking, the e.u. member states, they understand that it is unsustainable to have the u.k. as a permanent norway or a permanent country out there. at the end of the day, i think it is probably the best deal that we could get at this stage. tom: if you're just joining us, you see the house of commons. here is the prime minister again. let's listen to prime minister may. >> has put forward in the european union is based on that concept and the free trade areas that we have put forward is precisely in that phrase. we talk about remaining in the single market in the customs union. i don't believe that is right for the future of the union. i i don't believe that would deliver on the vote of the british people. i think the british people want various things that underpins the vote. also remaining in the customs

union does not enable us to have an independent trade policy. i think it is important that we have an independent free trade policy. once we have left the european union. it is based on the concept of a free trade area and he makes the point of being able to move seamlessly across the border. >> thank you, mr. speaker. francine: so that was theresa may. once again, we're keeping on top of it trying to figure out exactly what her main message is to the parliament. what is the chance that actually the e.u. at the last minute gives the u.k. a better deal? is this it? is this the only deal they will get? it is not so much deal. more like a blueprint of what could happen next. >> for the european union to

change and have dampte deal, you would need really a different mandate to be given to the chief negotiator, michel barnier and it is given by 27 heads of state and government. if you think about the politics of that, why would any of the 27 now sort of start conceding because of the troubles in the house of commons? there may be a few conceding but at the end of the day, you need a unanimous new mandate and i don't see that being given to michelle barnier. i think -- michel barnier. i think that is the deal on the table. francine: thank you so much. now let's get back to the studio here in london where anna edwards -- has anything been happening in the house of parliament and will we see a vote of confidence against prime

minister? anna: good question. the morning started out with great excitement. we had dominic raab resigning. and three or four junior ministers. is that where it stops? maybe that is containable. we're just hearing now in the comments from the leader to have scottish national party who described this proposal as dead in the water before it arrived. she is doing her best to give the sales pitch of her political career to rally support for this when it finally goes to the commons for a vote but she doesn't know if it is going to get there for a vote. it depends on how much opposition she needs from members of her own party. it would take 40 members of her own party. whether unclear as to the leert of the 19929 committee has that. tom: as we look at the house of

commons, what percentage of those people are pro >> at the beginning of this secret ofhere was no that. we saw many heart wrenching speeches saying they did not want to do a brexit. up in this we ended situation. mp's are probably more that are pro-brexit than the split in the vote. that is part of the dynamics. when theresa may talks about the options, she is trying to convince everyone to go along with her on this. tom: we welcome you all. ats morning, francine lacqua

westminster. in america, extraordinary market moves with a risk off feel. all the news out of washington, kevin cirilli scheduled to join us in washington. to review, prime minister may fighting for her political life. multiple resignations today, including her brexit coordinator , highly esteemed within london politics. also, headlines out of saudi arabia. the first clear news from saudi arabia about the jamal khashoggi murders. in saudi arabia, the crown prince had no knowledge.

again, the prime minister of the united kingdom. good in pointing a finger at me. in the settlement that more money comes to scotland. that is an snp decision. >> order, i protected the right honorable gentleman a moment ago. let me say to the scottish national party that they must hear the prime minister's reply with courtesy. don't worry. everyone will get a chance, but the prime minister's responses must be heard with courtesy and respect. >> thank you, mr. speaker. northern ireland did not state

in the single market. what is in the document is to ensure frictionless trade, northern ireland will meet those ,egulations in the goods part but not staying as a member of the single market. beingks about scotland given the same treatment as northern ireland. northern ireland has a particular set of circumstances, the only part of the u.k. that all have a land border with country continuing as a member of the eu. ireland is northern dealt with separately in the with draw agreement. finally, much of his statement was a complaint that scotland was not specifically mentioned in the document. scotland is not specifically mentioned.

scotland is part of the united kingdom. that is theresa may speaking behind me in the house of parliament. prop up the10 mp's conservative government under the arrangement signed in june 2017. an more on the dup, we have mp here. down even if it means bringing down the government? document, substantial 585 pages. we have to see what the implications are. notirst reading, it does look anything like a good deal. it looks like it is time the northernhe eu, and

,reland homeless in perpetuity -- almost in opportunity. many will vote against it and parliament. did the prime minister get the dup to support this agreement? >> it is safe fluid situation. there are ministerial resignations coming in. tomorrow what today or will bring. what people have to recall is if years -- two bring years, the entire premise of the agreement was on a false assertion about a hard border in northern ireland if we did not reach agreement. -- wasborder was in the

never going to come about as a result of any draft agreement. it won't come about because it is a physical impossibility to locate a hard border in northern ireland with the republic's constitution. it is impossible to do that. the premise is built on a false foundation. we are where we are now. we have to make this assessment. we will have to see what the next few weeks will bring as we go towards the vote in parliament on whether this proceeds or not. ok, what are the the brexitns of secretary stepping down? does it make the dup likely to vote down the agreement, or it makes no difference? >> there are a number of ministerial resignations, but

that is the key resignation. he was the key figure, the central figure, the central political figure in charge of negotiations between the eu and the u.k. the man who was charged with that responsibility has said when the document has come back untenable and can't promote it or endorse it, so he has resigned. make many people consider what the implications are for the future. , we don'tst reading believe there is anything of substance in the document that could compel a person who wants to see a u.k. free from the free toions of the eu, trade across the globe, and an independent trading nation. this dealld endorse

or vote for it. tom: thank you for being with us today. when i look at northern ireland and the linkage, i heard the prime minister say that scotland is part of the united kingdom. how much does northern ireland feel a part of the united kingdom on the state -- this day? >> that has always been the birthright or subsequent generations through many centuries. willer or not this deal stand, we will know within a few weeks, but we have to be careful and mindful of the general and reacting to outrageously to a document which on first reading is not a sustainable document. vote assess it and we will

in a few short weeks and parliament would decide what to do. my view is parliament should reject this. tom: the elites of the city of london talk about singapore on the thames, and new england reverting back to what it was centuries ago as a global center of trade. , the line that idea of the elites in london you can be a new singapore post-brexit? ofi don't buy the idea harking back to some halcyon day several centuries ago, but when we look at what is happening within the eu, germany, the there is a, france, huge upsurge of populism across one can say with

any certainty what the eu will look like in two or three years, let alone being divorced from that eu, but there is a much better future for an independent trading nation state like the possibly singapore and other examples can be used to show a dynamic form of leadership and business to deliver a greater degree of prosperity while having good relationships with it. francine: ok. given the news flow in the last five hours, 24 hours, no brexit or u.k. crashing out? >> the no brexit is not a possibility on the realistic radar screen. deal exitther be a no

from the eu, or an exit from the eu basin the terms in this agreement. my view is neither is acceptable. we have to vote this down. hopefullyoted down, there will be a greater realization amongst the eu that they have to come up with a better plan for the next a few months, but no one wants to see an immediate exit, but remaining within the eu is not an option. thank you so much. gregory campbell, mp for east londonderry. we are joined by our guests on set. if you look at what is happening right now, a couple of high-profile resignations. if you are the head of a retailer, ceo, how should you do

with the uncertainty of what likes it will bring right now? >> i don't think we have seen the uncertainty dialed up any degree in the last 24 hours. grocery retail businesses have been planning for a no deal brexit. aboutwhat we are hearing the likelihood this proposal gets supported, we would take the view there is less risk now, but you should plan it could come about. i don't think the last 24 hours have changed things much at all. francine: ok, what do you see the future relationship between the u.k. and the eu looks like? >> what is most interesting since the announcement yesterday is this change in narrative, where theresa may is saying if you don't vote for this proposal , you may well get remain.

s,e is saying to remainer you may get a hard brexit if she is replaced by a brexiteer, so she is presenting it as the least bad option for those on either side of the debate. you heard the dup saying remain is not an option. assertion.udicrous nothing has definitively changed yet about us leaving the eu. for is why i am a supporter a so-called people's quote. i believe that has to be one of the options we now consider. there is still a probability attached to the u.k. crashing out the eu. di, howare tesco, all do you secure your supply chain today? >> it felt like a real

possibility for a long time. i don't think anyone today will onlocking away those plans the basis that possibility has been removed. a no-deal brexit is almost impossible to conceive how grocery supply chains as they are constructed in the u.k. today can survive a no-deal brexit. you saw my successor a week or they have had about one-weeks food in their system, and that would be true for most grocery retailers. something between 40% to 50% is coming from europe. it is picked in the field one day and it is on the shelf that they next. just-in-time system can survive. we have seen the governments planning for a cliff-edge brexit.

you can't run a food business in the u.k. on the basis your trucks will be parked for hours, perhaps days, on the m-20. that doesn't work. tom: i want to go back to mr. king in a moment. good morning to our american audience. the chaos and turmoil within the u.k., images as prime minister may faces a contentious and angry audience. at this moment in brussels, a press conference as well as they manage the message. anna edwards is monitoring this. francine is at westminster today. we have some american guests watching the market flow here as well, so good morning to all of you. pulse of retail like no one else in the u.k. phrase, mutually

assured recession. politics, link this this historic moment, to economic slowdown? do you buy the linkage? >> it is difficult to say whether the economic challenges the u.k. is facing today are directly linked to the brexit vote. i did say on the record i thought a vote for rigs it was a vote for economic vandalism. if you take the long-term view, it is the bad decision for our economy. you were talking about the elite in the city. i am not a member of the elite and the city, but the idea there is a vibrant future for the u.k. on some kind of singaporean model makes no sense to me. being a remainer does not make

you rapidly pro-europe. i believe fundamentally that staying inside our most important trading block and the most important relationships with our neighbors, lobbying, arguing, and negotiating for change inside has to be a better outcome. imagine all the energy we have expending on negotiating this deal, what could we be looking at today? tom: everyone seems to be right honorable today. honorableof right prime minister which affect to see if prime minister may steps aside? what is the prime minister who will lead your nation through this mess? >> that is not on the cards this morning. there is say process within the conservative party that can elect a new leader.

that leader becomes prime minister. there is a separate process for , anding the majority party that would lead to a general election. we are a long way from a different leader. the real question is where do we go from here in our negotiation and will this deal passed through the houses of parliament. what you are hearing today is that it is inevitable, the clarion voices against it. when you heard her speaking an hour or so ago, there were a lot of people supporting her, so it is not clear-cut that she won't get this deal through. i expect her to stick by her proposal and fight to the end to get it through parliament. if it does not get through parliament, all bets are off in terms of her future. i am sure that is the case. francine: right, if you look at

the future relationship and what we know right now between the u.k. and eu, is it a customs union, do we know what the future relationship between these two entities will be? >> no, we don't. we have had a narrative in the u.k. over the last month that a , 100%gotiated deal negotiated, and sure enough we have seen a document published today. it articulates basis on which we .iew -- leave it does not articulate the basis on which we will go forward. there are just five pages on that. at thisould expect stage, it is large on assertion, but it is all yet to be

negotiated. today we are talking about the basis of leaving. we are not any further down the road on understanding with the future looks like if we do. a lot of we are seeing movement on pound. youthere a pound level that would be happy with? > well, if you are a grocery store, you are best not to be a currency trader. approach of that we forward bought on a structural basis so we could provide predictability on pricing and predictability to our customers. you have seen inflation come through the u.k. grocery system as a result of the brexit vote, 5%, entirely predictable given

how much food in the u.k. is bought in dollars or euros, and the weakness of the pound since the vote. that is embedded in our pricing today in the future forecasts of supermarkets. it is only the strengthening and weakening of the pound that will have price affects going forward. tom: the former chief executive officer or sainsbury. extraordinary news flow out of saudi arabia. headlines out of italy. washington waking up to that post-election turmoil. and micheltrasburg barnier. he says the hardest point was to respect irish peace stability and those sensitivities. he says the treaty should give back certainty and confidence. the eu spokesman saying they would not comment on u.k.

government governments. someone who most certainly will with expertise is anna edwards on queen victoria street. on whatr observations we have witnessed in the last 90 minutes. >> what she is doing is say the sales pitch. she is trying to sell the deal she brought back from brussels. she has been speaking for 45 minutes and has yet to have one question in her favor. this will be hard-fought. she is facing challenges from both sides. the remain side says we should stay in the eu. said this makes us a vassal state. that is the crux of this. if no free trade agreement can be reached, the backstop comes into place, where many concerns lie.

she is trying to get people away from focusing on the backstop. yet to bee is it has agreed, so she has to use all her persuasion to make people go with her. seerestingly, they leadership challenges coming in the next few days. tom: still following the story at the house of commons. out, theine coming u.k. remains a great country, a friend, and an ally. that according to michel barnier of the eu. we have a friend and great ally with chris. we will go to him on u.k. politics. the news flow is extraordinary. it is your fault. you did this. you onn, i have to go to

the support within the market. your notes speaks to the fragility and global markets and the u.s. stock market as well. >> there has been some clear deterioration and metrics. we are only a few points above where we closed the year in 2017. 2017 had 17% of s&p above their 200 day, now 40%. the market has gone sideways. tom: we are searching for a cathartic moment. how do you define the catharsis needed to wash out a market? >> we had some of that on october 29. often times you see some sort of retest on lesser volumes. is the overall trend of the market is shifting from an uptrend and now at best neutral, even shifting to a

bearish trend. tom: i have 18 different questions on all different segments. synthesize this new tech bear market? is it an intermediate trend? is it do men gloom, or just a pause? >> we talked about treasuries, trade, and trump. that is what we have been dealing with. we are in a pause. i don't think the market is broken. we are reassessing the global landscape. fundamentals look ok. we just got through qe. demand side looks ok. outlook's are being trend. tom: with all the distractions from the u.k., the profitability of all this new media, digital, streaming, is it there? >> there is not a lot of

profitability and streaming today. google and facebook are extraordinarily profitable. i think they will be less profitable going forward due to the money they will have to spend on privacy and regulatory concerns. .om: we will continue our american guess being patient with us today. i want to get to that import and new york times article on facebook as well. london watching history being made in the house of commons. stay with us. worldwide, this is bloomberg. ♪

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

that simplify your experience. my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. [ready forngs ] christmas? no, it's way too early to be annoyed by christmas. you just need some holiday spirit! that's it! this feud just went mobile. with xfinity xfi you get the best wifi experience at home. and with xfinity mobile, you get the best wireless coverage for your phone. ...you're about to find out! you don't even know where i live... hello! 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. francine: this is "bloomberg surveillance." i am francine lacqua at westminster.

about a a lot of talk possible no-confidence vote. , also awhile ago leadership challenge to theresa may. it is all about the arithmetic. hardliner pro-brexit conservative leader. does it mean labor will want a fresh election? there is no clear outline of what we do from here. let's get act to our studio to look at how businesses should be reacting to this. anna edwards has been following this closely as well. say does it mean when they there may be a leadership challenge? who will be able to challenge theresa may? >> it will be a game of numbers. influential among

brexiteers. he leads that side of the party. language that raises the question of whether he shouldn't write one of those letters and ask for a leadership for. he asked whether he should. in response, she went back to her usual lineup attack, stopping mp's from focusing on the backstop, and focusing on the free trade agreement she wants to secure. the trouble is that has not in agreed with brussels. the free trade agreement she wants is not what they have been reading about overnight. they have in reading about the insurance policy that does leave them attached to the eu in a number of areas. tom: what will we see as prime minister may tries to stumble to friday?

that keyer, after summit, it did not take just hours people to resign, it took a day or so. just because we have not seen any resignations in the last hour and a half does not mean there won't be any. we will be on the lookout for further resignations. some of the people who have been mentioned have been sitting royally behind her as she was speaking today. she can frame if some question with the help of the speaker, what question will we put to politicians? what will they leave voting on, if we get that far? tom: the latest on the parliamentary procedure in the u.k. i'm looking at futures up seven, righttures up 48, the vix

there. there is terrific news flow, including important headlines out of saudi arabia. >> in saudi arabia, prosecution will seek the death penalty for the killers of jamaal khashoggi. 11 people have been charged in his murder. ofkey has stopped short blaming the saudi crown prince, but a source says the crown prince had no knowledge. in california, the death toll has risen. 56 are dead and 130 are missing. the power company is facing its greatest crisis yet. the utility says if it is held responsible, the liability will exceed its insurance coverage. its shares are down 48% since the fire started. robert mueller has provided a look into his investigation.

ick gate ising said r cooperating on several ongoing investigations. say it is not appropriate to start the sentencing process yet. a federal judge will rule on whether it was legal for the white house to revoke the press pass after a confrontation with president trump in a news conference. the administration says reporters don't have a constitutional right to white house access. 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. this is bloomberg. tom: thank you so much. , we spokeanking onterday on the tensions cost control and the view forward for european banking. this from switzerland and credit

they will cut costs by laying off people. credit suisse to do job cuts this year, so 45 days. unith management and swiss cuts, so more towards zürich. that is clearly to lower costs. right now, washington waking up. our chief washington ,orrespondent, kevin cirilli joining us. a week ago, cbs was coming up with the idea of mueller indictments. friday is upon us. why does mr. mueller want to do his work on friday? there is a long history here in washington. i have no idea when indictments are coming. people are anticipating them at any moment or any day, but we

have no indication of when bob mueller will release it. tom: we have a clear indication of a lame-duck congress and a leadership change. anything yesterday that indicated which you will see on capitol hill and 2019? >> it was what people anticipated. jim jordan said he was not anticipating being able to to defeat kevin mccarthy to be the minority leader. kevin mccarthy comes from the same faction of republicans as outgoing speaker paul ryan. nancy pelosi still in the middle of her campaign for speaker of the house. in the senate, it is the same folks leading the way, mitch mcconnell, so not many unexpected things. there is skepticism about whether they can pass something like the russia sanctions in the lame-duck. we will get reaction to that

today. tom: this from the great wash tcher in the washington post on republicans, including jim jordan of western ohio. he reminds us that in 2000 it was settled by 537 votes. it is about whether republicans are willing to contain and, when necessary, opposed a man who repeatedly demonstrates hostility to the rules, norms, and constraints of constitutional democracy. will the republicans like mr. jordan of ohio change after what they saw in the selection? kevin: no. interviewed a republican from texas deeply

impacted by the president's trade policies. you get on board with legislation in the senate that protects bob mueller? he said he would likely support that legislation. this is a republican from kansas, the heartland, so there are republicans and lined with the president on his policies, but don't want to see him do something like fire rod rosenstein. you have that emerging that is a check and balance on the white house. tom: anna edwards looking at this. theyrime minister saying will continue no-deal preparations. will president trump continue or ineparations into 2019 the white house? kevin: he continues his preparations. the headlines out of saudi senatorwatch for what

lindsey graham and so many other hawks on the hill have to say. tom: thank you so much. good luck getting to saturday, if you can. as herinister questions government is threatened in the u.k.. tom, francine. -- looked at facebook's chart? where is the support? let sheryl sandberg no, please -- know, please. >> facebook was one of the weakest this year. it was the first one to break down. facebook topect continue to underperform on the way down. that is our call here. tom: do you have a buy, hold, sell for facebook? >> half of advertising goes to facebook.

it is an important company. we don't own it to any great extent. there is this overhang of regulation. i don't think my kids are using instagram any less. they will just have to spend more to comply with what the government wants. it will be interesting to see what happens with the new congress. perspective,ental they are generating a lot of free cash flow. i look at facebook, this new york times article. you have a history of reviewing management and being able to strategically move forward. do you have confidence that mark zuckerberg and sheryl sandberg, under such criticism, including the new york times article, do they have to bring in their john

sculley? >> they are talented, clearly. the company is going through growing pains. it almost grew too fast. it is unprecedented in recent history. they need to put procedures in place to manage growth. they have not done so so far. plus, isney streaming going to work. is this the shift and content. >> it is the way consumers want to consume content. there are over 200 streaming services. tom: the barrier to entry is not all that great. >> that is true. pockets,ers have deep facebook, google, amazon. netflix sits almost certainly in one of the wehner seats. ofney has the best hope

catching netflix. may be room for a couple of more. the media companies will have to choose where they play. tom: it is a different fang. is it of value in this market? think so.fett it is one of his largest holdings. the stock has gotten cheaper. tom: templeton would say shares are on sale. john, what does the apple chart look like? >> 180 is a good support level. the last couple of times we have broken the 200-day, it has been a good buying opportunity. tom: don't go away. the news flow is extraordinary , andf saudi arabia, italy now germany.

chancellor merkel said "very glad the united kingdom cabinet has offered a proposal." the prime minister of the u.k. continues to speak to her party, to her parliament, and to her country. stay with us. this is bloomberg. ♪ >> it was no more than a temporary construct. there were various aspects to this -- cts to this --

francine: this is "bloomberg surveillance." i am here at westminster trying to figure out what brexit means for markets and the way forward. joining us for the latest is the chair of the european parliament

committee on economic and monetary affairs and a member of the eu brexit steering committee. great to have you on the program. is this the best deal been eu could have given the u.k.? >> i think it is the best possible deal to address and minimize the consequence of something in itself which is the deal,brexit, so if implemented, will help it to , whichis process orderly is very important for an issue of stability, economic and financial stability, but safeguarding the rights of citizens affected by brexit. if you look at the level of divisiveness in the conservative hearty with certain

members looking for a confidence vote, but also a leadership challenge, could the eu have given theresa may something better? >> we are aware of the discussion now going on in the u.k. been reassuredve by the fact that the has endorsed of the deal. now we understand it is time for the parliament to scrutinize it and vote for it. we don't want to interfere. is now has tried to take into account u.k. concerns, in particular the strong concern that a simple irish-only backstop would have posed, let's say, some potential threat to the u.k.

i don't think it would have been the case, but there has been a compromise in accepting this idea, which came from the u.k., of a u.k.-wide backstop for the custom part, so this is a compromise. i can take you, the proposal in the beginning was very difficult to implement. to put it into agreement, introducing provisions, which are complex, so there has been technical work to transform this agreement, so that was a typical compromise to say who won and who lost. this should the taken into account. a fair and balanced compromise where concerns on both sides have been taken into account. haveine: right, could we

had more clarity on the future ?elationship of the u.k. and eu this feels like the u.k. would be part of the customs union, but it is unclear. >> it is written in the text that this backstop is not to be used because both sides have committed to work for a framework for future whose mainp, which principles are in this outline and has been agreed, but it has to be completed. there is still work to be done to complete the points which are in order tofined give a more clear sense of where are we heading. so in my view it should be not only an economic partnership as close as possible, which should respect a number of principles

and protect the single market, of, and the proper balance rights and obligations, so there is still work to be done, but both parties want to define a common framework to be developed during the transition in order to arrive to the comprehensive the trade agreement and more ambitious partnership things on number of which there is full agreement, a number of components of this partnership. francine: thank you so much. the chairman of the european parliament committee on economic and monetary affairs. brexit member of the eu steering committee. let's bring in anna edwards. what exactly is the latest in parliament? >> i have been listening in. it has in an onslaught theresa

may has been facing. we have had more questions that have raised the positive, her home secretary suggesting the prime minister set out the business reaction to her deal. that is one area with quite positive reaction to it. federationusiness coming out in favor of this. the dup, the labour party, the brexit camp, and some remainers who want another referendum, she faces challenges. this goes to underline that if she surprised that it will be difficult for her to get this through parliament. tom: it will be very difficult to get this through parliament. we'll bat speed up resignations and people showing less confidence? >> that might come first.

you are right. yes, he was the man leading the brexit negotiations, but did he feel sidelined? were theresa may and her team running things? he was always mentioned as someone who could run for a leadership challenge. black belt,te interesting to note in the current situation. a leadership challenge has not gone away, but we need to keep an eye on graham brady. if he gets conservative mp's calling for a leadership challenge, that is what will happen. tom: for all of us in america, thank you for the perspective today. we need to do the single best chart. perspective on facebook. john will give us perspective on a bank. i don't think it is a bank.

let's bring up the single best chart. 1940's, aback to the textbook head and shoulders. it is goldman sachs breaking through head and shoulders. does their newly minted ceo have challenges ahead? >> we think so. there has been talk about the short-term inverse head and shoulders on the s&p. this chart of goldman is a classic. it is a much bigger pattern. the right shoulder is lower than the left shoulder. that is very important. you never know if these patterns play out, but there is a risk on the downside and the trend has been deteriorating, so we are cautiously. tom: this goes back to credit suisse. it is just costs cutting. revenue is not there.

he's going to cut costs. will we see that across wall street? >> we have talked about the fifth wave of m&a. the underpinnings are still there. market tumult is probably good for the trading business. some of the figures are pretty good. tom: is there just in excess? >> the financial sector probably got too big. a lot of it is being replaced by machines. tom: what is the chart our viewers and listeners have to know about right now? which is the one that matters? >> i think we will focus on the nasdaq 100. it has been the growth leader. underperform the s&p the last couple of months. if it continues or gets worse, that is trouble for the market. if it can show some leadership, that is a good sign. the nasdaq 100 does come

down to apple as being market dominant. spot where if a the bull market is intact, it should townsend show leadership. if it can't, that is a bigger tell. tom: thank you very much. francine is at westminster. she has all sorts of headlines out there, including resignations. maybe a statement of no confidence. jeremy corbyn weighed in. francine, what do you take away from this historic moment for the u.k.? francine: of course i am keeping up-to-date with everything on the bloomberg terminal. i'm looking at the blog, the markets. even if there is a no-confidence vote against theresa may,

meaning 48 letters by mp's sent saying i no longer support the prime minister, then she needs 159 mp's to vote against her to make something unravel. she seems weekend, but we have seen this before. for the moment, i would suggest the market will really look at that parliamentary vote expected mid-december. tom: there we go. the story will continue. we have seen that with brexit over the last two years. we think all of our team -- thank all of our team. please stay with us. this is bloomberg. ♪ >> i know the prime -- --

♪ may's grumbles.

markets price out a rate hike. the fed chair says the u.s. economy is strong, but has slowing demand and fading fiscal stimulus. walmart reports earnings. warren buffett exits his shares after 20 years. j.c. penney on deck. day in london. goodness gracious, what has happened to theresa may? alix: the rhetoric yesterday was members will resign. we did not expect the brexit negotiator to resign. david: somebody was crying during it. she comes out, theresa may, in a subdued way saying we have support for the cabinet, then the man who negotiated the deal says he hates it so much that he qupi