>> a trade war or is it a tech war? and, fresh accusations from the desk of u.s. trade representative robert lighthizer. american intellectual property is showing up in china. back from the rink, bidding 2000 18 gains of the s&p, it dips again. awaits brussels, italy the decision on its budget and investors brace for anything. ♪ francine: welcome to surveillance.

-- welcome to "bloomberg surveillance." i am francine lacqua here in london. all the rhetoric we heard out there about trade may have quieted down a bit because the markets are pushing higher on reports that the italian government may be open to some budget revisions. italian bones actually gaining. gold is a good benchmark of a risk on-risk off mode and it is holding up. have a longer-term outlook for oral. saudi oil production is said to roger in that said test surge in a november. opec and its allies have had, to a couple of times, change their tax. going to cut production, then increase production, and another have decided to cut back production. year to date, it is down some of 9.6%. coming up on

"bloomberg surveillance, we speak to dr. philippe ryszard and it best dr. philippe roger italy'sregarding concerns. now we get to the bloomberg first word news in new york city with taylor riggs. hi, taylor. taylor: there are reports that the italy prime minister antigovernment might lower the amount to be spent on citizens income and for beneficiaries of the lower retirement age. the euro commission report this morning could say that italy's 2019 budget is in breach of eu fiscal rules. the u.k. prime minister theresa may heads to brussels today for has talks on the deal she agreed to with the eu. she has been told that there could be no more negotiations. her critics back home are demanding she secures a better arrangement she will meet with

the european commission president this evening ahead of a special summit with eu leaders sunday. howard wilkinson, former duncan bank employee turned whistleblower, has been lawmakers in brussels this morning as they look for answers to one of the region's worst ever money laundering scandals. has urged lawmakers to look closely at the role that correspondent bank played in the scandal. in the u.s., president trump says he will not let the murder of u.s. based columnist jamal khashoggi jeopardize relations with saudi arabia. he would stand by saudi arabia regardless of the order of the crown prince mohammad bin salman ordered his death. the president's comments through swift backlash from republicans and democrats in congress who have four weeks decried the murder and the crown

prince's alleged role. >> it is all about "america's first first." we will not give up hundreds of billions of dollars and let rush hour china have them. taylor: president xi jinping's visit to the philippines has already yielded a string of deals. the trip reflects warmer ties between manila in beijing, which began when dutere took office and moved the philippines away from a long-standing american alliance. the deals include joint oil and gas exploration in the south china sea. global news, 24 hours a day, on air and at tic-toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am taylor riggs. this is bloomberg. ♪ francine: think is so much, taylor. fresh tensions have risen on the ongoing trade war between the u.s. and china. the u.s. trade office has

released a report accusing china of accusing to report ip and technology theft. president ofhe china and donald trump meet at the g20 summit next week. what does this mean for the walls two biggest economies? i am joined by the chief economist and founder of 88 file a 10 conan -- rafael acting tenconi, and morris reid come up partner at llc.ry >> he will have a much more aggressive questioner this is one of the two issues that the democrats and trump can agree on. nobody will say that they should take it easy on china. expect with the relationship between the u.s. and china, that it will get worse. it works for the president was politically and legislatively. i think you will see a lot more fostering and also democrats rallying to the side to push

these things further. francine: fostering, does it mean they are trying to get -- posturing, could it hurt the u.s. economy? does it mean that there are trying to get more votes? theis: fostering for president is the headlining. if you notice what he has done on steel and aluminum tariffs, they have not changed anything other than made them 25% and 10% more expensive for the american consumer. that is a posturing. legislatively and long-term, it is something he can work with the democrats to push a narrative and an agenda that could have some impact. francine: we will get on world growth in the second. another thing that caught my eyes was the president trump called in the chief executive of european carmakers, as we now think that there may be some tariffs. is that posturing as well? think it is clear, a clear

signal to the germans in particular that he is unhappy that the markets are not fairly open from his perspective. i think you will see him going much more aggressive. again, it also plays to his five stake strategy, because it is good for the auto industry, if ,e can push germans cars out and more american cars on the street. it is more posturing that it is good for presidential and reelection politics for him. we have been embedded in u.s. politics for many years, you are in the 90's in government, weren't you? mars: i am getting older now. francine: when you look at all the plastering, is it possible that chinese consumers would be afraid of what the trade wars or trade tensions would mean for them, do you assume that all growth has to slow down because of this? : yes, i think so.

both american and eurozone downside, and a the forecast is about 1% drop. francine: how should the president deal with saudi arabia? we: have lost moral authority. the first time that the president has taken the moral and economic up on the screen and a decided to go with the economics over the moral, something that most american presidents have not done. it is an opportunity for the democrats. trump does not quite understand that there are now other power centers on capitol hill who are not on his team, so the democrats have an opportunity to embarrass the president. similar to what they have been endeavoring to do. this is not about votes. moral authority, american leadership, but shining city on

the hill, that is not about reelection politics, it is about moral authority. help when he it start to look at who emerges in the elections for the 2020 race? the democrats don't have somebody right now. but the power in the house has an opportunity to push a narrative and i think you will this aggressively. anxiety a lot of about donald trump and saudi arabia and i think you'll see them move very aggressively in sending the right message francine: or do you expect to become of the robert mueller investigation. morris: it depends on the politics. prior to him becoming president, his behavior, might play into this, similar to what happened

with bill clinton. but it was a mixed bag in the midterm elections. theyemocrats did what wanted to do, donald trump was it were to seize a some authority, it makes it 2020, andg for also for geopolitics. so what i see is a lot of grandstanding. coming out from the president. he understands that headlines matter to the people he is trying to communicate with. he is strength to promote that he is a strong, aggressive and muscular leader. francine: thank you of, they will both be staying with us. coming up next, we look at the markets. we talk investor sentiment and tensions deepening between nissan and renault following the arrest and detention of the chairman, carlos ghosn. that conversation coming up a bit later. this is bloomberg. ♪ this is bloomberg. ♪

♪ francine: economics, finance, "bloomberghis is surveillance." i am francine lacqua in london. >> the chairman says he is not confident that google is better of bringing the search engine to china, those are the words of the ceo of google, sunder pichai. chairman, john hennessy, told bloomberg that it is not read for any company wanting to operate in china. >> anybody who does business in china compromises their core values, every single company,

because of the laws there are quite different than they are in our country. the question that comes to my mind, that i struggle with is, are we better off giving chinese citizens a decent search engine capable, even if it is restricted and censored in some cases than a search engine that is not very good? if that improves the quality of their lives, that is a struggle that we have to work our way through. taylor: the ceo says the company will reveal further details of its plan to split next year. the german industrial giant repeated full-year earnings in line with forecasts. the company is facing lower profits due to provisions of antitrust fines and lower-than-expected earnings in its elevator decision. is replacing the chief financial officer when he steps down in april.

this comes as the european playmaker most offshore -- moves to change its management team after several scandals over the years. that is your bloomberg business flash. francine: stocks in europe are rallying along with u.s. futures, after a smooth decline. tech shares and car companies are leading the advance on the stoxx 600, and the dow and nasdaq are both wanting for more open. let's get to mark ardmore, bloomberg's strategist joining us from singapore. these markets don't really have a catalyst, they are all over the place. what is sentiment like amongst traders? mark: that is absolutely right. sentiment is worrying for overall risk takers. we saw a broad selloff yesterday across nearly all assets, from commodities, oil markets, equity markets, credit,

cryptocurrencies, they were all trading poorly yesterday. safe havens did not really, either. that reflected that china does not want to take risk at the moment. they are not trading bearish sleep. traders are not proactively bearish at the moment, they are coming back to cash and not wanting to take any risk. it is worrying. yes, we are consolidating a bit today, but the clamp we are seeing today is not enough compared to the selloff we saw yesterday. youcine: what assets are looking for? is there something in particular you are looking for to give us a sentiment of whether the rout continues next week? mark: i think all assets are looking vulnerable short-term, because first action has been so negative and people are scared. at the moment, there is not really a catalyst. people are waiting and watching. struggling with brexit, where we

expect to get a conclusion soon, we have the italian news coming soon, oil, all of these things are expecting a resolution soon. probably the biggest one is the trade war and we expect some news from that next week. people might be hanging on till then. overall, assets will not sell that much. equities,k to asian chinese equities, the ones that are most down are the least vulnerable right now. taylor: thank you so much, mark ardmore, bloomberg mliv strategist. i urge everyone to follow the blog to find out exactly what is at the bottom of this market. still with us are my guests come morris reid and raffaella tenconi. let me bring you both to my chart of the day, italian driven 10 year yields, widening, and it looks like we may get the person

in charge of the government, he may be open to a compromise on the budget. raffaella: it is possible. he has already yielded some ground to some extent. rhetoriclook at their pretty much throughout the last few months, the have always said that if conditions significantly change, they could get a bit more prudent. francine: what are they talking about when they mention conditions? ?s it market conditions raffaella: the economy has slowed down faster than anyone expected and that is not just an italian problem, it is eurozone-driven, italy and germany economy are links to each other so they go in tandem. so i think you may give a little .it. but i would not expect a lot of changes because to some extent, he cannot yield too much. is the russian

francine: what do we need the budget to do as long as there are no big fines? would that be enough to stabilize until the next elections or a new european parliament next year? raffaella: this budget may make of italians a little bit less skeptic. if you want them to stop. being eurosceptic, you need a lot. and i am talking about a lot bigger changes. the primetent, minister nice to take some of the pressure off so he can start his campaign? morris: you never hear this strategy when talking about growth. it is always about getting to the next election. there is never a clear message on how they will work on the economy. youth other big problem, they don't believe there is a future anymore. what i usually hear from the part of the world is that there

was no growth strategy, no aspiration. for me, i'd and see how they ever get out of this mess if you don't start talking about how you grow your economy, if you are only just talking about managing it to the next election. francine: the problem is that before you put a growth strategy, you need structural reform. and there is no politician was to do that. morris: that's right, that is not leadership, it is just kicking the can down the road. people are looking for leadership in europe. it is him was us if they are just managing their way through to the next budget cycle, but they are not is firing. this is where a man omicron frankly emerged, he was an inspirational leader. ,- this is her emmanuel macron frankly, emerged. he has some problems now, but in europe, you don't see a lot of younger leaders who are energizing that younger race. francine: alright, will be right back. coming up, we discuss how the carlos ghosn scandal is

affecting the nissan-remote nissan-renault championship. this is bloomberg. ♪

♪ francine: this is bloomberg surveillance. i am francine lacqua here in london. tensions between nissan and renault are deepening in

reaction to the arrest by carlos ghosn. the senate is expected to asked the chairman of doing a vote by the board tomorrow. firessan is expected to the chairman tomorrow. remains in custody after being arrested in a japan, accusing of -- accused of failing to declare his income. dave, what shall we make of the fact that he is still, in the last report, held in japan? >> this honestly means that it is not a tidy scandal despite months of investigation. nathan's internal probe apparently did not provide enough evidence to satisfy prosecutors that this was an open and shut case. they want to spend more time speaking with carlos ghosn about this. it has been reported in local media today that prosecutors have received from a further 10 days. there are obviously driven down,

looking for more information about this. there no is speculation or expectation that this is a witchhunt from the japanese, because they did not want the merger to go through? >> there is a bunch of speculation going on about that, but no proof of that yet. there are a lot of varying opinions about what on the shabbat all of this information. but the fact that he has been held now for 10 days and the fact that this information has not been shared between the two companies is pretty key supporting the theory. francine: thank you so much, dave. , an interview with the assicurazioni generali spa ceo. [ 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. >> economics, finance, and politics. i'm francie lechler in london.

generali's chief executive is banking on digital transformation expansion and asset management and insurance to boost their value. add sixany's plan is to to 8% value -- annually. join us now is mr. donate. -- mr. doner. how much money overall do you plan to commit to acquisitions? >> we aim to achieve a 6% to 8% growth of our earning per share. one of the engines of this growth will definitely be asset management. to 20 -- 15% to 20%.

we have our high potential centralin asia and america by 15% to 25% and also capture growth opportunities in europe which is our main market. it's where we are the leader. where do you see the biggest concern in opportunities? about a slowdown in world growth? how does that impact jenna raleigh? -- how does that impact generali? >> we have a diversified footprint, diversified business. hustling in every single market where we are. we spent a lot of time and energy to build strong business everywhere. in the next plan we are going to increase the diversification of our units.

as already mentioned, we are going to build another pillar which will be asset management business. thanks to this plan, not only are we growing but we're also oureasing the risk level of group and earnings will be more and more sustainable. be growing and more and more sustainable. i think we are less and less relying on the macroeconomics. asset management, would you consider a big acquisition or do you want to grow organically? we will first grow ournically thanks to platform which we are building successfully.

built another boutique in the u.s. with the very innovative fees business model. thanks to this multi-boutique platform, the third-party assets 35% of theoom 6% to total assets under management. mrs. organic growth. on top of this, we can consider acquisition if it's appropriate. we also acquired recently and asset management combining france, specializing in bsg. if it fits with our strategy, according to our financial discipline, we could also consider acquisition but our plan is not based on acquisition. we will achieve on our acquisition targets.

>> inode jenna raleigh has reduced their share of -- i know generali has reduced their sovereign debt in italy. we further reduce that exposure? sorry, i didn't receive the question. >> would you sell some italian sovereign debt off because of the concerns you see politically in italy? italy is not a real concern for generali. we are looking as anyone else at the situation but we are very disorders -- very diversified. we are growing in italy where our business is extremely profitable and growing. we are also growing and will be

exiting -- will further increase the diversification of the group. the fundamentals in italy remain positive. italy are growing and exporting. a 35% market share in those italian smes. look at our sensitivity for capital, we are very resilient. we can absorb significant shots -- shocks of the italian spread. 100 basis points or more of italian spread are worth 12 points of sovereignty ratio.

we can take short-term problems if they come. thehat do you think discount on your share price is because you are italian? because the company is italian? >> everyone understands you are diversified. we are building a new pillar of our business which is the asset management. earnings will be growing at a significant pace. it will be very sustainable. less risky business model. donnetk you so much, mr. .

.he share price is gaining 2% let's get to the first word news. >> italian bonds have rallied after reports the company is open to revising the budget proposal. the italian government could for income andts beneficiaries of the low retirement age. the european commission report says the current budget is in breach of eu fiscal rules raising the threat on the country. the u.s. has accused china of continuing intellectual property and technology theft. -- released,report just 10 days before trump is due to be on the sidelines of the g20 summit. it's a move by more of the hawkish members of the administration to bolster their

case. the whistleblower has revealed that has said the revelation of his identity is a brooch of his human rights. he testified to lawmakers in brussels this morning as europe looks for answers to one of its worst ever money-laundering schedules. he has urged lawmakers to look at the role of the correspondent played in the scandal. and theresa may heads to brussels for more talks on the draft brexit deal. she has been told there have been more negotiations. demanding sheare secure a better arrangement. meet with jean-claude uecker this evening ahead of a special summit with eu leaders on sunday.

president donald trump says he will at the murder of jamal khashoggi jeopardize relations with saudi arabia. wouldte -- trump said he stand by saudi arabia regardless of whether the crown prince ordered to show his death. -- ordered jamal khashoggi's death. for weeksin congress have decried the murder and the crown prince's alleged role. >> it's america first to me. it's all about america first. when i can give up hundreds of millions of dollars and let russia and china and everyone else have them. it's all about for me, very simple. america first. >> powered by more than 2700 journalists and analysts and more than 2700 countries. thank you so much.

getting some breaking news out of italy. this is according to an official. denying and revising by the reforms and we are seeing the 10 year italian yield at .55. this is bloomberg. ♪

>> this is bloomberg surveillance. italy'sa report that deputy prime minister might be

open to revision of a budget criticized by the european union within those reports being denied. the commission is going to take its first step towards fighting the country of a dozen changes spending plans. we have more with our guests. talking about italian politics and the budget, specifically, but if you look at europe, if italy turns eurosceptic, is it done? >> it's done. how to keep this thing together? no leadership. merkel is gone. you have france in trouble right now. if you have one more domino fall, i think it's over. >> what will it take for italy to turn euroskeptic? >> i think they are going eurosceptic. but i think actually it will be a good thing.

germany and france are entrenched in their position. they don't even work with their own electric. they need someone to rock the boat. you have to change the constitution but also vote on euro. it means that the next european elections don't yield any genuine change in the direction of europe. the european project lacks leadership and growth. italy lacks a growth plan but europe lacks a growth plan. if they just keep lowering taxes and hope it works, it isn't going to work. >> if you're looking for excitement and growth opportunity, i'm talking to smaller countries, not the traditional leaders. the excitement is in an emerging market.

>> if it's only abandons europe, what does that mean? italy is better if europe -- if euro collapses. is it without euro the currency or euro the group? >> it's the same thing. currency weakens, it would be good for the country. the country needs more fiscal space to invest. all european voters are asking for the same thing. more money for public schools and public health care. more money for infrastructure. the reason why hungary is doing theell, is they have leadership to do some of the problems.

the eastern european italy axis, he will win. you will win and it will actually take the discussion to the next stage. i don't see why italians would become even more eurosceptic than they are now. you can really turn the story around. the interesting thing is, whether you like him or not, he's a leader. he looks at the economy and progrowth. whether the politics or brighter or not they feel the economic future is brighter. >> is not without controversy. what does it mean for the rule of law? can you have a leader that is more aligned with western values

that gets voted and light inputs and place -- policies that people can get behind? >> i think this government is over. >> will it be a brighter day with the leadership on hand? people don't feel that way. >> they do so much. up next to speak about the banking industry with the chief executive. this is bloomberg. this is bloomberg.

>> economics, finance, and politics. this is bloomberg surveillance. let's turn to the state of the banking industry. the company raised its full-year guidance. join us now is the chief executive.

you are a little bit of a disruptor. you have a sense of what the banks are getting right and wrong. will we see more technology challenging the big established banks? so. think what is clear is the gloves are off. traditional banking is over. neo-banks, startups, people taking part in the value chain. there's so many business models been blurred every day. but at the same time there are so regulated. the chief executive, no one wants the job because they are overly regulated. it is a part of the market where you can have good returns that is as regulated? the regulation enforces discipline around the industry. it forces the system to act in

the interest of the consumer. they just need to wake up and take advantage of modern technology. the key assets. they have the customers. they have the reputation. they have the capital. you do need to empower yourself with technology and that's our message to the industry. what we do is we cap -- cell banking systems. our solution does two things. use banks, the system they is spaghetti. andeplaced the spaghetti have huge systems. we also allow banks to become digital. competitors are banks that understand technology. we allow for solutions to compete in the new world. i'm always stuck on my phone.

people banker or mobile phones. what comes after that? there are almost three waves of banking. you've got a big problem. the three waves of banking are one, branch banking. they quickly realized. the next as analytics. understanding your customer and buying behavior. becoming a true, trusted advisor to your customer. you provide that amazon like experience. was going to make my life easier? i would love to not have a credit card anymore and have it on my phone. is it apple? >> different solutions for different parts of the value chain. you flip your phone and you buy things.

other areas are quick decisions on things like loans and mortgages. each part of the banking ecosystem has been done very badly by traditional banking. coming in and finding the friction and pain to everything a part of that chain. each one has a different solution? do you think you will part of consolidation question mark -- consolidation? >> i would be surprised. banks have been asleep for most of the last few years. >> berkeley and the likes might want to buy you. have you had any offers? tends to be a winner takes all game. people like microsoft, sap oracle 10 to dominate their

industry. they sell the same software over and over again. do you buy anyone? >> we have access to market cap, they have access to debt funds. occasionally we can do things like moving into a new geography, something moving extremely quickly like analytics. mostly it is organic. 's size critical? how big do want to be in two years? big enough to be the leader. what we are proposing is the first time ever they will pick up the spaghetti and put it in the package. it's all about trust. we are big enough now to lead the industry.

the challenge has become how to help the industry. >> spaghetti is wires, correct? >> it is. >> great having you on. we continue in the next hour. tom joins me. growth,talk a bit about little bit about trade, and a little bit about china. market seen a reversal. they are gaining. there's a little bit of moveon tie-in bonds. this is bloomberg.

francine: trade war tech war? ofpages, from the desk

robert lighthizer, america and all showing up in china. beating gains of the s&p again. or wait it out? in brussels, italy awaits verdict on its budget. hello everyone, this is bloomberg surveillance. arabia, we look at oil, we look at the politics in europe. and look at brexit. holidayrica slips into mode here with thanksgiving tomorrow. whatever anyone thinks of the president's comments of the ,rown prince and the ft report that breaking overnight as well. saying they are

sticking with him until they find out more evidence that japan is to send over. 20 more on that. let's get to the first word news. here is taylor. the u.s. is ramping up the trade is too with china days before the leaders of the two countries are scheduled to meet. the trouble demonstration is accusing china of stealing intellectual property and technology. the reports that the chinese cyber attacks on american families have grown. president trump will that the murder of a u.s. journalist damage the country's relations with saudi arabia and the crown prince. trump says he will stand by the saudi's whether or not the crown ordered the death of jamal khashoggi. he said if he broke with them, oil prices would go through the roof. renewingdent trump is

his criticism of the federal reserve. he described the central bank is a problem and called for lower interest rates. the fed is expected to raise rates again next month. the fourth rate hike since jerome powell became chair in february. british prime minister theresa may is in a precarious situation as she heads to brussels for brexit talks. her collies want her to rewrite the deal and european leaders say they will walk away if she does. meeting with jean-claude juncker tonight. 34 hours a day on air at a tick-tock on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs, this is bloomberg. francine: thank you so much. getting some breaking news. we will speak to the chief economist at the oecd. are cutting their global forecast to 3.5% versus 3.7%.

i'm trying to see why exactly they are cutting it. probably mentioning some of the trade tensions. we will really delve deeper. tom: hundreds of pages there to go through. it looks like it's a 6.0% statistic for 2020. on leader will join us later the show. let's get a check on currencies and commodities. futures bounced on the card -- carnage. 1.9.es up you're a churning. some dollar strength today. loyal finally with a bid after a difficult day yesterday. elevated but not what i expected. 20.79 with the dow closed.

crude showing and i put bitcoin in their because francine has a lot of bitcoin. i do?ne: tom: matt miller. francine: yes, you are confusing european acres. sharp declines across acids on tuesday. asian shares were mixed. what i'm really focused on is what is happening in italy. conflicting reports of whether solving he would give in to the demands. salvini would give in to the demands. are not anarkets awful year. it is not an awful year but it's just subpar to say the least. a little bit of local perspective as well. february with a legitimate correction in the dow. we are well sort of near a correction here.

about theentilation market by the s&p 500 dow seems to be a little overwrought right now. this is my bloomberg chart. it's looking at italian 10 year yields and the spread between german ones. they had denied any budget climb downs. say he is.ts league officials deny it. officials deny it. you can see it there. witness up -- weakness across assets boiling over to investors with virtually no are too high. says -- says is not

worried. >> it's a lot going on. every morning get up right now and there's a strong news flow from overnight. paris,e brexit, political risk, protectionism, anti-immigration. before we get to the markets. to china. get before you get to the sanctions and russia. for you to war in syria. before you get to north korea. to do.lot for investors with thed with that backdrop of strong fundamentals and tightening and corporate credit is full. the issues around triple b credit. it's not surprising that markets are anxious. this is what markets do when they deal with uncertainty.

in the short-term they can get wrong but in the long-term they are always right. was james gorman speaking to bloomberg. let's talk to rick. were they oversold her undersold? rick: i think there are risk premiums to be earned by being in risky assets. i think risks are being rewarded. the market is volatile the short-term. you don't see a sharp slowdown or do you? seen a sharp drawdown. this has been a month where it's harder to diversify yourself out of trouble. defensive strategies have been effective in 2018 but the news flow as it was just indicated has been pretty relentless. wonderful to have you with

us. salvation ofat optimists is a lack of correlation in the market. strong yen, we are not seen substantial bond moves in full faith credit. how correlated you observe the markets? you can usually diversify your way out of trouble but if you look at areas like emerging-market debt in local currencies, this been a widespread outcomes. we haven't seen the contagion that is an unthinking contagion. some of the risk premium is driven by dollar strengthening. a little concern about pm eyes. it's been hard to diversify. tom: our central banks the key to market stability? iancine: i don't -- rick:

don't think we should think about them as the key because they don't have ammunition to save us. frankly the toolbox in many central banks is empty and that's a concern if you have an economy that needs propping up. they -- the exception is the u.s.. what you do with the u.s.? on a strengthening force. i don't think they will be deflected very much in the short-term from the path of normalization. we are kind of at a peak in terms of real yields. at, housing stocks, they are all doing reasonably well. u.s. is still diverting somewhat for the rest of the world. we will continue here. a lot of market talk. let's look at the bloomberg.

we are going to come back and have good conversation on the global economy. the oecd chief economist will join us. the united states economy looking at 2.9% this year, 2.7% next year and that 2020 2.1%. leaders of the oecd giving a summary of their crystal ball ahead. with us.ay from london and new york, this is bloomberg. ♪ refineeed to nurture and and the institutions that support.

>> let's get the bloomberg business flash. the insurer humana may take stakes each other. about acompanies talked variety of joint ventures. last month walgreen's ceo told shouldrg the companies have gotten a insurer for years ago when it's paul was higher. ofa -- theall goan hasof carki shed light on the problems in nissan and another company. a speculation that he was a victim of a coup by enemies at nissan.

a whistleblower testifying to their -- european lawmakers about the region's worst money-laundering scandals. he said almost all the money flowing to the estonian branch -- he also said what the intelligence agency was doing during the scandal. on china, november 30 the chart chief, we go asia economics correspondent. does the u.s. focus here. what the focus in china? it's been shifting into the g20. some ofthe potential of the framework on the trade story. china have been warming up and making a clear they're willing

to talk but now we've had this report out of washington as you stealing u.s.h is ip and forcing this sharing of technology. i think would demonstrate to two sides with talk of the g20, this reports shows how far the two sides still are and how deep the differences are and it's unlikely the chart can be resolved. a 6.0 percent of gdp. link this trade discussion with what it means of chinese economic growth. does beijing really make a linkage of these discussions? that if theo doubt

remainder of the trade warpath, remaining to the goods, there are some forecast that would say perhaps a percentage point in a half coming off the growth. within happen is china would respond. at the moment we've had a moderate slowdown. they will probably have to respond with some serious difference. in e*trade were due slowdown. -- any trade war domestic slowdown. francine: kent china retaliate? -- can shine up retaliate?

retaliate?na it's expected to have an import -- an impact on exporters. u.s. can't match the dollar for dollar in terms of tariffs but they can respond in other ways. they can make life difficult for u.s. companies in china and source products from other laces. making it clear they're willing to come to the table but setting up their red lines. they are up for a long fight. francine: thank you so much. there from hong kong. we will get back to more on trade. to, we'll be talking you commissioner for economic and financial affairs.

italy, we'll ask about and the budget.

tom: good wednesday morning. our chief investment officer, carnage, maybe that's too strong the world -- the word.

turnover in the market. one of the things i have seen that is distressing as i will get this bow tie right before thanksgiving. the linking market of american technology with stocks.technologies i don't buy it for a minute. how you interpret the chinese stock market and is their opportunity? a cheapthink it's market. there's enormous anxiety in asia. the investor base but more importantly the trade dispute. very different than what you see elsewhere in the world. i think this temporary trade dispute and discussion about ip is very damaging in the short term. >> we are going to come out new revenues,see what does that mean? rick: we think the u.s. equity

market would do well in 2019. on, i trade dispute moves think that absolutely is fully priced in emerging markets. at the moment, it's little bit of a value situation. we need to see that cloud lift before we are ready to really invest in emerging markets and catch that value premium. how much does the trade war escalation hurt world growth? if you look at foreign policy from the trump administration, the top -- the tough talk has been down back. isolation ofopeful what has happened. the election timetable of donald trump suggest these deals have to be done at some point relatively soon. in theage it is causing late investment spending and confidence among businesses, mainly in china and emerging markets, is going to spread elsewhere.

>> can a trade war actually start a recession? possibly a higher dollar? investors and businesses are going to firm up their view that this continue, it can be a cause of a recession. what are people going to do with retirement accounts? give me the angle on wednesday. what you do with a account to get into next year? rick: you shouldn't be doing short-term training. -- trading. usually thinking about how you diversify. funds have been dominant in many peoples's retirement savings accounts. you need to have a long-term respective and absorb some of these down moves in market. tom: i'm doing it in real time.

we do everything in real time. down 23%. that's the apple plans we have seen. rick akaieton and would say shares are on sale we don't feel that way. the market tells you fundamentals are getting worse as well. normalerse of the causation you see in markets. there are many other opportunities other than a single stock. there is a value of opportunity there that entails some risks. you have to take some short-term drawdown. about're thinking retirement savings, that's a long-term gain. you can't be-c trading your way to success. -- be short term trading your

way to success. tom: we have the oecd forecast and a nice view up to 2020. theleader will join us in next hour, we are thrilled to have her, the chief economist. please stay with us. to replaced catherine manette oecd. please stay with us. francine the quad in london, i am tom keene in new york. dow futures of 96. we are also watching sterling under 128. this is bloomberg. >> -- ♪

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drastically differing. asexpected to oust him chairman in a vote tomorrow. partner to at -- to hand over details of his alleged misdeeds. ghosn remains in custody after being arrested in japan. joining us now is bloomberg's senior editor. situationook at the and we will get on to what it means for the alliance, but are , this would be japan doing everything they can to stop a possible merger of the alliance. is there any truth in that? >> we don't know this at this point but what you see is certainly the sides moving at a very different pace. you have the japanese with a rather aggressive approach.

of nissan really throwing ghosn under the bus at his press conference. the french side, a bit more timid, innocent until proven otherwise. they did not fire ghosn. it is remarkable to see these partners really moving at very different speeds and not speaking with one unified voice. that raises the question what is the future of the alliance. francine: how unusual is it that japan would go at this alone without informing france? >> it is highly unusual. they did not just stumble across this. orchestrated,able well-run investigation going on. you would've thought they would side but ase french

far as we can tell, that has not been the case. was all but blindsided by this and now they are scrambling to find the latest on what is going on, but this is really an unusual move and it speaks to the fact that the japanese are quite aggressive in this. tom: i read the article and it exists -- it advances the story forward but what i find yeninating is the 5 billion sadistic, of compensation. in the world of mr. ghosn, that is not a lot of money. did they perceive in japan that that is a lot of money? >> certainly. there was a sense that people like ghosn, senior managers should not be paid those sums of money. if you look at the u.s. and europe, the kind of money being made is not overly extravagant. of moneytainly a lot

to people like you and i but to people like ghosn, that is what you would expect them to make. humbles a signal to the japanese worker, we will not let people get away with this kind of action. the kinds of things he did does not sit well with the japanese worker. does he get out of jail? the french ambassador visited him. i don't know what it likes -- what it looks like. does he get out of jail so he can go back and run a french company? up sort of end approaching christmas in jail, which we will see, but it is unusual for ghosn not to be in public. we have not heard his side, his voice. that is something everyone is waiting for, what he has not

been seen in public since he was whisked away in tokyo. francine: thank you so much. let's get to the "first word news." here is taylor riggs. taylor: president trump calls it a simple equation. if you does not stand by saudi arabia, oil prices could go through the roof. he says he will stand by the crown prince regardless of if he ordered the death of jamal khashoggi. reportedly one to the justice department to prosecute hillary clinton and former fbi director james comey. times,ng to the new york wide-out cap -- the white house counsel told the president that such a move could lead to accusations of abuse of power. house lawyers wrote a memo warning that investigating clinton and comey could lead to impeachment.

interior secretary ryan zinke e is blaming what he calls in via or -- radical environmentalists the deadly wildfires in california. he says they blocked efforts to clear forests of dead and dying trees. he wants congress to give government the more thor -- more authority to control fires. andy hall is predicting a recovery for crude. he says opec will probably raise cuts in the growing month or two to drawback on a growing stockpile. global news, 24 hours a day, on air and at tick toc on twitter, powered by over 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine: thank you so much. italian bonds are higher on reports that the deputy prime minister says he may be open to

revisions to a budget that was criticized by the european union. those reports being denied. -- we are in brussels. how much time will they talk about brexit and how much time will they talk about italy? >> in the morning, a full be all about the italian government and what is clear now is it has been a very confusing morning. we had reports that they were open to changing the budget but now he has flat-out denied that and said the deficit will stay as it is. it makes sense for the italian government to not back down here. they argue if they remove the basic income and pension reform, their agenda looks the same as the previous government and they want to disrupt the european union. clear that the european commission will probably save you time

government is already breaching fiscal rules in the european union and that is going to lead to fines. what are they actually get f -- whether they actually get fined, that is a different question. francine: what can you tell us on brexit? always expecting theresa may to arrive this evening? is that going to take precedent? think they can still get concessions. what we hear from the european perspective is a different story. that saysa faction you cannot get too much in this declaration and there should be a clear message that is political that leaving the european union cannot be a win. by definition, brexit is a failure and is just about damage control. the u.k. things they can get concessions.

the eu and the french now believe or argue you should be very careful on that. francine: thank you very much. the polls between the european union and italy continues. let's get back to rick lacaille, state street global advisors cio. i think the european authorities should deal with italy in a way that recognizes this is a government that can do things other governments cannot. that is a subject that is probably the most sensitive within italy as well. i think the italian spread is too rich but it is a binary bet. brexit is a different case entirely because they no deal disruptive --e

because a no deal brexit could be disruptive. opportunity to acquire shares in eu multinationals? rick: we don't think so at the moment. we are underweight in europe. it is cheap but the resolution of some of those longer issues does not seem to be coming quickly. standoff between italy and european authority of the demises the whole problem -- authority epitomizes the whole problem. you've got to gloom and a lack of growth, a lack of structural reform. they need a big premium to be reported -- premium to be rewarded. francine: what does a lehman moment look like in europe? it is the shock to the

public and to businesses from a confidence perspective. what does it mean if you have no deal? although there would be a rapid repair job, i think the shock of that happening could be pretty significant. francine: how would a no deal actually happen? a report says parliament would prevent a no deal from happening. would it be a mistake? rick: it is quite possible a mistake is made and we could see parliament going to vote against . an optimist would say they will vote it through on the second round, but that is not a given, so you have to price in some elements -- some elements of probability. i think there is a possibility you have no deal. francine: thank you so much, rick lacaille, cio of state

street global advisors. -- we will talk to her about italy and brexit. this is bloomberg. ♪

taylor: this is bloomberg surveillance. isebook ceo mark zuckerberg defending his embattled chief operating officer. fire for thender way he handled the company dickey disclosures about russia's election influence. there is a signal that t-mobile dickey arguments for buying sprint may not be winning over

u.s. officials who can approve the deal. t-mobile is telling regulators the type -- the team up would create -- the italian insurance company is betting on growth markets and asset management in its plans to boost profit. >> we can absorb a significant shocks on the italian spread before volatility adjustment. more are points or more -- are worth 12 points. we can definitely absorb shocks as they come. taylor: and that is your

bloomberg business flash. francine: thanks so much. president trump says he will not let the merger of -- the murder of u.s. based journalist jamal khashoggi -- >> it is america first for me. we are not going to give up hundreds of billions of dollars in orders and let russia, china and anybody else have them. it is america first. was president trump to reporters on the lawn of the white house. lacailleck with rick from state street global advisors. relationshipsna are in a different phase. going from engagement to containment. in the discussion about ip and the geopolitical military situation out in the south china sea. it is hard to price because it ofs not affect earnings

individual companies for a very long time. francine: do you look for regions? do you look for countries? rick: you have to look for things that are temporary, that and offerto blow over a risk premium opportunity. and offer a risk premiumthis trouble won'. you do have a new world where there is more uncertainty and risk premium needs to be priced and all assets. the tactical opportunities of where we have a temporary situation, that the permanent state is we have moved from a normalized world where international institutions are making a determination to a less connected world. francine: what does this mean for the markets because something that is so vague that unless you have a

market panic, what do very young traders, how do they view that? rick: some risk will be different to what they have seen before. sterling andith with the rmb in china. maybe people have not done this for a long time. they neglected currency risk. others are opportunities. traders need to take account of this. where will we be and trade relations in 2, 3, 5 years. the discounted value of an asset is -- tom: how does the dollar fold into that? what will affect currency swings

from holding national? rick: the dollar is on a multiyear uptrend. turnnly thing that could that around is a little bit of news on the trade front because the dollar is definitely pricing in a more aggressive trade versus thethe u.s. rest of the world and although we are confident in that view, i think there may be relief for those who see the dollar as a short-term overvalued. if you see light at the end of the tunnel, the divergence between the u.s. economy and the dollar and the rest of the world is likely to continue into 19. with the currency conversion, there has to be an opportunity there. you mentioned you are underweight europe. where are you overweight? and: we are overweight u.s. japan. japan is offering good value. equities overall are offering reasonable value. you have controlled core

inflation. you have a synchronized increase but that is a pretty benign environment for an equity investor despite the short-term volatility. tom: rick lacaille, sticking with us. i want to show you something which i rarely do. image, but you can scroll down on dtv go and find endless smart charts to make your wall street day go better. coming back, rick lacaille of -- on the state of asset management. this is bloomberg. ♪

tom: good morning. with us, rick lacaille of state street global advisors. there is a bombshell mckinsey mackenzie on the future of asset management that

focuses on north america. aboutof lessons worldwide active, passive and just competing in a low fee environment. where is asset management in five years? rick: i have a lot of respect for the mckinsey team. wherek we are at a point the industry dynamics are very competitive. we have to focus on how we can relentlessly drive costs down and focus on new things. will certainly move stock prices long-term in the be there has been a neglected part of the asset management armory and knowing that asset management is at the center of the financial ecosystem brings with it a responsibility to get these things right and make sure the system works well for everyone. it is something the asset management industry needs to focus on. tom: state street has been one

of the great innovators over 20 plus years within asset management. that innovation is between equities and bonds. what do you do about equity investment? rick: equities have become more complex. indexing has been with us for several decades and provides incredible value for money for investors. as investors focused on that, what is next? can we capture some of the benefits of indexing and that is what gives you smart -- and then it leads to management in a state where it needs to differentiate and that is what we have been focused on. what can we do that is distinct from what may have been done 10, 20, 30 years ago? francine: the problem is in -- is passive investors have been doing so well.

does that change in 2019? when did we actually have central-bank policy that normalizes -- will the markets ever go back to precrisis? rick: precrisis indexing was also pretty well. it is a fantastic place to be for investors, regardless of monetary conditions. associating indexing with qe or loose conditions is a false correlation. indexing value from money is a perennial. francine: some breaking news, the italian new it -- the italian news -- agency, the eu -- the eu rejecting the italian 2019 budget. rick: a lot of periphery bonds, but we have -- tom: very good, rick lacaille, thank you for the briefing. always interesting.

in our next hour, we are to drive forward this conversation with the international investment efforts. it will be a good template for an interesting 6:00 hour, including a conversation with laurence boone. a look at the data right now, a lift in the market. i don't know where that gets you at 2:00 p.m. this afternoon. moon this gorgeous morning in new york. it is a new york to get ready for thanksgiving. team of the surveillance traveling this year. this is bloomberg. ♪

? tom: this morning, the stock market finds of bid, a risk on,

but across assets. partially non-correlated in this hour, the character of this market correction. 30 new year begins november as trump meets xi. presidential mercy, peas and carrots. good morning. this is "bloomberg surveillance." we are live in new york. francine lacqua is in london. what is going on in italy? all, what isst of going on in brussels? it is a standoff between italy and the commission. we have an uneasy coalition in italy. brussels says they are unhappy

with this. rules say you can't have a certain percentage of gdp in terms of deficit. -- the eu hased rejected the italian budget. we will wait to see if there are timeepercussions, or the coalition says we are ready to give you concessions. this is unclear at the moment. tom: is this fiscal battle original? francine: it has happened in the past. the market is taking notice this time. ,don't have moving yields you can, but this feels different because you have this uneasy coalition. tom: very good.

with first word news, taylor riggs. u.s. is ramping up the trade dispute with china before the two countries are scheduled to meet. accusing china of intellectual property theft. it says taxes on american companies have grown and sophistication. president trump won't let the murder of jamal khashoggi disrupt the relations between the u.s. and saudi arabia. we brokeeporters "if with them, i think your oil prices would go through the roof." renewing hismp is criticism of the federal reserve, describing the bank as a problem and called for lower interest rates.

the bank is expected to raise rates next month, the fourth hike since jerome powell became chairman. theresa may is in a precarious situation as she heads to brussels, trapped between her colleagues who want her to rewrite the deal and european leaders who say they will walk away if she does. she meets with jean-claude juncker tonight. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. thanks so much. equities, bonds, currencies, commodities. let's do a data check. futures up10, dow 70. euro 114. oil bid south yesterday. that's the new level lower on oil. the vix, i suggest that should be higher. it is not.

correction point near 10%. bitcoin announcing off an ugly set of days. francine: this is what i am looking at. my data check is similar. stocks in europe are rallying. u.s. futures are up, trimming losses after the declines on tuesday. dollaries lower, steady. gold, look at that. tom: very good. it may be speaks to the lack of correlation. let's discuss this with brian from oppenheimer funds. terrific a international bet. is it a time to load up on em? >> em assets are among the most attractively priced across all assets.

you are likely to see emerging markets outperform in the intermediate term. in the near term coming you need a catalyst for that outperformance. you need to see greater clarity on policy, especially with trade. i think we get there, but uncertainty persists through the g20. tom: the headlines, world is coming to an end. bear market is -32%. we are miles from that correction. in february, bear market here. s&p is right here on a correction basis. nowhere near a pair market. there is -- bear market. and yet there is the history. what should our viewers to? >> last year, investors were clamoring for a correction. be careful what you wish for. corrections happen when there is policy uncertainty, the fed, brexit, italy, trade, so a lot

of different factors. the global economy is reasonably sound to the u.s. economy is reasonably sound. valuations are reasonable. i think the fed ultimately backs down. this is not a prolonged bear market in equities. it is a correction that we should be used to sing by now. francine: when the fed backs down, how many hikes and what does it mean for dollar? and theyer happens will be data dependent into 2019. perhaps march with guidance that we will be more data dependent and this half and this path will be more gradual. that should cause the dollar to stabilize or moderate some. you would think a country like the u.s. will be running large fiscal deficits. the dollar toct

weekend in that type of environment. that has not been the case because of rhetoric. ultimately, we would head into a weaker dollar environment, but it will take a shift in policy to get there. francine: what is your best play right now? where do you see value where no one else does? >> in the u.s., it will be a growth market. a lot of the concerns right now in the market, tech hardware for example, are the input costs go up and profit margins come down as a result of the tariffs. i believe we will see an agreement. the most attractive valuations are outside the u.s., em debt and equities. you need a catalyst. i think we get there in 2019. i don't think it is massive chinese stimulus like 2015 and

2016. i think the catalyst is more clarity on policy and a u.s. that moderates back towards trend. tom: everybody has a view on correlations, linkages, long-term investment people look at it differently than a black box guy at a hedge fund. stronger, and it is not. we have seen correlation of different asset classes go up in this environment. tom: it is a sort of, kind of like correction. >> it has moved into different parts of the world. environment where everybody got on one side, which was to say the u.s. is diverging from the rest of the world, and now we are repricing the u.s. converging with the rest of the world. tom: i'm going to bring this up. it is hard to see.

it works even better on radio. this is the chart where you can convert the currencies. it is a terrible single-digit 4%, the dow up 2% on the s&p, and flat on the nasdaq composite. it is the wednesday before thanksgiving. is coming the world to an end as we know it, and all we have is a flat market. >> the world is not coming to an end. we know what the end of the cycle will look like. looknd of the cycle will like significant tightening from the fed, and inverted yield curve, a stronger dollar, not credit spreads moving up modestly, credit spreads blowing out and they deterioration in growth and earnings. u.s. at theng at a peak on this everything, leading indicators, profit margins,

earnings. the idea the u.s. would move to this new, higher level of sustained growth was always hyperbole. it is too light in the cycle -- late in the cycle. we are pricing in policy risks. with inflation benign, we can back off with trade policy. if we are going down that path, self-inflicted. cycles do and with policy mistakes. francine -- tom: francine, this is great. i have my tea. it was prescribed by dr. mcallen. it is really good. francine: i think it was prescribed by a viewer. i'm going to send you some european medicine. stay with us. --ing up, the oecd economist chief economist.

we will talk about the italian headlines. seriousian budget is a noncompliance risk, and the eu office sees italy breaching their budget commitment. this is bloomberg. ♪

taylor: let's get your bloomberg business flash. walgreens boots alliance and humana may take stakes in each other. the two companies have talked about a variety of joint ventures. the ceo said the company should

have bought and ensure years ago when it stock multiple was higher. tensions between two bank are companies, nissan and renault. the french automaker's board has stopped short of firing the chairman. after his arrest on financial misconduct allegations, it was moving to dismiss him. former danske bank employee turned whistleblower in brussels sent all of the month -- said all of the money that flows through the estonian branch pass through banks in the u.s. he called for an investigation into what the financial intelligence unit was doing in estonia during the scandal. tom: thanks so much. let's do a morning must read with kevin cirilli.

this goes back to jfk. the wall street journal doing it up every year. kevin cirilli joins us on this paragraph about getting out of washington for thanksgiving. that was a time and place of another america. if we have learned one thing from this election, our demographics are changing. i thought he was brilliant and the washington examiner on this. what you see as the new america for 2020? howisconsin and florida are , they have to focus on

wisconsin and florida to win in 2020. if you look at states like pennsylvania and to some extent michigan, you might see them trending towards democrats, more blue. be ank this is going to very contentious cycle, because the last presidential race was decided by less than three percentage points, and hillary clinton won the popular vote. tom: how does it democrats win in utah? runn: they would have to has a new kind of democrat. you saw some trial runs in the midterm elections. o'rourke try to unseat ted cruz. or you saw this with amy mcgrath

when she lost against andy barr in kentucky. all politics is local, but when i was speaking to a democrat earlier this week, they said they are has to be this intent democratic party because there are so many types of democrats now, just like republicans. francine: president trump standing with the saudis and crown prince. how is that being taken in washington? >> it has been interesting. outside as and issue of human rights and the president overlooking human rights five patients. yesterday we had congressman brendan boyle, a democrat from philadelphia. he said the u.s.-saudi relationship wasn't wharton. it is a very nuanced relationship. no one is praising the king for

the killing. there is skepticism for why the president did not come out in full agreement with the intelligence community, which clearly has evidence that would say that the king was responsible for that killing. i think there is a lot of skepticism there. in terms of washington, there has been a ton on both sides of the aisle, republican and , who are increasingly skeptical of the business deals with the u.s. and saudi. buts not off the table, this is a major setback for relations. tom: safe travel for the holidays. we will do much more. brian from oppenheimer funds with this, a smart conversation on the state of these markets. also, a smart conversation with

a wonderful economist on the potential economic growth of america. he is the j.p. morgan chief economist. looking forward to that. this is bloomberg. ♪

--ncine: the you mean union european union took a first step imposing fines on italy saying

the spending drive violates the blocks spending rule. we heard from the deputy prime minister saying he was open to small changes in the budget, reassuring voters that he would not compromise on the main principle. radio listeners, this is the vice president of the commission. , he has accused italy of being regulus, the eu commissioner for financial affairs shortly. we will have an interview. turmoil showshe no sign of dying down with every major digital currency extending a route. that rings this week's drop to more than 25%. alastair marsh joins us now.

what is going on in this market? >> the market has fallen out of bed in the last few days. boring,almost became staying around $6,000, then it has quickly fallen, touching $4000 on bitcoin. it is hard to pinpoint one single cause, but quite a few things have contributed. cloud.ion is a black we had reports the doj was looking in to potential price manipulation around a controversial crypto and how that has affected the price of that coin. we have had civil action last week against two ico companies, saying they should have registered their tokens as securities, which would put them

under the same rules as stocks and bonds. this we have had adolescent infighting with regards to bitcoin cash, an offshoot of bitcoin itself. tom: what i find most interesting is the single word market. rationalizing a market for bitcoin, i don't know a single probe who agrees with that. would you inform us of the so-called market of bitcoin? marxian the established economic scarcity within that market? >> right. as we have discussed before, rather special use case in terms of how it compares with traditional markets. community wanted to

be taken seriously. the market cap approached $800 billion last year. suddenly this is something we can ignore, but now we are seeing the complete reverse of that. yesterday we broke to the level where jamie dimon said that coin is a scam. perhaps his train of thought is being vindicated in this latest rout. francine: thank you so much. brian will be staying with us. coming up, we talk world economy at the chief economist at the oecd. this is bloomberg. ♪ this is bloomberg. ♪

york,rom london, from new let's get right to it. here is taylor riggs. taylor: president trump calls it a simple equation. if he does not stand by saudi

arabia, oil prices would go through the roof. he said he will back the saudis regardless of whether the crown prince ordered the death of jamal khashoggi or not. the president said the kingdom strategic importance outweighs the horrible crime. wanted therump justice department to prosecute hillary clinton and james comey. white house counsel don mcgann told the president that such a move could lead to accusations of abuse of power. he had white house lawyers write a memo saying it could lead to impeachment. rienzi kee ryan zinke he said they brought efforts. he wants congress to give the government more authority to control fire second clear underbrush.

andy hall is predicting a recovery for crude. he says opec will probably reimpose supply cuts to help draw down growing stockpiles. intermediate is now trading in the bear market after plunging formate four your high in october. -- four-year high in october. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. tom: thank you so much. oecd has been, greatly respected for reviews forward on the global economy. they have been strengthened by the work of catherine mann, now at citigroup, and now laurence as the oecdin paris chief economist. we are thrilled to have her with us this morning. it is a dark and gloomy report. winter is coming.

, ort a defeat of capitalism is this a normal slowdown you look for? >> you are right. growth has peaked. we are entering a slower growth era. challenges,fficult and it is particularly tough we have a lot of risk around. tom: do we live in a mercantilist age? trump brought upon us some neil mercantilist age -- neo-mercantilist age. >> we are making three calls. one is on trade. we are looking at tariffs, and more importantly, non-tariffs measures.

is to sitant message negotiating table and think about the impediments to trade and a message about the ifessity for cooperation several of those risks were to materialize. francine: good morning from london. do you worry about too much debt in the world, that countries are accumulating too much debt, and could that lead to the next financial crisis? we have pointed out the risk of debt in some countries, sometimes in the financial sector, sometimes in government, but the reason why i was talking about fiscal capacity is -- fiscal coordination, if the downturn was more severe in the coming years, and then we have

little room to maneuver. we have very low rates. we also know that coordinated fiscal action is much more powerful than individual fiscal action, so what we are saying is sit around the table and prepare for the next downturn. like the central banks in 2009 when they cut rates together, then if we have a downturn, then government should stimulate the activity together. the effect would be much larger. francine: with italy, if you spend fiscally but will the markets allow it? >> the big problem in italy is growth. we have been saying it for years. ofneeds to level productivity, improve qualifications, skills, and employment, especially of the

infrastructuree and focus on public investment. that is our main concern at this stage. what we would like to see is a slight shift in composition and that the targeted measures are better targeted, that we put more emphasis on public investment and reforms. tom: you have within your report a spectacular chart on average wages, median wages, and the inequality. this is a primal scream in america about where is the wage growth. do you have any optimism we will see the wage growth, or is it a global gilded age? i'm sorry, i have to confess that i have a lot of difficulty understanding you.

please stop me if i got it wrong. have labor shortages in the u.s. and the unemployment rate is really low. that has not translated yet into as high wage growth as we would hope to see. think it is because of skills and qualifications, and you can see that in some people who have left the employment market and have not come back yet. partly it is the ongoing discussion about the firms which are super productive and do not fully redistribute the productivity gains into wages. on this we are digging deeper in some analysis to see whether it is a competition issue, whether it has changed and how you look at market power. tom: one final question.

if we look at the caution in the oecd report, the idea of a difficult view ahead, can central bankers come to the rescue? ,> to me, central bankers again, stop me if i get it analyze first the fantastic job they have done in the crisis and how well they are ,avigating this new territory implementing unconventional policy that has never been done before, and so far, so good. we are quite happy with what we are seeing, a forthcoming, gradual normalization in the u.s. with a little inflation. we think that is perfectly appropriate, and a persistent approach of the ecb is perfectly

appropriate at this time. let me take this opportunity to add that we would want to see the fiscal authorities take away a bit of the burden they have put on the central bank so far. tom: laurence boone, thank you so much with the oecd in paris. brian, you have been listening to that. it is a big institution and they are supposed to do that. there is optimism central bankers will push against them. importantly, corporations will have room to move to maintain profitability. optimism given the cautious view? ofcorporations have degrees freedom so long as we remain in a reasonably expanding economy and inflation remains benign. i expect that is where we are going.

what we have seen over the last couple of quarters, a growth that is above trend as more of a risk, because it strengthen the dollar and brace long-term rates. the u.s. is still an interest rate sensitive economy. housing is slowing. to his back revert towards a trend. that is more of a goldilocks environment for rates and inflation in the united states. tom: that brainstem nominal gdp and revenue growth estimates. you saw that with target yesterday. the animal spirit comes down, doesn't it? >> but we have been seeing for most of this cycle 2% growth and a little bit less than 2% inflation. that has been just fine for corporate profitability and earnings. in thats are environment where you don't

bring forward fed tightening and slow down the economy, companies should do well. the other thing is this headwind of strong dollar and this capital flight from emerging markets also hurts u.s. companies. they famously collect something like 40% to 50% of sales overseas. stanceack off from that and stabilize the dollar, the cycle should continue. francine: thank you so much. brian is staying with us. we are getting breaking news out of brussels. there is a news conference that started with the vice president of the commission, all about italy. towardsing a first step possibly imposing fines on italy. the italian budget is something we need to keep a close eye on. he is saying it is a natural step.

whether italy comes back with adjustments, we are not sure. coming up, member of the european parliament for germany will talk about italy in, shortly. this is bloomberg. ♪

fiscal first-quarter ,arnings missed estimates shares are lower in premarket trading. there is a signal that t-mobile's arguments for buying

sprint may not be winning over officials. that tie upsaying with help it compete against rival carriers. in september, t-mobile focused on how taking over sprint would give it a quick edge building a five g network. airbus is closer to cementing its executive lineup. cfoplane maker named a new . the previousce occupant and shores of a move that has been rocked by bribery investigation. that is your bloomberg business flash. francine: thank you so much. we have been following the standoff between europe and italy. the european union and posing fines on italy after the cream the government spending drive s fiscal the bloc'

rule. joining us now is our guest. thank you for joining us. if you look at brexit and italy, what concerns you? >> hello? >> -- francine: i think we are having connection issues. this is what happens when you have a lot of technology around the world. chart, whichto my you can pick up on the bloomberg terminal. spread see this widening between the german and italian 10 year yields. any further tensions will be played out here. earlier we were hearing that it would be logical to impose fines , but we are waiting for the titans. therewas some noise that

was some willingness to compromise. tom: it is interesting to see the headline flow. it speaks to the international inestment, the opportunities europe. with us is brian from oppenheimer funds. , here,o the pacific rim there, everywhere. no one talks about continental europe. they pay a big dividend, don't they? >> they do. trading at reasonable valuations. tom: our associate says the same side.as you do on the buy is that an investable opportunity? >> it is. don't tell us enough. there needs to be a catalyst, and improvement in economic activity. we live in a globalized world. europe benefits as emerging markets improve. what you would need to see is a

better trade environment, china responding to the stimulus you have, those great brands in europe and the fitting from emerging market growth. to, all of that comes down some breaking news here right now. this is apple computer, the biggest iphone assembler is planning deep cost cuts. this is a readjustment on iphones. we have seen this with the plummet in apple shares. within thet manufacturing process of apple computer of rightsizing the business. you would expect tim cook to get to it now. francine: this is basically foxconn, the biggest assembler of iphones. it is aiming to cut $3 billion from expenses in 2019. according to an internal memo

foxconn faces a difficult and competitive environment. brian, you are talking about the market. is tech the biggest front ability? >> you are going to see a decline in valuations, and that is what you are seeing. i don't suspect this persists indefinitely. these are companies still trading at reasonable valuations and are good, strong companies with good long-term growth trajectories. a lot of people are asking is this 1999. from the returns we have had and where valuations are, it is not

for a variety of reasons. the tech companies need to see is where we are going with regulation, but we have got to get beyond the trade concerns. profit margins will come down if costs go up for these tech companies. tom: brian with oppenheimer funds. let me show you an apple chart, the degree of the last few days moving down to $170. a bounce this morning. we see that on the foxconn news and the cost cutting their reported by bloomberg. getting back to november 20 levels. stay with us. worldwide, from london and new york, this is bloomberg. ♪

francine: this is "bloomberg surveillance." let's go back to brussels. we are joined by a member of the european parliament from germany . she sits on the brexit steering group. brexit, theresa

may is in brussels today. how will she be greeted? >> i think today we will have a meeting between theresa may and jean-claude juncker. this will be the last step sunday when the member states will meet and decide about the common agreement. that is why it will the an important step. i think theresa may is some wording get saying more about the future relations. getill be keen that we will , that we will remain in the framework of the withdrawal agreement at the moment. francine: will theresa may be

able to get a better deal from the eu so she can pass it through u.k. parliament? to passi think she has it on to the british government. we will get it in the european parliament and the beginning of december. , then alle preparations can be done to prepare the brexit at the end of march next year. tom: thank you so much. francine, what is the next step in italy? do not understand what the ramifications are or the consequences are for italy. francine: i think they are huge and varied. we will see if the eu threatens

italy with sanctions, if italy says we will change at the margins. it comes back to whether these two sides can agree on it. government goes to the electorate and says we can't do this because the eu is not allowing us come it could spur backlash with italian voters turning against europe. tom: somehow this will continue into 2019. the final thoughts from brian from oppenheimer funds. 60-30?s the old how much cash are you living with right now? >> the cash i have is the emergency fund, the number of months i need to live and how long i would need to maintain a pile. i think we need to be fully invested in markets. we have long-term growth goals in our portfolios.

valuations are reasonable, the fed will back off, the economy is ok. tom: the emergency fund is the next pair of ice skates. thank you so much for a serious discussion. i think we tried to make a little less hysteria this equity markets. we will continue this forward. i will be on bloomberg surveillance on radio. the 9:00 show, an important show on bloomberg tv. there is the real new york. drive careful, america. ♪

♪ alix: buy the dip, market

stabilize. lame tech, retail, and oil. tech, retail, and oil. contagion and credit spreads. investors worry us a lot is triggering stress. eu rejects italy. it says the budget is unacceptable. we speak to the european commissioner. welcome to "bloomberg daybreak." david westin is off today. not only that unbelievable selloff yesterday, we come in and get the report they will be cutting costs. apple can't catch a break. >> absolutely. they are cutting costs. it is not good news. if one of your big suppliers is saying we have to cut back, an