Skip to main content

tv   Bloomberg Surveillance  Bloomberg  November 26, 2018 4:00am-7:00am EST

4:00 am
♪ francine: good luck theresa may. eu leaders keep your fingers crossed for her. will she be able to convince u.k. lawmakers to back her brexit deal? aramco's ambitions. the invest billions of dollars in acquisitions in the next few years. the chief executive told bloomberg that the long-awaited ipo has not been called off. >> we are committed to the ipo. the government is committed. it is about timing.
4:01 am
italy's leader signals a possible offer to the eu. the prime minister is set to meet with his cabinet today. welcome to surveillance, i have francine lacqua. brexit,urse, talk about this is why we are here after the eu leaders signed off on the deal. we'll talk about that in just a second. but first, let us check in on the markets. nejra cehic has been watching all the action. nejra: france income is only bring you the data crossing bloomberg now. the november german business confidence index coming in at 102.3,e estimate was coming in a bit soft, on the context that we have had softer pmi's.e
4:02 am
and of course, germany's economy moving into contraction in the third quarter. markets. to the despite any data we may have, the stoxx 600 was up 1%. the upside is in italy, the ftse gaining as much as 3%. meanwhile, the 10-year btp yield points.wer by 20 basis we are now firmly below 300 basis points on the bone spread this on optimism that there could be some compromise with the eu and italy. the euro is also rallying 1.1378., on mario draghi talking to lawmakers later, and about credit drive a currency. oil is also undergoing seven weeks of losses, it had dropped on friday under $50 a barrel, but it is back on top of that. wti also making a rise. it has been above $51 a barrel and is holding above that, too. u.s. equities took a big hit
4:03 am
friday due to weaker energy stocks. we could see a rebound at the open today. 10 year yields are moving basis points, a min of the a lot, but it is a first-time it has moved higher since november 8. it.cine: and nejra come of coming up on "bloomberg surveillance," we speak to the chief executives of nadya bank and societe bank, and-nordea societe generale. in the meantime, let us get straight to the bloomberg first word news. in new york city, here is taylor riggs. capturedf russia has three and injured some of the ukrainian crew. the incident occurred near the peninsula that russia annexed from ukraine four years ago, crimea.
4:04 am
the united nations security council will hold an emergency meeting later today. saudi aramco says they remain committed to an ipo and on the question now is timing. speaking exclusively to themberg, the ceo said saudi oil giant is also committed to a majority stake in sabic but the two cannot happen at the same time. the listing is seen essential to saudi arabia's attempt to diversify its economy. cannot gowo concurrently. you cannot list one if you are going you through acquisition. the acquisition makes a lot of sense for us and we need to do it now because you have a g of shifting 2 million or three billions of barrel of crude to chemical. >> emmanuel macron is facing his biggest challenge. used yournd, police gas and water cannons to contain thousands of protesters who let fires and ripped up
4:05 am
cobblestones. a grassroots movement, the so-called yellowjackets, shut down key transport links in their protest. polls show that they have the support of three quarters of the french public. the protests show that the greater opposition macron is likely to face next year when he aims to overhaul the country's retirement system. italy is looking to change the 2019 deficit target according to officials who said that the premier and his deputies would look at the nation's various articles at a meeting tonight in rome. deputy premier luigi demaio says there could be dialogue with the eu over the deficit targets. brussels says the budget breaks eu spending rose and may show signs of concern over the nation's debt. u.s. officials temporarily closed a border crossing between tijuana and san diego, one of the busiest in the world. they reported security forces
4:06 am
fired several rounds of tear gas at migrants after some try to reach a fence. authorities say that approximately 8200 migrants are now in mexico. president trump has vowed to shut down the border using four-seam necessary. 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? francine: taylor, thank you so much. prime minister theresa may is urging u.k. lawmakers to embrace her plan after eu leaders finally signed off on the deal. happen and it took less than 45 minutes to approve it agreement. eu officials say the outcome is the best for all sides and there will be no renegotiation if british mps reject the deal. before christmas, mps will
4:07 am
vote on the deal. it will be one of the most significant about parliament holds. on it will depend whether we move forward together into a brighter future, or open the door to yet more division and uncertainties. who havenviting those to rectify this appeal in the inse of commons to take this consideration. this is the best deal possible for britain, the best deal possible for europe, and the only deal possible. >> the agreement must not be ratified. it is time for everybody to take their responsibilities to this theement, to help create trust and confidence needed for negotiating our close and unprecedented future relationship. this, we get to maria, our reporter in brussels. room forany negotiation if the deal gets voted down in parliament?
4:08 am
maria: francine, for the time being and especially the europeans will tell you, there is no room for negotiation. it has been second best 17 pages, almost 600 incredibly technical and it is unprecedented for a member state to leave the union. so everyone is keeping a close eye on the u.k. parliament. there is already chitchat that it might not go through on the first round. europeanomething leaders are keeping an eye on. i would also point out to the words of the head of the european commission yesterday who said that at this point, the u.k. parliament should know better, should be smart enough to know that this is the only deal on the table and that there will be no more concessions. francine: maria, thank you so much. let us keep the conversation on brexit. us is andrew sheets, chief cross asset strategist at morgan stanley. he will be with us for the hour.
4:09 am
thank you for bringing the wind and the cold. how much stress will the markets feel from now until the vote on possibly december 10 or 12? andrew: i think the markets will be in limbo. we have been in a long period of time with uncertainty about what the endpoint will be. we know we are getting closer to the endpoint but i think markets without that this will pass or pass in this form. i think we could be in this period of volatility from now until when we have the meaningful vote, and then afterwards. there still seems to be a high chance this will not pass on the first attempt and that could drive more volatility after that. francine: so what we have heard in what we have been briefed on from various corners is what could happen if the first vote fails. markets could tank. there is actually a second vote that gets passed through, but that is a test scenario. the more we talk about it, the more likely it seems that
4:10 am
markets move that way? andrew: i am more skeptical of that scenario. cleark there was a very direction for the market. the market was under a very clear level of stress. this time it is a little less clear that you get a firm market reaction. i don't think i would count on the markets to provide that push. otherk it will require actors to do it, but i don't expect markets to give us that effect. i do think the good news for u.k. assets, there is still a risk premium, and uncertainty premium on the brexit. u.k. equities -- all the major equity markets in the world, they are cheaper to their global peers. sterling is still very cheap on a variety of measures. so there is uncertainty out there. you also have a question that in this version does not us, we don't know yet, we have to wait -- is it more likely that one gets through aliment is
4:11 am
something closer to europe, or further away? and if you think between those two, a closer option is more likely, that is what our economists think. that is good for sterling in the long run. therene: the market, if is a referendum come with that be positive or negative? andrew: i think the market would price it in as positive. it would bring uncertainty but it would probably put on the table a scenario where you have a much softer version of brexit and maybe even remain itself. both of scenarios probably involve a much stronger pound reared i think the market moving towards a stronger referendum would see a rally in the pound and also a rally in other assets, as well. francine: thank you, andrew. he will be staying with us for the hour. up next, live at climate finance conference in paris. we have two interviews, first with the chief executive of
4:12 am
sedition a row and also the nordeaxecutive of bank. this is bloomberg. ♪
4:13 am
4:14 am
♪ economics, finance, politics. this is "bloomberg surveillance." i am francine lacqua, in westminster today talking about brexit, and also climate change on the heels of the paris agreement. global leaders met in paris four years ago for the fourth climate finance day. the event examines what public and private sectors need to do to battle climate change. leaders are expected to fund conservation projects and
4:15 am
efforts to fight climate change. joining me now is casper von koskull, chief executive of nordea bank. thank you for joining us on this important day. we understand that banks in paris are launching a roundtable, presuppose of banking. -- principles on banking. what does that mean for nordea bank? casper: it means that we can enable our customers to transform their business models to amort -- to a more sustainable future. it means mitigating risk, improvement of resilience and, of course, trading opportunities for a better society. francine: does it actually give you competitive advantage? do your clients bank with you more, thanks to this?
4:16 am
casper: i think over time, yes. it is not only the right thing to do, it is the smart thing to do. i think this is what our constituencies, our customers and society, wants us to do. we take this extremely seriously, and i see it as not only our role our responsibility . it is the smart thing to do. --ncine: the s&p -- the fs rbs is nong with globallyassified as a competitive bank. what is that mean for your dividends? casper: i think it is too early to say, i have for some time argued that given our very focused model, simple model in , we don't qualify.
4:17 am
i am pleased the decision was made. what the impacts are, i think we will have to see, i think the decision is the right one and something that we have also argued for? casper: but could it impact your dividend policy? again, i think it is too early to say. i think we have just made the transition and transferred from the swedish system, we are now under a different system. we will work under that regime now for the next 12-18 months, then we will see the impact, if anything, it has. but i think it is too early to comment on that. francine: what is businesslike at the moment. in the fourth quarter, what is market activity like? what are your clients asking of you? casper: i think the fourth quarter is going in line with what we expected.
4:18 am
we have seen somewhat higher demand on the corporate side. otherwise, i think it is in that line with what we have been expecting. see the quarter through, then we will report the numbers, in late january. francine: our markets a little more subdued than you were expecting? tradet know if if it is concerns or what we are seeing overall with geopolitics, do you think activity will remain subdued, because of some of the things you have just been highlighting? for the time think being, i think it is in line with what we have been expecting. changes expect very big in the overall demand richer. i think it is going in line with what we have expected -- the overall demand picture.
4:19 am
i think overall, the fourth quarter, it is early, but so far -- it would be wrong to draw conclusions for the whole nothing iut i think would comment on yet would be different than before. you so much,nk casper von koskull, chief executive of nordea bank. in can join us anytime london in the studio when you come. we have a little that of breaking news on the car sector, mitsubishi. nejra: yes, we have heard that the mitsubishi motors board has dismissed carlos on as chairman. masiko is to double as chairman. we had the meeting from mitsubishi earlier today following the one from nissan. mitsubishi is the smallest out of the alliance between nissan and renault.
4:20 am
the shares have popped up higher than 3%, higher for a fourth day iliad -- fourth day, francine. francine: up next, our exclusive interview with frederic oudea, chief executive of societe generale. we will talk to him and asking about the finance green project. this is bloomberg. ♪
4:21 am
4:22 am
4:23 am
♪ ♪
4:24 am
francine: this is "bloomberg surveillance." i'm francine lacqua, here in westminster. let us go to tailor in new york city for the bloomberg is not flash. the struggling commodities trader extended its deadline for marathon restructuring to december 11. the company says authorities in singapore extended a waiver allowing the extension. the traders survival plan was thrown into jeopardy last week when the country announced an agency probe into its accounts. , isish airways owner, iag preparing a bid for a u.k.-based airline according to the sunday telegraph. pit the airline against virgin atlantic which confirmed that it is also considering a bid. the next step in an ongoing rivalry between the two airline owners. at 1mdb meetings
4:25 am
was erased from the records. the added happened before the report was presented to a parliamentary committee in 2016. the malaysian anticorruption commission says it has started an investigation into the matter. and that is your bloomberg business flash. francine? francine: thank you so much, taylor. guest,get to our next chief executive of societe generale, the largest bank in france, frederic oudea a. thank you for joining us. we start with climate change and climate finance this private financing. do you worry that geopolitics , whether itconcerns could be traded or lower revenues and market activity, whether that will affect climate change and climate finance? eric: francine, good
4:26 am
morning. i am delighted to be here. i am not sure i understood your question exactly. but let me say, we are in paris effectively to deal with how we can contribute to the renewable energy financing and energy transition. i think we have, as a bank, among the first to commit to and we are effectively contribute -- we effectively contribute to this comment goal. we have set clear objectives regarding this commitments for 2016-2020, 11 billion euros of financing to renewable energy. 58% of this objective us. we are moving forward and it is not a reality. isncine: societe generale
4:27 am
one of those financial companies which has decided to either stop or limit this mess in carbon intensive projects. so you are losing business because of this. decided to do is effectively contribute positively to the changes in society. today, as i said, it is a reality, this business of financing projects to manage the transition. it is something which is happening underground. requires from our clients a better understanding of the risks involved. we are there and we are accompanying our clients. francine: the your plan in a climate-related asset disposals over the next couple of years? frederic: listen, what we are doing is monitoring the decline of fossil energy, in particular,
4:28 am
step-by-step.s, as we have decided to stop any new coal projects. we were among the first to make that decision. so we are managing the transition in our portfolio step-by-step, considering, of course, that we need to balance the climate change and the need for growth in certain countries, which still need different sources of energy. but we are really very committed, again, to finance more and more renewable energy, and of course, to have progressive evolution of our portfolio. so we don't plan disposable years, but step-by-step, after year, the decline of traditional energy and coal assets in particular, is happening. francine: away from, change.
4:29 am
are you comfortable or uncomfortable with the way that markets are progressing? is there more risk to the upside or to the downside? frederic: the you mean in terms of the global economy? of thee: yes, the impact global economy on markets. will we see more volatility on markets? frederic: listen, we remain over all pretty constructive in the coming quarters on of the global economy, and in particular, for the u.s. and the eurozone. the financing conditions in particular remain very good. at the same time, it is safe to say that there are more risk potentials -- geopolitical risk on one hand, and we have also seen a correction of the market recently. the question is the magnitude of the correction, and whether it could derail what remains fundamentally still a good
4:30 am
economic condition. when you speak with ceos of companies, they feel comfortable .ith the near-term prospects as i said, the question at the end of the day is whether psychologically there will be this growing sense of unease, or less confidence, which could again, potentially change investment decisions. we are not yet their interviews. we remain pretty constructive for the coming quarters. francine: societe generale also reached an agreement last week with u.s. authorities to settle its major legal issue. what were you focused on, -- what are you focused on now? is there a new project you can take on now that that is dealt with? frederic: first of all, we are very happy that we have put the past behind us. the another- at
4:31 am
day, societe generale will have been involved in a limited number of litigations. it is behind us and it gives us for the coming-- years. what is very important is that the way we do business today does not trigger any new litigation in the next 5-10 years. that is why we put so much emphasis on culture and conduct. how we can ensure that every member of our staff, etc., has knowledge of the new requirements. the world has changed also, from that perspective. requirements of good agency have increased dramatically. sanctions are now used as an international web on and we need to comply -- international weapon, and we need to comply. we are going to focus on that in francine: how is your french retail business going? frederic: sorry?
4:32 am
can you repeat the question? francine: i was asking about your french retail business. how is that going? frederic: the french retail business, of course, like any activities still a very low interest rate environment. as you know, when we put our bank, wethe central stay at 0.4%, very different from the u.s. at the same time, the volumes of credit are going fine. well.onomy is doing the volumes of activity are positive and the business model target, wealth management is working pretty well. i am pretty hopeful that the ecb will stick to its progressive
4:33 am
normalization of monetary policy. with exit, this issue of negative interest rate. that is why i'm very -- we are transforming the business with digital technologies. we are adapting to this environment. step, we are making good progress. francine: thank you so much for your time. that was the chief executive of societe generale. taylor: russia has fired on ukrainian warships capturing three and injuring some of the crew. this renews tensions. the incident occurred near crimea. it earlier cut off access for security reasons. the united nations security council will hold an emergency meeting later today in new york.
4:34 am
theresa may is urging lawmakers to embrace her brexit plan. she has announced that parliament will hold a vote on whether to accept or reject a deal before christmas. eu leaders finally signed off on the agreement over the weekend that warned there b."no "land be." -- "plan >> this is the best deal europe. for britain and this is the only deal possible. taylor: saudi aramco remains committed to an ipo and the only question is timing. gianto says the saudi oil is committed to a majority stake . the two cannot happen at the same time. aramco has been hurt by falling oil prices.
4:35 am
>> these two cannot go concurrently. .ou cannot list one we are going through a major acquisition. we need to do it right now. [indiscernible] taylor: emmanuel macron is facing the biggest challenge of his presidency. the police used tear gas and water cannons against thousands of protesters. a grassroots movement, the so-called yellowjackets, have shut down -- against an increase in gasoline taxes. the process show that greater opposition that macron is facing next year when he looks to overhaul --
4:36 am
the associated press reported security forces fired several rounds of tear gas at migrants after some tried to breach the fence. severalies approximate caravans are now in mexico. global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. francine? francine: taylor, thank you so much. italy is looking at changes at its 2019 deficit target. they will weigh the nation's various budget goals. in a cooling, the deputy premier says there can be dialogue with eu over the deficit target. andrew, every time you come on we talk about brexit and the
4:37 am
spread between italian bonds in german bonds. will it get easier question mark -- easier? andrew: there is an interesting link between these two stories. where out today with morgan stanley's 2019 outlook. -- we are out today with morgan stanley's 2019 outlook. the rest of the world is going to look better relative to the u.s. that can apply to europe. -- there is a lot of uncertainty in italy. the good news is that markets are already quite concerned about these issues. expectations are quite low. if you look at the situation like italy, but there is also -- this also applies to u.k. this also applies pressure. politicians and just their stance. -- politicians adjust their stance. the best case is they are wider
4:38 am
for current levels. it doesn't prevent the european economy from growing a trend. francine: how concerned are you on the u.s.? if the u.s. slows down, is that it for fed hikes? andrew: that could be a market that surprises people. we have u.s. growth decelerating to just a 1% growth rate next year. after the fed hikes in march and june and trying to stay on track, but when it is confronted with that kind of deceleration, it has to pause. it has a number of important effects on markets. that should weaken the dollar. that should drive some convergence. if you have a weaker dollar and u.s. 10-year yields that are at current levels were lower, that is quite supportive for em. in a big change, last year we are underway with equities. this year we are changing that.
4:39 am
we think they are going to be s.tter performance francine: are we talking slow down a recession? andrew: the odds of recession, our economists put it at one and five. that is higher than where the market has it. it is more about a slowdown. i think it is about the rates of change are going to look tough. this is a market in the u.s. that had an enormous amount of adrenaline by fiscal stimulus. next year that pulls back. you are going to see sharp levels of deceleration. 500 running a 25% every year. we think it slows the 4% next year. it is still positive but a really large deceleration. francine: if you look at the yields, and you think it will
4:40 am
grow a trend compared to the u.s. andrew: we have the spreads modestly weiler -- wider. the treasuries will do better than people think. if we think about it this way, if u.s. 10-year yields struggle to break the 25 and 2018 when in 2018very strong -- when you had very strong growth. next year we think we have slower u.s. growth, i think it is going to be harder to break those levels. the treasuries look better. francine: andrew, thank you so much. coming up next, while first we are at westminster so we will talk brexit. we will hear from the saudi aramco chief executive. our exclusive interview is next. online sales on black friday. we will talk about the health of the retail markets. this is bloomberg. ♪
4:41 am
4:42 am
4:43 am
francine: in london. let's get a check on your markets. we are seeing a rally both on a regional basis and also industry groups the stoxx 600. the benchmark up 1.3%. on some signals that we could be getting some compromise, some signs of compromise from rome, they rallied hard. the ftse gained. the btp drops. the bone spread on around of -- of.bund spread on a round
4:44 am
testify later?hi we saw u.s. equities get punished because of the drop in energy stock. we have seen several weeks of losses in oil but brent and wti -- net longs on brent have docked at the lowest. with the underperformance of energy stocks dropping into correctional territory on thursday, looks like we could get a bounceback in today's session. the 10-year yield bounces back on a handle. we wondered if we were going to attack that 3% level of the downside. francine? francine: saudi aramco's ambition is to become a leading chemical maker.
4:45 am
the oil giant saying they are going to tap into areas where demand is growing faster. the project is backed by $500 million in investments planned for the next decade. to yousefr spoke gamal el-din in saudi arabia. >> demand is salty. we are looking at 1.3 and 1.4 this year. year, it will also be the same in terms of additional demand. we are crossing 100 billion barrels. there is a lot of demand. we are not looking only at oil. we are looking at gas. at chemicals. there is a lot of growth potential for saudi aramco as we are attracted balance. -- we are trying to balance.
4:46 am
yousef: there is skepticism among investors about your ipo ambitions, because it has been delayed a couple of times now. 2020? 2021? is that date firm? could it happen sooner? highnesshis royal highlighted earlier that we are committed for the ipo. also said we are committed to the ipo so the government is committed for sure. it is about timing. that thetalk before ipo would have happened -- geico the second half of 20 -- yousef: the second half of 2018. amin: we talked about the .cquisition of a major stake
4:47 am
these two cannot go concurrently . you cannot list one. you are going through a major acquisition. the acquisition makes a lot of sense and we have to do it right now. yousef: the king has taken a lot of steps to bring in foreign investors. murder of jamal khashoggi has dampened investors interest. what is your message? amin: there is a lot of investment that is coming into the kingdom. we signed $54 billion. tomorrow you will be attending total value program and forum. we are signing more than 30 deals worth $27 billion.
4:48 am
,f you put the two together more than $60 billion of agreements and investment that were signed between us and our partners. yousef: you are not worried about any longer-term damage from the murder of journalist? amin: you will see tomorrow, total value ads for the 3000 ceoscipants, more than 150 , 80 ceos of out of -- from out of saudi arabia. francine: that was yousef gamal el-din speaking to i mean assayer. amineatures -- speaking to nasser. that is according to a person familiar. opec is meeting next week to discuss the groups 2019 production strategy.
4:49 am
andrew sheets from morgan stanley is still with us. 2019, do yous for assume a benign environment from oil? andrew: we think oil prices move higher. it depends on the opec meeting. we are expecting there is a production cut. hasction is surprised -- surprised us. y haven the u.s. where the produced more than possible, as a move into next year within opec cut, demand still looks reasonable. the oil market looks tight. without much fair capacity our oil price ending in the high 70's for brent. it 70? how can you be so sure this is not a demand concern?
4:50 am
andrew: i think it is the second question that is fascinating. we don't have great real-time oil demand data. you can look at what is happening in bond yields and equity markets. a lot of that is consistent with a slower growth backdrop. based on the current incoming that our analysts look at, demand looks fine. i don't think we should dismiss out of hand the next year, demand might be softer. the high prices we have had can shrink that demand. is a think about next year broad investment backdrop, a slower growth extra is going to be -- growth backdrop is going to be something investors are going to have to deal with. francine: the lower oil price. i hear that europe really benefits from its. is it 35 or 65? -- 55 or 65?
4:51 am
andrew: there are winners and losers at both ends of that range. we think it benefits india, a large oil importer. that should benefit from a recent drop. in europe, around that difficulty being precise, europe has made enormous investments in energy efficiency. it gives it a different elasticity which is a benefit. even as oil prices move higher, europe has more of a cushion. askcine: today on mliv, we --n will 2018 price peak when will be 2018 price peak be seen again? andrew: we think it could get back there by the end of year. there are asterisks involved here. this is our best case. the oil balance remains tight.
4:52 am
even speaking to saudi production, it is a double-edged issue. they raise reduction now -- go ducks and now. uction goescuti online. francine: we talk retail. it is cyber monday. the strength of the consumer. this is bloomberg. ♪
4:53 am
4:54 am
4:55 am
francine: economics, finance and politics. i am nejra cehic in london. let's get a check of the markets. global context, you are seeing global back to back after several weeks of losses. you are seeing 18 year treasury yield as higher for the first time since november 2008. his a picture, the stoxx 600 -- here is a picture, the stoxx 600 higher. optimismquite a bit of . the 10-year btp yield moves lower.
4:56 am
the euro is big. --io draghi, could he poor of the risk on that we are seeing in these markets. u.s. futures pointing higher after the s&p 500 dropped into correction on friday as energy dropped the benchmark down. tom keene joins out of new york. we will be talking to the chair, nicky morgan. this is bloomberg. ♪ ♪ there's no place like home ♪
4:57 am
4:58 am
argh! i'm trying... ♪ yippiekiyay. ♪
4:59 am
mom. ♪ [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: good luck, theresa. new leaders keep their fingers crossed for theresa may.
5:00 am
aramco's m&a ambitions. $500 millioninvest and acquisitions over the next five years. the chief executive says the ipo has not been called off. italy's -- italy signals. drop. banks -- btb yields hello, everyone. this is "bloomberg surveillance." i am francine lacqua. tom keene in new york. focusing a lot on brexit but there's a lot going on. i would urge everyone to follow closely what is happening with italy. the cabinet is meeting at 7:30 local time. we are awaiting theresa may to give us a date on the vote goes to parliament. tom: in america, front and
5:01 am
center, is the russian attack on ukraine. really front and center. -- world leaders mentioning aggression out of canada. the market recovery, little bit of a bid on this cyber monday. francine: i think you are right. we are looking at russia, crimea and exactly why the market is not reacting. that is an interesting point. let's get to bloomberg first word news. taylor: british prime minister theresa may will again selling her exit -- her brexit. authority ond her a longshot campaign to persuade the house of commons to endorse the agreement in a vote expected next month. she has warned that a better deal is not possible.
5:02 am
-- the uae, a close british ally. he denied he was doing anything other than research. the government shows videos of admitting he spied for british intelligence. -- sos of beanie has beanie indicated that the italian government may be willing to change his deficit target for next year. the european commission may have posted fines on italy because of concerns over italy's growing debt. on -- firedes died on crimean forces and captured the ships. the impact could place -- the place in crimea. the un security council will meet on the matter today. alix: places to increase
5:03 am
security at the border -- mexico plans to increase security at the border. incident happened in tijuana and led u.s. authorities to temporarily shut down entry. global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. tom: currencies and commodities on a full trading week. really difficult pricing on and on day, friday. the markets closing early. it bounced futures up. steepening but fractionally here. handle not get to a 49 on friday. we are at the 50 level on friday. 3 --ix showing 23 point
5:04 am
23.35. break below 60. west texas intermediate, 5111 a barrel.- 51.11 a francine: i am looking at stocks in europe. european stocks are getting a boost. aboutse is quite positive the fact that the cabinet will meet this afternoon. i'm looking at dollar treasury. on the back of our interview with the saudi aramco ceo. theresa may is urging lawmakers to embrace her brexit plan after european leaders finally signed off. the 27 other nations took less than 40 minutes to approve the deal. theresa may says it will go before the house of commons before christmas. we are pleased to welcome nicky ofgan, a conservative member
5:05 am
parliament. .lso rupert harrison thank you both for joining us. nicky morgan, let me start off with you. how does the prime minister get this through parliament? the vote to -- we expect the vote to be on the 12th of december. appeal to the members of the public. constituents rightly having this say about this deal. people from around the rest of the country at the moment, the views are down the street. there are those who will not take a second vote. thee is a vast amount in middle who are saying, we have had to use of this. no deal is ever going to be perfect. say yes and get on.
5:06 am
weekend, back in my constituency, it came up everywhere. people wereevent, really keen to discuss it. it is important i hear from them. it tone: how difficult is get it through parliament? what happens if she doesn't? nicky: it is going to be challenging. there are a couple of my colleagues said they will not vote for the deal. 2.5 weeks is a very long time in politics. rings change by the hour. -- things change by the hour. it is going to be challenging. parliament, there is no majority in parliament. they will have to work out what are we going to do in order to make sure that doesn't unfold. it is a majority for a second vote. what questions would be
5:07 am
answered? it creates longer-term uncertainty. it is right, the pm is doing the right thing which is concentrating on making the case for her deal. tom: rupert, what happens the day after parliament votes this down? rupert: that is a very good question. we cannot rule out the possibility that theresa may manage to get the votes for the steel. the amount of commentary -- for this deal. the amount of commentary, we have this fact that there is a deal on the table. the question is the right question because ability -- because probability favors the deal. by 10 to 20is lost votes, the game is still on -- the game is still on. there isn't a small tweak to the future relationship document.
5:08 am
with that combined pressure might get it over the line. if the market is much bigger than we are into plan b. his theresa may able to stay --und and lead that plan b is theresa may able to stay around and lead that plan b? tom: what i find here and i am speaking as an amateur on all things exit, is the idea that we are going to amend or we can negotiate for that. . don't hear that from brussels it is there any wiggle room here for members of parliament? nicky: you are right. that is not the message we heard from brussels over the weekend. appetitea potential for people who want the fundamentals of the mutual agreement which relates to the
5:09 am
backstop relating to the border between north island and the republic of ireland to be negotiated. i don't think that is up for renegotiation. the potential for further move , the norway model. we have agreed a u.k. wide customs arrangement is a possibility. the eu giving nothing away as to whether they will entertain that. and i, we all know that no negotiation is quite done until the 11th hour. we don't reach the 11th hour until the 29th of march next year. francine: if this deal fails in parliament, will he be backing the referendum? nicky: i feel really strongly
5:10 am
around this. i understood it was something that we would have a say on. [indiscernible] to sort this out. if we cannot do that, i think there is something greater that is in trouble and our parliamentary representative democracy. for a constitutional reason, i think a second vote would be a bad idea. francine: even if you could argue we are better off in the you than the better deal -- in the eu than the better deal. this: 70 million people in country took a different -- 17 million people in this country took a different view. secretary is going to be looking at the government analysis of the deal. deal is going to be as good
5:11 am
as the one we got but people voted for change. tom: i am going to rip up the script, nicky morgan. people voted for change. what is the change right now other than the presumption that parliament is not going to go for this? right.you are the point is, we have had two years of u.k. politics stalling while this deal has been negotiated. we will carry on having two years of stalling. negotiationget this agreed, not much is going to change but i think people begin to see that -- i do a lot of work and looking at financial services. in the city of london, there is if we areor thinking, not going to be a part of that,
5:12 am
what would we do differently? what international standards would we look at? it is going to take quite a long time for that to unfold. that is the discussion that i can begin to see people think about. tom: i know you are transfixed by chelsea but you are back to wondering who is going to replace prime minister may. is there a full-blown discussion about who will replace the prime minister? am i being rude enhancing -- in asking that question? nicky: a number of my colleagues put that question on the table earlier on this month when they said they were going together letters to defeat the prime minister. that attempt failed. it would be the height of madness to change prime ministers. there is discussion, nothing formal. the only truth is there is no
5:13 am
replacement because whoever takes over the job inherits the same arithmetic. they are not going to have any better of a landscape in which to negotiate. for all the reasons we have heard, the prime minister has shown resilience. on this i have to say i think she is acting in the country's best interest. shoulde: rupert, how markets look at this? is it a no deal first time but there is a second vote to get it through? rupert: there's been a lot of commentary. the problem is that is priced in. most people are expecting the deal. i have identified [indiscernible] it was a prediction. that if the vote is quite close, i don't think
5:14 am
markets will respond very negatively. a lot of that is because all these plan b's are more market friendly. you are going to end up with markets having a problem with pricing. a small tail risk. the possibility that something is more market friendly along the e.a. lines. the reason we have seen more volatility is people are looking through -- francine: nicky, all bloomberg viewers know you are you justdent they are prepared know you. are you confident they are prepared for a brexit? beky: if there was going to in brexit, we have ahead of revenue and customs before us and we asked about the systems that would be necessary in the event of a no deal.
5:15 am
they cannot put them in place because they know what the premises are to design software's desk software and systems. .- software and systems what they have to balance, raising money, security and the border checks. it is going to be a question, sub optimal what would happen if we would lead with no deal. tom: sub optimal brings up heathrow. how are customs going to change at heathrow? everybody else like ugly americans, it takes the hours to get through customs. how do you perceive heathrow will be after this agreement? nicky: it is a really good question. there are plans being made in the home office. you are talking about people and borders.
5:16 am
i was passing through the border last week myself and thought, i wonder what the signs are going to look out -- look like. if you are a part of switzerland or the e.a., you still get to go .hrough the quicker queue is that something that can be negotiated? heathrow is a huge freight hall. they bring in freight from around the world. one of the things we are going to have to change is we have 140,000 more companies in this country so they are not filling change.at is going to training and getting people use is those sorts of forms, that all takes time. it can be done but it takes time. they will not be exporting. that is when you start seeing the damage. that is why no deal brexit is
5:17 am
damaging. francine: november 26, what are leaving theof u.k. eu in a messy way? nicky: i think it is quite high. i think it is quite 50-50. if this agreement doesn't get isn'ted and parliament able to come up with an alternative, it is possible the government might say, that is its. we are handing over -- that is it. where handing over a no deal. is colleagues may find out we run out of road. francine: thank you both. nicky morgan joining us today and rupert harrison stays with us. dr. clemens fuest coming up next. we talked germany and german growth. -- we talk germany and german
5:18 am
growth. this is bloomberg. ♪
5:19 am
5:20 am
5:21 am
>> this is "bloomberg surveillance." tom and francine from new york and london talking brexit. german business sentiment that dipped further.
5:22 am
mario draghi considers whether more stimulus is needed. isning a -- joining us now dr. clemens fuest. thank you for joining us on bloomberg surveillance. how worried are you that trade tensions will escalate putting pressure on german exports? dr. fuest: there is a real danger. currently the conflict is focusing on china but still there is the issue -- so the risk has not gone away. the hope is the trade conflict will focus more on china. this is a problem for the world economy but less of a problem for europe. is thee: how significant
5:23 am
cdu leadership on december 7? growthhat change the prospects for germany? they are: whoever wins the two candidates -- both of traditionalnt conservative party values. both are pro-europe so i don't think that is the big impact. other risks like italy are more significant. francine: what worries you most? how does that impact german confidence? dr. fuest: italy is the bigger problem. brexit is more of a short-term issue. if the comments reject the deal, that would be a problem -- if the commons reject the deal, that would be a problem. italy is the greater problem. if italy ins of any greater financial crisis, that could be
5:24 am
a bigger problem. tom: tom keene in new york. good morning to you. would you explain the auto input in germany? i understand it is different than the united states. dr. fuest: the auto industry has recovered little bit but suffered a setback in recent months. i love that is related to the difficulties in car emissions and slow down car registration. this is a transitory issue. the bigger problem is the whole debate about the diesel crisis, the whole debate about electro mobility. there are question marks over the future of the big car , not the -- over future of the big car companies.
5:25 am
continue, that would be a big problem for the whole of the germany economy. francine: what kind of euro-dollar level do german exporters need? exporters areman benefiting from the low value of the euro from the strong dollar. live withpanies could a higher euro, a stronger euro, with exchange rate, 120 21 25. to 125. much.ne: thank you so that is clemens fuest. we will continue the conversation coming up on
5:26 am
bloomberg surveillance. we will talk more about saudi arabia. we had an exclusive conversation with the ceo of saudi aramco. coming up, we talk treasuries, political risks. one of the main risks in geopolitics. what happened with russia. we will talk a little bit about that. we here in westminster, it is not raining yet. a lot of arrivals at downing street later went to resume a meet with the cabinet. -- when theresa may meets with her cabinet. this is bloomberg. ♪
5:27 am
5:28 am
5:29 am
tom: good morning, everyone. bloomberg surveillance from london and new york. one of the great themes we saw today. next hour, will be a
5:30 am
lower inflation drifting into december and 2019. let us drift to first word news. here is taylor. theresa may and european union leaders are on the same page. none of them wishes the brexit deal to fail. may will try to sell they plan to a skeptical parliament. there is no plan b. ireland's prime minister said any other deal only exists in other people's imagination. in the u.s., democrats will investigate whether president trump's financial ties to saudi arabia influences reaction to the murder of the saudi journalist. the democrat said it would be a responsible not to find out. adam schiff accuse the president of misleading the country about the killing. in northern california, the deadliest wildfire ever has been
5:31 am
contained after more than two weeks. at least 85 people were killed and the number of missing has dropped in recent days. the fire destroyed almost 19,000 buildings, most of them homes. bernardo bertolucci has died. he won an academy award for the 1987 hit the last emperor. he may have been best noted for his controversial x-rated film the last tango in paris. he was 77. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is "bloomberg." francine: thank you. buttrading higher today still deep in bear market. close tobia is pumping 11.2 million barrels of crude a day. that is the most since the kingdom extracted its first oil
5:32 am
nearly a decade ago. we spoke with the chief executive of saudi aramco. said he wants to become a global refiner and chemical maker. he addressed uncertainties around the ipo. here he is. >> demand is healthy. we are looking at between 1.3 and 1.4 of additional demand. next year, will be the same. we are crossing 100 billion barrels. there is a lot of demand in our industry. we are not looking only at oil, we are looking at gas and lng and chemicals. potential as we are trying to balance our upstream and downstream. there is a lot of growth potential. >> a bit of skepticism among
5:33 am
investors about your ipo ambitions. it has been delayed a couple of times. 2020-20 21, is that firm or could it happen sooner? as his royal highness highlighted earlier, we are committed for the ipo. the minister of energy has said we are committed. the government is committed, for sure. it is about timing. the talk before the discussion , it would have happened in the second half of 2018. we talked about an acquisition sabic.jor stake in
5:34 am
these cannot go concurrently. the acquisition makes sense for us. we have a strategy of shifting 2 million barrels to 3 million barrels of crude to chemicals. the kingdom is taking steps to bring in foreign investors. murder of the jamal khashoggi has dampened investor sentiment. what is your message to foreign investors? >> there is a lot of investment coming into the kingdom. signed $34 billion worth of investment with partners. attendingyou will be we are signing more than 30 deals worth $27 billion.
5:35 am
,f you put the two together more than $60 billion of agreements and investments that were signed between us and partners. >> you are not worried about any longer-term damage from the murder of the journalist? addou will see total value more than 3000 participants, more than 150 ceos, 80 from out of saudi arabia. francine: that was the saudi aramco chief executive. let us get straight to yousef gamal el-din in saudi arabia. thesaid what surprised you most in the conversation, do investors believe in the ipo? that is the thing. they was the thinking
5:36 am
would lead to downstream units and it suggests they could get a violation upwards of $70 billion. it is the second-largest -- a valuation upwards of $70 billion. it is the second-largest. that is not on the table. they are looking to create synergies and deliver on a stronger ipo. the other component is they are trying to get on with a business as usual message, they are working through the aftershock of the murder of jamal khashoggi. going to ask you about the murder. is investor money back? there was a backlash. has the government dealt with it in a way that they can put money back in the kingdom? government has made it clear that they have pushed
5:37 am
this issue through the legal system. the number of saudi's that have been charged is clear. the story is more transparent than it was at the get-go. it was difficult to get information from the government about what was happening. when it comesbers to appetite levels for equities and bonds in saudi arabia. that took a hit. the government made the announcement and they have signed billions of dollars in agreements. key names all the way from siemens and other household names are here and represented which shows you how this story is moving. that non-interview, the elephant in the room is will the american wall street firms show up to do this deal or do a bond transaction if they cannot float equity.
5:38 am
firms doingl street right now in riyadh? yousef: they're trying to drum up business. that much is clear. the ipo getting pushed is not ideal but it is something they can work around. what a complex transaction of the scale and size. this is one of the largest petrochemical companies in the world. there is plenty here for investment banks to work around and maybe this is a signal that aramco has appetite for more mergers, they want to pick up more assets ahead of the ipo, if it happens. francine: thank you so much. yousef gamal el-din joining us from saudi arabia. let us get back to rupert harrison. oil,you look at demand for
5:39 am
a lot of it will be dictated to what happens with opec next week. how can we be sure it is not a lack of demand pushing down the price? rupert: we were talking about lack of demand and fears around global growth. what has accelerated has been two things. there has been a realization around the implications of saudi arabia being caught in a weak position in relation to the united states. donald trump is a factor. that is going to limit ambitions in relation to the oil price. they need to keep the noise down. there are continued upside surprises on supply. is, from theion saudi point of view, what is enough? this new level is probably enough to keep things quiet enough and we could continue to
5:40 am
get upside surprises from u.s. supply. it has got to be less than we have had. tom: when you look at oil down and lower, you look at the index we saw in the conversation in germany, is blackrock framing for a lower inflation than what was expected? we are thinking about lower global growth. is longation response and this is one of the key crossing points we have which is the market is worried about global growth. the market is looking at three things that can bail us out. the first is the g20 summit. the market is hopeful that china is going to put a floor on the growth and have some sort of
5:41 am
stimulus that can bail out the global economy. i'm not sure that is going to happen. inflation, the market has moved to price in a more dovish fed. that is where the risks stand. the fed is thinking about the labor market and inflation in the u.s. those pressures have been building a long time. there is a risk the fed does not deliver. tom: well said. rupert harrison with us a blackrock. little bit of healing today after a difficult friday. a shortened trading session. mark mobius of mobius capital partners. stay with us. this is "bloomberg." ♪
5:42 am
5:43 am
5:44 am
5:45 am
tom: good monday morning. francine lacqua in westminster. by an transfixed important moment for brexit. this is where they say yes to the divorce. she has got to bring it home. parliament may disagree. there is other news. if you're catching up, you need to figure out where the black the peninsula of crimea touching up. this goes back hundreds of years and an expert on russian and ukrainian history, gregory white, joins us. thrilled to have you today. across thebridge
5:46 am
strait but there is a longer bridge built. would these russian ships have fired in injured ukrainian ships if there had not have been a bridge? greg: the bridge seemed to have precipitated it. we know the russians fired on them and this is about the territorial waters around the crimean peninsula. russia has been trying to defend the bridge. it was a project putin ordered built. there is no land border. russia has built up its navy in ov, an important trade route for agricultural shipments. tom: not to be a media animal
5:47 am
but i will go there. utin order this attack? greg: we do not know the answer. in, theone hand, for put timing is not great to have the issue come back up before the g20 meeting where he was going to put this issue on the shelf. it is not clear it plays well to him. the reaction has been very strong for a vote on martial law which could delay presidential elections next spring. it is unclear at this stage who made the call. the russians are blaming the ukraine and the ukraine are blaming the russians. , it is a chance to
5:48 am
show the ukraine that is western allies are not ready to protect it when it comes to shooting. a could complicate efforts to patch things up with trump and get that dividend he has been hoping for. francine: could we see more sanctions? i count germany, estonia, finland coming in saying we need to be tough on russia if they were behind this. what would sanctions look like and what is the possibility of sanctions? with theseunds like calls, we are likely to see additional sanctions. limited to sanctions on individuals and companies we have seen. market reaction has been muted. the ruble has weaken some. be if thesus seems to sanctions come, they will not be bad.
5:49 am
sweeping sanctions, there is not a lot of appetite. it washington, they have barely said this and trump's attention has been limited. in europe, they have got other issues to worry about, countries like italy calling for easing sanctions, not adding sanctions. it seems like the pressure is not too great. francine: thank you so much. rupert harrison stays with us. at 6:30p, colin chen our in new york and conversation with the french finance minister this afternoon. this is "bloomberg." ♪
5:50 am
5:51 am
5:52 am
taylor: this is bloomberg surveillance. i'm taylor riggs. more follow from the arrest of carlos ghosn. nissan wants to direct imbalances to japanese carmaker. towas the limited power
5:53 am
nominate directors to its board. -- has joined nissan in dismissing goahosn. >> i have argued that given a very focused model, we do not qualify. i am pleased this issue has been , what the impacts are, we will have to see. the decision is the right one and it is something we have argued for. taylor: that is your business flash. tom: thank you. great to be with rupert harrison of blackrock. he joins francine look walk -- francine lacqua.
5:54 am
dealing with a correction in the ftse, the s&p 500, john templeton would say shares are on sale this morning. how do you justify acquiring equity shares after a 10% all? -- fall? rupert: it is a nervous moment. the news flow has been negative and we are seeing that reflected in commodities, in the, and in equity markets. one of the things that is keeping investors more in the middle is the fact we have seen such big corrections in markets. the s&p 500 is continuing to break the october lows. you can construct a more optimistic case which is if we
5:55 am
see more of a benign shift in the global growth. the story would go, chinese authorities doing enough to put a floor on the growth, reduce downside risks, seeing a bounce back in europe. yet. is not evidence of if we see growth coming off in the u.s., if that is on the fed,n side, with a dovish you could see a softer dollar, yields not driving a risk market the same way they have been and may be some of the asset classes that were most beaten down having an environment where they can outperform. it is about can we get a benign shift or is this going to roll over into something less benign. tom: rupert, thank you so much.
5:56 am
it is amazing, we just got through one hour and we did not address the meetings going on in buenos aires. i can see you and me in buenos aires this week. francine: we addressed it with rupert in the break. we were thinking about the heads of state showing up. will try with the saudi crown prince. be interesting to see who he meets with. tom: it will be extraordinary. please stay with us. this is "bloomberg." ♪
5:57 am
5:58 am
comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers.
5:59 am
"activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. unstopand it's strengthenedting place, the by xfi pods,gateway. which plug in to extend the wifi even farther, past anything that stands in its way. ...well almost anything. leave no room behind with xfi pods. simple. easy. awesome. click or visit a retail store today. tom: good morning. the search for a legitimate fixed to the market.
6:00 am
the s&p 500 has corrected. bitcoin finds a new low. we go in search of inflation. james sweeney of credit suisse. russia attacks ukraine warships east of the crimean peninsula. nato requests restrain. canada sees aggression. it is cyber monday, which is different than black friday or wallet wednesday. that is what we get to next. there is no money in the wallet. this is bloomberg surveillance live from new york, i'm tom keene. so close to bonded street, she may go to cyber monday, francine lacqua at westminster. parliamentarians do? francine: they talk about the
6:01 am
deal and how they see the prospects if the deal does not get voted through parliament. i would imagine a lot of people are trying to figure out what day the vote will be on. be sometime before mid-december but they are expecting the prime minister to give us a date. cabinets are meeting with the prime minister. we saw pictures of cars arriving. we are in a wait and see situation. there is a secret spreadsheet both for and against. that is what we have to get into. got a spreadsheet for cyber monday. here is taylor. theresa may will begin selling her brexit agreement to a skeptical parliament today. the deal was finalized with the european union over the weekend. may has staked her authority on
6:02 am
a campaign to persuade the house of commons to endorse the agreement in a vote next month. she has warned a better deal is not available. the united arab emirates has pardoned a british academic sentenced to life for spying. it ends a diplomatic headache for the uae, an ally of britan. matthew hedges denied he was doing anything other than research but the government showed videos of him admitting he spied for british intelligence. in italy, deputy prime minister matteo salvini has signaled a possible concession to the european union in that budget fight. salvini indicated the government may be willing to change its deficit target for next year. the european commission may impose fines because of concerns over the growing debt. there was a germanic renewal of tensions between russia and ukraine. russian forces fired on three ukrainian warships and injured their sailors. it captured the ships.
6:03 am
the attack occurred near crimea which president vladimir putin annexed four years ago. russia says the ukrainian ships violated its waters. the un security council will meet on the matter today. mexico pledged to increase security at the border after u.s. agents fired tear gas at migrant to try to get through the fencing. it led u.s. authorities to shutdown the border crossing at san ysidro, california, the nation's busiest. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is "bloomberg." tom: thanks. equities, bonds, currencies, commodities off a short trading session friday. , a risk on up 268 feel.
6:04 am
$50 ad not get to barrel. 6, many would expect that to be higher. there is the friday close. wo prices for oil, the global price brent and west texas intermediate. what is mosthink interesting when you look at european markets, they are up. investors are looking more optimistic about the outlook for in thend interest rates wake of another miserable week in the markets. stocks are gaining and i am looking at italian bonds climbing. atre is a cabinet meeting 7:30 p.m. local time and they
6:05 am
may give a little bit more in the way of what brussels wants. in the united states, it is a new set of news items. the important issue of russia attacking ships within the ukraine and in taiwan, and election, the taiwanese party , the traditional party did better. that was a resounding change within taiwan. right now, the united kingdom. with bloomberg news, an expert on brexit and its affects on the politics of the nation. stephanie flanders is the senior editor for economics with much on the dynamics, the linkage of the economy. why don't you pick it up with mr. hutton? spreadsheet. has a
6:06 am
throughre and it goes every member of parliament which way they will go. will it be for theresa may? be to getult will it it through parliament? rob: people who have committed to vote for her are 230. she needs 320. she is not close. the only way i can imagine that would shift is if she managed to win over blocs. if she managed to get a bunch of and it is hard to see what you could offer that would not alienate another. francine: if you do not vote for this, we crash out. will people believe that? rob: none of them do and all of
6:07 am
them have their alternative. all of those have in common is to them isute through voting this down. if you want to a second referendum, you both this down. voteu want no deal, you this down and you get no deal. that threat does not work. 2019.t is november, i have the recollection of you waiting in the evening of brexit and the morning after, -- of you ghing in the evening of brexit in the morning after. what is the surprise? stephanie: it took as a long time to get to where many people said we would. it is a deal which pleases no one.
6:08 am
i was explaining that most of the public want to be part of this club but not abide by the rolls. -- by the rules. you are always going to have people who did not like it for reasons. , i agreenteresting with rob there is little chance of how you could pass the first vote. admirationing through the public. they are on paper more in favor of brexit than the mps. bethat admiration starts to an acceptance of the deal, those mps could face pressure from constituencies. i do not see it more than rob does. tom: to those of us distant, what is most remarkable is the labour party missing in action.
6:09 am
are the evidence an opportunity -- events on opportunity for labor? stephanie: there are people who would like to push a closer to that second referendum. the labor party is split almost down the middle on this just as conservatives are. that is one reason people have started talking about a second referendum because it solves problems. they can kick it back to the public. paper, it is an opportunity for jeremy corbyn. thes not a defender of european union. he takes persuading. it is hard to get through to his inner sanctum with a pro-european view. do you here in the corridors of westminster? there will be a
6:10 am
second referendum? if it does not pass, what can the prime minister give? rob: we cannot see anything. we went through all of the things that might happen and all our unlikely. the second referendum can only get through parliament in time if the government wants it. the likeliest is another general election. francine: i spoke to nicky morgan. the argument is, nothing else happens, we crash out without a deal. but other people say parliament will not allow us to crash out without a deal but they cannot explain the mechanism by which parliament stops us. that is our problem.
6:11 am
they won mechanism i can see is -- the oneed mechanism i can see is you only mps.7 toan see either side opting go for that. you can easily imagine seven. i can get you seven tomorrow. that could also mean jeremy corbyn is the next prime minister. rob: it does. there are people who are so committed to brexit they would rather have corbyn as prime minister than lose brexit. francine: a final question. voteeresa may loses this in parliament, does she have to step down? rob: you would think so. theresa may's capacity to endure
6:12 am
has exceeded anything anyone thought she had. i would not bet on her quitting. stephanie flanders, since we have got you and if i can drag us away from brexit, one of the great themes in december is the dearth of inflation. do you anticipate we are going to see central-bank adjustment into the new year because of a lack of inflation? stephanie: it is a lack of inflation and a lack of global momentum. we had what we were hoping was a in thein the -- hiccup third quarter in a economies. we look at pmis outside the u.s. and there is momentum. over the lastck
6:13 am
year, as many people are doing, we got the inflation we were expecting but we did not get it for core inflation. central banks are as aware of that as anybody. is there a question about when that fed pause might happen? i think there is although i do not think you're going to get a concrete commitment from chairman powell. it is too early to say that. tom: there are stories coming out, and i do not mean taiwan is little. , wherection was stunning we saw the independence party the china-taiwan from decades ago. these are little tea leaves within the chinese debate. stephanie: if you look around asia in general, the change in politics, it was a few years ago
6:14 am
when the economic imbalances were as high as they were. in indonesia as well. you have populist dynamics coming in next year. thee is a questioning on political front and a questioning for those leaders whether that same model of them benefiting from globalization is going to work for the next phase of globalization. just as we have had in the developed world. it is on the horizon. oilcine: when you look at and prices, could it point to a downturn so that what we're seeing is not about supply but we forget it could be a demand problem? stephanie: we had them arguing about a perfect storm for the oil price.
6:15 am
we saw supply and demand worries coming into that price fall last week. there is a perceived lack of commitment to curb supply which if you combined with the demand issue. there are different directions. you look at oil, what happens to asset classes across the board. two and the year with almost every asset class down when you have not had a recession is unusual. people are trying to get a sense of whether that should change their views. does butthink it everyone is thinking the risks are going to be rising into 2020 and that feels uncomfortable. you do not get 12 months notice. tom: thank you so much. rob hutton, be careful of that spreadsheet. it is a secret. leading all of our brexit
6:16 am
coverage this morning. we will continue from westminster, from new york, oil above $50 a barrel. this is "bloomberg." ♪
6:17 am
6:18 am
tom: good morning. francine lacqua in westminster, i'm tom keene in new york. lots going on. a parliament vote next week. news out of the ukraine and russia, out of taiwan. there are other markets. speech onowell's wednesday to the economic club of new york. we go to the political club of washington.
6:19 am
we do that with kevin cirilli. i want to go with a morning muster which encapsulates the lame-duck. it is a monday morning start up. and the legendary senator from baltimore. to restore package our democracy, a responsibility to honor the vision of our founders. our duty to the american people. we can make progress for working trustingand renew congress to tackle the issues that matter. there is no liberal and no progressive within this important essay by speaker pelosi. is she running from the left? kevin: no. you saw this with her alliance
6:20 am
with the new democratic star. alexander our cause su cortez z, she was able to get her support. those closed door meetings are going to be held this week. i am struck by president who is headed to mississippi for two rallies trying to get the republican senator back into the senate. tom: within that, let us rip up the script, are the images of confederate flags from the deep south, is this a president of the deep south? kevin: he feels that is his base. after the midterm elections, the general thinking was that republicans were going to have to moderate following the
6:21 am
doubling down on the issue of immigration. have seen is a president who has gone back to the base on the issue of immigration, deal or neil deal -- deal or no deal with the outgoing mexico president. hyde,ve a senator, cindy who is in a tough reelection fight. that is dominating the discourse here. the news overnight was that the ukraine was saying russia fired on their naval vessels. how will the white house navigate this? kevin: this is tricky now that the white house is facing criticism for their relationship with russia and saudi arabia. this comes at a time when mike pompeo is going to have to try to walk a narrow political tightrope he or. days -- here.
6:22 am
days ahead of the g20 summit. tom: kevin cirilli is our chief washington correspondent. it is a joy to catch up on price james sweeney of credit suisse, his call to not was anbout inflation exceptional impression. he joins us today with a different inflation dynamic. bankse central wrong? james: we are moving from a world where you have deflation fears to a world where inflation fears are more likely. inflation, not yet. it is going to be a little while. it is boring and sideways. tom: help me. let us get this chart which is not boring and sideways. it is.
6:23 am
sectors and goods inflation. it makes for good tv. to zero. almost maybe goods inflation pulls back to true deflation. is that going to happen? james: headline inflation is going to go down as gasoline prices go down. , excluding energy, is that you're seeing upward pressure and that should continue. the trade war could make that worse and you are running at high levels of factories worldwide. there are categories that are keeping things calm in health care and housing. tom: the politics and shooting. threatens tomp permanently close mexico border if necessary.
6:24 am
this comes off of all sorts of drama over the weekend. i'm going to get the "new york post." this is the treatment out of the new york press. the president driving forward this story. that is a populism out there, the tensions, we see it with russia as well. how do synthesize all of this politics? james: when you're looking at the economy, you have to ask which policy changes are an economic shock. that is why the trade situation and tariffs are important. onget this 25% tariff chinese exports to the u.s. on january 1, it will be a
6:25 am
meaningful economic shock. it will slow global growth and give us volatility and inflation. immigration has a long-term effect but they do not have an effect on short-term wobbles in the stock market. watch the tariffs. you are expecting tariffs but you are not expecting it to plunge the world into a downturn or recession? james: we already have tariffs but our expectation is that the president is going to be able to avoid this increase at the last minute. if we get it, it will be a problem. it will be a manufacturing slump globallyglobally in 2019 if we t 25% tariff. i do not see a u.s. recession.
6:26 am
the labor market is too strong and i do not see how changing prices is going to weaken the u.s. labor market by a lot. tom: james sweeney with us. let me read the tweet we have from the president because it does contain the emotion. should move the migrants, many of home are criminals, back to their countries. do it any way you want but they are not coming in. we will close the border permanently if need be. fund the wall. the first tweet of the morning by the president. stay with us from london, from new york. this is "bloomberg." ♪
6:27 am
6:28 am
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.
6:29 am
my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. ♪ there's no place likargh!e ♪ i'm trying... ♪ yippiekiyay. ♪ mom. ♪ francine: this is bloomberg surveillance. tom and francine from new york and london. let us talk about oil, saudi producingaudi arabia
6:30 am
as much as 2 million barrels of crude a day, the most since it began extracting oil. yesterday, we had an exclusive interview with the aramco chief executive. he wants the company to become a global refiner. he dutch questions -- he'd dodged questions around the death of jamal khashoggi. >> we're looking at between 1.3 of additional demand. next year will be the same. we're crossing the 100 billion barrels. there is healthy demand in our industry. we are not only looking at oil. we're looking at gas and lng and chemicals. there is growth potential for saudi aramco as we're trying to balance upstream and downstream. a lot of growth potential. there is a bit of
6:31 am
skepticism among investors about -- ambitions.tors it has been delayed. -2021, is that date firm or could it happen sooner? >> his royal highness, the crown thate, highlighted earlier we are committed for the ipo. also saider of energy we are committed. the government is committed. for sure. it is about timing. now, the top before -- the talk before that the ipo would of happened in the second half of 2018, in the first half we talked about the acquisition of a major stake in sabis and these
6:32 am
cannot go concurrently. you cannot list while you're going through an acquisition. the acquisition makes sense and we need to do it because the strategy of shifting crude to chemicals. >> the kingdom is taking steps to bring in foreign investors. the recent murder of jamal khashoggi had dampened sentiment. what is your message to foreign investors? >> i think there is a lot of investment coming in. during, tomorrow you will be total value add program and we are signing more than 30 deals worth $27 billion.
6:33 am
together, more than $60 billion of agreements and investments we have signed. >> you are not worried about longer-term damage from the murder of the journalist? , more will see tomorrow than 3000 participants, more than 150 ceos, 80 from out of saudi arabia. tom: the aramco ceo. let us get to taylor riggs. trump: president resume'tis tweets on america's border problems today. deportd mexico to migrants, many of home are criminals. president tweets come a day u.s. agents used tear gas
6:34 am
to disperse migrants who try to get through fencing. and northern california, the deadliest wildfire ever has been contained after two weeks. at least 85 people were killed and the number of missing has dropped in recent days. the fire destroyed almost 19,000 buildings, most of them homes. the oscar-winning director bernardo bertolucci has died. he won an academy award for the 1987 hit the last emperor. he may have been best noted for his controversial x-rated film the last tango in paris. he was 77. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is "bloomberg." tom: james sweeney with us of credit suisse. chen, seniorliver analyst. he has the nature of fake job on the changing desperation of
6:35 am
retail. job onas done a terrific the changing desperation of retail. chelsea said it is not happening in bricks and mortar. tell me when do we move on? it is about combining stores and it stores as distribution points. 90% of the united states is within 10 miles of a walmart and these will become distribution points. the younger generation appreciates a different kind of experience which has to do with convenience. tom: if i go over to tiffany's and they are changing the store and you go up three floors and they are experiential, is it
6:36 am
turning into profits? oliver: it is because that traffic is healthy and that is how the consumer is shifting. adding food and beverage, service, adding employees who are well-trained, that is important. tom: can you get a reservation at tiffany's? i cannot. where is the retail within consumption in the united states? james: it is doing well. it is growing north of 4% and consumption is doing well because of the labor market. what are people buying? what kind of goods are worth it? is it the cheaper stuff, , and does that mean they are not buying what is not on sale? oliver: there is a focus on value, retailers like walmart are succeeding in gaining traffic. we are also recommending
6:37 am
sotheby's. the one reservation is that the chinese consumer, the economic environment is more cautious. consumers are going for value. apparel is stronger and there is this activewear movement happening, it is about sports and integrating that into apparel. sports, leisure, thinking about dressing in a versatile weight is the future of retail as well as streetwear plus luxury. tom only our dapper wears italian ties. how many retail zombie companies are out there and if the fed normalizes interest rates, are we going to see companies go bust? seen a cycle,e
6:38 am
including toys "r" us and this is a season where retailers are capturing market share. .e like the prospect of kohls the store closure cycle is on its way, there should not be major catalysts. we have low employment as well as wage growth. this might be as good as it gets in terms of the u.s. consumer. what we do have is a shopping mall problem. malls, we have a bifurcation in terms of healthy malls versus less healthy. what you're saying is accurate in terms of being selective in which retailers we like and the format of the future and a format that appeals to generation z. tom: i want to start with you on the technology overview of our economy.
6:39 am
what oliver is seeing is a technology change. does your data figure that out? ins your data have the boxes the bottom of my skyscraper? technology is shrinking employment in some sectors. as long as you're running the labor market tight, that is ok because people are getting jobs. if you're looking at income overall, income is strong. if you look at spending on food , that is atnd bills a multi-decade low. gasoline prices are falling. now soe is not eating she could afford more gloosier. oliver: those are huge topics. robots are a big future retail and that has to do with labor. we have seen a lot at walmart.
6:40 am
tom:, on. within your world of retail, is all this turning into profit down the income statement? oliver: it is because of the transformation of the consumer. traditional retailers have had to adapt. , those arers reinventing retail for a new generation. it is about what is happening next. the retail of the future is about convenience, about culture and that is changing. the way people think about france is changing. traditional retail is fighting back. we see superpowers making changes with regards to speed and experiential. everybody wants goods fast. speed is important and mobile is the new mall. glosine: if you look at
6:41 am
sier, they do not have brick-and-mortar shops. is group orders the future? is it generated online and you do not have to go to fifth avenue to buy it? oliver: the future is 50% online, 50% physical retail. a number one complaint from amazon is customers want a place to return items. , one of ourout alta favorite products. the customer wanted to touch and feel is that lift kit. you see that with nordstrom taking brands in their store network.
6:42 am
the majority of sales are in stores but the store needs to transform. tom: a store like nordstrom, how are they going to transform? they have bars on every floor. tom: i did not know that. is it fun for a dad? no, when you add a scotch and liquor, it can be fun. scotch doesnd of nordstrom serve? oliver: johnny walker and others. tom: that is the most important news of the day. i will see you at the bar. he and james sweeney, maybe we will finish the show today at nordstrom's. you can join us.
6:43 am
coming up, an important conversation on the markets with mark mobius, mobius capital partners. johnny walker at nordstrom's?
6:44 am
6:45 am
6:46 am
tom: bloomberg surveillance. london, aster in historic 14 days, parliament will vote on brexit. james sweeney with us of credit suisse in new york. andill discuss inflation his few forward on the american economy. chatham house joins us on these important events.
6:47 am
what will you be watching for this monday? does the u.n. do something? do you assume more sanctions? explaint is easier to why this has happened then to explain where it is going. indirect answer, it is helpful to the ukraine that there has been strong statements from the e.u. and nato. taken a tough cohesive line on this. with the russian veto in the un security council, there is no possibility of the u.n. doing something. it is important to understand this is going to roll on because
6:48 am
the issues that russia is responding to our serious. -- to are serious. mmetricalhis is an asy response to something we have been waiting for and that is russia's response to the decision of the patchwork in constantinople to grant independent economic status to what had been the ukrainian part of the russian orthodox church. this is a big deal. state is wedded to the view the russian civilization extends beyond russians borders -- russia's borders. the second issue is the upcoming presidential elections in the ukraine next march.
6:49 am
they would love to encourage the hasident to do what he attempted to do, to hand them an excuse to declare martial law, to postpone elections, putting people on the street and giving who is to his opponent talking about a peace plan and compromise with russia. all of this plays into that. francine: let me jump in. would putinely, why do this a week before the g20? russia has been demonstrating consistently that they are willing to be defensive in their interest. they do not care what we think.
6:50 am
one of their most seasoned deputy ministers said, you regard us as an adversary. why should we care what you think? what they want us to understand is that russia is important. you cannot isolate russia, ignore russia. the timing makes perfect sense. tom: we are going to get you back in the coming days. he is at chatham house. we're going to continue with james sweeney of credit suisse. the markets rebounding this morning. this is "bloomberg." ♪
6:51 am
6:52 am
6:53 am
tom: bloomberg. good morning. francine lacqua in westminster. i'm tom keene in new york. i'm going to roll out my chart of the year. i have never done this before. i moved the chart as a look forward. it is a twin deficit chart from the 1980's, the budget deficit, the current account deficit. where will we be in 2019?
6:54 am
this has got to be on chairman powell's mind as a secondary condition to slowing growth. what will you look for at the wednesday speech? james: what you're looking for is any sign of concern about global growth, anything about changing inflation risk, any concern about the recent market volatility and whether that is changing the expected path of hikes and any guidance on where they think that neutral rate might be which is something the chairman has been downplaying. they are saying they do not know. tom: bring up the chart again. these twin deficits, is that tangential to powell? james: in the short term. that thean awareness larger fiscal deficit is giving the economy more stimulus.
6:55 am
it is going to create problems. we are to have high interest costs in the future but that is meetingncern for monetary policymaking this year. plans,y changing their given recent market weakness? my guess is no. you will get the lipservice that they look at global growth and they do watch with concern when markets sell off but the labor market is strong, wages are rising, hikes are coming. do you think treasuries are mispriced? james: not really. i think the 10 year is about right. it has been notable that they longer-term yields have not moved down more well equities have sold off.
6:56 am
the reason they have been sticky is that growth is slowing because of high frequency things like manufacturing activities abroad are going down. the labor market is not showing cracks. the fed is unlikely to change his outlook at a time when the labor market is doing so well. tom: got to leave it there. james sweeney, thank you. we will drive forward the conversation, notes on international politics and the markets. stay with us. this is "bloomberg." ♪ [ phone rings ] what?!
6:57 am
6:58 am
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!
6:59 am
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. . >> golong oil.
7:00 am
they see short term upside on an opec cut. we speak to a saudi c.e.o. teresa may sells her agreement to the public saying there's no better deal out there. and italy potential compromise. they're studying a rower goal. and an expert says he's not hug up on decimals. david: welcome. lack with alyx. it's cybermonday after black friday. though friday feels like it was cyber, too. because they sold more online. alix: i bought most my stuff on friday. but to your point, cybermonday should see abouted 7.8 billion to be spent today. david: overall on the season expected to be up almost 15% online and comes on the heels of singles day which was a

83 Views

info Stream Only

Uploaded by TV Archive on