francine: president trump threatens more china tariffs ahead of the g20 summit. december the 11th is theresa may's d-day. she is set to vote on her controversial brexit deal. president trump port water on the agreement. a stalemate in rome as the populist leaders fail to meet a new deficit target. hopes that a class with the eu will be avoided. ♪ -- a clash with the eu will be avoided. ♪ i'm francine lacqua in london.

these are your markets. the stoxx 600 down 0.1%. a little bit of concern over trade concerns and tariffs. the u.s. and china ratcheting up some tension but also hoping they can find an agreement ahead of the g20. that is very shortly. brent crude at 59.74. beneath $60 a barrel. pound, there's a little bit more skepticism price in the market that theresa may can get her deal. that vote settled for december 11. thumbs cook shares thinking in london trade. .ne of the booking companies 21st -- 26% of its value be lost as we speak. coming up we talked details and italy. firstget to the bloomberg

word news. >> president trump's is likely to push forward plan increase tariffs on children billion dollars of chinese goods. that's if negotiations with xi jinping fail. apple chinese made iphones and laptops could be hit by tariffs. may will sell their brexit deal for december 11. that's the date for a decisive vote on the final agreement. to save she's ready brexit with an opposition with jeremy corbyn set for december 9. italian newspaper is claiming that italians populist government is reducing its deficit to 2.2% of gdp. deputies say the

budget issue is not a question at this point. meanwhile, the government may try to save money by delaying implementation of its income for the port to next june at the latest. ukraine has imposed martial law in some reasons a day after he was fired on by russia in a major re-escalation of hostilities between the countries. the president said martial law was needed to ready ukraine for further russian aggression. haleymbassador nikki condemned russia's move that may clear the u.s. would refrain from further actions and play a supporting role. back here in the u.s., robert mueller has said that present transformer campaign chairman

paul manafort has invalidated see deal by lying. he had pleaded guilty to rent -- two charges laid out by mueller. check thell now claims that manafort denies. nasa celebrates the successful arrival of its insight lander on mars. inside was programmed to decelerate from 20,000 kilometers an hour to just eight as a reaches the surface. it is to deliver more information about the martian interior. tony four hours a day and a tictoc on twitter, powered by with an 2700 journalists and analysts in more than 120 countries. i'm taylor riggs, this is bloomberg. francine: for the first time in eight years, apple give up its crown as the world's most five of publicly traded company but

only for part of the u.s. trading day. president trump has reported threat of a 10% tariffs in china has hit the stock after hours. the iphone maker has lost 1/5 of its by you since october with the tariffs being a new setback. for apple with the turbulence in the sector? joining us now is pau morilla-giner. welcome. i'm losing my voice almost on a daily basis. what happens to apple from now? it all has to iteris but you can't believe the u.s. president would hurt stocks like apple. there'sess you realize a trade-off. he knows the talking trade wars,

it will hurt apple, but he also knows his got to reactivate and re-energize that middle class that will vote for him in a couple years. underestimate his ability to talk his own game. it's not just about trade wars. yes, trade wars are going to be foughte and they will be but apple in the meantime is already losing market share. it's gone from 15% of global 2014 andne sales in the numbers are not a big difference but it means there's a trend on the way down. smartphones from providers, many of them chinese, are starting to offer technologies that are appealing to consumers at lower costs. handsets you sell,

you're losing service. how can the market be sure that president trump will go ahead with this? we see in the past and it's a difficult administration to read that they will say they do it and then try to reach a deal. pau: you are right in that is probably what will happen. they send an aggressive salvo in and revert back to something more minimal. . think you're right i think ultimately the tariffs will not be nearly as aggressive. if he was going to continue down this escalation of commitment, then things he really dangerous. you're at that tipping point. something can have a major impact in the economy and that would be good for anybody. what happens to that was a stock? does it change? i know the iphone was something

they were looking at, the apple watch that's doing ok but not exactly the el dorado was -- they were hoping it would be. it's not just about selling headsets. they have an ecosystem around operating systems that allow them to get an ciliary revenue from people that accreting apps. i do think apple stock will continue to be under pressure. tactic that they are embarking upon which is increasing prices were for wealth years ago. there is love differentiation between what an apple smartphone was able to do and other manufacturers had to revert. it's not going to be another nokia but i think apple stock will find a floor and be at lower levels than before.

forcine: he stays with us the hour. up next, we talk brexit. just two weeks until a vote on theresa may's deal with the eu. what is the market expecting? we discuss that next. this is bloomberg. ♪

>> i think the market by large still expects there to be a deal. brexite truly was a hard

that was devastating, i think the markets would react negatively. that was the chief executive of oak hill advisors talking brexit. let's get straight to the bloomberg business flash with taylor riggs. k touras cook, view operator, suspended its dividends. it dropped the most in seven years after it says the summer travel season was ruined by unusually hot weather the cap travelers at home. the company was forced into heavy discounting that lasted through the holidays. --y hope their final results they say their final result of the around 30 million pounds lower than previously guided. president trump is pressuring general motors to move production back into ohio after closing the facility as part of a plan for changes around the world.

they will lay off 40,000 workers in close seven factories including one in ohio that makes the chevrolet cruz. game fortnight now has over 200 million players. that's about the population of brazil. it's a 60% rise from the numbers in june. fortnight is of -- is free to play and available on multiple platforms. they make money by charging players for decorative items such as costumes and props. this is your bloomberg business flash. theresa may will put her brexit deal up for a vote on december 11. the u.k. prime minister and says she's looking for to the vote. two hours of debate yesterday were dominated by criticism from outside including from within her own party. president trump has dropped a bombshell warning that the deal they have reached with the eu

the u.s. u.k.e trade pact. serious a to look at you out -- u.k.'s allowed to trade because they may not be of the trade with us. that would be a good thing. i don't think they meant that. i don't think they meant that. i'll think the prime minister meant that and she will be with do something about that. right now, as the deal stands, they may not be able to trade with the u.s. and i don't think they want that at all. join us now on the phone is are u.k. political reporter. rob, we're looking yesterday at the list and going through the arithmetic. the fact that president trump poured cold water on the deal change the perception of the u.k. where the deal is good or not? >> i think the picture in the u.k. is so bad, certainly the

perception in parliament is so bad, but i'm not sure that it sways anything. indeed, thing about trump's thatnts, the suggestion britain might not be able to trade with the eu et al. -- i'm sorry, with the u.s. at all, slightly suggests that he may have misunderstood something. that's certainly something the government will have to reassure people about area this idea that there was ever going to be a u.k./u.s. trade deal, which to be fair downing street talked up and the white house talked up, the problem was always going to be that when you got to the sorts of things the u.s. wants, food standards lowered, the sort of things that are very hard to sell to voters. aboutmember the row chlorinated chicken. whether or not it's safe to eat, no politician wants to be the

want to sell the idea that you have to eat learned chicken to the british public. this trade deal has always been a highly problematic idea. francine: let's go back to the vote. convinceeresa may parliamentarians to voted through? that she have to promise some things? rally support from citizens? i cannot see any way that she can do this. i just can't. votes, thereort 10 are an awful lot of things you can do in politics. you can build bridges in people's constituencies, build hospitals, give people might hoods. you can month them on a dark night. there's a lot of things you can do for 10 votes. at the moment, she might be losing by 150. that point, there's an

overall thought from buzzfeed there's an operation vote set up in downing street and those apparently focused on the vote after this. even the vote after this vote, it's not clear to me when you do in us you can convincingly persuade people that if you don't do this, it is no deal, the factories are closing. i think that's the one thing that might work but don't think she's going to convince them of that in two weeks time. francine: we hear basically the findings of a top eu tribunal on whether brexit can be reversed. does that make a difference to the deal? rob: this one has gone below the radar. that if youe thing talked about the logic, you are quite heart of the remain side. rule that article 50 can be revoked and it can be revoked unilaterally, that will make it harder for parliament because the people that don't want brexit to happen at all or even

the people that want to take longer over the negotiations was say, look, see question mark you don't have to take this deal? you can remove article 50 original have a big think. -- 50 and we can all have a big think. francine: thanks so much. how do you see this ending up? is it the only certainty you have? pau: in answer to your question yes. this is the only certainty we have. it will be for a long time. there are three kind of mps. the idealist that believes anything is better than a brexit agreement will not change their minds. the ones that think, let's get on with brexit: probably not change their minds until they really see that the alternative is a no deal area and in those that are clinging to that wishful thinking saying, mid-we

want a second referendum. legalat it would not be to repeal article 50. i don't see this getting the votes. only when the alternative is a lot worse than it is now, and is a lot of psychological biases that humans tend to have, we do have this wishful thinking. there willtimately be somebody who will say, let's go get people's votes. and we believe that we want to get back to where britain was, we don't really need the u.k.. it's a dangerous game. it will be very interesting. think it will happen in 2018, unfortunately, with a deal going through which will ultimately be bad. will go into christmas holidays with the truly weeks to spare.

is.now what the worst thing francine: no deal. crashing out. thank you so much, pau. he stays with us. talk to the leader of the u.k. democratic unionist party. draghi comes back. he defends his legacy in front of the european parliament eu policy has traded millions of jobs in a few years. this is bloomberg. ♪

francine: mario draghi spoke to european lawmakers in brussels yesterday. a parliamentarian describes draghi's policies is disastrous. draghi delivered these responses. >> did have disastrous consequences? he created nine and a half million jobs in years. pau is still with us. what you see euro doing is that more of a dollar story? i think the euro will continue to be under pressure. i think it's partly because of dollar strength on the back of a fed which is willing to get on with hikes. arearug is saying is true

i'm sure that without the impact of these actions. -- with its actions, the eurozone would not be in the existence it is. there's is no way the ecb can get on with finishing qe anytime soon. you would be meeting at the intersection of crunch and lower demand which we know is a recipe for disaster. in the eurozone, it's different politically. if you went to italy or spain coming to talk about austerity and people set it, but -- now there's no way. the middle class in italy or spain -- initially or spain will accept anything but fiscal stimulus. there's no way they will get on with that they say they're getting on with. get the markets have an price it in. correct?

pau: which is a danger. i think on the back of the ecb backtracking a little bit, you could see europe doing a little bit better but because of the international but because people will breathe. but she by another year. it will take years before that gets washedenomena out. in the meantime, i don't think they have the ability to get on with finishing. francine: thanks so much. pau morilla-giner stays with us. up next, robert mueller says present trumps former campaign manager has voided his plea deal. we talk about the next. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." let's check in on what is trending on tictoc.

a chinese at the scientist says he has helped make the world's first gene edited babies. his claim is drawing backlash and denials. banking deals are happening in europe. governments in eastern europe loosen their grip on state held assets. our most read stories on the bloomberg terminal. market players give a bright outlook for emerging markets next year. president trump saying he will likely push forward with plans to increase tariffs on china. paul manafort could face a lengthy prison term. special counsel robert mueller has struck a deal. manafort's lack of cooperation could hurt the investigation of

russian meddling in the 2016 election. a judge will now considermuelle -- consider mueller's claims. what do we know he was lying about? we don't know, and i think that will tell us a lot about where the investigation is at. i think it is safe to say that he wasn't lying about something trivial. it wasn't some white light. mueller has alleged that he lied repeatedly, violating his cooperation deal. our story overnight quoted a former federal prosecutor that said either he is just a pathological liar or he is somehow trying to position himself for a pardon by president trump. we will know a lot more when mueller comes back with a filing detailing what. he lied about ahead of his sentencing that could give us more clues about where he is at.

what this is also tell us about where we are at with the investigation? -- it is hardhink to say how much this is a setback for mueller. coo forquite a mueller to get manafort to cooperate. that he was may be able to catch manafort an ally. -- in a lie. it does tell us that he is perhaps sitting on a lot more information than any of us know and certainly more than manafort new. -- knew. francine: thank you so much. taylor: president trump says he is likely to push forward with plans to increase tariffs on $200 billion worth of chinese goods.

trump told the wall street china madeple's iphones of laptops could be headed for tariffs. president donald trump has warned the brexit deal could jeopardize the uk's ability to strike a trade pact with the u.s.. aump called the agreement great deal for the eu and urged the u.k. to reopen negotiations with brussels. i think we have to take a look at seriously whether or not the u.k. is allowed to trade. right now, if you look at the deal, they may not be able to trade with us. that wouldn't be a good thing. i don't think that the prime minister meant that hopefully she will be able to do something about that. may embarksheresa

on a tour to sell her brexit deal, december 11 has been set as the date for the parliament votes. may says that she is ready to debate brexit with opposition leader jeremy corbyn in a television show down. celebrating the successful arrival of the insight lander on mars.it touched down after a high-speed dissent through the atmosphere described as seven minutes of terror. the probe aims to deliver more information about the martian interior. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs, this is bloomberg. francine: thank you so much. let's turn to retail.

cyber mondayand are proving to be the best shopping weekend in years. americans spent $6.2 billion online on black friday. yesterday's cyber monday is expected to add another $7.9 billion. on the flipside, physical stores issapointing sales.y thank you for sticking around. always, you make us a little bit smarter about what is going on in retail.

if we do so well on black friday and cyber monday, people want bargains and sales. i was reading numbers for both the u.s. and u.k. in fact, there is a perfect -- because people started ordering in the morning online. they avoided the cues and fights for getting a product. it is good because sales are going up for many categories. the point is that they are all discounted. merchandise not on sale can face the situation.

talking about luxury and fashion. francine: is luxury safe in this kind of environment? we also see trade concerns and wars, is luxury doing better? michele: i would say luxury is new agedvantage of people and increased population. there are winners and losers. inside the channels, there are winners and losers. online is winning on certain categories. i think fashion should be ready to present a different selling program also to face this big change. christmas was usually the time when merchants were going to discount. now, it is a concern and not easy to face. francine: what does it mean for

your investments in retail? do you buy high-end? pau: you adopt a very different approach. luxury has is pricing power. they have the ability to do something that quite frankly no other sector in the retail space has. francine: and technology. pau: that is why apple is not really just a tech company. towardher go bargain-basement prices or you go all the way up the curve into those companies, ultrahigh and tap into that space. china is growing and that middle class is becoming wealthier. millennials have gone from being has a lot oft

headlines to have a more disposable income for them to spend. they're looking for either great deals or differentiation. i think you captured both trends -- you are probably would you would probably be reasonably fine. michele: very often, companies of all sizes are not able to face a crisis. crisis management is always neglected. the reaction of the chinese is quite interesting. i was in hong kong talking to different people and something which was very surprising is in

october, chinese sales to the united states were down 34%. it means probably people are not getting visas. there is always a strong reaction. i think we all must be very careful. of a is the consciousness country which is becoming a variant in the world as it was 1000 years ago. also, in terms of duty, the biggest impact is not 5%-10%. an aggressive attitude from the u.s. and europe could really affect. francine: when you look at the brands that are doing well, how difficult is it for a brand to remain relevant? are hundreds if not thousands of luxury brands. why do i buy this one and not a

bad from their? have you type into the chinese psyche? michele: things giving black friday is innovating of a product. innovation and captivity is number one. while you go and buy a television, you probably buy a last year television. in fashion, people want the latest collection. point. a very strong with the chinese, i think you have to understand their culture. you have to understand how they dress and how they leave. wu cannot sell evening ear.

if you get to the products they are using constantly, the brand is still very relevant. being for 100 million -- it will keep being for 100 million people. we are also watching shares of osborne lift. bain capital is said to be exploring a takeover bid for the company. this is according to people with knowledge of the merger. next, italy's budget talks fail to reach a conclusion after a night of feverish talks. this is bloomberg. ♪

francine: this is "bloomberg surveillance." italy's populist government failed to agree on a new deficit target. some cracks are starting to show. insisted that the budget issue is not a question of decimal points. deficit target will be reduced from 2.4% to 2.2%. if you are in the markets, it is decimal point. you do care and i do accumulate. it was not that long ago that -- they do accumulate. i think what the market is

telling us is that the ecb will blink. i don't think with european elections quite close, i don't think the league or five star is going to be blinking because they say we really need to have elections, which means it will be draghi and the ecb that will blink. as early as december, you will probably see the rhetoric receiving, and most importantly, perhaps support for italian bonds. francine: what happens to the commission? does the commission actually stay on siding? michele: the commission will be out,at some point, chill we know what you are doing is the right thing, but this is not greece or portugal or ireland. this is italy. this is a systemically important country that quite frankly cannot be allowed to continue

this road. i think that will cool off. i think the italian government has won this round. this is not the end of the war with italy. francine: how does it feel to be an italian businessman? it feels like when i speak to chief executives, business trends quickly into politics. e: the italian situation is probably the most complicated, very close to the u.k. situation because the real point is the stability of what is going on. i believe the key point is economic growth. in six months, if italy is not able to prove that the growth continues at the present rate or north of 1%, i think everything

will be easily digested also by europe because at the end is a budget. if you miss your budget for a certain number of points, it is so small it will not be a problem. if not, there will probably be elections in italy before the european elections. int can imply a major change the present situation. francine: against the concern is, how do you grow italy? italy? the reality in revolt and come out of the euro? i think people just want it to work and have the opportunity to work in a less bureaucratic country, to accelerate investment. we have to work on both.

i think supporting italian companies which are exporting and on the other side, infrastructure and even promotion of italy is a country of fundamentals. you can get growth, but it is very difficult in europe which is also slowing down in other countries, because not all other rent thisare making year. italian: do you buy gdp? pau: you probably do, but you have to be very brave. ofis going to be a very hell a ride in 2019. i don't think italian problems are fixable in the short-term. it might even take a generation -- you have to educate the people.

i think that with the dangers of these shortened democracies, but you're always working towards the very next election. the issues we have are more structural. we have these timetables which don't quite match the core of the solutions. francine: thank you both for joining us today. coming up, we speak exclusively to the oak hill advisors, glenn august. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." we listening to emmanuel macron talk about energy. what people are really expecting him to talk about is the alleged jackets -- yellow jackets. they look like were scenes in

paris doing some of these blockades and protests where people were protesting some of the increased taxes and increased price of energy cost. police fired over 5000 chair grass -- teargas grenades. firefighters put out some 100 fires. macron asking and answering some of the questions lies. let's get straight to the bloomberg business flash. taylor: shares and thomas cook have plunged after the operator suspended its dividend. the stock dropped the most in seven years after summer travel season was ruined by unusually hot weather. 1/5 in dropped by almost the year ending in september as the country was forced into heavy discounting. be about 30s will million pounds lower than previously guided.

-- the ceovisors says the company is preparing for situations, including a recession or downgrade that could be a buying opportunity. of $5have in excess billion of available capital to seize on the opportunity. taylor: google is expanding its mountain view headquarters, spending $1 billion on the business park next-door. the local mercury news says the area is bigger than the existing complex and is the largest real estate purchase this year in silicon valley. expansion.ammoth

we continue in the next hour. tom keene joins me out of new york. we'll be talking to the leader of the u.k. democratic union at 10:30 a.m. london time. we will have a full roundup of your markets. a lot of the focus is on oil.dities and brent below $60 a barrel. pound is pretty much unchanged. this is bloomberg. ♪

francine: taxing times.

president trump threatens more china tariffs ahead of the g20 summit. december 11 is theresa may's d-day when parliament is set to vote on her controversial brexit deal. we hear from arlene foster this hour. stalemate in rome. italy's populist leaders failed to reach any deficit target. yields fall on hope that a clash with the eu will be avoided. this is "bloomberg surveillance." i'm francine lacqua in london, tom keene in new york. quite a lot going on when it comes to market moves. tom: bitcoin as well. the united states, extraordinary news flow. a stunning announcement by general motors to exit manufacturing and ohio, factories in michigan and even up in canada. that is taking all the headlines this morning away from a small landing on mars and some

manafort news as well. francine: we will go through all of that and brexit and some of the things we keep seeing here. we will be speaking to the dup leader, arlene foster. president trump is about to escalate the trade fight with china. he tells the wall street journal he will likely go ahead with plans to boost tariffs on $200 billion worth of chinese goods. he may impose duties on all remaining chinese imports of with president's vision week failed to reach a trade xinpingpresident xi this week fail to reach a trade deal. the ceo of investment firm oak

hill advisors or in what would happen if there is no deal brexit. think the market by and large still expects there to be a deal. brexite truly was a hard that was devastating, i think markets would react negatively. the u.s. and european union have condemned russia for firing on three you can you -- ukrainian navy ships and capturing them. russia says the ukrainian ships entered its waters. ukraine denies that. exploreirst attempt to mars and more than six years has gotten off to a successful start. the probe survived the harrowing climb through the atmosphere before touching down. the agency is helping the probe will answer critical questions

about how the planet was formed. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs, this is bloomberg. francine: thank you so much. we are just getting some headlines of from the president of france. he is talking about energy policy, but has a much bigger problem on his hands, which were the blockage and protest over the weekend. they have blocked highways of the blockades across the country for the past two weeks. lit fires., some he is currently talking about energy saying fossil energy use has dramatic consequences. some interesting headlines

and very much different from what we see from president trump in the united states. let me go to the data right now. got chairman powell speaking tomorrow. markets will be really sensitive to those two fed elites. futures flat. euro weaker. a 112 euro would be of interest. the fix coming in from a 20 level into 19.34. 12762.g, bitcoin, i guess there is a bid there. i see green on the screen. francine: i am looking at european shares fluctuating on tuesday.

i think a lot of focus will be on what president trump says and does on tariffs. it is all about the g20 also. thatdities retreating, pushing some of the european stocks down. isyou look at pound, it probably the one we see the most of volatility when it comes to europe. on to today's top story. for the first time in eight up its crowngave as the world's most valuable publicly traded company. while it remained on top of the close, president trump's reported threat on a 10% tariff after the comes president says he will likely push forward on increased tariffs on $200 billion worth of chinese imports.

patrick, to tech and apple. life is pretty difficult right now. patrick: they are facing some headwinds. i think these were will approve companies a year ago and now we are seeing some pushback where apple may be facing margins from tariffs, political issues. facebook and google have their issues with data protection. amazon on taxes and different jurisdictions. they have gone from incredible growth stories to companies peaking and facing issues. francine: an extra 10% on apple products, is that really realistic? president think the would do it and i don't think there would be that much consequence. shownthe buyers have their pretty much elastic.

i don't think it would have massive consequences. it would probably reduce margins for apple. hit.would take a bit of a i'm not sure he goes that way, but i don't think it is completely implausible. tom: we're looking at two important fed speeches today. what will you be listening for within those speeches that pertains to yield? a sensehave got to get about whether the fed it really think they are going to be continuing on the path they have set out over the next 12-18 months or so. what has happened over the is how manyks hikes of a going to get in next year? that.is question around oil prices coming down, inflation is going to be impacted by that on the headline level. it is going to have a big impact

on what the fed looks at over the next few meetings are so. tom: how do you use the equity market volatility now? iain: we had that big drawdown within stocks. what it did was it translated through to the high-yield markets and corporate markets. we have seen spreads on those markets widen out. at the moment, you can. maybe the rally in the treasury market has not been as strong as maybe people would have felt following a 10% drawdown on the equity space. francine: where do you see value in the markets? patrick: outside the united states. i think they have come to fair value on earnings. now. is very cheap right we haven't started making allocations to japan yet, but it

is shooting at a very good value. on bonds, we like credit a little bit more than we did. we think the fed is going to hike. francine: who do you think will disappoint? ecb, we are pricing and pullback of qe. who is going to blink first? patrick: i think the ecb is going to do what it says. hike in september if we follow a path where there is some growth. think four is more likely. francine: do you agree with that? two: i would probably take in march engine.

it gets into a base rate of around -- march and june. it gets you to a base rate around 2%. going, and continue i know, the fed is and the world central bank the for them to continue, i do feel like you need to see the rest of the world going with of them. maybe it is a softer brexit and you get the bank of england involved. francine: thank you both. foster, u.k.lene democratic union party leader. we will ask her what she thinks of theprime minister intake needs to do to win the house of commons vote on brexit. this is bloomberg. ♪

taylor: this is "bloomberg surveillance." a very bad year is getting worse for thomas cook. shares sank by as much as one third after the company reported annual profits below guidance that had already been cut twice. thomas cook says it may take three years to get things back to normal. the company failed to spend properly for one of the hottest european summers on record.

that led to millions of customers to holiday at home. united technology's acquisition and ceo has been under pressure from investors. president trump adding his voice to those who want to general motors to reconsider its plans to cut jobs and close factories. the president says it is pressuring gm to move production back into ohio. the automaker plans to close a plant that makes the chevy cruz. battlegroundcial and presidential politics. tom: thank you so much. there will be two fed speakers.

tomorrow, chairman powell will speak to the economic club of new york. our economics team will be in attendance. right now, we anticipate discussion with patrick armstrong and ian steely. what will you listen for from richard, the academic? he is the giant of equilibrium theory. what are we going to listen to? if the: we will see market volatility has impacted their views at all. i think the beginning of the market in the u.s. came with powell's comments who said we neutral.r way from if we do see any blinking on that, markets will probably take some good news from that. i don't think the fed has been changing their mind this month. tom: you can't join it jpmorgan

-- you mentioned the yield and watching it. how does the fed look at the 10 year yield? how do they use that as a diagnostic tool for data dependency? i think we are quite happy that the yield and tenure haven't come down. that probably means the curve hasn't flattened further. everyone starts to talk about recession. i think they will be quite comfortable with that. to me, it makes sense the yield has it come down to dramatically. i think the fed will continue to go in december and likely to go in the beginning of next year. you are going to get these in cash rates after the next three meetings. francine: what does it all mean for treasuries? tom: i still think yields go higher.

iain: are your and forecast is around 3.5% by the end of next year. i think what will be interesting is when you think about what the market has done since the fed talk more recently, is they have started to price some of their hikes out. more recently, it has been the market that has been wrong and the fed has been right. whether this time, we will have to see who is right. there's a big disparity over what the fed says they are going to do and what the market is not pricing. tom: we will get a much better picture of fed determination culminating in chairman powell's speech tomorrow as well. we will continue with patrick and iain. coming up, an important interview. the former fed governor, very wise on regulation.

this is bloomberg. ♪

francine: "bloomberg surveillance." this is -- this is "bloomberg surveillance." dip in the bidht to cover ratio. italy's populist governments have failed for a new plan. not adget issue is

question of decimal points. sitedow, and his agency mateo saying no new deficits would go toward the budget. we probably shouldn't call them deputies because they are actually in charge and run the show. how does this end? first of all, the market cares about decimal points. how does it end? that we are fact talking about decimal points it is almost insignificant. the first proposal was not designed to be accepted. we are seeing give-and-take. by the time we get to the middle of december, we will have reached a conclusion. i think both sides will have saved face and italy will give it up a bit and the european commission will not be too heavy-handed.

iain: i think we will get to a situation where both people say they have won. francine: is this always going to be a problem? is and it is going to be a significant problem the next time italy goes into a recession. in the meantime, i think definitely over the next few months, you can probably muddle through. people look at btp spreads at the moment. tom: is there any sense that germany or core europe will budge on italy? so.: i don't think i think they're going to want the italians to bring that budget down. as we have said, it will be effectively a numbers game. that budget number is going to be dependent on what the growth number is out of

italy next year. that is what to be dependent on how the eurozone as a whole is. we're not going to know what the deficit is towards the end of next year. what the european commission would like us to have the ability to say that the italian growth trajectory looks like it is going to be a downward trend over the next couple of years or so. i think that will keep them out of that accepted deficit procedure. francine: how do you see italian growth being kick started? difficult.ry the italians have a huge amount of government debt. personal private debt is actually very low. the italian individual consumer actually could leverage up a little bit. it is very hard to provoke that because they are not actually going against the house the way they do in the united states. the individual consumer in italy can be a driver of both domestic demand. francine: does it change ecb

policy? iain: i don't think so. it does lead to a significant downturn in growth, maybe. i think we get to some kind of agreements and we get through this. tom: what is your investment strategy for europe? do you buy bonds and if you do, what? iain: we still like the european high-yield market in the bond space. you have had the combination of slightly weaker data and italy hindering that market. we still see very low default rates. we also don't see the ecb aggressively tightening policy. 4%'re getting paid over which is pretty good at the moment. francine: thank you both for

joining us. us. a stay with expert.p, blackrock also, arlene foster. there is a little-known story that there is a role on whether the eu can unilaterally revoke brexit. i don't know whether it impacts of this deal, that we will try and figure it out. this is bloomberg. ♪

tom: and away from his concerns of ukraine and russia, mr.

putin, this is at the kremlin. 2018 comes to an end. we do not have a translation. what we do have is the pageantry of mr. putin. russia with challenge and poll numbers, some of that in our discussion. overnight, we see martial law in ukraine as well. vladimir putin and state awards. here is taylor riggs. sebastian: -- notor: president trump is backing off his threat with china. he will move ahead with plans to increase tariffs on to chinese goods. the president indicates if he cannot reach a trade deal, he will impose on all remaining chinese imports. the president of politics in the

economic industry are crashing head-on. president trump is pressuring back inmove production ohio, a state that is usually a battleground in presidential elections. g.m. lends to dismiss 14,000 workers. one is in ohio. manafort could face a lengthy prison term. special counsel robert mueller has accused him of lying repeatedly after striking a plea deal. lawyers have asked manafort be sentenced soon. his lack of cooperation could hurt mueller's investigation of russian meddling in the 2016 election. there is speculation that president trump plans to shake up other cabinets. bloomberg learned the president plans to keep steve mnuchin and wilbur ross. -- president trump is the satisfied with them.

global news 24 hours a day, on-air at tictoc on twitter, powered by more than 2700 journalists and analysts, in over 120 countries. i am taylor riggs. this is bloomberg. tom? francine? francine: let's talk about brexit. the democratic unionist party is opposed to the agreement. we will talk to the dp leader shortly. let's get back to patrick armstrong. does it move guilt whether it does get past or is volatility just for --? >> it definitely move skilled. soft brexit leads us the bank of england being more aggressive throughout 2019. it does not get past markets. most people's assumption is the base case.

>> people are complacent now. people do not expect to get through on the first go but they have a believe it will get through somehow, someway. that is the consensus. that is my view as well but the risks of hard brexit are increasing. if it does not get through parliament, hard brexit becomes real possibility. -- a real possibility. it eventually goes through and there are compromises being reached where the europeans give a little and theresa may's parliament give a little bit too . what is going to matter is how much it loses by, if it is a landslide. francine: i have heard people say that. let's go to one of the newsmakers, one of the key newsmakers on this, a unionist

party leader. what does the prime minister in your eyes need to do to win your support in a vote on brexit? >> it is good to be with you. deal the unionist party can support because it makes a difference between northern ireland and the rest of the united kingdom by the facts of the -- there are good parts in the deal such as the recognition of european citizens rights. the backstop as far as we current -- as far as we are concerned, the backstop must go. is a suggestion the prime minister will agree to a common role but between the u.k. and a you to avoidt be enough barriers between northern ireland and the rest of the u.k.

with such a unilateral declaration be enough? >> the difficulty in northern ireland is being accepted by parliament and if it will be -- accepted by parliament, would bring a legally binding international treaty, which is .here in black and white our difficulty is the political declarations being told about our aspirational, they are not legally binding and therefore there is the -- relationship between two documents. , correct i understand me if i am wrong, a unilateral declaration would not be good enough for you. >> we want to hear what the prime minister has to say and welcome her to the united kingdom but we will be saying clearly she needs to get rid of the backstop. this is a waste of time.

as far as i can say, this is not going through parliament and instead of wasting time over the next two weeks, what she should be doing is find a third way .orward we are saying do not waste time, use that time profitably and find a better deal. francine: the u.k. government is telling us there was no point in reopening talks. -- of course people are going to. parliament is going to tell us something different. the dp has a way of saying important votes on government business. how likely is that to continue? the -- i understand is coming to parliament next week and it will be voted on the 11th of december.

as it stands, we will not , for manyis sale across the chamber. they are not going to support this and therefore the prime minister is not going to get this through. instead of wasting her time, she should try to find a way acceptable to everybody. francine: i was talking to nicky morgan of the treasury committee yesterday and she said there was a 5050 chance we have a hard brexit. if this deal does not get through, what is the probability of a crashing out? >> people want to put trade this as a binary choice between this deal and no deal. the prime minister wants to put trade is that because that is the best chance. we say there was a third way, a better way, a way that will get the support of the british people through parliamentarians and we should be looking for that way instead of wasting time on a deal that is not going to get support.

francine: a lot of people think the dup is bluffing, that you will end up supporting this deal because you see fresh elections and german corbyn coming in or you will support the exchange for more money. are you bluffing? that is quite offensive. we were given money for northern ireland. is this about the future of northern ireland constitutionally and economically? we will not be supporting the deal and its current format. if it is voted down, that does not mean a general election because what we have is a fixed term parliament act. that is a false thing to say. ,t is quite offensive to say nothing could be further from the truth. francine: how do you see it? it willhink this year

be voted down, does the prime minister the back to that you and get a better deal and it gets through parliament a second time? what happens after december 11? patrick: -- arlene: we prefer she makes a better deal now. we think that would be time much better spent, trying to find a better way forward. the only we -- reason the irish ,ackstop is -- any way at all the irish prime minister has said europe says they are not going to put up a hard border. pagese hundreds of dealing with an irish backstop. heard anyhave you indication from the government or theresa may she is willing to go back to brussels before december 11, and if not what happens december 12? arlene: i have not and she is determined with her deal.

she believes her deal is the best way forward but she is not listening because parliament has .- was clear yesterday she does not have support to get the deal through. francine: thank you so much for joining us. she is arlene foster, she is the u.k. democratic unionist party leader. we'll get back to our guest on brexit. we will get back to kick morgan asset management. coming up on bloomberg radio, goldman sachs ahead of research. this is bloomberg. ♪

taylor: this is bloomberg surveillance. google is testifying from the eu's watchdogs. the eu is accusing -- file complaints with the national regulators. google will see if there is anything it can use. the world's politicians have been turning against mohammad bin salman since the murder of jamal khashoggi. the capital made up of flying -- mind long before that. bloomberg learned a number of rich audis have been trying to move money out of the kingdom.

standardsh bank chartered is considering a plan to simplify structure across 60 markets. bloomberg learned the bank is reducing liquidity and funding expenses. investors are concerned by rising costs. bloomberg business flash. francine: thank you, taylor. federal reserve chairman j powell today, meanwhile -- have retreated. for more on all of this, we are joined by a global head of -- thank you so much for staying around. commodities, how was china

doing? >> i was in asia last week. we are at an instant time. what is going to happen in the talks between trump? that is one component of it. the second component is the dollar. what do we see with rates over the near-term? do we see a change in language? all of these from a macro point of view are going to have an impact on the near-term. the supply and demand looks good. we have spoken about the lack of investment into new supplies, keeping markets relatively tight. inventories are low and the economy continues to grow. francine: what you think of markets getting low? the impact a trade war has on commodity prices, was the dollar called because the fed hike is as much the market is pricing it? evy: i think the market is always pricing things. the information changes

constantly. -- that information we comes out, and we see a new pass that comes forward, the market will price back and we will see a change. overlet me show a chart the years. we have some this chart before. this is a bloomberg commodity index adjusted for american cpi and there was a search through the 90's and a surgeon to china. and the great collapse and the hallmark of the last 24 months has been a rollover in inflation-adjusted prices. what will be the catalyst to lift commodity prices? is what weity prices wel of the other element is invest in equities. the probability of the companies is a combination of price and cost. we have fantastic margins generated by the companies we invest in. we are about to hit the 25 year anniversary of our investment

trust in december. we have been too many cycles and the evaluations across the equity states relative to the margins of the companies they are enjoying, it makes it look an attractive opportunity. tom: has there been a management change? a profound change in how airlines were run over the last 10 or 15 years? what is the new management of mining look like? evy: we have seen a huge change in management in the resources sector over the last decade. we have seen a significant shift in personnel but also strategy. much lower levels of capital intensities so every unit of production growth, increased focused on return to shareholders and today when you look at the levels of debt the companies are carrying, it is a conservative sector. francine: thank you both. coming up, an exclusive

conversation with the european competition -- competition commissioner. that a lot of tech companies will fear so we will ask about data protections. this is bloomberg. ♪

tom: good morning. francine lacqua and tom keene. you get lucky sometimes. we talked to smart people like patrick armstrong and you get really lucky when you look at blackrock's ability to link the research of the commodity of dash cam broke. we had a bombshell in america from general motors shutting down auto works. morning 3.2ys this million vehicles per year are overproduced now in america. everybody getting out of the car business because of electric vehicles. wilford bishop, charles

and hannah gray have done billion research. the electric car is for real, isn't it? question.is a good it? for real, isn't evy: absolutely. what we see is a transition. the -- there is a societal pressure and a regulatory pressure to move away from the combustion engine. the third factor increases the rate of adoption, the economics and the performance. the incumbent is being displaced by a battle alternative that is appreciated by society and a quiet regulatory point of view and there are serious forces that -- in gains and market share. electric vehicle is well-positioned to take that market share. we see that in terms of the growth of sales of these vehicles. the exciting thing for us on my team at blackrock is we're approaching this significant

inflection point where the customer is going to have an increase in choice of vehicle, away from the ones they have been told to buy. you will be able to buy them from mainstream automated manufacturers on a range of different models at a lower price point. that is the key when we see an increase. -- increase in sales. tom: this is within the blackrock report. we get this from blackrock. there was only one where that matters and it is battery. batteryery is there and is chemistry coming from commodities, right? evy: absolutely. i do not think we have the ideal battery now. battery technology in the chemistry in it is going to of all over years and the future. now there are materials going into the batteries that only market. that is dominated by lithium. you have got cobalt and nickel and graphite. that will change the for the

next decade, we see these commodities in strong demand. we have been playing across our resources portfolios but also our future of transport fund, which is a new product we launched of giving customers what we think is the perfect way to lay this transition in the automotive's. francine: you have a new website . how do you take advantage of this, patrick? do you buy carmakers? talk abouten you electric cars, you should not be looking there because of a valuations. they do not have monopoly on ,attery technology and bmw, gm everyone is moving into these cars. they have got the marketing and those things are going to be important. tesla sells a car now. bmw makes a profit on it. it is a valuable point.

the cut -- the incumbents have a huge advantage but you have other changes taking place. , it is as the battery the components, it is everything else. tom: thank you so much. with clarida and powell speaking, we wanted to get someone who can go across asset, all of this on the foundation of the u.s. dollar. no one better than alan ruskin, joining in moments. this is bloomberg. ♪

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leave no room behind with xfi pods. simple. easy. awesome. click or visit a retail store today. ♪ there's no place likargh!e ♪ i'm trying... ♪ yippiekiyay. ♪ mom. ♪ tom: this morning, clarida and powell speak. we consider the state of the

markets. the dollar in international dollar liquidity, alan ruskin of deutsche bank. ohio --lake on -- lake make ohio, make michigan great again. forget new indictments. robert mueller's suns want to know the way to put it. he wants mr. manafort in jail now. this is bloomberg surveillance. i am tom keene. francine, so much to talk about in america. look at any newspapers in the extraordinary mars landing but there is a bombshell of agm announcement that we spoke to ambrillam roll --vey h about. francine: the president of the united states talking about tariffs. that said jitters on apple after

trade and we have to look at the repercussions of suppliers. tom: in new york city, here is taylor riggs. is aboutresident trump to -- trade war with china. dutiessident may impose on the remaining chinese imports if talks of the chinese president failed to put is a trade deal. china says they have agreed to reach a mutually acceptable proposal. theresa may is in belfast to sell her brexit plan but the democratic unionist party is opposed to the agreement. in an in her view, the head of this is a -- likely to be a waste of time. think that -- by a margin

expects there to be a deal, and if there truly was a hard brexit that was devastating, i think the markets would react negatively. and european.s. union have condemned russia for firing on navy ships and capturing them but there is no widespread call for sanctions. says hopefully it will get straightened out. ukrainian ships entered its waters. ukraine denies that. the mars inside probe provides a , before touching god. the space agency hopes to answer critical questions about the way the plan. it is part of an effort to plan a manned mission to mars.

global news 24 hours a day, on-air at tictoc on twitter, powered by more than 2700 journalists and analysts, in over 120 countries. i am taylor riggs. this is bloomberg. tom: thanks. let's get through this quickly. too much to talk about, with alan rest in an kevin cirilli. features negative. euro, i am watching carefully. within the weakness we saw of the last 10 days. 19.65. it -- wasas at great great at j.p. morgan. a littleitcoin with bit right now. francine, bitcoin tenuous. francine: that is a diplomatic words. u.s. stock futures, european shares. there is concern about president trump and he said likely increase tariffs on chinese imports and i am looking at

commodities retreating. top down and look out for any kind of move on the pound. pound weakening. deal will be december 11. tom: i want to show analysis, first financial and we will go to the political with kevin cirilli on general motors. i would suggest even the sophisticated people in autos were thunderstruck. back to the initiation of the gm bankruptcy and public trading, they are rim lock step forward -- are in lockstep forward in general motors. and the great separation, gm up. ford down. will movee clear she that along. kevin cirilli joins us now, our chief washington correspondent. kevin, what an extraordinary announcement. we need to see further reaction

from the president. kevin: this is a nightmare for this administration. this president said he was not happy with gm's decision. this impacts a state that has shifted red, towards the right. ohio. go to youngstown ohio specifically. this is the crux of the populist movement that propelled president trump to the white house but this is also a state that elected sherrod brown, a democrat by double digits. i will make this point. the politics of america differs severely from the market reaction. the market welcomes is .orecasted news the peter navarro's of the world are shaking their heads. tom: the ramifications will go on for weeks. i know, kevin you saw this as well.

summary within the election. house democrats were represented in new congress. 72% latino. 62% with african-americans. they do well with college grads. landed area,ans -- within this polarization, where does trumps ohio fit in? kevin: this has been america. the bottom line is in order for republicans to win over, suburbanites in -- suburbanites in swing districts, they are going to have to shift towards the center. that is what i hear from the business community in the beltway. if you are senator sherrod brown, who over the past 72 hours has circulated the idea he could be eying a 2020

presidential run, this is the type of news flow that is going here forthe calculus the centers leaving more progressive democrat in washington. talking about trade wars, did they help with winning votes? kevin: i think so. the populace streak we identify as francine in terms of what the republicans say, but there exists that streak on the left. i mentioned sherrod brown. if you read the new yorker, if you read bernie sanders' interview with them, those terror stocks exist on the left. we heard from the president he had that phone call with the chinese president. they are set to meet. this is a line is framework talking at the g20. the real developments are going to come in january and if the

president has anything to do with it, we saw the frustration mouth to over the holiday with his frustration with secretary mnuchin. according to sources, the president and peter navarro talk frequently. on thee: update us mueller investigation. robert mueller is saying paul manafort lied repeatedly. kevin: that is good news to president trump because it would suggest bob mueller was unable to flip paul manafort and threatening him with a long prison term did not work as of now. this story moves quickly. the second point is it would suggest common for believes he would get a pardon from president trump, if the threat of long-term life sentence does not scare him. tom: thank you so much. we are joined to bring alan ruskin of deutsche bank.

he and i have seen the dollar move up, move down. bring us up if you would. this is a standard bloomberg dollar index with the joy of 2016 strong dollar. the socko by ohio for the president. is he going to see the shock of a stronger dialer -- dollar? the dollar has been stronger than this. in that sense, he can tolerate where we are now. chug along were to in the dxy to move 100, the-dollar break 110, all other currencies with it, you have got renewed issues. tom: what does the word drag mean? is it a flows drag? the city political drag? -- is it a political drag? euro-dollar tends to be

the anti-pulse of the u.s. dollar. when the euro goes in one direction, it and to pull other currencies with it. the european complex, the emerging markets, but a lot of asia goes with it as well. francine: how do you see asia performing? does it depend on what the fed does? alan: it relates to what is going to go in one a says between president trump and president xi jinping. i think president trump spoke for real last night insomuch as it is going to be difficult to get a deal done anytime soon between the u.s. and china. anyone who has read the latest tr report in terms of the potentially egregious acts of chinese u.s. trade on the chinese side would suggest the deal is a long way off. that is going to place dollarely pressure on

china and it is going to pull dollar is a up as well. tom: let me bring this chart up. dabbled mr. ruskin. you are going to get this on tv in a moment. we take deutsche mark. we flip it over. we invert it. dazzled by this bloomberg chart. it shows the 116 level of 1998. we are about where we were supposed to be. alan: i was talking to a colleague yesterday. we always seem to have 120 an hour frame. always the 120's in our frame at some point in time. the currency market gets excited orit is 10% less than 120 10% more than 120. 120 is a fair value. our model suggests 120 is fair.

inverteddo ok with the deutsche mark there? alan: it dazzled me. tom: alan ruskin of deutsche bank. we are starting with italian lira. tom: we will do that when we come back. goncine double daring me to synthetic lira. that is what you need at the bottom of the spanish steps. allen west skin, chad alden. what an hour. this is bloomberg. ♪

francine: this is -- taylor: this is bloomberg surveillance. a bad year is getting worse for thomas cook, the british operator. below --ny reported thomas cook said three years to get things back to normal. the company plans to sell for one of the hottest summers on record. technologies will split itself up. the conglomerate will focus on narrow space and climate control

divisions. the move follows united ceo hasgies, plus the been under pressure from bill ackman and dan low. president trump is adding his voice to general motors to reconsider its plans to cut jobs . he is pressuring gm to move production back into ohio. -- ohio is a crucial battleground in presidential politics. that is your business flash. tom: thanks. i and to boost my chart of the year on the twin deficits. we lose that today for a great chart with the deutsche bank research team. i wasame out with -- when in london with francine. this speaks to that idea of only italy would go back to the italian lira. alan n-rescued with us now,

working with dfl daily. here is deutsche mark lira and it is weakening here, strong deutsche mark, au. they are locked in and if you extrapolate that trend, this would be a massive devaluation of the italian lira. thesea pipe dream countries can unhinged from the euro, right? alan: it is difficult. it requires discipline. you are alluding to the fact italy lost its this change it -- exchange rate. they have lost more than that. ofy have lost control military policy in terms of interest rates and loss control in terms of fiscal policy. the problem lies not just in the exchange rate but it has little power in terms of the main policy levers. francine is covering this

every day about the italian soap opera and the populace. it is -- this is not in the textbooks. it is not classic isl in theory. it is not supply aggregate demand. , is it? one of the correct elements in this system should have been germany should be pursuing policies such that germany's inflation should be lower than it is. italy's inflation could be normal, say sub 2%. there would be gains effectively, potentially in the competitiveness. andcould have germany now the current circumstance, relating at its inflation rate running above italy's effectively and that should be happening now. case, if germany is relating in a big way and

showing up in inflation, that would be helpful for italy. francine: but this is not what germany wants. there were rules we have to stick to. how does italy grow? is it through austerity like the germans say or do they say, forget the deficit. we need to go to 3% because we need to kickstart the economy? alan: i am skeptical a fiscal stimulus will have a positive lasting impact when we look at a 3-5-year time. au can pump up the -- over one or two year period. that is questionable that you from the to have -- monetary policy sides. that is the tension you see already. buthave a fiscal stimulus what fiscal gives us, the bond market and monetary policy is going to take us. the offset is apparent. it is tough in the situation italy is in.

tom: this has been wonderful. a little obscure, unless you are in italy, unless you are in germany. he is not obscure. he is a true expert on the fed, the former governor denier to daniel tarullo. ♪

francine: this is bloomberg

surveillance. about turkish and turkey lira. this is supported by one of the highest deals across emerging markets and contained volatility. alan rest can is with us. how much does lira move? erdowan will mr. meet with the saudi crown prince. politics has been influential and the way the turkish lira is traded, both on the back foot and recently in a more positive way. at this point, the turkish lira has come a long way. , there was bad news priced in the market. the market recovered. dowan played his cards well read -- regarding the jamal khashoggi killing. it has plays -- played positive

lira in recent weeks. my sense is in may have run out -- run itself out. francine: what about the yield curve? alan: when you have yields as high as they are at the front end of the curve, to talk about inversion is not a big deal. as long as the currency hits such that you are getting some offset from parked inflation pressures, you have got a natural tendency for curve inversion. how quickly can one get short-term interest rates down. it is critical at some point that short-term rates come down to the point where that supports the economy. tom: deutsche bank with the jewel on the bloomberg, let's show this. from from turkish lira 2004 to the beginning of heard is linear, it, it

is not. these countries are depreciating themselves into some form of stability. alan: wow. you would hope. the exchange rates are so inherentlyere is unstable situation here. i would be hesitant. tom: francine? francine: thank you so much, alan ruskin. coming up, an exclusive margretheon with vestager. ♪

. .

tom: good morning, "bloomberg surveillance." we will get to g20 coverage with alan ruskin entitled in such and ted alden. taylor: starting with the g20, president trump not backing off his threat to widen the trade war with china. the resident indicates we can't reach a trade deal with president xi jinping he will also impose duties on all remaining chinese imports. the two leaders will meet at the g20 summit in buenos aires later this week. the presidential politics and economics of the auto industry are crashing head-on. he'sdent trump says pressuring general motors to move production back into ohio, state is usually critical battleground this presidential election.

to dismiss 14,000 workers in close seven factories. one of them is in moorestown, ohio it makes the slow selling study -- chevy cruz. paul manafort could face a lengthy prison term, special counsel robert mueller has accused manafort of line repeatedly after striking a plea deal in promising to cooperate. lawyers from both sides who asked that manafort be sentenced soon. like of cooperation could hurt mueller's investigation of russian meddling in the 2016 election. and there is speculation the president trump plans a broad shakeup of the cabinet but two key players not be changed. he plans to give steve mnuchin and wilbur ross. toh have been subject reports that president trump is dissatisfied with them. 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'm taylor riggs. this is bloomberg. tom: i want to bring this to your attention, i've been waiting for citigroup to publish on general motors. he has been hugely informative on the recovery of gm and marginalize tenure there. barra'sbar -- mary tenure there. is missing is understanding the north american sedans were deeply struggling without a recession. he thinks this is usually product based on what we see. that's from citigroup. and now john butler joins us with bloomberg intelligence as cycle, timthe other cook is directly affected by the trade war?

john: let's lies the whole risk for apple and it's not good news. chinahones are made in but only 23% of apple's revenue by my calculation could be affected by the tariffs based on the number of iphones they sell in the u.s. to spell out a best case scenario here, apple is a premium phone vendor, so the price of the high-end phone which is $1300 goes up $130, does it really matter? they have a very broad portfolio of phones from the tenaris the low-end probably a to the tennis 10s plus.e it's hard to tell right now. within the manufacturing, distribution, and promotion of the roberts, the elasticity of

demand and supply and are they placed -- are they price inelastic? john: they are relatively price inelastic. we have seen a correction over the past few months and that iphone, that with the and it has been big, we are starting to see that elasticity kick in where maybe you're getting a delay in purchases, certainly to me, the supply chain rhetoric suggests that ambitious outlook may not really a line a told suppliers. or they are telling suppliers now. that one.ve to see on francine: if there is a 10% increase in you say doesn't actually hit all iphones sales, can they pass that on to the consumer? connecting cap of that in

percent increase on margins but also pass on the 5% increase to consumers? the: i think they can with issue is you're going to give it up a little bit on volume going back to the question of price elasticity. there is a point where getting to that point, even the premium customers look at $1300 iphone going to 1400 or 1500 and begins to balk a little bit. that's on the margin, so how much are really hits in the end is tough to assess. my call is it's probably not that much. apple is a premium smartphone vendor and this is not a price-sensitive group in general. but i think there is a point or on the margin you do begin to take a little bit of a hit. francine: does the company like why way actually make money in western companies?

concerned we are about cyber spying and security mean they need to take a step back? huahui areway -- owned by the chinese government, their spying concerns, i don't see them getting good traction here in the u.s., which really is the iphone's home market. 35% of all iphones are sold in so i think they have -- i don't think there's any risk of share loss here with tariffs. if anything, it sort of glazed apples advantage in the u.s. if all smart phones are hit with a tariff because again, they are playing in that premium segment, which is less price-sensitive. tom: john butler, thank you. we look to the g20 now with alan

ruskin of deutsche bank and edward alden of the council on foreign relations, senior fellow and author of an exceptionally important failure to adjust which continues to need rereading. chapter helping the losers trade adjustment assistance. i think there are losers this morning in ohio and losers in ontario, losers in michigan. how do we help them? in this question, it's not a trade story, the technology story. gm trying to move onto the next generation of vehicles and become more efficient. there's a lot of experience in europe in particular on retraining programs that work. and we had that experience in the united states. they work but would never done it seriously. 1/5 ord on average about 16 of what typical european

country does an much less compared to countries like denmark and germany. we just don't take retraining seriously in the country. unionized workers are little better off, the unions sometimes have programs that help them make the transition but there is a geographic problem which is these factories are all in the heartland of the united states and that's not where the jobs are being created, they are being created on the coast and a few big cities in the heartland of the united states, not in the places where these factories are closing rate -- our closing. tom: as we look at trump neoliberalism, is it a one off of this presidency or is there a purpose to the zero-sum trade attitude? we have moved into a new era, it's not to say that a new president would use the tariffs with the same aggressiveness trump has but there's no strong constituency for the old version of free trade. democrats are upset they -- that trump took this issue away from them. the presidency,

they're not going go back and say we were right about tpp and the wto, we should go back to the way things were, there is going to be a new mercantilism that survives into the next and administration. francine: what will be the main talk of the g20? we already saw isolated president the last time world leaders got together, to the get them backd in, because that's how you negotiate and don't yet put in the doghouse? mr. alden: get them is no evidem the g7 or g20 reading international meeting the trump wants to be brought back into the fold. i think the real game of the g20 which you have been really focusing on is what happens between the u.s. and china. i think this is the last serious chance in this administration to try to put in place some kind of framework deal like was done with the europeans last summer that allow negotiations to take place. thisat doesn't happen weekend, the two sides are digging in for a trade war that

will run for the rest of this administration at least. francine: do you agree with that? is this the right time to get a framework if we don't get it, does it move dollar? mr. ruskin: certainly in this now where's a period everything is at stake. but it's not obvious what the endgame is in all of this. there's an attempt to talk beyond trade, the technology transfer is a refashion of the strategic relationship between the u.s. and china, so it's a big deal really. and it doesn't beget easy solutions. the bestense, almost you can hope for is that both sides agree not to up the ante, not to raise tariffs immediately, not to reengage with new tariffs. in that they continue with talks after g20.

i think is a lot to ask for for g20 to somehow have a document at the end of it which people can sign off on. i go back to failure to is adjusting.a as you mentioned, the technology overlay, can politicians legislate or ameliorate technology? is there any evidence of that? mr. alden: i do think so. yes, politicians could do it. you could do bill gates' robot tax. but at the end of the day, that's a losing game. if the united states is going to remain a leading economy, it has to be on the cutting-edge edge of these new technologies and these are disruptive. trade is disruptive, technology is disruptive. the question is how we as a country adapt and succeed in that fast-changing environment.

if you throw too much sand in the gears you kill the goose that laid the golden egg. can't say enough about "failure to adjust," a superb overview of american trade in our future and michael mckee will attend the g20. we continue with alan ruskin and we want to talk about the fed and we look at the automobile industry. given time is scheduled to be with us as well. on radio, we address -- readjust the american economy. with stephen stanley. please they with is worldwide. this is bloomberg. ♪

taylor: this is "bloomberg surveillance," i'm taylor riggs. google runs the risk of pesky fines from the european union areeu consumer groups accusing them of using tools to track user locations. as said they will file complaints of national ringleaders and google says it will read the report to see if there's anything you can use. the world politicians have been turning against saudi crown prince mohammad bin salman since the murder of journalist jamal khashoggi last month the private capital made up its mind long before that. bloomberg learned growing number of saudi's have been trying to move money out of the kingdom or have drawn up plans to leave. that was triggered by a crackdown on corruption the year ago. and that's your bloomberg business flash. francine, tom. tom: there are two new things to talk about to do it our with

alan ruschel deutsche bank. we could do three hours with ,iven time and -- kevin tynan car guy. he was at a seven car garage and had eight cars in it and he knows automobiles. , they talk about the volume that got to be done, i guess there's a strategy here, but within is noted citigroup, he goes deeper into the effect on suppliers. ohiothose in a state of how will the adjacent parties to gm react to this news and survive? mid-shift look at the from car to truck which is really since 2013 and that volume clawback, you are really doing more with less. when you look at the revenue contribution on the truck side

versus the car's side and the profit contribution, it's much greater. while we have seen general motors, for example, 18% decline in car volume for the full-year 2017, down another 20% this year , that mixed going to 80%, 80 plus percent on the truck side, pickups, crossovers, suv's makes up for a lot of that. tom: i'm watching eli manning go down in flames this weekend with the new york football giants and all of this action wrapped around endless car ads. one of them is the gm and paula and everyone is cheerful which is all going to go away. why can't we build and affordable smaller or mid-smaller car? we lower labor costs, what is the line? kevin: that's the thing. we lower labor costs coming out , bute bankruptcy period

you look at the action in canada, it's very expensive to reduce in north america in the u.s. and canada specifically, so margin on those vehicles isn't good enough. you look at where the marketing engineering design and energy goes, he goes to the truck side of the business. as you get that normal production cost inflation, the car side of the equation doesn't make sense. how much is china problematic for general motors? they need to shift to more technology savvy cars in the past, china was a christian and the slowdown means is no longer a cushion. is that right? kevin: it does. it also what you are getting is this to me feel the little bit like clean the slate here and let's realign the product portfolio and one of the things that i have been watching through this process and you look at a company like tesla and i talked to a lot of clients and investors that talk about there is no real competition for tesla

and i agree 100%. dabbling inakers the electrification, whether of plug-in hybrid or battery electric vehicles but none of them are really there. we heard volkswagen talk about realigning factories for electric vehicles. i think this is where gm is going to that end. -- you look atl volume of electric vehicles, 1% globally, what does that make him, and to give mary barra credit, she's looking ahead. and saying to we want to play in that $10 million or the other $90 million m to her credit, she is getting into it. tom: kevin tynan on gm. we continue with alan ruskin. this is bloomberg. ♪

tom: 3.06% on the 10 year yield in the united states. francine lacqua in london and i'm tom keene in new york. alan ruskin with deutsche bank, this is a fed chart that vice-chairman claris is very aware of. down near a stan fischer

speaking of economic club of new york and up we go with all the fed rate increases and alan ruskin, we're barely back to 0% real fed funds target rates. it is still an ultra thatmodative cleared is this isn't it? mr. ruskin: it's not as a common event that once was. we pay nominal rates and terms of a nominal mortgage rate, we don't a real mortgage rates so nominal rates matter a great deal as well. been vis-à-vis your chart, i think most people with the neutral real rate star at something like three quarters of a percent or 1%, much lower. tom: that's true three rate increases from here. what after that? mr. ruskin: that's the guest. we are getting past the easy part is concerned, getting towards will be would describe as neutral. maybe the next couple of rate hikes or the easy part

thereafter, it's going to be very data dependent. we've already reaching the point the fed is looking at what's going on in the financial markets and is perhaps going to be more easily persuaded if you get softer data, more easily persuaded to get stronger data going forward. parts. different moving oil, for example is positive for growth in the medium-term, the oil price declines. there are a lot of different elements here that they say they're going to take into account. francine: do you think data points alexa turned to the downside or do you think they will stabilize? it's probably close to a peak as far as the growth rate is concerned. seo a three handler gdp growth are probably going to be passed, if not now, the very soon. theo be expected i think key is how quickly doing move back to trend, and we don't have half which goes 3% to 2% or do we like the financial markets fear go from 3% to 2% rather quickly?

they could be much more disruptive course. alan ruskin, we greatly appreciate your tenants. these with deutsche bank and lots of that coverage here with powell tomorrow and the chairman to the economic club of new york. jon ferro i will drive for this conversation with a lot more on gm, you tx with that company split up as well. stay with us, markets right now, futures negative eight, dow will drive for this conversation with a lot more on gm, you txfutures -54. from london and new york, stay with us. this is bloomberg. ♪ mberg. ♪

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"all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. i am a techie dad.n. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience. my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. alix: trump tariff threat.

president trump says if he and make a deal cannot of the g20, he is ready to put tariffs on all products into the u.s. it can present tariffs could be placed on mobile phones like the iphone and news ways on the stock already in a bear market. shares of apple suppliers feel the heat. inflation warning, the san francisco fed says there is a considerable possibility that inflation will fall below the 2% target we speak to dan cerullo on the fed's reaction function. david: welcome to "bloomberg daybreak." i'm david westin here with alix steel. onhave theresa may taking it the road, she is going to sell this plan and she goes to belfast. alix: why don't people start getting old lettuce and throwing in anger? david: she comes to town. alix: your visit is wasting your time. this is the leader