i'm in product development at comcast. we're working to make things simple, easy and awesome. francine: the equity route rolls on, there is a glimmer of hope as china echoes president trump's optimism of our trade talks. a night to forget for theresa may, the u.k. prime minister, who has the worst defeat in the house of commons in 40 years. bond markets, fears are overblown. ♪ francine: good morning. good afternoon if you are watching from asia. this is "bloomberg surveillance ." i am francine lacqua in london. u.s. stock markets are closed to

mark the day of mourning for president george h w bush. we are getting breaking news from european stocks. down 0.8%.00, november services pmi, 53.4, a touch above estimates. euro-dollar on the back of concerns on the trade war, finally a glimmer of hope as we heard from china on the fact that they are making progress. and because of the defeat of theresa may in the house of commons, because we are five days away from the important vote on december 11, i am looking at the pound. 1.2728. of the funerale of president george h.w. bush coming up at 10:00 a.m. new york time, 3:00 p.m. in london. here is bloomberg's first word news. prime minister theresa may

has lost a series of votes in a dramatic session in the u.s. -- u.k. house of commons. if as expected, may's view is defeated next week, the prime minister was defeated over the publication of secret legal advice on the eu with draw deal. the government says it will publish its full legal advice at 11:30 a.m. u.k. time. think, i ask to them to think what they would say to the 52% who came out to vote for leave? in many cases for the first time in decades, it will be their decision and ignored, what will it do to our politics? >> china is reportedly preparing to start imports of natural gas

after the countries commerce tradeer described the meetings as successful. beijing will push forward on trade negotiations with the u.s. on the 90 day timetable and roadmap. it is the first confirmation, although there was no mention of the u.s. threats to raise tariffs. back in the united states, special counsel robert mueller is recommending no jail time for national security visor, michael flynn. a federal judge will sentence for when more than a year after pleading guilty to lying on trump's behalf. top saudi officials say the terms of the oil deal remain unresolved, despite crude prices surging after vladimir putin and extendd bin salman

cooperation. in an interview with bloomberg, ter energy minis cautions all members of opec need to come together for a cut to go ahead. leading figures in washington say a classified cia briefing has convinced them that the crown prince of saudi arabia has played a role in the killing of journalists jamal khashoggi. bob corker is even saying, if a jury were to consider it, it would convict him of murder in half an hour. senators say riyadh must accept responsibility for the killing. global news, 24 hours a day on air and at tic-toc on twitter, powered by 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine: thank you so much. wall street suffered its biggest loss in more than two months, with all major indices closing

down more than 3%. u.s. futures have regain footing after china's trade meeting with the u.s. at the g20 was successful, and it is confident of the results agreed. teachers are open, but markets are not open because of the funeral of george h.w. bush. joining us now to talk about the markets is mark cudmore from our team in singapore. what is driving the markets lower? trade or the 10 year? mark: i think the main thing is broken,er psychology is which means they are overreacting to any negative news at the moment. we had a couple of scare stories about the trade conclusion between talks of trump and residency. that was causing some nervousness. it is misleading people a little bit that we would have a recession, that was the wrong

takeaway. overall, the fact is there should not be anything driving things lower except investors are in an environment where they do not want to take risk. especially as we enter christmas, where liquidity will drop further. francine: do you expect more versions to come, and if we have a big one, does that mean a slowdown? mark: i think we will get more inversions. the flattening of the yield curve, the inversion is a normal part of the economic cycle, and it will happen to the end of the economic cycle. we will get the big one as you mentioned. invert, between they and when we get a recession, normally by 18 months, and another 50 months of a bull market. overall, this period of a flattening yield curve is a positive time for the bull market in equities.

violent on the most the top side. ist we need to worry about if it's deepens. the economicd of cycle, this has been a long economic cycle, and the end-stage might be long as well, two years or so. francine: mark cudmore, part of our team in singapore. as we approach the end of the year, the forecast survey is now open. we are asking, do you think assets will end the year ahead? bloomberg to your put your calls in. it is a fun way to check out if you are better than your peers or not. let's bring in our guest paul hamill, global head, citadel securities. it has more than 500

.nstitutional clients this is our semiannual interview. i am excited to host you here in london. how worried are you about the yield inversion? this is limited to the markets, but does it mean something ugly will happen? is that what your clients are worried about westmark paul: investors have an enormous amount to contend with. we are seeing that coming out of the fed and the trade -- the change in the fed moving from an unpredictable uncertain model to one that is responsive to data. at the same time we are moving through this, there is a myriad of headwinds that could impact rates. , orink the primary concern the narratives emerging, it may be signaling the beginning of a late cycle stage of the u.s. economy. were is some consensus that

will see some slowdown in 2020, but not total consensus because positive datat of coming out of the u.s., and i think that is what is driving uncertainty among investors. francine: is the market binary? back the curve inversion to 1981. is this different from the past because of qe? and if the market freaking out, or is it the slowdown you were talking about? paul: it is very hard to set. .- it is very hard to say we sell recent comments from chairman powell talking about it being close to neutral, after it was said we were a long way from neutral. that caused gyrations last week. the trade gyrations we saw were positive over the weekend, then trending negative. we have the brexit situation going on. it is hard to pick what is

concern atryone's this point in time. it seems clear there is edible research to suggest we are not late cycle in the u.s. economy, and that certainly -- i do not think there is a strong consensus we are headed for a slowdown, it is just part of the narrative. francine: what is the question you get asked most by your clients for 2019 question mark is it on monetary policy? questions,nk everyone is trying to understand the scenario. in a correlated way, it could bigger, and it starts with the fed, it starts with the u.s. and what it might take in terms of tariffs or brexit or italy or u.s. data. what might it take for them to change the course? and dramatically changing their

course might have an alarmist impact on u.s. rates. we might see a strong diversions of opinions around the rate hike paths of 2019, but i think the fed and the rate hike paths, what is neutral, those are the things driving investors questions and concerns. francine: how do you expect fixed income to apply with equities? paul: we have seen a lot of correlation in reaction recently. anhink fixed income remains asset class where we are still seeing a lot of activity in u.s. treasuries globally, and that continues to quality and factors . i think it is one of the most weive periods in trading, see more volatility, more volume, more two-way flow than we have seen in many years.

it does not look like it will continue to be an active market. francine: paul hamill, global head, citadel securities stays with us. theresa may is locked in a struggle over the house of commons over brexit. a plan beu ever except from the u.k.? we will focus on the u.k. next. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance ." let's get to the bloomberg business flash. approval for a

$60 billion acquisition. the japanese company is saying it won the support of 88% of shareholders at a special meeting. an endorsement of management strategies transform the drugmaker into a global powerhouse. shareholders will be voting later today. back in the united states, les moonves could move out on a $120 million severance package. according to the new york times, lawyers hired by the network destroyed evidence and misled investigators looking into multiple allegations of sexual misconduct. it is a case to deny moonves his severance pay. the former ceo has previously said sexual relations were consensual. jp morgan's ceo says fourth-quarter trading revenue is on track to be roughly equivalent to the same period a

year ago. jamie dimon says the budget will bank is, and the increasing its efficiency ratio. that is the bloomberg business/. francine: thank you so much. in the u.k., theresa may versus parliament in a battle that will determine how brexit turns out. the weakness of may's position was underscored as she lost votes in the house of commons over her disagreements. the parliament has the power for plan b. paul hamill, global head, citadel securities is still with us. david, what does it mean that parliament has the power? do they start negotiating with the eu? if you are an international investor, you try to make sure if it makes about less likely? david: what we saw yesterday was the parliament inserting itself

showing thatand ms. may was not able to win any votes that came through yesterday. that does not bode well for the big boat, which is still on track to happen next tuesday night. negotiateoing to directly with the eu? this idea of no deal, it was ms. strategy, noting deal is receding as a possibility. the whole point yesterday, the parliament would intervene and instruct the government. francine: is in this messing around with democracy? does it make it more likely that the vote goes through, or less likely that we have fresh elections. david: there is no time for fresh elections or brexit day

for a fresh referendum. the other thing that happened yesterday which was more significant, the european top cause gave an opinion that britain is allowed unilaterally to stop the process. that is a game changer because it means parliament can instruct the government to cancel article 50. that gives them time for another vote, for another election. the public already decided this the public already decided this question, but the problem is there is no version of brexit that can get through parliament. parliament says they have to turn the vote back to the public and have another run at it. francine: this is my chart of at what itoking means for the market. how stressed should the markets be question mark paul: i would say already there is a set of

emergency consensus among our clients and investors that it is difficult to imagine this vote being successful on december 11. people have moved, there is an expectation that something gets done before the hard no deal brexit scenario that governor carney laid out in a dystopian fashion last week. generally speaking, i do not know what the detailed factors are driving people to form that view, but there is a view that it may not happen as planned, but something will happen. francine: does it impact your commitment to the u.k.? marketike all participants who operate a business in the u.k., it has the potential to impact and be disruptive, if we experience the hard brexit. we have a large operation in and we would seamlessly move ever operation to continue

to serve our clients in continental europe, and have made plans to do so. it would be disruptive, no doubt, for a hard brexit scenario. , global: paul hamill head, citadel securities stays with us. up next, our fears overblown? this is bloomberg. ♪

francine: this is "bloomberg surveillance."

i am francine lacqua in london. at the washington capital, a lot of pageantry and sadness today will be because of the funeral of george h.w. bush. we will have special coverage of that starting at 10:00 a.m. new york time. let's get more on the fed and treasuries. treasuryont end of the yield curve, does not mean it will invert. that is according to bloomberg intelligence, and they point out , one year forward rates is getting about flat. let's get back to paul hamill, global head, citadel securities. we were talking about the inversion earlier on. we started the show talking about that. what makes you worry about the changes in the fed? is it the communication or that we are so data dependent that markets are free to wobble? paul: we are certainly moving

away from an environment where there was a lot of forward -- ance, eight oh path, qe predictable path, qe. and we are in a new world order where the fed made it clear they will be more responsive to data, and that creates uncertainty. that creates volatility. it also creates a lot of opportunity, so it is not a welcome on the part of investors. moveportant point is the to a press conference after every meeting gives chairman powell and the fed more flexibility around how they might be responsive. historically it might be a quarter hike situation. used to more gets frequent communication, that is there in the toolkit, we know chairman powell wants to pause. there are many factors in play

around that pause, plus the global issues we talked about and the potential slowdown in the u.s. economy. there are a lot of factors investors have to contend with now. .rancine: one thing we debated we will get back to paul and talk more about other markets including emerging markets. paul hamill, global head, citadel securities stays with us. coming up, the ukraine after the naval clash that reignited tensions 10 days ago. we will bring our exclusive interview with ukrainian president, coming up next. this is bloomberg. ♪

see live you can pictures of the casket of mr. george h.w. bush. yesterday, president trump made

it briefly visit to the rotunda. it is 4:29 a.m. in washington, d.c. many people have come to pay their last respects. he will be later buried in his home state of texas along his wife. a reminder that u.s. markets are also closed today as a mark of respect. specialgtv will have coverage at 10:00 a.m., new york time. you can member services following to 54. a little bit of a move on pound. vote, as closer to the theresa may got voted down three ,imes on some of the amendments pressure on pound will be more

on the political then the data. uma: here is what is happening. theresa may has lost a series of votes in a dramatic session in the u.k.'s house of commons. lawmakers of voting to give parliament the power to shape the final brexit settlement if may's deal is defeated next week. parliament will be voting finally on whether to accept or 585 pagee agreement. think what itto would say to the 52% who came , in manyte "leave" cases in the first time in decades, if their decision were

ignored. what would it do to our politics? reportedly ready to start imports. beijing says it will push forward on trade negotiations with the u.s. within the 90 day timetable and roadmap. it is the first official confirmation from china of the talk window, although there was no mention of u.s. threats to raise tariffs again. robert mueller is recommending flynn. time for michael a federal judge will be on december 18n more than a year after he pled guilty to lying to the sba about contacting russian officials -- fbi about contacting russian officials on trump's behalf. 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. this is bloomberg. francine: thank you so much. the ukrainian president has renewed appeals to his nations allies to punish russia. we spoke exclusively to him and asked if he was satisfied with the reaction from the west. >> i want to thank all the leaders of the world for supporting us in this difficult time. the statement of the united states, the g7, the european allies andother strong words is definitely the strong support of the ukraine. with this situation, i think western partners make

strong statements, putin acts. we should have better coordination also to act. act means, not open war. definitely, no. we just want to defend and protect our sovereignty and integrity in our independence. act means a new block of sanctions against russia. increase the presence of nato in the black sea. this is the new type of war, the hybrid war.

exists with the cyberattack of all western democracy, the disinformation campaign, trying to attack the different countries during their election. embargo on buying ukrainian goods. stop supplying natural gas. the most important factor, using the military force against independent countries, including ukraine. francine: that was the ukraine president speaking exclusively to bloomberg. italy's populist government has a new problem brewing. it could soon be dealing with the first recession in five years. for theother blow coalition which has been blocked in a battle with a european

commission over its budget. overall, what are you expecting from the european central bank and what does it mean for the markets? what will 2019 bring? is,: the overall narrative a year ago we were talking about europe being a tailwind in the context of synchronized global growth. that doesn't seem to be the consensus view where we stand right now. there is no change in verbalize path of the ecb yet. there is still the intention that they will hike at least one time in 2019 after the summer. the market has started to price some doubt around that. it is impossible to say what happens with italy and brexit in

the negative impacts they would have an volatility that would introduce in europe. all of that going on plus softer data. tariffs.al for it's not a very positive picture. francine: if you look at the trade were between the u.s. and china, where does europe set? -- sit? does it benefit or is it collateral damage? paul: one of the things we have seen is that it takes quite a long time for any of these terrorist type programs to play through. that is a narrative -- tariff -type programs to play through. that is a narrative in the u.s. we know that the agriculture sector is under a lot of stress in the u.s. economy. i think it does take quite a long time to play through. situation,ole tariff there are so many variables, it

is difficult to see. it is certainly not regarded as by most as a positive. 2019 represents a big change in the european swap market, which we are going to capitalize on and bring our unique business model to investors here. we take very seriously our responsibility; to maximize available liquidity, especially in times of stress and chaos. we stand out because we do that and because many of our big bank competitors tend to pull back in times of stress and chaos. francine: is a appetite for that? paul: absolutely. the idea of firm pricing, consistent, competitive liquidity, especially in volatile markets.

as it relates to us trying to make sure we are there when our clients need us, there's even more impetus to expand in europe. francine: does the european customer expect other things? do they want bigger yields? paul: when we talk about what we do best, the appetite is global for that. certainly some of the changes we see this year will make it even more easy for us to bring that liquidity to investors. francine: thank you so much. up next, we talk regulation as the world remembers george h.w. bush. we look back on his legacy, and then we will talk regulation with paul. this is bloomberg.

>> we now have a pretty clear model. he goes in, declares greatest of deal of all-time. it is a lot like that first merrill lago summit he had with president xi. he leaves the details to everybody else i do realize nothing has really happened, and you are right back where you were before. >> the market didn't think there was going to be a trade war with china. it may be helped a little bit that he delayed it two months. there was really no resolution. the vague proposals china gave were almost embarrassing onto what is really going to happen there. there is a troublesome trend in the jobless claims of the last couple weeks. flooredre, i was really when i saw it down to the 288 today. that is a concern on growth.

you don't get a decline like that. >> i think we're looking at the bond market. it seems like it is missing out on a lot more growth weakness. you have a bold flattening of the yield curve. i think people are going to risk off in a pretty dramatic way that i don't think we would have expected. lot of the a financials trading below book value. anytime you get to that level, unless you're entering an immediate recessionary environment, it is a great entry point for financials. probably the two best value plays are financials and industrials. francine: that was some of our guests talking the market downturn. billions affect is the european landmark regulation. -- going intotens affect is the european landmark

regulation. still with us is paul of citadel securities. last time you are on, it was at the start. what kind of impact have you seen? the research business model has changed across the market. it is obviously something that investors have had to grapple with, paying for research and unbundling the concept of bundle execution and research. we see that as a positive for the market because customers can isolate and identify the quality of the execution and focus on best execution and price, and separately look at products like research and evaluate who offers the best services of the best price. we started to see the market shift and adapt in that way. it is obviously an enormous regulation.

i think there is still a area of adaptation. one thing i did mention last time i was here around trade reporting, it has been very positive to see european regulators jump in and report issues. francine: is there anything else you would change now? tol: there are a few i's dot and t's to cross. i think we are about to see the full and limitation, and that will result in full-scale trading. no doubt there will be issues. i think we are very comforted with how we expect similar outcomes. house, arket making sell side equivalent to some of the big banks, we don't necessarily consumer research. impact the does

overall business model and how our customers value what we do for them in terms of providing liquidity and what some of our competitors do in terms of providing research. francine: are you worried about the rollback in the u.s.? paul: i think worry is a saying concern -- sane concern. we have seen a recent proposal that would rollback a large ules.r of those r there is some ideas about making trading venues more small, reducing access to buy site, we know that is going to reduce transparency and increase cost. i don't think there is any investor that wants to go backwards or wants to see the market rollback to where it started. we have to remember what the

goals of dodd-frank and the original g20 commitment were, to make the market safer, more robust, more competitive, more transparent. this goes the opposite way. francine: if we have a period of volatility, is it even worse if transparency actually hits the market at this time? to changing the market structure again after investors have had several years to adapt to it, during a period of high volatility, it would be very difficult to rearchitect and redesigned the business models again. ae other big concern is global framework which investors can think about. this takes us back to a world where the u.s. regime would be different, more complex, and higher cost. the only constituent i can see that stands to benefit from is a handful of

large u.s. banks to continue to agitate for re-architecture of regulation to mold around the business models. i don't think it will be well-received by the investors. francine: does the midterm election change that? are banks going to be back in focus once again? paul: this has been underway for quite some time. i think there has been a long-term effort to lobby to roll back some of these regulations because those that don't benefit from greater competition have been on the sidelines, very active in this for a long time. i don't think this is related to the midterm elections. francine: if you look at brexit, will it change the way europe regulates some of the institutions? paul: i think the things we

think about with brexit are things like -- which has come up a lot recently, some of the infrastructure located here in europe. we have seen some very positive momentum. it would certainly impact us and our customers, and certainly anyone active in one of the largest markets in the world. those are the kinds of things we are focused on. there are a lot of detailed issues like european entity ifding with a u.k. entity there is a hard brexit and we have no passport to do business with those kinds of entities. there he complex for very large banks with large operations. we have a large number of continental european clients given the scale of our business. i think we will be able to more seamlessly move and be reactive.

i think there is a lot of complications on the regulatory front around supervision that arises from certainly a hard brexit. francine: thank you so much. up next, remembering the first president -- 41st president of the united states, george h.w. bush. this is bloomberg.

francine: economics, finance, politics. this is "bloomberg surveillance." national day of mourning for the passing of president george h.w. bush. his first funeral will be held at the national cathedral today, followed by a second service in houston tomorrow. bush died at 94, making him the longest living president in u.s. history. he fashioned a restrained response to the soviet union's collapsed and assembled a

multinational coalition that rescued kuwait from invasion. tell us about the legacy of president bush senior. >>. i think he has got three legacies one is his handling of foreign policies and procedures he put in place for the national security council to be an honest broker. when the iron curtain collapsed, the president stood back and let the germans work with the russians to put together a united germany. he worked on the sidelines to convince the french and others in europe that this would be ok. that it wouldn't be a threat to those countries to have a reunited germany. he didn't spike the football when the soviet union collapsed themr, preferring to guide toward the west rather than push them toward the west. while things didn't last, it did work. he also put together the coalition to take on iraq, and

did so in a way that united the world. was a different kind of foreign policy that was built on international cooperation. we don't see that as much today. side, his desire cuts, whichn tax have led to a rise in the republican marty of environment feeling.lent anti-tax his last legacy, such a nice person. basically, he brought a decency and goodness to the presidency we've not seen in a very long time. francine: what was his role in history? what will he be remembered for? the new yorker writing

that he was probably the last president that was not despise by a good majority of the population. he called for a kinder, gentler america. that didn't take, but everyone misses that. we talk about what a decent person he was and how he had respect for his opponents. francine: thank you so much. a reminder that u.s. markets are closed today as a mark of respect of the funeral taking place in washington, d.c. bloombergtv will have special coverage beginning at 10:00 a.m. in new york. this is bloomberg.

francine: the equity route rolls on after selloff in the u.s. there is a glimmer of hope as

china echoes trump's optimism over trade talks. the u.k. prime minister loses three key brexit votes. oil continues a retreat on concerns output curves will be as great as one spot. this is "bloomberg surveillance." will of course also be on the death and funeral of george h.w. bush. tom: you have to go back to the state funeral for dwight d. eisenhower in 1969 to really pick up on a modern presidential state funeral and all of washington will do that through the day today, not just about the national cathedral service. we will have that coverage layer on.

-- later on. i would really say it is a next ordinary moment for this capital in an extraordinarily political time. we see the president and his remains in the rotunda now. last night around boston, it was a packed washington waiting for this very special day. we look at equities, bonds, currencies, commodities. the u.s. markets closed today with a bounce off the horrific close we saw yesterday. most importantly, the 2/10 spread, that is an extraordinary number. 11.68 don't know what means, know that we got there quickly. francine: i'm looking at the markets and european and asian stocks are dropping today. rising,ity futures

although this is futures for tomorrow because today, markets are closed in the u.s. as a mark of respect. global markets have been left reeling after tuesday's steep selloff. i'm also looking at pound importance because of what is going on in the brexit debate. we have the all-important vote next monday. this is my chart of the day and i'm looking at the cost of hedging pound. a lot of the focus today will be on the funeral of george h.w. bush. tom: very good. right now, we need to go to michael mckee. by his serviceed to bloomberg. over the years, he was with reagan and gorbachev, and far more importantly was moment by moment with president bush. a few years back, to say the least. what is a thing that we don't know about president bush?

what is the observation you would make away from all we have heard over the last few days? after his life has been described and dissected in so many ways, the take away i would besides the legacy of the job you did was the love he had for his family and for their traditions, for going to kennebunkport, for having the family around, and the fact that he was a genuinely nice person. the campaign trail of 1982, he is to take on the press and talk about us as terrible people, but in a completely different way than the candidates now. atry summer he would have us the kennebunkport compound and spend hours talking to us about just anything. he was a different kind of person, and you don't do that anymore and politics. tom: the dignitaries of the world will assemble.

prince charles and angela merkel. theand i were talking about obituary where it was simple, and berlin fell. that is so much a legacy of this president. 1989us of the moment in and into 1990 when he had to manage that as a global leader for a fracture germany. michael: all of a sudden, the u.s. saw itself as the world's sole superpower. the president made the decision to not force the countries behind the iron curtain to follow the united states, not push them, but see if they would come our way by setting an example.what he did was work with the french and others in europe to reassure them that the u.s. would still be there and that a resurgent united germany would be no threat while he worked with the to reignite the country

behind the scenes and let them work it out with the russians so the two countries could have a peaceful resolution to the idea of what was going to -- or a new germany was going to look like. -- what a new germany was going to look like. they worked to bring the other countries behind the iron curtain to the west as well. but noctators toppled, revolutions followed the fall of the iron curtain beyond the toppling of the soviet union. tom: as we begin our broadcast, i was with senator dodd of connecticut yesterday. spectacularutely about eisenhower america and how his father went up against president bush's father. it was absolutely brilliant

connecticut politics of another time. for our global audience, explain the bush family from president bush's father. michael: originally, they came out of ohio. came out ofh connecticut and eventually became a senator from the state, retired i think in 1962, but set an example for the bush family of hard work and giving back. the idea that you are privileged. and you need to get back that was the credo that george h.w. bush lived with his life and try to instill in his children. prescott bush, a senator from connecticut, then george h.w. bush try to get a job at procter & gamble, got turned down and moved to texas. the rest is history. francine: you talk about the legacy of bush's senior, george h.w. bush. does it change the funeral, and what he stood for, change

politics in washington today? : michael unfortunately, not. it is a reminder of what we lost, but i can't imagine it will change politics. many people got where they are because of the less kinder and gentler practices we have seen these days. it would be nice if people absorbed the lessons of george h.w. bush, but i don't think we are going to see that. it, he mayker put have been the last president of the united states that was a despised by a significant portion of the body politic. that is a sad commentary. francine: what changed after he stepped down? why have all the presidents since him been so divisive? michael: it's hard to know, but it does seem to have something to do with social media and cable television, they have made it much more possible for people to attack. i don't want to completely becausegeorge h.w. bush

he had what was seen as dirty politics. in a way, he sort of contributed to it. he didn't condemn it. that may have been when it started, the feeling that the ends justify the means and politics. then, it becomes a sort of stone rolling downhill. we see it in many disputes where people cannot forgive and they have to tit-for-tat follow out. tom: what a spirited conversation. i think it is brilliant that john meacham will provide a eulogy. his one volume is widely considered to be the definitive book on the president and on the era. here he is a few days ago in the new york times. i thought this was wonderful

from the gentleman from chattanooga. it is an unexpected will fact of history that while bush tried to lead like ike, the world was beginning to resemble a joe mccarthy rally. what mattered to him was not what one said or did to rise to ultimate authority, what mattered was whether one was principled and selfless once in command. what a shift and politics from the quiet gentleman from kansas to the rally from wisconsin and onto our modern politics. michael: things have changed quite a bit, on your probably say that george h.w. bush was probably the last of the he woulder republican, be considered almost a very far right-wing democrat these days. the idea that you could cooperate across the aisle.

that has really fallen out of favor in washington. tom: thank you so much. i look forward to our radio coverage today. that while markets are closed today for the state funeral of president bush here in washington, we will provide special coverage at 10:00 a.m. this morning, 3:00 p.m. in london. it will be a most interesting service. some 3000 people expected by invitation. chandra now with our first word. uma: thank you, tom, it is actually uma pemmaraju. bloomberg learning that beijing will start imports of american soybeans and liquefied natural gas. that is the first time confirming white house claims that china will start buying u.s. products immediately. robert mueller is urging a judge to go easy on michael flynn.

mueller saying that flynn has provided so much help to prosecutors investigating russian campaign meddling, that he should not get jail time. flynn has pled guilty to lying to federal agents. theresa may versus parliament and a battle that will determine how brexit turns out. the weakest of may's position was underscored in a day of drama. she lost three key votes in the house of commons over her agreement with the european union. parliament now has the power to decide on a plan b if it rejects may's plan next week. russia and saudi arabia meeting today for a make or break prep meeting that was set the direction for the oil market. it is taking place just before the beginning of a critical opec meeting. saudi's energy minister saying there is no deal to cut out the. -- output.

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 them a uma pemmaraju and this is bloomberg. this is what the markets are telling us today. european asian stocks dropping today. u.s. equity futures rising. this is after china pledged to start delivering on trade agreements reached with america. tomorroweing futures because markets are closed out of respect today. pound moving on the back of what we heard about brexit. that crucial vote to parliament is on december 11. investigators now awaiting the publication of legal advice on theresa may's brexit deal following a pretty brutal day for the government and parliament yesterday.

also bring about u.s. futures. i brought those to you. they are kind of moving sideways. this is for the market opening tomorrow, not today. tom: very good. there are the futures for the market opening tomorrow. please stay with us. we will do this at 10:00 a.m. this morning. this is bloomberg. ♪

uma: the ceo of ford is

downplaying a report that the automaker may cut 25,000 jobs. jim hackett saying for did not provide numbers to an analyst who estimated the job cuts on monday. an company will have internal announcement about plans are for its workforce later this week. cicada investors have approved a deal at a special shareholders meeting. shareholders will be voting on the agreement today. moonvesbs is ceo, les could lose out on a $120 million severance package. lawyers hired by the networks esve found that movonv allegedly destroyed evidence and investigators. a draft report as saying that cbs has justification to deny him his severance pay. that is the bloomberg business flash. francine: thank you so much.

let's go back to what the markets have done.wall street suffered its biggest slide in stocks in almost two months with almost all major indices closing down almost 3%. thank you for joining us. what are the markets worried about? is that the treasury yield or trade? >> i think they are mostly worried about the curve. the fed has written a lot about what the yield curve implies over the last two years. i feel all of this assessing over the tape of the u.s. yield curve and what it may or may not mean. i don't know whether we will survive this concern through friday. people are looking at the curve is flat, if it gets inverted, we will have a recession.

the fed is going very fast at the moment and there is not much inflation. it is gross. this is a gross concern that is based on quite limited information so far. francine: is the rethinking actually write to happen right now? with, that we have with trade is that there is only a small circle that knows exactly what the next step will be. we haven't seen yet trade coming down in volumes. trade is just starting to. that is a problem. the impact of trade on growth and what does that mean for the u.s. economy and globally? i think that is the key. the g20 and next step into trade and where we fit in. i think we have the markets trying to gauge. it is the key for the u.s. and also europe. francine: how should markets

look at the trade story? kit: i think they should look at it nervously. the global economy is past its peak. the u.s. economy is past its peak. we are rolling down. we are showing that once we see we are going down, we're worried about falling off a cliff, and that is not a given. i think what markets need to do -- i think they will calm down in due course. the bigger question is, are we going to see a soft landing for the global economy, or could this start to spin out of control? i fear that what we are going to do is spend at least the first quarter, possibly first half of next year chopping around between, this is going to be dreadful to, this isn't going to be that bad at all. down whatever. direction of travel. francine: let me bring you over to my chart. it brings it back to 1981.

it is basically ready for a recession. why is this time different if it is different? antonio: that is the key question. nobody has the answer. the inversion is almost like half the precision of a medical test. different, we have massive financial problem. that is why we are not fully understanding that this time is different. you see the tightness in the market. that is the key. i think that is the problem. francine: thank you both for joining us. both staying with us. we will be back and go through a little bit more on yield inversion and what that means for investments in 2019. this is bloomberg. ♪

tom: good morning, everyone. much later, we will have the state funeral service for president bush. right now, francine and i need , always with annmarie having trips for coffee. in joins us this morning

preparation of what will be a most interesting opec conference. why is this the and a different than the last five? annmarie: this of vienna is different. it is a complicated one for the saudi delegation because they certainly want to do something. they said a nobby dobby -- in abu dhabi that they need to cut. geopolitical tensions are really putting pressure on them. many traders are saying that they cannot defy president trump's call for lower prices given the support he has shown to the crown prince of following the killing of jamal khashoggi. on top of that, we do see a bit of a glut. many say that a deal is likely to happen. saudi oil minister said to me yesterday, the deal is not done. tom: fascinating.

thank you so much. really the nexus of their of the tension between saudi arabia and russia and their cordial conversations as well. we have many wonderful guests today with perspective on president bush. we are thrilled that ron can join us. he is really something within the operations of the republican party. ron bonjean with us in the 6:00 hour. please stay with us, from london and washington, this is bloomberg. ♪

♪ tom: good morning everyone. beginsne and washington the day of mourning for the 41st

president of the united states. service beginning near 10:00 a.m. david westin special coverage at 10 a.m. of the service at the national cathedral. the cathedral is outside of what so many tourists know as washington. it is a gentle right away and they will move there later this morning. in new york city, first word news. reporter: it is unclear what leaders of u.s. and china have agreed to in trade talks over the weekend. bloomberg learning beijing will restart imports of american soybeans and liquefied natural gas. china will push forward with negotiations within a 90 day timetable. senators briefed by the cia say they are convinced that the saudi crown prince played a role in the death of jamal khashoggi,

one describing the evidence as to the, a reference dismemberment of the victim. ukraine, the president is appealing to the u.s. and european allies, over the naval clash last week with russia. statementsde strong but vladimir putin acts. >> the new sanctions against , absolutely increased alsoure in the black sea, welcome to invite nato vessels and keep stability. reporter: so far, russia has not been punished for firing on

ukraine naval ships off crimea, that they annexed into 1014. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine: thank you. in the u.k., theresa may versus parliament in a battle that will determine brexit. the weakness of her position was underscored yesterday. she lost three key votes and ns -- in the house of commons. coming up, the government will publish the full legal advice on the deal after mp's found them in contempt of parliament. like the conversation has gotten more complicated. the legal advice and the votes.

what will happen? do we have any clarity on the chance of a vote on december 11 getting through? to go throughkely then it was before but still, when you look at the stated position of various mp's, it looks like there is no chance to get through. maybe changes. francine: do you believe the same? it seems practically impossible for her to get it through. what happens next? antonio: the next question is about, by how much it does not get approved? narrow. narrow no? 25? 75 or above? vote, youink, no could see a way to a second

referendum perhaps with a withdrawal agreement. at the other end, significant rejection, then all options are open. it is difficult to see this parliament being the one that passes that. there could be a new prime minister. a new withdrawal agreement. another referendum. all options are open and a large rejection. -- in a large rejection. tom: we had a battle of central bankers over brexit yesterday. scathing essay on prime minister may and the path forward, taking a shot at the bank of england, and there was governor carney coming right back, his predecessor i should say. who is right? carney or king? boe'sverybody agreed that

assessment of no deal brexit economics was a position that was extreme. governor carney defended it. this was showing the banks were well-capitalized for the event, as opposed to empathetic. people disagree with what king has written. they agreed on the general principle. even if you wanted to leave the eu or remain, this deal has holes in it. that was something people agreed with. tom: for both of you on the london desk, kit i will go to you but antonio, jump in as you choose. brexit must be good or remain must be good for the elite, but what does it mean for wealth dispersion or income dispersion in the future for the rest of the u.k.? will inequality be accentuated? inequality is only not

going to be accentuated if the economy weakens enough that everybody goes down, mathematically that narrows the gap between the bottom and top. that is the most hopeless form of reducing inequality i can think of. i cannot see much help. focus on the negative. the economy needs to go forward. you need better policies if you want less inequality. antonio: nobody will debate that. growth andpends on inflation. the morethe household, difficult to hedge. that will move quite a bit with currency moving to the point of boe, whether it was too harsh, i think here the key point is, are we assuming if there is a brexit without a deal, it is disorderly? how disorderly?

decide on ays stress scenario that breaks everything down. you have to make the scenario plausible. i believe, in no deal brexit scenario, it is difficult to argue that it will be completely disorderly. it is dangerous for the u.k. and eu. scenario in a disorderly no deal brexit, 10% of boe is plausible. is that a likely scenario? francine: what are the steps? december 11. is there a second vote? if she loses the first, can theresa may stay on as prime minister? is there a leadership contest? fresh elections? 12 ways to look at it. antonio: absolutely. weit is a narrow rejection, are heading to a second vote.

if it is a large rejection, 75 or 100 votes difference, it is almost impossible for the prime minister and this parliament to continue. it has to be a new prime minister or a new parliament or a new deal. kit: no deal brexit gets less likely on this outcome. there is likely to be a leadership challenge if she loses by significant margin. the conservative party is so fractured that a leadership challenge does not necessarily find another winner, unless she decides to leave. francine: thank you both. both of you are staying. coming up, we speak to nigel wilson. we will talk about the insurance business and brexit. 6:40 a.m. in new york 11:40 a.m. in london. this is bloomberg. ♪

♪ francine: this is "bloomberg surveillance," special coverage of the funeral of president bush senior. in angelanting merkel's party. close.e remains merz victorying would trigger a rupture in the

party. antonio, the concern, risk across europe. maybe we are underestimating the boat, that could change the way europe is going -- the vote, that could change the way europe is going. backdrop,he political shocks from trade, is much weaker. no doubt. that is a problem. all of a sudden, italy goes wrong for whatever reason, auctions fail, whatever. how can europe recompense the rest? it is not just the ecb. that is the race. you catch offguard germany, france -- paying attention to domestic issues -- and italy. ecb price andcan

the politics -- do they exacerbate politics? antonio: look at italy. the engineer of fiscal budget to propel growth, they basically did the opposite. the economy is contracting. we have the data. is saying there will be another contraction. the government engineered a recession when the objective was to stimulate the economy, not to mention the deals to find the 100 basishich is points over bund. activitypolitics hit -- that is for the cyclical, for the structure -- what can they do long-term for europe? not much. not much, frankly.

if the situation gets disorderly, they will try to set up a firewall to the rest of the periphery and let market discipline on italy, but that may be wishful thinking, because they may not get their act together, given that they are looking at domestic politics. tom: bush as a one term president understood the economy has a lot to do with the voting booth. the election, two days from now in germany, what is the state of the german economy? antonio: a couple comments. german economy contracting, minus .2 quarter on quarter. that was a one-off. regulatory changes to auto industry, critical to germany. we know today you should see a rebound in this quarter in q4. next year, you should see

germany glowing and growing slightly above trend. mainly domestic. there is stimulus coming up, given that there is political uncertainty, politicians try to spend their way out. .6 oft something like .5, growth next year coming from fiscal stimulus. tom: what will that mean for euro? ambiguity on the dollar, much about that is partition of different parts of dollar blocs. tell me about euro-dollar? what is your view. kit: one year out, higher. hear at theto middle of next year and 10 figures higher by the end of next year. 90% of the strength in euro-dollar, will be a weaker dollar. next six months, the euro will

do worse for the -- worse than the yen. independent revaluation of the euro this year back to average levels of the last decade only comes about because of weakness in dollar. there is not enough good news in europe to float a boat. francine: forget the good news. we need the bad news to stabilize. kit: euro this year needs two things. narrow spread between bonds and bunds. it needs a higher 10 year german yield. you need both of those to move euro the right way. could we see bund yields heading toward zero? i agree, the level of bad news we have now is bad enough that we think, 15 basis points to 1% 3-6 yield is more likely in months time then a 0-30 year

yield. francine: should economists look at more disruption, more symptomatic about a country that does not want to be reformed? antonio: this is one aspect. if you have a core country slowing, that will be a massive, unexpected news. nature of risk in 2019 r binary. that makes the market more difficult. you look at the potential for eu-u.s. trade war, remember the auto tariffs, steel, being discussed and negotiated. that is a massive hit on germany and europe. secondly, you have brexit. a it is hard, there will be hard impact on europe, less than the u.k. but it is there, and on italy. either they happen or they don't and the markets struggle.

you have different central banks and euro as well. it is hard to make it a baseline they will hit the risks. but if they do, let's take trade. 25% tariffs been discussed against autos. that would hit germany at .6. instead of growing, they will be below trend. less of an impact but very negative. the shocks, either they happen or they don't, political. tom: thank you so much. london ands, from washington, this is bloomberg. ♪

♪ francine: this is "bloomberg surveillance," tom and francine from washington dc and london.

tesla managed to buck the selloff yesterday, just shy of $360 per share. highest since august, this could locate investors about the cash flow at tesla. te investors about the cash flow at tesla. >> they have debt coming up in march. it is convertible above $360. time,is for the first cash flow positive, $730 million. debt,g $100 billion of $90million billion -- billion due. we still have three months to go. francine: what are investors asking? >> stability. ken tesla stabilize production numbers.

-- can tesla stabilize production numbers? elon sent it out. if they can bring the cost of manufacturing down, they can start selling cheaper versions of the model 3, which will undercut competitors as they come to market with electric cars. once they have all the moving pieces in order, they are in a strong position. francine: has elon musk been tweeting? our thing stabilizing? -- are things stabilizing? >> their have no -- there have been no off-the-wall tweets. it is still early days with the new chairwoman coming in. there is still no head of communications. there remains certain uncertainty at the top. we are not in the depth of the wild tweeting of several months

ago. tom: everybody wants to be a tesla killer. how will they defend themselves against 14 companies that want to deal with tesla? >> frankly, the growth of the electric car market, this is seemingly a lot of upside. as much as there might be other companies coming in and taking pieces of the market, there is enough growth to satisfy everyone. can you get a tesla fix? i saw an article that says one of the biggest headaches is getting it fixed is difficult. what is your research? >> in the u.s., they have come a long way and are improving. in europe, it is not something they need to solve. norway, the biggest electric car market, tesla has very little

distribution channels. buyerhard for a norwegian to fix. much for, thank you so being with us today. much more to speak of through the day. i will be joined by michael mckee on radio through much of the early morning. david westin with coverage at 10 a.m. of the state funeral of the 41st president of the united states. look for that at 10 a.m. in new york 3:00 p.m. in london, world dignitaries visit the national visit the national cathedral. this is bloomberg. ♪ this is bloomberg. ♪

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♪ aside themorning, set of thetrade, the fear markets losing money. remembrance, a state funeral for george h.w. bush. good morning. this is "bloomberg surveillance." worldwide all of you and across this nation. tom keene in london. prince charles will attend. carter dedicating it in 1977. what is the symbolism of his attendance? francine: former presidents and first ladies are there, children of past presidents, and world

leaders, prince charles, also many world leaders, german chancellor angela merkel arrived today. presidentsjapanese and japanese prime minister's, leader of former qatar. tom: let us look at the data. nowus get through it right as we can. center for thend financial system, the stability measureystem, and the of interest rates, the 210 spread, near in version. francine, what do you have for data in europe?

francine: volumes are thinner. futures are open. dropping.asian stocks declines more contained. china pledged to start delivering on this trade agreement. i'm looking at pound at 1.2775 after a difficult date for theresa may and the vote in parliament. tom: very good. much to talk about. funeral, a rare event, dwight eisenhower, ronald reagan , and for the lieutenant of the u.s. navy today. our chief washington correspondent kevin cirilli is outside the national cathedral. kevin, walk us through the events from the rotunda to the

national cathedral. kevin: former president george h.w. bush lying in state in the capital rotunda until 10:00 a.m. this morning. he is scheduled to depart. the funeral procession will arrive at the national cathedral, where security is picking up behind me. that funeral is scheduled to begin at 11:00 a.m. former heads of state, including angela merkel, president trump, first lady a melania trump. the former president becoming only the 12th president to lie in the capital rotunda. president trump and the first where formerthe president george w. bush and laura bush are currently staying while in washington, d.c.

they met with the previous president and first lady for half an hour. they were also paying their respects in the capital rotunda and are scheduled to attend funeral service at the national cathedral. francine: as his legacy is remembered, does it change the politics in washington? kevin: politics and market trading are at a halt. the facts are that there is still a lot of business to return to come some type of government funding bill two weeks from now to keep the government funded. a twoave punted that with week extension to pay their respects to this president. meanwhile, we saw the market reaction yesterday, but today in washington dc, it's about honoring former president bush. folks giving a eulogy include

john meech and just -- jon meacham and others. tom: thank you so much. we will return through the morning to our coverage at the national cathedral. we are thrilled to bring you the former office of policy planning for george h.w. bush now working with the trump administration and treasury, working with secretary mnuchin. it is on economic policy. you have a span across republican politics i would suggest as no one truly does. some did then, some along the way, and some doing it now, but i would argue in washington nobody like you. what is the difference between treasury, financial, and the process of republican politics now versus under president bush? i started with president

reagan in the council of economic advisers. it has been a great privilege to work under four administrations, reagan, george h.w. bush, george w. bush, and now president trump. we are here to talk about george h w bush. he was a kind man as many people have said. he did his best to cut the deficit and keep the economy going, and what was really interesting is that in 1992 what we were seeing is that the economy was growing, but the national bureau of economic research did not mark the end of untilcession, march 1991, december 1992. that was when president bush said the economy had been growing all year. it turned out he was right. i'm not naming any names. tom: it is so important.

i say this with great spirit for the humor of the former president. we need a definition of food to economics. you are the only one on the planet -- jim baker and others could do it, but what is food to economics once and for all? >> i don't know what voodoo economics is, but right now we have cut taxes and the economy is growing strongly, great gdp numbers last month, the economy growing about 3%. tom: i take your point. we will debate about the factor. this goes back to something michael mckee said. he will join me on radio here on bloomberg surveillance in the morning. the is so interesting is lessons we learned about cutting ands to spur growth maintain fiscal integrity, that

important to president bush, president reagan. under president trump's leadership, how is the experiment going? can we grow our way out of a fiscal challenge? >> there is a difference between .he 2016 and now it is remarkable. tom: agreed. >> people thought the economy could not grow at higher than 2%. it is on track for higher than 3% this year. we saw consumer confidence, business confidence up. tom: ok. i will take your point, what is so important is to understand that idea of a twin deficit. my chart is the linkage of trade deficits and the linkage of our and the vector is getting back to the time when

you were very young, reagan and bush senior. do we have the risk of twin deficits into 2020 and beyond? up to congress to put in place proposals to cut spending. president trump propose cutting spending. george h.w. bush proposed cutting spending. it is up for congress to follow and make those spending cuts that presidents propose. presidents propose, but congress is responsible for how much is spent. tom: thank you so much. spanning the many republican presidents of this washington. , first wordcity news. >> china plans to start delivering on the trade commitments that led to the weekend truce. imports ofl restart

american soybeans and liquefied natural gas, the first sign confirming claims that china would start buying some u.s. products immediately. robert mueller is urging a judge to go easy on president trump's former national security advisor michael flynn. mueller said flynn has provided so much help to prosecutors that he should not get jail time. michael flynn has played guilty to lying to federal agents. prime minister theresa may in a battle to determine how brexit will turn out. her position was underscored in a day of drama where she lost three key votes over her agreement with the eu. parliament now has the power to decide on plan he if it rejects theresa may's plan. russia and saudi arabia meeting to set the direction for the oil markets just before the start of a critical opec meeting.

arabia's energy minister telling bloomberg there is no deal to cut output. both the saudis and russians are pumping oil at near record levels. 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. tom: thank you. again, coverage of the state funeral of president bush across all our bloomberg platforms. we are thrilled to bring you coverage on radio and television , and of course our digital product. is statew. bush funeral at 10:00 a.m. this morning. this is bloomberg. ♪ this is bloomberg. ♪

francine: this is "bloomberg surveillance." we have special coverage of the funeral of george h.w. bush. joining us to talk about the markets is simon kennedy. before we talk about the fed and yields, i want to update our viewers about what is going on in markets. the markets are closed in the u.s.. european and asian stocks following the rout on wall street. this is on the fact that china seems to be delivering on these trade agreements they reached with america. dollar a little higher. let's get back to simon. in your world of economics, does

the inverted yield curve change the path for the fed? >> there was some commentary in the two camps within the fed. one says it would be a big signal, others say there is so much going on that the yield curve is no longer necessary as it once was, no longer the recession indicator it was him a but as to the list of things they need to discuss later this month when they look at the outlook, which we now have jerome powell signaling the potential for a pause next year. the yield curve is a good market metric. francine: how will communication from the fed change? they are looking for data dependency and every meeting is live. >> i think so. theoretically always live. francine: theoretically. >> realistically they have only

moved when there is a press conference. next year there will be press conferences all the time. in december's meeting, we will see the shift away from raising rates to what comes in and make a decision. it is an interesting point to make. when people talk about these speeches recently from jerome powell, that it is dovish. not necessarily that if the data comes in heart and we see that unemployment rate still declining, jpmorgan and goldman sachs appreciate that there are risks, but still see four hikes next year, some not necessarily a dovish message. francine: should markets worry about fed independence given what we are hearing from president trump? >> that would be the next future drop. we have tweets from the president in which he has increasingly signal displeasure with the hiring of jerome powell

a year ago. i would say two things. one, the fed is ok as long as the two key constituencies, capitol hill and congress, are happy with that, so committees and figures saying the president has a point here, that might start to concerned people. secondly, markets have not shown much reaction to these tweets, side, thered trump is a steep by steve matthews on the overheating of the u.s. economy. the economy is not overheating. aside from the jobs market, there are not too many proms and does reinforce trump's argument. tom: as you know, i will steal from anybody at any time. i did that with a conversation with richard clarida. and select others. let me ask you the question i

asked the chairman. how is that forward guidance thing going? are we done with the crystal ball gazing and go back to data dependency? >> i think so. i think we are moving away from area,oreig forward guidance certainly in the u.k. that mark carney brought in to it did not last too long. here andyment market another places performed against historical reckoning and was tighter than we thought. but with thepan, fed we will see see more data dependence, optimality, room for maneuver. the rate is moving towards neutral that rate that neither breaks nor spurts the economy. they don't know where neutral is.

so certainly less commitment that will tie their hands. one thing mark has found is that if you make amendments and move get grief foryou markets and politicians. enter are jerome how, you 2019 saying mission accomplished on the first stage. he said,rward -- as feeling your weight in a dark room with furniture. tom: thank you for that definition. is executive editor of the dismal science here at bloomberg. coming up, an important perspective, a across the republican experiment across this nation back a number of generations. william holden joins us from the center -- the bipartisan policy center. well-timed. an important conversation. this is bloomberg. ♪

tom: good morning. tom keene in washington. francine lacqua in london. markets closed in honor of george herbert walker bush, his state funeral at 10:00 a.m. this morning. about thetell us weight in the u.k. pre-brexit right now, some document?

francine: legal advice. yesterday, theresa may had a tough day in parliament. three of her votes got voted down and was found in contempt of parliament, which means parliament has forced the government to publish this legal advice on what the text means for the future relation of the u.k. and eu. we should get it any minute now. the text of could also have an impact edition -- implication on the politics of that. it plays into the psyche of the parliamentarians who will vote. tom: we have guests today in washington that span the nation's politics back to the time of bush. william holden is not that ancient, but more than associated with those names as well.

your expertise, and we love having you on the show, a navy pilot in the pacific ocean, a deficit of $55 billion in the heart of world war ii, a time of no new taxes, read my lips, to 90 billion, now trillions, $1.2 curveon, is that a smooth or is there an acceleration to this deficit? acceleration that has a lot to do with the changing demographics and the makeup of federal spending, focused primarily on medicare, medicaid, and social security. as those demographics grow, you will see this upward turn. ross perot talked about it as an stick. tom: we will continue. much to talk about with the

bipartisan policy center. other esteemed guests as well. we will be on bloomberg radio on a day of a state funeral in washington. green on the screen for futures. no markets open. no bond quotes after that historic move yesterday, well under 3%, the two-10 spread is absolutely flat-out remarkable. thanks for the comments in the previous our on that flat yield curve. please stay with us from london. from london and washington, this is bloomberg. ♪

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gerald ford 2007, and then ronald reagan. there have been other presidents at rest in the rotunda. woodrow wilson buried at the national cathedral come up this is special, only four times in our modern history we have seen a president on your -- honored with the state funeral. we are looking at the usual global news flow. as dignitaries worldwide travel to washington, including prince charles, for this funeral, our special coverage beginning at 10:00 a.m. this morning. tell us about the coverage in the london papers and across europe. francine: a lot of the papers like your papers look at the legacy of president bush senior. it is interesting to see world

leaders showing up at the funeral in d.c. former presidents and prime ministers that new george h.w. bush well. german chancellor angela merkel is showing up. it goes to remind everyone how long she has been in charge and how many ties she has created with the u.s. in: all presidents attendance as well. one thing i have noticed in the last few days is a younger group that doesn't remember the and -- off making89 1989 and the fall of the berlin wall, the fall of the communist experiment in eastern europe and across russia. right now with first word news. it is unclear what the leaders of the u.s. and china

have agreed to in those trade talks over the weekend, but bloomberg learning that beijing will restart imports of american soybeans and liquefied natural gas. china says it will push forward trade negotiations within a 90-day timetable. senators briefed by the cea say they are convinced that the saudi crown prince mohammad bin salman did play a role in the death of journalist jamaal should cokie. one describing the evidence as in "smoking saw." the senate is expected to consider a resolution to restrict u.s. support to the saudi military campaign in yemen. russia is warning the u.s. not to pull out of a three decade old treaty on nuclear weapons. the kremlin says if president trump withdraws from the landmark agreement on intermediate range missiles, russia will target countries where u.s. missiles are deployed. the u.s. says it will pull out of the treaty and 60 days if

russia does not stop alleged violations. in the ukraine, petro poroshenko is pleading for punishment over last week's navy clash, telling while the west makes strong statements come a russia's vladimir putin asked. >> it means the new block of thetions against russia, absolutely increase the presence in the black sea would be very much welcome to invite the nato vessels and keep the stability. >> so far russia has not been severely punished for firing on ukrainian navy ships off the coast of crimea. 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.

tom: thank you so much. -- worthies these have told america of president george h.w. bush. morning, you don't know him, but you should. things get done in washington, and they get done by people like him. he has been exceptionally successful for various republican projects. still with us is william holden of the bipartisan policy center, senior vice president and expert on the nation's deficit among others. andnt to rip up the script speak to a quiet morning yesterday when you attended the

rotunda. tell all our viewers the experience going into the rotunda and the privilege of going in with essentially no in there but you and a casket. >> thank you. it was an honor for me. i had last been with the president four years ago. thed been invited down to library to discuss the 1990 budget agreement, which i was a staffer working with senator dole, senator mitchell, tom foley, nick brady, dick durbin. into of waiting to get the on the stage, the president rolled in on his wheelchair and pulled on my sleeve and says, you are responsible for me being a one term president. largely because, and he was kidding me. he was always great to his staff, even lowly staff like me,

but it had to do with the fact that budget agreement was that budget agreement in 1990 that i worked on with the number of members as a staffer and created the famous violation of, read my lips. tom: the image of a fragile senator dole in the capital yesterday quite a moment in our history. thisin to our audience distinction between the senator from kansas and the gentleman from texas and connecticut. >> both the same generations. tom: both very different. >> both different. senator dole is and will continue to be one of the great leaders of our country, serving our country, what he went through. i think there are a lot of similarities, but different personalities. senator dole had more of a spark to him, more of an edge,

particularly during the campaigns. president bush was of the two more laid-back in terms of the approach he took. i still look at that as one of the great generations out there. tom: you have communicated the transfer of this moving to the modern republican party. is the modern republican party at risk? >> i don't think so. every republican believes and fiscal responsibility. 26% california is 25%, registered. it used to be 29% and higher during the time of rating. >> california is an exception. in a midterm, the party in power historically loses seats. tom: it is still a victory for the president. the state of the republican party, how are they doing? >> the state of the republican

party is strong. we have the white house, the senate. we have done well in the senate. tom: do you need as a republican theative today to get back disaffected republicans who have left the party because of the president? >> what we need to be doing is focusing on different types of republican voters, female voters in suburbs, for instance, that were in clinton and obama districts that we lost this time around. tom: this is critical. cook political report lays out the diversity of america, and it is a democrat diversity. how does the republican party get back to the diversity represented by george h.w. bush and the bush family as well? is a great question. they need to focus on the fundamentals that matter to

republicans, that matter to people across the country, opportunity. republicans really drive opportunity in terms of getting , trying to to people create jobs, that opportunity and so on. how i can't convey and of much he is knee-deep in the communication of messages. were going to the national cathedral today. there has been a raging debate about what to do with memorials to the confederacy, robert e. lee, stonewall jackson. , howt about the niceties does a republican party get away from what is perceived as a polarized diversity, a polarized racism. >> they need to create a perception of inclusion. they need to show that they are inclusive and believe that everyone should belong to the

republican party. it is really important to do, absolutely. can i just say about president bush. tom: please. school andto my high campaigned with ronald reagan in 1984. it was amazing. he talked about the value of education. we were an all boys high school seeing a vice president who came in. , he riled usne all. he was the first president i voted for in college. i believed he was a foundation that helped me with my career as i got into politics. tom: i have to run, but have to ask this question, do you have an optimism that republicans can get back to rockefeller republicans of another time? >> i think so. long-term, i think we will come back together. tom: wonderful, gentlemen. thank you so much for being with

us on this early morning in washington. much more to come. an important discussion, the doctor from m.i.t., nigel wilson, and he is exceptionally astute about the dynamics of his united kingdom. nigel wilson coming up next. from washington, london, this is bloomberg. ♪ bloomberg. ♪

francine: this is "bloomberg surveillance." we are getting some breaking news out of the u.k. because parliament forced the government to publish, we now have legal advice the government received from various legal sources on the plan that theresa may is putting to parliament and

what it means for the future relationship of the u.k. and eu. advice, but could influence the way parliamentarians boat. the backstop on ireland could enter indefinitely. legal advice is saying it could lock in the u.k. and according to the legal advice, this was given to the u.k. government during brexit talks and has just been published. a lot of the talk is on the backstop, because that could tie the u.k. to this backstop they devised for northern ireland. let's talk more about brexit and the insurance business. joining us is nigel wilson. we will get on to the things to do with your business and a second, but first, what is your take on brexit? how concerned are you brexit will hurt your share price? >> brexit will hurt the share

price, and has heard companies for the last two years. there has been attention on this, political austerity when we need political leadership to solve the issues. we know with the issues are. there is a massive trade deficit in the u.k. with europe, china, at huge infrastructure deficit, inequality deficit, and demographic deficit. the politics of getting to those solutions are causing chaos in and notl markets addressing the real economic and social issues that politicians should be addressing around social mobility, inequality, and inclusive capitalism, which one of your previous speakers discussed. do you believe that brexit is a distraction to address some of the concerns you are seeing in the u.k. society? >> the causes of brexit are

those that i highlighted. it is difficult to come to a compromised, negotiated settlement with europe. the prime minister has done a great job getting as far as she has, but it is not making anybody happy, so it is hard for any parliamentary group to support and champion the deal. therefore we have this difficult political backdrop to brexit at present, which everyone is finding difficult to interpret, rather like the china-u.s. trade negotiations, which in real terms are more important to the future of the world economy than changing the terms of trade between the u.k. and europe. tom: how has it changed your business planning? nigel wilson had a five-year business plan, and you turned it into a three-year plan eight years ago, but how do you plan for 2019 or 2020 given the ballet in britain?

>> in our particular business that does not make that much difference. one of the key things we have ironicallym america, , america has devolved a lot of powers to the mayors. michael bloomberg did an outstanding job. we are copying that model across the u.k. right now. a lot of the political force is coming from cities and towns across the u.k., and they are getting on with business, but largely ignoring brexit. the second thing they are doing is learning that universities play a critical role in the economic government of key markets or key cities, and this is self evidently true in the united states. of u.k. and the u.s. have 25 the best 30 universities in the world. we lead the world in science and development. we have huge capital markets to

help us grow. we are not using that at the moment because of these endless political squabbles with our trading partners when we all know there are domestic issues that need resolving at the same time. tom: if mark carney with good looks at theysis dampening affect of brexit on economic growth, you know you have to reestablish a vector upwards to recover that dampened factor. where is that upward momentum going to come from? do you buy the idea of increased productivity in the u.k. post-brexit? >> our productivity has fallen 30% behind french, german americans in the last 30 years because we have under invested in infrastructure and businesses have under invested in the u.k.. the solution is to increase investment.

getting the confidence to increase that investment is something the politicians and business leaders have failed to deliver, and that is the issue. brexit is making the situation more difficult and the political shenanigans and westminster are making it even more difficult. mark has given an honest assessment around the risks of a no-brexit deal, and i would share the views he put forth in his recent presentation. nigel wilson, thank you so much. we will have to get you back in. tom: i want to show this. this just came in. photo, hardbulous to see, but important photo. the senator from kansas, bob dole. the washington post chose to place senator dole of kansas in the rotunda yesterday. that is an extraordinary photo

of bob dole, world war ii , aeran with george bush world war ii veteran as well. here is the video. let's watch. ♪

francine: this is "bloomberg surveillance." say goodbye to george h.w. bush. we will have full coverage of the funeral with david westin and tom keene. u.s. markets are closed today at of respect for the funeral for former president george h.w. bush. bloombergtv will have special coverage beginning at 10:00 p.m. new york 3:00 p.m. in london. let's get to new york where michael mckee joins us. he covered george h.w. bush at the white house as a correspondent. what will president bush senior

be remembered for? >> a number of things. more than anything else, what has come out over the last 48 to 72 hours was the fact he was a genuine nice person in politics. butas a political insider, someone to whom courtesy and respect meant a lot. you could do what you need to do to get in office, but once in office, to govern with grace. that was his legacy. perhaps the last president who was not hated by a significant portion of society, one side or the other. his foreign-policy compass minerals were strong, managing the decline of the soviet union and putting together the coalition for the first iraq war. his domestic accomplishments much less so.

it did set up the fact perhaps that the republican party is completely anti-tax increase. , remarkable legacy for a one-term president. francine: thank you very much. michael mckee there. a reminder that u.s. markets are closed today at of respect for the funeral taking place in washington, d c four george h.w. bush. bloombergtv will have special coverage beginning at 10:00 a.m. in new york, 3:00 p.m. in london. this is bloomberg. ♪ rg. ♪

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allies. a fed cut priced in, the yield curve flattened spirit fundamental or technical? peter navarro urges people to keep the faith. u.k. prime minister theresa may loses control of brexit after three key votes, potentially raising the likelihood of a hard >> it. welcome to "bloomberg daybreak." david westin is in washington today. david: this is a national day of mourning for george h.w. bush. coming up on the capital where the former president license state in the capitol rotunda. at 10:00, the bush family will make their way to the capital, wait at the bottom of the steps, the honor