prime minister theresa may is set to pull a vote on the deal to avoid a huge debate. equity selloff, blame the fake news, jpmorgan says that the biased media projects are responsible for the consistent selloff and that hedge funds have more to sell. china summons the u.s. ambassador, the foreign minister summoned ambassador to china to protest the arrest of the huawei cfo. welcome to "bloomberg daybreak --," i'm alix steel alongside carol massar. david is off again. but you argue with me, good to see you. anotherarkets here, lower open and there is geopolitical political turmoil over in the u.k.. that will be key going into the open. to that point, cable rates are down by 5/10 of 1% around the lows of the session on the news

that potentially theresa may is going to pull that deal. the 10 year yield is pretty much 285 online. coming in $78 billion this week, on friday the show makes that story, carol. carol: looking at the week ahead, it's another busy week with u.s. congress and on thursday you have got the european central bank rate decision followed by a closely watched news conference by mario draghi. trump is expected to replace a current replacement for his chief of staff, general john kelly. our first topic it, no doubt about it, breaking news just moments ago about brexit. looks like theresa may will look

to did -- delay the vote but aat's not -- not necessarily down vote. >> tim russert broke the news just minutes ago. she was destined to suffer humiliating defeat, delaying it won't change anything. say what the endgame is in terms of how she rescues the brexit plan. thel: and it doesn't change deadline. marty: and some people think there might be a second referendum that might explain some of the move, but ultimately this is uncharted territory that we are in in the u.k. and the rest of the world. the same time, hey guys, you can reverse article 50, that's ok. it's like they're trying to get to that point.

>> it's a confluence out there. certain ishat is that the one thing keeping her in office right now is who else wants this job, right? it's difficult and she doesn't have much time, as marty said, it looked like it was destined for defeat and she had to rally support for her compromise path. saying thatuardian theresa may will make a statement at 3:30 p.m. walk: we will continue to you through those headlines. peggy, the hedge fund and private equity world that your team plays in, there has been so much to worry about. we talk about more selling in the market, how does brexit fit into that? peggy: it's another whack-a-mole type problem? global politics headlines are really whip sawing the markets all over. certainly china and trade but

italy over in europe, the u.k. just not being able to execute on what's next. carol: china trade is our next topic. we heard from robert lighthizer over the weekend and how it might or might not impact trade talks. >> from the chinese perspective i could see how they feel that way. it's a criminal justice matter. the trade policy people in the administration for us know that it's criminal justice. carol: he's is saying that this is a justice department topic or problem, but is there a firewall there? you actually have to have the second party agree with the

first party for that analysis to be true. the chinese definitely think the they are linked and no matter how much the administration wants to separate them it will be up to the chinese to decided they are separate issues. alix: the markets, how do they react to that? jpmorgan put something out over the weekend saying that to some extent there was a disconnect between the negative extent and the macro reality between fake and negative news. analysts in part blaming fake news for the reasons that equity is selling off? peggy: monday out of the g20 meeting we saw that things were great people were trading on a dinner conversation that didn't have a lot of details around it. we have seen these things turn quickly and now it seems to be over what day hold

will come out. will be get a better deal between the u.s. and china or will we have these headlines circulating for the next 30 months? carol: with both the united states wanting to look strong, china wanting to look strong, ultimately the understand something has to be done for the benefit of both sides. to what cost? there are certain red lines that the chinese won't cross in terms of their own business model for how this works and if the united states won't has their redline, you could have impact for quite a long time. i know the chinese thinks that hallway is linked, but how personally does china take that situation even if in reality president trump can say whatever he wants to say about that? at a certain point the personal relationship can only go so far. they had dinner and these great

words about a great conversation, but at the same arrested one of the preeminent business people in china. it only goes so far. we haven't even talked about the press in india, the central bank governor quit and in another day this would be an upset for the markets. alix: oh the fake news, fake news. marty: yup, just fake news. alix: thank you, guys. you can find all the charts in the next two hours with your g tv features. u.k. and pound related. who would have thought. this is bloomberg. ♪

," this is "bloomberg daybreak haven japan prosecutors found the former chairman after three weeks for understating pay. rearrested on the new allegations that he will be released from bail for now. also facing charges that they and they have agreed to purchase the diet plan company nutrisystem for a $1 billion cash and stock deal over the average price alongside trading days in the program. the ceo says that he doesn't expect the securities and exchange commission and that he reached an agreement in october and hasn't had any of his tweets signed off on the deal. he tweeted about keeping the

company private. the tesla board has long been criticized for being cooked. alix: thank you so much, mi. theresa may will make a and she said to pull the parliament vote on her the lowest level in 2017. joining us now is emaar ross thomas. how did this all unfold. to wait on this process for ministers and lawmakers to pull this, she was headed for a catastrophic defeat . what we are hearing now is that she has the boat pulled. in brussels she will be going on thursday for the eu leaders meeting. they have made it clear that they don't want to get --

renegotiate the deal, this is the final offer. they could go back to parliament. mounting another leadership challenge in general against her , not out of the woods. alix: what is the talk that it ?s more likely to be emma: if there is a deal by january, the government will withto go to parliament them being increasingly assertive over the brexit endgame with a view to

preventing a no deal brexit. now it's less likely than it was before as it heads towards that deadline. exactly, everybody watching. emaar ross thomas, thank you so much. , great us now, jim tisch to have you here with us once again on what is turning out to be another good monday. had you see it? what's important for investors to know at this point? is: is the story that really encapsulating -- it's the story -- captures the attention of europe. the way that brexit goes, that's how europe goes. the initial story is also what's going on in france and paris. those stories are all about europe. marty schenker was just

saying to us that if we were not so focused on brexit we would be so vote -- focused on paris and the pressure there. similar stories, though, they are about upset voters and that's the story going on across the world. voters are upset. it happens in bristol, arguably it happened in the united states. it's a real story. alix: it's not just there -- carol: it such as their, italy, you name it, it's there. germany got plugged into that. is the risk premium well priced? jim: for what? anything, the cable rate, the countries, anything overall? jim: i would say that today it's

appropriately priced, as a few months ago, possibly not. as a look at the world today and things. equity market, seem very cheap to me. looking at what's going on in terms of the british pound under pressure, this morning on bloomberg radio i heard concerns about ultimately u.k. growth and they feel global growth is , toming a bigger story higher global growth and then maybe not so much, china and the united states are seeing things slow down. jim: there never was a lot of global growth in europe. in east there was significant growth, though i never believe those numbers in the first place . how can a country like china inw consistently at 6.5%

than it slows down to 6%? those are not credible. carol: do you think it's worse in china? who knows. what i'm saying is that he don't think those numbers are in any way credible. carol: d think it has been rated to the appropriate extent? in u.s. equities i think there is lots of value. the stock market is trading on a 15 times multiple for forward earnings. one you're out from now is like 15 times earnings and that includes tech stocks. companies that represent the old economy, that could be nine times, 11 times earnings, an environment for the

tenure notes are trading under 3% and it seems to me to be an extraordinary value. investors, what you said, trading on things like fake news , d you agree with that, jpmorgan coming out to say that? trading onet really such confusion at this point? there are so many different factors that investors look at. for equity investors the problem is that interest rates are moving up upwards. got 0% on yourve bank account, it was easy to jump. income isat fixed yielding you to an a half percent to 3%, maybe that's some competition for equities.

carol: how would you play it? with so many equities being down at this point would you think of this as an opportunity? get in? jim: i don't see any recovery from here in the united states. it will go for another few years. in terms of what we are having a discrepancy over the next recession. people will see that is pretty far out on the horizon. i don't think that we are at the end of the recovery, we are the middle of the recovery. i think we have got good growth coming ahead of us. alix: from where? jim: from productivity. alix: in the u.s.? jim: i think the combination of the tax-cut and artificial intelligence, robotics, a tight

labor market, forcing us to do more with less. to be anoing extraordinary factor in the economic story of the united states for the next several years. does that mean that the correct trade is to short treasuries? like an energy value trade? or staying with growth? a growth never been investor, i've always been a value investor and i see that value stocks are trading at low prices. what about treasuries? jim: there's no need to short them, but in the fullness of , in the next rates six months they could be on the way to 3.5.

curious, there is so much talk about recession, but you see it so differently. bloomberg of the big wall street firms with recession risk. jim: i don't see signs of recession. yes, things are good, auto sales seem to have stopped growing for a while. starts areusing down, but i think that the housing story is all about people getting accustomed to the new level of interest rate and once they do get accustomed to it i think they will come out and buy houses. upol: what did you wind making of the fed hike? what does your view encompass for the next year? jim: they could easily spec that

desk if the hike in december. my guess is that they won't. powell was recently talking about a very tight labor market. next year we are certainly not going to see more hikes. i think a lot of that will depend on what happens in the equity markets. that will be i think for the chairman an indication of investor confidence. part of that could come from the u.s. china trade wars. the trade tensions are rattling those markets. here's what we heard over the weekend. that the probability of u.s. china trade war? >> it shouldn't have much of an impact. i can understand from the chinese perspective how they would see it that way. thehat's just protecting family joules, protecting the what's important. >> it takes both parties, u.s. and china to be determined to

reach closure on this and it is vitally important. trade is a major action for growth. alix: what is your base case? that theree case is is a truce called for sometime in the next 12 months. the u.s. china trade issue. bothdifficult for countries. it's especially difficult for the chinese. when you think about american companies importing from china right now, they are thinking about -- all right, how do i source my goods from someplace other than china? it's incumbent upon the chinese i think to settle this quickly in order to make sure that they don't lose all of their customers based in the united states. carol: is it the right fight when it comes to china?

they are on a mission in terms of advanced technology and they don't want to be the manufacturer of the world anymore, they want to go to super high-tech at this point. are we really focusing on it, can we really kind of hold china to the rules when it comes to high-tech? you have got it right, the two issues are trade and what's going on with intellectual property. of other is general agreement safed ofe has been a and intellectual property the trump administration is bringing that to the four, the other thing that they are bringing to the four is that the terms of trade between united states and china are stacked andnst the united states they are tried to get the terms equaled out for a more level playing field.

perceived as a developing country it was relatively easy to justify terms that favor the chinese but there is a general perception that that is no longer the case and therefore it is pushed more like a bulldozer that is pushing, not a diplomatic push, a real push to equal out those terms of trade and to stop the theft of u.s. intellectual property. carol: thinking about the european union, a key trading partner to the united states? took on threedent major trade deals at once and everybody scratch their head and said what's up with this. issuehe mexico canadian has seemingly been resolved.

there's a few more to go. the president in some way has generated a lot of this chaos. the world doesn't know what to make of this and when he will be happy. that plays into the way that he likes to manage. it's highly unconventional, it makes you squirm a lot, but we will see if he is able to get results. alix: the reason we have seen equity volatility selloff, how bad is china and global growth related to china? that global think growth has slowed down a bit. i don't think that's the case in the united states and in many ways it's an engine of growth for the world. and we continue that even if other areas are slowing?

for the next few months we will be exporting a lot more goods like agricultural commodities to china. alix: why could u.s. oil producers be breaking even? more help today on the jump with at 10:30and brexit eastern on the potential decision. this is her.

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"activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. alix: this is "bloomberg isbreak," and in the markets a risk on steel, off by 10 points around the lows of the session, european athletes are

also moving lower, the dax hit by 7/10 of 1% with one week of internal and external demand and it's a direct link in some ways to germany and what's happening there. brexitsset classes, on at 10:30 eastern, stories to pull a parliament deal to vote on the brexit deal and go back to the eu to talk about the deal once again, once in the markets you can see the nice big developing market down by about five basis points. stronger when it comes to sterling, that is why you are seeing that rally as well. so much on fridays. carol: money is certainly different, up-to-date on the markets making headlines outside the world of business, emma chandra is here with surf -- first word news. emma: theresa may looking to avoid defeat and bloomberg has

learned that tomorrow's will be scheduled through brexit prices and further confusion back in brussels for the eu summit on thursday, excited for a fresh concession in attempt to rescue the deal. the finance ministry with banking crisis and interest thes with india including worst bad loan ratio. haveil billionaires opposing visions on what the state should be. they want to keep things how they are with >> environmental regulation and george k wants higher taxes on the industry with corporate charges on criminal justice reform and this year lawmakers increased taxes to pay for the rates for teachers. global news, 24 hours per day on

air and on tictoc on twitter, powered by 2400 journalists and analysts in 120 countries. carol: what you make of that? two political billionaires on different sides of the aisle. who is right? jim: in terms of? alix: what should they do? advocate for more taxes, advocate for less regulation and less taxes? jim: the american story that i believe is dramatically different than the european one because of taxes. when you look at the average tax rate in the united states, 27% and in europe and goes up to 45%. look at growth in the united states. it's not that it has been this way for five or 10 years, it has been for a long time that we have dramatically outperformed

the europeans. you need no better example than that to say that low taxes really do help promote significant economic growth. what is the responsibility of corporations who have done so well and now have a lower tax rate? their responsibility really is to their shareholders. i think that they have got to use the government to determine how to allocate that. the thing that i know is that i believe that the wealth created by corporations for americans and for the government is greater with the tax rates that we have now rather than the tax rates that you might have for european countries.

carol: they benefited from that tax break, but now you are looking at oil prices. what are you hearing with these companies doing it 50? jim: there has been phenomenal productivity growth for cheaper and cheaper prices. at $50 per barrel you can't find oil and produce it profitably. there was an interesting article in the journal three days ago cost of shale oil production, about $50 per barrel. that's what the producers usually quote as their profitability.

that doesn't include overhead and land leases. when you include all of that, it oil in order for them to really be profitable. carol: you're saying that's wrong? the those numbers are just cash cost of drilling well and getting the oil out. it doesn't include what you are paying to lease the land or the overhead. companies are underestimating the cost? about just these costs, the cost of drilling the well, not the cost of running the whole enterprise. , youhen you factor that in can factor in another 20 to $25 per barrel to the total cost.

that is the case and you are at 50 and crude tells us we're not doing anything anytime soon, it's no buyback? they are borrowing money and scraping along. alix: but money is so different. jim: this too shall end. it's the reason i would say that i would rather forecast oil prices two years from now rather than two months from now. two months from now anything can happen. when you think about the you can thinkme, inut where prices have to go order for production to be sustained and to grow. pricesell us about oil two years from now. jim: my guess is they will be back at the $75 level, yes.

what we have seen this year is a dramatic increase in production up 2 million barrels per day starting on the nine and a half million barrels from a year ago, at 11.5 7 million barrels a day. we now produce more energy, more in thehen we consume united states. the united states is an exporter of energy, but that was when oil prices were 55 moving to 60, 70, and $75 per barrel, now it's $50 per barrel and the shale producers are singing the blues again and i think that things are going to slow down. i'm curious, positioning for two years from now with oil going higher in terms of making a purchase and the system is dying up there among the customers? jim: we are not looking to make additional investments in the oil industry.

we are already drilling for contractors in the oil prices going higher with a natural gas pipeline system. alix: to be clear, you think that this price will curtail $75uction in the u.s. for oil in a few years? jim: ultimately coming yes. alix: if u.s. producers have proven anything it's that they love have it -- hedging on a rally. jim: i would imagine that is prices move up, backwardation would increase genetically. oil pricing in 2025 was $53 per barrel. now that it has dropped by $25 per barrel the oil price in 2025 is still the same price.

that's really interesting. when do you see the day rate autumn in? i think they bottomed. they are generally not going to go any lower because they are at the crossroads. lower,t going to go any the real question is when they will go higher. there is a big surplus of drill ships sitting there on the salt water and as you can imagine when something has been on saltwater for a long time it starts to get rusty. for drillship's that have been stacked or laid up for 2, 3, 4 years, it's going to cost a major fortune in order to re-commission it to come back to work. the suitef the 50% of that is stacked, a lot of those ships will never come back to operate.

alix: is that true or are the rigs not as good a quality? jim: that would be more for the jack up market than the floater market. the floater market goes from 500 feet to 20,000 feet. market we have focused on is the floater market and there is no additional supply coming from china. some are left in the korean shipyards. but there is not much movement there. i love analysis and the energy group. [laughter] withisch is going to stay us and later on bloomberg, don't forget, we will be sitting down with the chairman coming your way at 2:30 p.m. wall street time. again up, they take him

at wall street. this is bloomberg. ♪

emma: this is "bloomberg daybreak," coming up in the next hour, martin chandler with a chief market strategist. this is bloomberg. i have your bloomberg business flash. napit suisse reportedly a -- announcing the buyback share program worth aliens, the bank

increasing its dividend and under pressure to raise the share price. world's largest cleaning company plans to cut 100,000 jobs, about 1/5 of its workforce. 13 countries mostly in emerging markets, the company includes catering and support benefits with security. shares are down 19% this year. victims have been surprised by the fight to recover the lost billions and no one will ever recover the profits on what was $30 million from those that profited from the scheme, 70% of the increased claim. that is your business flash. i carol: can't believe that it's been 10 years.

>> i was thinking about how it was nonstop coverage of that ponzi scandal. it's amazing to see what has been brought back. alix: jim, can you believe 10 years? i'm thinking back to when i first saw that when he was running a ponzi scheme and my first thought was that i wasn't surprised. this goes back to china. his results were too good to be true and when something is too good to be true, oftentimes it isn't. his results were consistent 12% and for 10 years i had been suspicious of it. i never thought there was such fraud, but it was too good to be true. similar to what i said before about the chinese gdp growth. generalrol: that electric story that we were talking about, totally unrelated , you think how it's possible. really interesting stuff.

jason kelly is sitting next to me. three things the wall street is buzzing about this monday morning, the ipo bonanza, sticking to that ipo pricing that was said to be have filed confidentially. losthen berkshire hathaway as much as $11 billion during the last trade and in 60 minutes the tesla ceo opening up about his tumultuous year, it was a crazy year for him. bloombergosh, our business chief is with us. me lyft story that broke and then there is a breaking story on that? >> you have to think that these have to do with each other. let's be honest, we are just talking about the things that people talk about over

breakfast. people imagine that many are talking about this because it could be the year of the big ipo, this is what we have been waiting for, the unicorns trotting out to see if they are actually going to be worth what venture capitalists say that they are worth. jim: they have been doing that for a long time and maybe i'm too practical, but when does the loss of cash turnaround? can they really get $120 billion valuation when they are losing $1 billion per quarter and per year? and how is it that they are going to get the profitability?

>> clearly there is also a race at work to get out while the markets are still somewhat supportive or deal a little bit supportive of these kinds of big deals. late 19 and early 20, maybe the market isn't so. jim: this is not semi-cuts the time to bring out a unicorn tech company. >> he just major pitted for you. carol: with warren buffett it was a tough week, a lot of the industries are ones that warren buffett plays into. take a look at his investment in apple, look at that, a loss for mr. buffett with bank of america , wells fargo, coca-cola, added all up it's a bit of a headache. ,ou look at these investors

warren buffett is a valued guy and maybe he's thinking he should buy some more. >> we talk about this a lot on the radio show. with an element of growth to it, are you a buyer of some of these names at this point? jim: i would be and it's about shares going down. last quarter he showed us that he is read willing to -- he is willing to do that again and beyond that with so many of these old economy stocks down so much, there is no doubt in my mind that management is looking at their share prices and turning things up a bit in terms of their share repurchases.

alix: you guys are doing that, too? jim: i would like to say that we haven't long and glorious history of that. spent this year we have $800 billion repurchasing our own shares. about 5.5 to 6% of our shares. so yes, when we think our shares are cheap, we buy them back because we think it's good for our shareholders in the intermediate and long-term. you are not repatriating anything? we started out the year with our $5 billion. we brought back half of our natural gas pipeline system and spent another $900 million on share repurchases. alix: another man most definitely watching his share

trophies, here's what he had to say. >> at want to make it clear that i don't respect the sec. >> but you are abiding by the settlement? >> because i respect the share system. >> it also reminds us, and we have said this a lot, we have said this all over the place, there is a trump like element to this, sort of going right at the on the air, going right after the person who can in ably hurt you the most lot of ways. he is saying i have to abide by the sec but i don't respect them , which is again how he rolls. jim: 100%, but i think that beyond that it is what has become of our twitter culture. say theer you have to most outrageous things in order to get noticed.

it's a dramatic coarsening of the public debate. a clip of yourself to be played on the morning business news, you have to say something truly outrageous like that. i don't know if that is the motivation between -- behind elon musk, though. shares of tesla are up from the october low. it works. investors are listening. i feel like this is a company or an individual where people are cheering for him, he does it differently, he calls out the conference call, this is just feeding into it. >> also notable is the idea that he would purchase those shuttered gm plants. he is very much in the business of the zeitgeist.

i'm going to say it, did that just for you. [laughter] >> it really is amazing how he is at the center of some of the most important business issues of the day, whether it is contraction or if he has set the stage for the biggest revolution and vehicles we have ever seen. the spaceind that, travel, all sorts of things that he is involved in. he is a genius. sometimes focusing on the mad, sometimes on the genius. carol: that's 2 p.m. to 5 p.m. eastern time, on the radio, and tonight we will be live at the second annual bloomberg event live on the road red carpet. we are going to have a live show. so much caffeine will be going into us.

>> jim tisch, thank you for being with us. watching now the indictment from japan, this story is fascinating because i feel like it just keeps getting more interesting and more interesting with him coming out and thinking about getting rid of the key top .issan official the timing is interesting, and the japanese will be able to jim was, i feel i talking about transparency and we don't know exactly what's going on. meanwhile, he is still employed. it's like this is crazy. jim: i had no idea what happened. it says something about international collaborations. cc companies recently doing more business and there are hazards of doing something like that. or is it? jim: i don't know if we can take any lessons from this because i

don't know enough about what happened. who knows what happened. how can you pass judgment? you personally responsible for reporting your income to your own company? i don't know, that seems weird, i don't do that. , thank you soch much for being with us this whole hour. alix: we are going to be speaking to a conservative member of parliament next, theresa may, will she pull the brexit vote deal from parliament? this is bloomberg. ♪ ♪ there's no place like home ♪

argh! i'm trying... ♪ yippiekiyay. ♪ mom.

♪ >> brexit breakdown. theresa may is set to hold a

vote on -- a selloff blames fake news. the media and biased politics responsible for the consistent equity selloff. experts say hedge funds have more to sell. china's vice foreign minister has summoned the u.s. ambassador to china to protest the arrest of why way -- huawei's ceo. i am alix steel alongside carol. >> a busy monday. >> what happened to the holiday slump? about -- lookf by at that. now we are flat. they were off by about 10 points in our ago. some geopolitical risk happening in europe. a bit of a dip in the morning. the pound and dollar down 6/10

of 1%. the political risk premium still in there. take a look at cable overnight volatility. ,he 10 year yield a bit selling margins up by one basis point. $7 billion worth of supply coming online. paring earlier losses but still down by 1%. >> it is time for your morning brief. ceo testifying before the u.s. congress. on thursday the european central bank issuing a rate decision followed by a news conference. week president trump expected to name a replacement for chief of staff general john kelly. the news flowing out of washington. let's get an update on what is making headlines outside of business. >> british prime minister theresa may is moving to avoid certain defeat by delaying a key vote in parliament on her brexit deal. she will make a statement in parliament later today.

that throws the brexit process into further confusion. she is due back in brussels for an eu summit tuesday. she is expected to ask for fresh concessions in the attempt to rescue the deal. goldman sachs has lowered the chance of federal reserve interest rate hikes. they expect the fed to boost rates this month but the bank says there holding firm in march would coincide with a volatile punto for markets are in -- markets. president trump is looking for another candidate to succeed chief of staff john kelly. the front runner for the job, vice presidential chief of staff nick ayers is leaving the administration. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i am emma chandra, this is bloomberg. >> theresa may is said to speak

at 10:30 new york time after reports she is pulling the plug on tomorrow's parliament vote on her brexit deal in the face of likely defeat. opposition labor party leader jeremy corbyn tweeting, the government has decided theresa may's brexit deal is so disastrous it has taken the desperate step of delaying its own vote at the 11th hour. joining us is john redwood, conservative member of u.k. parliament. mr. redwood, are you delaying the vote and why? >> we must find out from the prime minister. i am a strong opponent of the withdrawal agreement that she was recommending until recently that we signed. it is a surrender document that would be damaging to the u.k. and create an enormous amount of business uncertainty for 21 months or maybe three or four years because there is no agreement to a future partnership. i am thrilled she is going to delay the vote. i think it means the vote is

canceled because i think it means the withdrawal agreement is staying dead. >> is the u.k. going to crash out of the eu? is this a hard brexit call? >> we won't be crashing up a we have legislature to lead on the 29th -- past 2019. that is a good outcome for the u.k.. we don't have to pay the money and accept their laws and rules after march 2019. reason for there to be major disruption to trade or any great difficulties. once we spend the money we will be saving it will be a wonderful boost for the economy. we should be very optimistic. prime minister may has a meeting with european union officials on thursday, what about the timing with that that is maybe playing a factor in the delay here? >> there is a standard meeting of all the member states of the european union.

whether they will make any serious time available to discuss the british issue remains to be seen. set up untilays this point in either sign the withdrawal agreement or we leave without signing it. ist for most british people a terribly easy choice to make, overwhelmingly the people have said let's leave without the withdrawal agreement. we don't want to leave with it. >> i am curious about theresa may and her political future here. how much is she at risk of being pushed out? >> she is obviously at risk because she has decided to associate herself with disagreements, her agreement along with the european union. she lost to senior negotiating colleagues. they did not feel they were part of her negotiation and did not agree with the way she took it. if she announces she does not agree with the agreement it is over. reaction to the equity markets?

if this pans out the way you are saying markets want like that. are atcable trots and we 115 or 120 do you have a reaction function? >> i am not trying to give you any kind of investment advice at all. >> i am not saying that. i'm not saying you are. if we wind up seeing a huge market reaction to a downside if we don't get any kind of vote and the u.k. leaves the eu with no deal does that change how you think about it? >> it does very much. it makes me more positive. i think it gets rid of all the uncertainty after march. i don't think we are crashing out i think we would be cashing in. we will have access to $39 billion of our own money -- 39 billion of our own money. under the withdrawal agreement we would send that to the european union which would be a drag on our balance payments which is weak. could not mean we

spend that money on boosting our economy. i don't understand why economists don't see this. of 2019t out on march with no more financial obligations we get a huge boost. alix: one last question. we haven't seen the eu or brussels say that they would offer up any further concessions , is that definitely off the table at this point from what you hear? >> you should ask of them. they have been insisted throughout that you either sign this withdrawal agreement or leave without a withdrawal agreement. they would like us to change our minds and stay in. they have made it very easy if we try to reverse the referendum and stay in. i ensure you there is no appetite in the governing party and the bulk of the british people to reverse the decision. the decision of the british people was clearly an solemnly taken in the referendum. >> an interesting week when it comes to the brexit negotiation. john redwood, conservative

member of the u.k. parliament. joining us in studio is mark chandler and chris. nothing like another busy monday, great to have you here. i want to start with you. tell me about the brexit news and how it fits into the investment environment and investment psychology. >> i think sterling is selling off because people thought with the u.k. leaving without an agreement would be sterling negative. i am sure the members of parliament speaking very well from the tory point of view that if the u.k. leaves without an agreement this is good news for the u.k.. he may be one of the few people in the investment community that would agree with that. we have seen sterling selling off and that is why the ftse 100 is higher. it is highly nationalized and benefits from weaker sterling. u.k. interest is lower in a vote of confidence that u.k. leave is bad for the u.k. economy. >> be you agree? trade overy speaking

the last 50 years has been an amazing thing for them. 39 billion is nothing to sneeze at. so many pieces of this agreement need to be untangled and that will not be simple. believe marcht to 2019 is the clean break no matter what. >> apparently politicians agree with you. i was trying to get a reaction function from politicians. this is the cable overnight volatility. mark shandler, is there a level we get that things start to unwind, how does it play out? >> what people are doing in the options market is buying protection. this is partly a function of people's uncertainty. the only -- by delaying the vote today uncertainty gets extended. when they leave, right now, under the agreement the minister of parliament says was foisted on the u.k., i say was negotiated by the u.k. includes a transition period. that includes some certainty

that there will not be big uncertainty or chaos during the transition period. without an agreement we have no transition period and it becomes more chaotic. at the borders we are unprepared. it is going to be chaos. alix: in this situation is an agreement better than no agreement? >> i think so. there is a school of thought that is very conspiratorial list that this is a negotiation tactic. there are some thoughts out there -- >> there is a lot of that going on. >> just like 2008 in the u.s.. the reality is that there may be a lot of things going on here. the reality for part of this is market stop panicking when policymakers start panicking. we haven't seen that just yet. there are a lot of ossified positions on each side. we get panic from the u.k. central bancorp policymakers i think we will see volatility measures come down. >> ossified.

that is a new one. >> you're like i just on the word of the day and i'm going to say it on bloomberg. does that mean there is now you the u.k. if markets are overdoing it? >> i was there in november. property markets are quiet. there are a lot of things for sale. i think it is a little early. you are seeing money movement from transient folks leave already. there will be some places out of all this -- we will look to 2019 and let this political stuff settle out. >> in november i was at a bloomberg event for small and mid iced companies and brexit did not, until the very end. >> that is the media's fault. >> they are going about running their businesses and looking for workers. dealing with the same issues. >> it is different in london and other countries. they think about things a little differently. in london proper -- >> there are other options here.

delay the vote. does this mean leaving without an agreement? what about a second referendum. what does this mean about the u.k. -- >> that hasn't come up again. >> in my work i say there is an escalation letter. leaving the eu without an agreement -- there are a lot of steps along the way. >> mark chandler and chris wolf are sticking with us. coming up, markets under pressure. we have come off our lows. u.s. futures back in the green after declining. renewed worry about trade is front and center still. more next. this is bloomberg. ♪

alix: why have we seen the equity selloff? jpmorgan has the latest story and apparently it is our fault. disconnect face a between negative sentiment and macro economic to the reinforcing feedback loop of real and fake news. with us are mark chandler and chris wolf. mark, what do you think of that, is that our fault, fake news? biased by outside reports of geopolitics another reality? >> i can't fully explain why the stock market got hit so hard but i think there are a lot of factors. a big collapse of oil prices. i think there is good reason for volatility. i would hardly want to blame it on the media. >> thank you. [laughter] chris, you said something on the break. he said people were nervous about holding positions ahead of

the long weekend. because of the news out of washington. >> you have a lot of things that came to bear on friday alone. i'm not sure if you are a traitor you wanted to be long over the weekend. it was a mueller weekend. >> you wanted to belong the week before. the week before we had 4% plus rallies. >> there are so many more machines doing trading and a lot of rules-based investing. there are a lot of books on this. machines make the trading rules. if it is down 2% the role seb salek. it doesn't matter if it will go down 34 or five. machines trade like humans don't . >> there is the conversation in the market about how much equities hedge funds own. jpmorgan said they are buying on the dip but then you end up having other analysts say there is no capitulation because they are still heavily owned inequities. >> it is hard to figure out market position. especially this time of year.

there are lots of conflicting forces. 2600 on the s&p, we tested it and we saw in october. as long as that holds i think this is at the tail end of a wee rally starting last year saw a bit of correction and volatility. i wouldn't say it is a big deal yet. >> i would say two things and i would agree with that. the fundamental picture does not argue for where we are. we have had downward guidance for next year. we have 25% eps growth and a stock market that gave us a goose egg. >> it is slowing down. >> great to good is a term we use with clients. we are still going to good. unemployment is low, margins that may come under pressure but not a lot. alix: what is the problem we might be missing? the yield curve freaked out everybody. a portion of the yield curve inverting. what is it that we might be missing? is it a leverage loan market.

is it china? he was say he didn't trust gross mummers -- growth numbers. >> we have been expanding. a strong expansion since 09. goose from aof a fiscal stimulus and the tax cut spending increase. come to thewe will end of the business cycle in 2019 are 2020. officials like ben bernanke you talking about 2020. maybe the middle of 2019 when the economy slows up and we get the fed to study its hand. >> we talked to jim tisha blows and he says he sees an extension of the cycle -- jim tisch of the lows and he sees an extension of the cycle. >> the fed could easily skip a hike this december. my guess is they won't because powell was recently talking about how very tight the labor markets are.

i think next year we are not going to see four hikes. chances are we will see two. a lot will depend on what happens in the equity markets. chairman an for the indication of investor confidence. dip -- that mean by the buy the dip? >> as those guys were listening they were nodding. >> the fed doesn't even say four. the fed says three so four is a bit of a strawman. latest easing of that expectations the market was never at three it was at two. now they are debating at one. >> things are slowing and there is room for the fed to take a pause in 2019. will do a december hike because it is an insurance hike. you have a couple things of great to good happening. a slowdown in economic growth and profit growth. what you will see in 2019 is the

rise of a couple other things. slow economic growth and the rise of institutional trading. another piece of the puzzle might make more volatility in that is instability. a combination of those things means the market has a high overreaction function. alix: does that mean ubbuiy -- buy the dip portrayed differently? -- or trade differently? >> across all markets nothing is up. it has been a challenging market. we want to add positions on individual securities. >> volatility, we keep saying this is normal volatility. what we have seen over the last decade is not normal. is that important to remember as we see extreme swings? is interesting to note that volatility we are expecting is not abnormal. what would be abnormal is low volatility. it is difficult for traders to adjust because higher volatility means smaller positions. carol: great discussion.

and chandler of bannockburn chris wolf up first republic private wealth management. they will stick with us. the recent ride-hailing ipos. uber filing for an initial confidential offering. take that lyft. this is bloomberg. ♪

alix: time for bottom line where we look at three companies worth watching. at $120 is uber ipo million -- $120 billion. second biggest ipo in history. carol: we have been awaiting this one. it is their telecom asset. -- a bighe ipo market tech name we have been watching

for a long time coming into the public market. alix: i agree. carol: 10 display a little quirky. this stock under pressure. down about 10% in the tokyo trade. they are a big supplier to apple. concerns about the apple iphone, we are continuing to see that play out with company suppliers. not only is japan display down but corvo and skyworks solutions taking a hit in the premarket. keybank also downgraded corvo and skywards. alix: another company we are .tching is .> the ceo is stepping down this is not surprising -- the ceo just

last month had to walk back their operating income guide after affirming that not too long. what is really interesting here is that he has in the past gifted resistant to a takeover. not appointing on permanent replacement. i do feel like there is a connection. you have these companies that maybe are doing what investors want to see. there patience is not very long. you bring in a new ceo or new executive to carry out a different plan. the day they walked back to guidance the announced the deal with investors. there are parallels. investors have some sort of game plan in mind. they don't think this is the guy to carry it out. they don't think this is the guy to be flexible or malleable to transform to their position. i desperately want this to

happen for me. >> that is probably a key part of this. even with the announcement with the active as he was implying we would talk about collaboration and maybe some joint ventures. the way this is trending is probably more towards a full merger. adm and glencore have had talks with bunge in the past about a deal. you could see something happen. >> abcd -- this is -- the u.s. economy potentially overheating in 2019. joins us on our outlook. this is bloomberg. ♪

alix: this is bloomberg daybreak. welcome to the buy the debt morning. we were lower in the futures market, we have gained some

steam and have moved higher on s&p futures up by five points. european stocks low this session as well as the dax. want to highlight china trade data, internal index in of the men were week, that weighing on europe. thes a by the dip -- buy dip story. in other asset classes it will be focusing on the cable rate, down by 6/10 of 1%. yields down by four basis points. at 10:30 you will get a speech from theresa may, will she delayed of -- will she delayed the brexit vote deal. the 210 spread getting flatter. by 2%.k crude off the bump we saw on friday, no more bump. carol: let's get an update on what is making headlines outside the world of business. emma chandra is here. british prime minister

theresa may is moving to avoid a huge defeat in parliament. bloomberg has learned she is calling off a crucial vote on her brexit deal. she will a dress the house of commons later today and thursday she may attend an eu summit in brussels. she is expected to ask leaders for more concessions in an attempt to improve the deals chances. and japan the economy shrank more than expected in the third quarter. of fell at an annual rate 2.5% and was driven by the biggest drop in business spending and nine years. the japanese economy is likely to recover in the current quarter but trade tensions and a slowdown in china are major risks. france is investigating possible russian influence behind the yellow vest protest. there have been reports that social media counseling to moscow have targeted the movement. russian linked sites have pushed questionable reports of a mutiny among france police and offered support for the protest. global news 24 hours a day on air and on tictoc on twitter

powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. alix: -- still with us is mark chandler of bannockburn. i have to ask you what is going on in france. macron is in a difficult position. how does he make everyone happy? >> he can't. this is dangerous. talking about the russian this is bloomberg. influence, i think russia might be amplifying it and trying to stir things up more. this is an indigenous movement within france. sort of like the five-star movement in italy without a leader it is hard to know what the demands our. this is not just a protest against global warming with the u.s. president tried to suggest. this is a broader rejection of macron's policies. cut taxes and make working-class people are the burden of the adjustment. >> he has to revive the economy. >> it is not doing so bad.

some of the pmi's are doing better than germany. this is a larger problem within france. -- aopularity is roughly tough situation. >> 29% approval rating or something depressing. abbas -- thenb bar withdrawal of unprecedented levels of stimulus slow and posted by central banks is inherently uncertain driving higher volatility and recent choppy or more unsettled market conditions. joining us is one of the offers of daniel morris at pnp bn baribas. mark chandler and chris will still with us. if that will be seen is that the reason for the last couple of weeks selloff? >> it certainly has to be a factor. we talked about risk we have known about for a long time in china. frankly the fed.

interpretationng balance sheet runoff. it is that possibility of it exacerbating the move the markets are going to take. contextronment of the and the result is higher volatility in the context with rising rates and less support from central banks. >> how do you see the u.s. federal reserve preceding and what should they be doing based on the economic backdrop in the u.s.? >> we think it is encouraging that the fed does seem to be signaling more volatility. the dot plots, their own production of the outlook for interest rates for next year does signal several more hikes. is becoming more skeptical that is going to take place. scenario that is visible at

this point, if this continues at this point, we don't see the cyclical pressures strong enough to warrant the hikes we initially felt were going to be necessary. ultimately the dots to move down. it does suggest a softer path for interest rates for the economy. >> we had a note up with the three key risk. are those the three to key risks you are trading around for 2019? walk me through your trading scenario. point we are strategically neutral on equities and underweight on fixed income. we think regardless of how quickly the fed moves the general direction for interest rates in the u.s. and in europe and japan has gone to be up. would you think rates are going to rise belly question how quickly.

literacy are exaggerated reactions. we are tactically overweight on equities. >> we think the earnings story was the liberty good next year. think this will flow through a lot of attacks that was and that will be working in 2019. the consumer story is still good. there is a really high association with low unemployment and this function. it is hard to see a recession. you asked for traders earlier. what could trickle things -- trigger things, the credit market. credit challenges all around the world. likely to be more intense next year. the second is political instability. not uncertainty.

lots of instability. all of those things make it much harder for everyone from cfos to investors to gauge how much risk they want to take. >> we have had a lot of political instability over the last decade. we talk about the banking crisis in europe. i am looking at the u.s. 10 year bond going two to 80. >> you see it going down. stock market in october people were selling off because they understood powell to the hawkish. how far away they were from neutral. the stock market will be selling off because the federal reserve is being dovish. these keep changing. >> why do the narratives keep changing. what do we see happening.

oil prices made for your prize then sold off a seven year lows. it has nothing to do with monetary policy. the same thing with the stock market. we were at record highs with the s&p. --hink this is a fundamental i think this is an individual market story. held for a long time. >> i'm not convinced something serious is underway. >> the selloff in stocks last week suggest there's something wrong with the narratives. can't decide. daniel, we had a chart that came from your outlook that showed the earnings estimate revisions for 2019. it was across the board, whether with u.s. with text, u.s. without tech, are we going to see a shift in the global leadership board next year? we have been looking for europe to lead the way for years but it never seems to come

through. it is hard to think it will be a great year for europe next year either. if it is anything -- if anything we have slowing growth in europe where it is still stable in the u.s.. margins are holding steady but not much acceleration. there is potential for a big change relative to the leadership that we had this year. it will be emerging markets versus developing markets. there are poor performers in emerging markets this year. primarily the strength of the dollar. if, and this is a big if, if trade tensions decline and the dollar weakens and you combined that with what we think are attractive valuations in the equities -- we are not there yet. >> mark chandler do you see it as an opportunity at this point? >> i think the big way on emerging markets is not the strong dollar but a tightening of the fed. if we talk about the fed apposite the -- these are two big positives.

three or six months down the road. >> chris wolf, in terms of leadership? >> i think it is the u.s. in 2019. it will be tough outside the u.s.. economies like sweden, south korea and japan are coming in lighter than expected. before.e seen this we constantly come back to the u.s.. >> he laughed when you said we are supposed to see europe but we never see it. with a little bit of growth it will go but not next year. >> it is only monday. basiel morris of pnp bari asset management, chris wolf of first republic private asset management and mark chandler. the u.s. pushing back at its role as the international reserve currency. with a look at that in our future of money series. this is bloomberg. ♪

>> this is bloomberg daybreak. i am in the hewlett-packard enterprise greenroom. coming up on balance of power, michael pillsbury at the nielsen love -- senior fellow. this is bloomberg. alix: it is time for our regular monday feature on the future of money where we take a look at different aspects of how the digital world will affect money. we are looking at the u.s. dollar, its dominance and role as reserve currency. a former treasury secretary noted in 2016 the more we

condition use of the dollar in our financial system on appearance to u.s. foreign policy the more the risk of migration to other currencies and other financial systems in the medium-term grows. joining us to talk about this is peter coy come our bloomberg economic editor. peter you had a great story in business week back in october that talked about the world using the u.s. dollar. you asked the question about for how much longer. the u.s. dollar is still very dominant. >> no question. i am raising a question of what could eventually happen. there are people who are not happy with the status quo and the europeans are among them. also the russians and the chinese. europeans whothe are close allies of the u.s. would themselves be chasing the u.s. dominance is pretty meaningful. the loophole that i got in with it.

it is like the sanctions against iran. europe did not buy into the sanctions but it is almost being forced to comply with them because the long arm of the u.s. dollar. in.ark, come on when you look at the dominance of the u.s. dollar in the financial system are you say a changing soon or is the dollar too entrenched? >> i don't see a changing because i don't think there is a compelling alternative. until there is an alternative to the u.s. treasury market. bonde does not have a market. they have the german bunds , they don't have a euro market that can continue the treasuries. their bond market is more like our muni market, small issuers and different schedules. without a unified bond market can't complete. the chafing peter speaks of his perennial. going back 30 or 40 years, the europeans always

complain about the hold of the dollar, they are jealous of it. wishes don't make it true. we have a chart from your article that showed global payments currency. there could be a case made a you're not going to our race the dollar. china had its own oil futures contract. it will not have the same liquidity -- you are moving towards it. you are moving towards it at the margin that shift things. what baker the potential. with mark that we are not close to any other currency replacing the dollar. we could get into a multi-folder world -- multi- polar world. two thirds of all global board reserves are in dollars -- foreign reserves are in dollars and two thirds of international

debt are in dollars. that is disproportionate given the size of the u.s. economy. you can see things moving towards being more aligned with shares of world gdp. mark thatree with this is a long-term project. a journey of thousand miles of the into they single step. before the u.s. pushes its advantage, really squeezing countries that this is going to sound like a weird segue. ceo wasst of the huawei because of the hub and spoke airline system. she was grabbed and commanded a. the canadians on behalf that she was grabbed in -- i call them public goods. the u.s. controls. the u.s. can either allow them to be treated as utilities for the good of all or they can use

them to put the squeeze on other countries and that is what they are doing with iran. >> how much of this discussion is a result of geopolitical tensions? when there is much more harmony around the globe. what everybody not be so freaked out and be pushing back on the issue of the dollar mark? >> the weaponization of the access to the dollar is important. the g7 were5 weaponizing the foreign exchange market. we moved away from that and other u.s. is weaponizing access. the u.s. has some powers besides military power that they want to use to exert their will over other countries. using economic power is called financial statecraft. the danger of it is that by overplaying that card it can give rise to alternatives, people searching for alternatives such as things like that going. >> that is the thing i wanted to bring up. you think about emerging economies. in china everything is on your phone digitally.

africa, that is how they were brought into the financial infrastructure. do we have a point where there will be some pushback on the dollar because you don't need it? >> i think there is a pushback it is just not very effective. over time when you look at the advent of the euro, the deutsche mark, the french franc, they were 25% of global reserves. today the euro is about 25%. in effect what we have is central banks have made a decision individually, that is why i object to the title of the tyranny of the dollar, i think central bankers vote every day. it is not at the dollar share is oversized, there are parts of the world economy like the middle east, parts of the world that are tied to the dollar and they are part of the dollar's bloc. the dollar share is fairly proper. >> good stuff. and chandler of bannockburn

peter coy of bloomberg businessweek. futures recovering as trade tensions simmer in the background. more on what i am watching. this is bloomberg.

-- jpmorgan had a note that talked about what investors need to know going into 2019 on hedging. they wrote, markets are in a state of flux at the moment of market in liquidity exasperating market moves to address this and thisct our portfolio from volatility headwind. we recommend a range of options structures across asset classes that would benefit from a rise in volatility. let's ask an expert.

joining me is amy was silverman -- amy wu silverman. you are who i call when i want to know how to hedge. >> the first thing i would say is the irony is nobody ever asks us about hedging until we see a month like october. then all of a sudden the questions come in. the second thing i would say is, the you look at s&p, relative cheapness of put options, they are very cheap. that is a function of the fact that we have gone down so much. i call it there is not much left to hedge. if you do want to own that protection is close to one year lows. you have to believe that we have even further to go here. very simple. one is owning put options. one is selling upside in the markets within a range of that

downside. the got sick complaint is to carry cost of owning protection. that, does that mean we can read into the fact that we haven't seen capitulation? is there a broader takeaway. from the fact that put options are so cheap? >> part of it is a function that if you look at the positioning of investors they kind of went from being skyhigh to giving everything back. simply the fact that they don't have much to hedge in terms of their actual performance. the second thing i would say is that when we look at what is driving the market when it is further downside it basically boils down to what is going to happen with inflation and credit quality. we have seen that expressed in the options market. very particular single stock situation.

our investors are harbingers of what we are going to see in 2019 as the high-yield market potentially degrades. i thinkssed that -- that will continue. wu silverman of rbc capital markets equity. brexit or it is market volatility, i kind of can't wait to get to the next earnings cycle when we start to hear from ceos about the outlook . >> that wraps it up for bloomberg daybreak: americas. coming up bloomberg markets the open with jon ferro. ♪

jonathan: i'm jonathan ferro. the countdown to the open starts right now.

coming up, the u.s. and building tensions over the arrest of the huawei cfo. a small window open for the race to go public. uber set to join lyft and fighting for an ipo. good morning this monday, with future stable, recovering from early losses, following a big week of losses on the s&p 500, the biggest week's decline since march. nervouss worldwide about buying into pullbacks. >> buying the dip is not working. >> heightened uncertainty. >> confusing and messy. >> uncertainty. we learn to live with the noise. >> learning e