♪ tom: -- francine: mays big gamble. the prime minister heads back to europe. will she get parliament to vote for her deal? cfo remains in custody. india prepares for the rupee underper pressure -- pressure after the surprise exit of the central bank governor. we're live from mumbai.

i am francine lacqua here at westminster. we will talk a lot about brexit and the fact that the prime minister pulled out on postponing that polk, on her way to brussels where she will meet with leadership. let us check in on what your markets are doing. stockse sideways a bit, mixed, european shares rallying, u.s. futures slipping. a lot of the pressure or comeusness we are seeing from the prospects for success in these american-chinese trade talks and the pound edging after yesterday, prime minister theresa may delaying this critical vote on brexit.

theresa may seeking reassurances over the irish backstop plan in a bid to win over colleagues in her party. facing almost certain defeat, may calling off a vote despite promises that the vote would proceed. parliament returns from its christmas break january 7, pushing the bow closer to the exit in late march. emmanuel macron is admitting he the concernsve to of regular folk and is promising measures in an effort to stop the yellow vest crisis. statement, he is urging companies to pay workers a tax-free bonus indicating the government would fund a 100 a month increase in the minimum wage and abolishing a tax on pensions. reportingr there is the french government deficit

will be close to 3.5% of gdp next year. >> i accept my responsibility. i may have given you the feeling it was not my concern, that i had other priorities. i may have heard some of you with my words. i want to be clear with you. shakeup theto political system because i believe hard in our country and i love it. shocked exit from the royal bank of india has shocked world markets. slumping to its biggest two-day decline in five years after his resignation. months fromng nine the end of his three-year term as governor and ahead of a board meeting in which it is expected to push the r.b.i. do more to ease the s crisis there.

-- the cast prices there. comes in the wake of a series of challenges arguing bond program was a breach or prohibition of monetary financing by the central bank. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is "bloomberg." francine: thank you. theresa may may be gambling the running down the clock to a no deal departure might change the math in parliament. may pushed off on almost certain defeat by delaying today's vote. take a listen. >> it is clear this house faces a more fundamental question. does this house want to deliver brexit?

given the answer she gave, can she tell the house whether a single of the leaders she spoke to over the weekend indicated they were prepared to renegotiate article 20 of the backstop protocol? any suchsence of commitment, isn't canceling tomorrow's vote postponing the inevitable? >> it is clear that while there is support for the aspects of , theeal, on one issue northern ireland backstop, there remains deep concern. voteresult, if we held the tomorrow, the deal would be it -- would be rejected. deferl do for the vote -- the vote. >> bringing back the same deal

either next week or in january and can she be clear on the timing, will not change its across thisjections house which go wider than the backstop alone. britain, bad deal for a bad deal for our economy, and a bad deal for our democracy. our country deserves better. i took up thement responsibility of being prime minister, i have known my duty is to honor the responsibility of that bow. francine: -- that vote. francine: let's go straight to brussels. what could it concede on if they wanted to? we are dealing with a followed of that decision to cancel the vote. they are dealing

with a prime minister that is weaker than they anticipated. we heard from the head of the commission that this is the only deal and the only possible deal. are hearing that the european union does want to help theresa may at this to the finish line and have concessions. that they haved to make a difference between the legally binding and non-legally binding. the european union is a political and legal union. into law ise difficult to change. if we get any change, it would be in a political decoration. the question would be, is this enough? francine: thank you so much. for more on brexit, we are pleased to be welcoming in

westminster e.m. blackford. thank you for joining us. where do we go from here? a government in crisis. it seems a long time ago that the government lost three votes in one day. unprecedented. this is a government they cannot get legislation through. they does -- they do not have the support of parliament. francine: what is the ideal deal given where the e.u. is? stay in the union. people were not told the truth. no such thing as a good brexit. in any analysis, people are going to lose their jobs. they prime minister has the responsibility of looking after

the economic interests of citizens. her deal does not have support. no deal does not have support. we need to go back to the drawing board. francine: we cannot have a referendum. every time you do not like you have an out -- every time you do not like the outcome of the referendum, you have a vote. ian: scotland voted to remain. when we had our own independent referendum the rights of our citizens would be respected. respect,talked about we have not been listened to. the government has to listen to the voices in parliament. she has lost confidence and what she is trying to do is kick this into the long grass and vote as

late as the 21st of january and try to present this as a choice between her deal and no deal. francine: is there any deal you would support? ian: the government has said we would seek compromise. we would like to stay. we have said we should stay in the customs union. it deals with the situation in ireland but is the least worst when it comes to jobs. francine: if there is a choice, 50% you crash oh, what would you choose? ian: no rational person would want to crash out. that would cost 80,000 jobs. that is not worth paying. today, wethe vote would have voted down theresa may's deal and we would have said a no deal is not acceptable.

that would have allowed us to talk about alternatives, either staying or staying in the customs union. francine: that would require an extension? ian: we can extend in the short term. yesterday, in the court of justice, they did say the u.k. has that right to an boko article 50. we do not have to leave. we need to look at alternatives. francine: given where we are, do you think there is a more likely chance of fresh elections or a second referendum? ian: myself and the liberal democrats are calling on jeremy corbyn to put down a motion of no-confidence. i will be at a press conference at lunch today where we are calling for them to speak out and give people that choice and

make sure we protect the economic interests of the people. francine: if there is a vote of no-confidence, do you not risk a political crisis? does it not make it worse? if you do not have an extension, you risk crashing. ian: that is what we are trying to avoid. extend article 50, let us have that option of a vote and we can revoke article 50. we can see scotland -- we can save scotland from this chaos. francine: if there is a referendum, what if it goes the other way? we: we voted heavily and would do the same and we will not allow scotland to be ripped out of the european union again. if the u.k. chooses that, that means independence for scotland. francine: thank you so much for joining us.

plenty more from westminster throughout the day. tom keene has just arrived. we will be together in the next hour. the keynote address at the bloomberg global regulatory forum this afternoon. more on brexit. this is "bloomberg."

uma: welcome back. let's get the business flash. is expected to tell the congress that the company supports privacy legislation and is proposing a framework for privacy this year. in prepared testimony, saying he leads the company with little bias.

congress will expect answers on data collection practices. are higher today after the largest advertising group says it will slim down its work horse in a bid to grow sales and maintain stable dividends. the company plans to make 2500 job cuts and has promised to become a sector leader in technology. it says the restructuring will yield annual savings of 275 million pounds by the end of 2021. conoco phillips is saying capital expenditures are flexible enough to handle price swings. the chief executive officer also weighing in on opec production cuts, saying they are needed to balance the market. opec took wasthat needed to balance the market supply. this should help to tampen that out.

you cannot tell. it seems as a volatile as ever, driven by other events. goodyear is shedding its operation in venezuela and laying off more than 1200 staff as the crumbling economy is forcing more foreign companies to shut down. workers arriving at the plant to find a letter posted saying the plan is no longer working. goodyear offering severance res fors including ti workers, valuable in a country short of almost everything. that is the business flash. back to francine. francine: thank you. here is the brexit schedule. to get may traveling concessions to make her deal more bearable for the house of commons. meet withstop was to

the dutch prime minister. she will travel to berlin where she meets angela merkel. westminster, the house of commons will hold a debate on the postponement of the vote. may's last stop will be brussels. that is at 4:00 p.m. u.k. time. tonight, she will sit down with jean-claude juncker. joining us now is charles lichfield. to the politics of brexit and then we go to the markets. what can they do next? she has a few days to secure concessions. she can secure reassurances for the parliament. the pointed the british parliament objects to cannot change. it is an insurance policy for

ireland. what they want will never be accepted by the e.u. we have a deadlock. francine: deadlock or crisis? charles: we do not have a crisis yet. outcome of her last-ditch attempt to get concessions is likely a crisis. francine: we saw pound weakness and then it stabilize. where do we go from here? charles: once we get more clarity -- francine: which is when? .harles: it is a win, not a if if there are elections, does the pound dropped? if there is a second referendum, does the pound drop? that could be the final

leg. elections,e fresh there will be an outcome and there will be life after it and and cons and pros what remains is that the observation at this level, the pound has taken the brunt and is more likely to recover. francine: what is the percent chance of us crashing out? charles: it is well below 50%. there is a strong majority against such an outcome. we have set off the stopwatch and we have no deal for the moment. i think mps will not simply sit tight. we have a few months before we exit and there are negotiations between the parts of the parliament that are against no deal. for the moment, they have not agreed. are does mean the chances 20%. francine: what is priced into

european equities? some of theure how german exporters would react in case something ugly happens. burkhart: it seems like a lot has been priced into equities. it is not only because of brexit. other countries have their own politics and economic woes. you speak about germany, they have got a car industry they need to fix. a lot has been priced into equities compared to where the bonds stand. look at the stocks earnings and look at the germans, next to nothing. risk equity a 7% premium for the eurozone. francine: where do you value for europe? if you look at the yellow vests, is there anywhere you see value? burkhard: let us look no further

than the energy sector. recover andy prices the sector should benefit and that includes english companies. we see value in the financial banksr, thanks b -- and health care. francine: thank you both. both stay with us. plenty more of brexit and we talk more about europe, a wave of populism, coming up. ♪

francine: welcome to bloomberg surveillance. a focus on brexit, i am here at westminster. markets sideways, a little bit of impact on europe, the focus is trying to figure out what the prospect for a success and this american-chinese trade war are. we are also looking at the pound, it is gaining a little.

francine: good morning, everyone. it we are live from westminster. usually, it pours with rain,

guests are miserable, but today is pleasant. we will discuss what prime minister theresa may can get from the eu, if anything. let's get straight to the bloomberg first word news. happening.s what's theresa may set to meet european leaders, seeking reassurances over the irish backstop plan in a bid to win over colleagues in her own party. pushing the key brexit vote closer to late march. there iscover while broad support for many key aspects of the deal, on one

issue, the northern ireland backstop, and there remains widespread concern. as a result, if we held the vote tomorrow, the deal would be rejected by a significant margin. we will defer the vote scheduled for tomorrow and not proceed to divide the house at this time. emmanuelwhile, admitting he was insensitive to the concerns of regular folks and is not promising concerns of new spending measures in an effort to stop the yellow vest crisis. he is urging companies to pay their workers a tax-free, year-end bonus indicating the government would fund the 100 euro a month increase. a leading newspaper and france is reported the government deficit will be close to 3.5% of gdp next year. >> i accept my share of

responsibility. i may have given you the feeling it was not my concern, that i had other priorities.i also know that i may have heard some of the with my words. i want to be very clear with you tonight. up thet to shake political system precisely because i believe very hard in our country and i love it. uma: 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. uma pemmaraju. this is bloomberg. francine: thank you so much. some u.k. data. it is the three months. this is basic wage growth accelerating attach, 3.3%.

that unemployment rate staying at 4.1%. brexit. british opposition parties are of showingeresa may contempt of parliament over postponement of her brexit vote. the labour party has sent out questions for her to answer. may delayed today's a scheduled vote. lawmakers may not vote on the proposal for at least a month. thank you for sticking around and for joining us. where do you see this going? there are about 15 possibilities on the table. what is the most likely option? >> who knows.

the vote today would have given parliamentarians of the opportunity to voice their concerns. theresa may could have gone back with a new set of negotiating policies. instead, what we saw happened was that the 11th hour, theresa may pulled her deal because she knew it wouldn't make its way through parliament. she stated yesterday she was going to seek assurances on the northern ireland backstop situation because there is a member with her own party that are not happy with the way that has been negotiated. she didn't talk about any other aspects. seeking assurances, not trying to renegotiate. francine: where does labour stand on the second referendum? >> we want a secure deal that .as a permanent stance on the irish backstop.

we wanted a strong single market deal, a free-trade agreement that gave us the same rights and protections that we currently have. we had a referendum, we have to respect the result, but we can't damage our economy as we exit the eu. we have to have a stronger economic relationship. i don't think theresa may has brought that back the table by any stretch. the deal offers no certainty to businesses whatsoever. beyond that, there is a huge question mark over our economic future. that is not good enough, in my view. francine: every time a politician talks about shambles, do you try to cut out the noise and focus on the fundamentals of the u.k. economy? or does it stress the market?

while rebecca is saying, sitting outside of westminster brings to mind up how am written in 1624. no man is an island. each is a piece of the continent, parts of the main. those were his words and 1624. you are asking me about the fundamentals. how much more fundamentally aboutcould you be understanding that we are all in this together? in a year of mercantilism and protectionism, we should open our eyes that trade makes everyone better off. francine: but people are angry. forget it is a good idea. how do you deal with the anger?

burkhard: we are seeing that in paris, southern italy, around the world. economica tangible, obligation for societies and their governments to make sure that everyone can share the fruits of globalization. many societiesng have turned a blind eye to in recent years. populism is a great scare to markets. francine: you could say it is a scare, but something you could change. what are the chances of a general election in the next 12 months? rebecca: we are in a state of extreme chaos. the government lost three votes last week. one of them found the government in contempt of parliament for refusing to publish its own legal advice on brexit. where the prime minister pulling

a crucial vote yesterday because she thought to is going to lose. a don't see how she can carry on. francine: do you really see any other prime minister doing any better given the hand she has been dealt? rebecca: i certainly do. we know we will be able to reach the commonplace with our european partners. was certainly wouldn't be taking the antagonistic and bullish approach that the prime minister seems to have taken in negotiating with our european member states. we are not keeping it in the customs union, we are having a new customs union relationship. there is no other option on the table that would prevent a hard border in northern ireland, would keep our borders open, protect services and manufacture, in particularly. until that option is presented,

i think the customs union is the only pragmatic way forward. francine: how should markets price populism in europe and elsewhere? burkhard: we can already see that there is a law rise of national champions. we can see that in markets. as we see it is not good to be a global player in the next few years. we are at the beginning of an asian century. one thing we believe markets will start to price into markets more as we move into 2019 is the rise of the asian century, which is not determined out of europe. francine: thank you both for joining us today.

rebecca and burkhard. coming up, we have a pretty packed show. investors brace for the results of a key election. we are live in new delhi next. in the next hour, we sit down with the director of chatham house. ♪

francine: this is "bloomberg surveillance." after a pretty big day on brexit. let's talk about emerging markets and india's rupee.

investors breaking for crucial state election results. let's get back to hear and westminster and top emerging markets with burkhard. i don't know if you focus that much on india. is 2019 going to bring more volatility for em? burkhard: there will be more upside in emerging markets from here. this reminds me of the emerging markets crisis in 1998 when people have fled, and yet it double.e for markets to downee a slight slow in the global economy next year. let's not underestimate that this trade war is not derailing china from its medium to

long-term economic strategy. india is rising and the whole of southeast asia is rising. we will overcome the trade war at times, the valuations are offering opportunities for investors to step in. we believe they offer them in ,inancial services, technology and in many fracturing. francine: when you look at china, is there a concern for the domestic slowdown but they are going to focus on boosting the economy. burkhard: their concerns are understandable. debt servicethat levels as we speak are at a multiyear low because of many years of cheap money and declining inflation. ballooned, that has

the reality is, it is not as financially pressing as it was. that is what we also see in high-yield spreads, was are still surprisingly low. francine: do you see anything in a bubble? what is your take on treasuries and 2019? burkhard: you are right to ask the question because they are suggesting, could we run into a big bear market? bull markets don't and like this one. they end when there is euphoria. 2000 when the equity risk premium in the dow jones was negative, when the dow jones had been lifted from 1600 points to 11,000 points by a sector of seven times, and when investors were invested under the roof. today, the average equity share of european pension funds is

11%. the is not irrational exuberance, but the opposite. you see that around the world and in england as we speak. i don't see equities being a bubble when the risk premium is at 7% in europe. francine: thank you so much. we talk a little bit more about brexit as theresa may heads to europe in an attempt to salvage her brexit deal.we will bring you the very latest from westminster. this is bloomberg. ♪

francine: welcome back. this is9 the google ceo is expected to tell the u.s. congress today that the company supports privacy legislation. ies hepared testimo is saying he leaves the company without bias.

a canadian judge is signaling opposition to set bail for the huawei ceo. sheexpressing concerns that may post bail. by hearing resumes later today. in an exclusive interview, the chairman of hair group is saying uawei'scked arrest of h ceo is shocking all executives. >> you can't interfere without any grounds for doing so. the u.s. is the one who always claims to protect human rights, but now, the haven't given any reason. whoever travels to the u.s. now, they must be very scared. uma: that is the bloomberg

business flash. back to francine in westminster. francine: thank you so much. we are here back at westminster trying to figure out what brexit are., what the next steps we know the prime minister is going on a whirlwind tour in europe, and then she meets with -- for dinner. let's get straight to one of the most popular mps. you wanted an amendment to make sure a no deal brexit was not going to happen. can you still push that serve? -- through? >> i can when they get a chance to vote on it. yesterday, the prime minister paul the plug because she news who is heading towards a heavy defeat. i find it difficult to see what europe is going to offer. them any reassurance, an

exchange of letters, aside agreement. i don't think that is going to change the problem for members of her party,; which is what it says in article 20 of the northern ireland-ireland issue. francine: do you think it is every person for himself or party, or is there a general willingness to try and get something done so that there is no crashing out? hilary: i think there was great frustration yesterday. everyone was anticipating we would get to vote. parliament was denied that opportunity because the prime minister realized she was going down to a heavy defeat. parliament is for debating and voting. i think today, as mps come into work and we are to debate what happened yesterday for three hours, we have got a responsibility because we have to find a way forward.

i think facing up to some hard truths would be a really good place to start. the deal the prime minister has negotiated is in real difficulty. francine: who could come up with a better deal, in all honesty? hilary: i think parliament could. while the government is in office, i think there are two choices if this deal is eventually defeated. number one is for the government to change course and say we are going to seek to remain in the economic area and the customs union. problem oflve the northern ireland because you wouldn't have the risk of out border. number two, it would reassure a lot of businesses. francine: but is it brexit? hilary: i think it is. nobody is going to get everything they want out of this. the nation was almost evenly split.

last 2.5 years have taught us is, what does this leave mean? of a canada levers? leavers?ey canada what kind of side agreements would you have? all of these questions about be left hanging if you pull the plug in march, which is why parliament rolling out the no we doand that is what voting government prime minister steele clarifies what is it acceptable anymore. francine: does it automatically mean you have to go to the eu and try and get an extension? hilary: if we end up with the second option, you probably would. now, we know what we know.

from the moment you decided to you one about 22 weeks, would inevitably have to have an extension. i think the eu would agree to that. francine: even if parliament decide they don't want a crash out, a no deal brexit, you must go to the eu and say, give us more time to negotiate. hilary: a think that is probably it. francine: will they give it to us? hilary: number one if there were a general election, if there were a referendum, or if we were going to about to undertake a significant approach to policy. we would need a bit more time because that would involve a political change to the political declaration. a lot of businesses aren't sure where jeremy corbyn sees this going. do you share the concerns? hilary: labour has been very

clear we want to remain in the customs union. francine: has mr. corbett been clear? he has been clear that those are the things we want. the government in the circumstances, one is policy looks like is going to be defeated, does have a responsibility to reach out to others. jeremy said, we are prepared to work with you, if you are prepared to work with us. the prime minister has spent all her time managing the problems in her own party, the party interest. francine: please come to the studio. we will have plenty more throughout the day. this is bloomberg. ♪

you can't prime

minister has back to europe to try and win concessions from eu countries. this after pulling her deal and vote from parliament. trade withut trade, china. imf's managinghe director this hour. india prepares it for state election results. stocks were under pressure after the surprise exit at the central bank governor. good morning for our european viewers, u.s. of viewers, good afternoon from asia. i'm francine lacqua with tom keene. he has just arrived to join me at westminster green. tom: really a constitutional crisis. it, you cany of feel right when you touched down in heathrow. francine: it's difficult to see a way in which theresa may gets out of this.

she is doing it was a blow tour and is good to speak with the dutch and brussels later. i don't see the concessions and she can extract from them. tom: i would suggest it has global ramifications. have trouble thinking it is just about the united kingdom. the economic consequences of this could be quite profound for asia and the u.s.. francine: on yesterday, we had quite a big market reaction when it came to the pound. pound recouping some of those losses. uma: in other news, where walking away from westminster. the french president now promising new spending measures to try and whenever the so-called yellow vest protesters. he now admits of that he lacked insensitivity to the concerns of regular folks, and they taxes on overtime, boosting the minimum wage and abolishing a controversial tax on small pensions.

the u.s. and china are signaling a dialogue between the two nations on trade issues is continuing despite their arrest of a huawei executive. beijing says the two sides exchanging views on the roadmap of future trade talks. that russian woman accused of acting as an undercover agent of the kremlin in the u.s. will change her not guilty plea. signaling and a court filing that she might admit her guilt. she was a gun rights activist hibor friend of leaders of the national rifle association and republican party. oil is holding its biggest loss in two weeks.futures in new york are a little changed after yesterday's 3% the klein. -- decline. 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. -- umam up a mirage in pemmaraju. this is bloomberg. tom: the euro remarkably stable. i notice a little vienna weakness in oil. right now, we are looking at sterling as the litmus paper for what we are doing headlined by headline here. francine: i'm looking at pound minute by minute. the pound is rebounding. yesterday, it fell quite significantly.

a lot of the stocks are getting the message is not from brexit. what they're looking at is trade and the success of the american and chinese trade talks. sterling a little bit above 126 right now. francine: if you state a lot of market participants, they're basically saying that based with the brexit vote, theresa may is trying to gamble the fact that if she delays this, it would put more pressure on parliament to deliver the deal. the pound yesterday hit a weakest since april last year. when i am looking at is theresa may trying to get concessions. joining tom and i from , the chathamoday house director. we spoke yesterday.

vote.he has pulled the does that mean we cannot vote until january? jess: she hasn't set a date for the vote yet. christmas is fast approaching and parliament is due to break up for recess. there is a chance it could come in january. she reassured parliament yesterday that any votes would come before the 21st of january. that is the date when she is supposed to say if it goes to be a no deal or not. inncine: but also bring maria in brussels. what can the eu give the u.k. today? question,answer that i want to say this paper. brexit is now on page nine. this is not front-page news and the european press. what it says here is may has canceled a vote and keeps the guessing game going.

i think this really does reflect what european leaders bank. this is a u.k. polluteritical story. is not much else the european union can do now. tom: the back and forth here is evident. what i find so it significant is the game theory involved. i.am certain there are no key decisions here there's no discrete miss. wherein issituation that nearly three years after brexit was voted upon, we're in a situation where each of the different camps is trying to think their vision of brexit might work. rather than converging to resolution, you are seeing a splintering taking place. thinking, maybe we can have a referendum and this whole thing will be a nightmare. fragmenting,a

rather than coalescing at this critical obama. tom: -- moment. tom: do you find that you reach back in history. is it about the polarity that is centuries-old, or is it just simply a modern crisis? robin: there's a geographic polarity in the united kingdom, especially a north-south polarity, which is why so many people worried about the idea of a second referendum. if you were given the choice, the northern institute come back and say it could go the wrong way. you have the other polarity which is within the conservative party. this has gone on for centuries. a brain of empire versus a britain focused on its relationships in europe. that divide actually is in most explicit and most important right now. francine: is their appetite to get something done?

or because everyone is pulling in their own direction, is it impossible to get any vote through? will we get some kind of amendment to actually stop a no deal brexit? robin: the capacity for a no deal brexit to be stopped is now that much stronger. as much as the brexiteers think a no deal brexit could happen, they are relying on a clock. i think the chances of a no deal are relatively weak at the moment. the recents idea of, theresa may traveled around the country was to start to build up that she could go over the top of parliament and come up with -- the country is tired, they want my deal, my deal is the best deal there is available. i thinkulling the vote,

she is loss of the trust of the people who thought she would be the answer of getting this finished. the fact that she is not taken it to parliament and take in the knox and gone above private to the people is a real problem for her. francine: i was good to ask you what makes the prime minister more vulnerable, the fact that she pulled a vote or if she had lost the vote by more than 100? may, she theresa feels like she doesn't want to just leave the country without a leader. done.nts to get this job for her, she could see she was going to lose and is going back to try and make the vote work. looksfrom the outside it -- she is prepared to admit that it is not working and can try and make it better. tom: what does she do on the airplane home? she is going to be greeted with a steely silence.

what does she do on the plane home, who does she called, who does she speak to? jess: she is going to be speaking to her loyal cabinet ministers and brexit, everyone actually. there are so many different sides. you have the brexiteers, remainders, loyalists. to news to bring enough people together that will get her deal through. tom: thank you so much. we will continue europe parliament. an important speech. this is bloomberg. ♪

uma: welcome back. let's get the bloomberg business flash. the world's largest advertising group planned to cut 2500 jobs, that is a little under 2% of its workforce as part of the new ceo's strategy to grow sales in line with peers and keep its dividend payouts stable. shares of wpp rising the most since april. the google ceo supports privacy legislation and denies the company is politically biased, that is according to a transcript that he will be delivering to congress later today. also promising to continue to work with the government to .eep the government secure

a billionaire hedge fund managers says volatility in or may not be good for investors who hold long-term positions. this might be a better time to be a traitor than just hold. told.der then just it could just be an enormously volatile. with a lot of -- volatile period with a lot of back-and-forth. thank you so much. we are back your in westminster. we have a lot of things to talk about. first of all, populism. we now understand that the also above thes italian budget because of what emmanuel macron said to his people. tom: italy has got to be loving it.

francine: probably. we did have a couple of headlines. let's bring you back to robin and then. -- ben. thank you both for either sticking around or joining us. what does this all mean for equities? ben: a small opening question to deal with. as we have seen in markets, it has been an extremely volatile time. it is a time for investors to think how they are going to robot over the next couple of years and decide whether or not you see the world becoming a more difficult place. francine: where do you position yourself? ben: i think we are seeing a

pretty challenging market, and i expect that to continue. i think investors should continue to be focusing on the quality businesses, strong balance sheets, robust business models. francine: the markets aren't good at seeing the politics of things, riots in france and what that means for economic growth in the longer term. do you worry about populism coming back with full vengeance in europe? robin: i think populism has not gone away. it is a case that is persistent because it has that 20 years to embed itself of repressed median wages. it is going to take 10 or 15 years to flush out of the system. as each leader comes in, we are reminded macron was elected and after the first round with only 20% of the french vote. we are reminded that in italy, you have a very strong populist

government, getting stronger. i think populism is here to stay for the long-term. the markets are always a little over optimistic. every time some little note of seeming positive stuff comes up, we get a jump and now we're finding the markets are saying, we have had enough. i have to say i am pretty bearish right now. tom: how do you fold in the lack of confidence at this populism agenda, as we saw in japan was very weak gdp numbers. begin to cmrto down in gdp -- a markdown in gdp? wakening inseeing the market -- weakening in the market. a must when of those exchanges in the next six months, we are currently finding ourselves --

tom: what are you doing in your portfolios? what is the to-do list today? ben: making sure we are comfortable owning businesses into a downturn. that is very much what we are going through at this moment. francine: let's make some money. what is your favorite industry? ben: i think we want to look at demonstrates that have been sold off in the last few months. those are the ones that can be resilient. medical technology or even software and services. tom: thank you so much. robin and ben with us this morning of parliament. it will be an important conversation with david lipton of the international monetary fund.

please stay with us. this is bloomberg. ♪

francine: this is "bloomberg surveillance." we are talking brexit and europe.

the governor of the reserve bank of india has resigned. investors were already worried about election results. joining us now is bloomberg's executive producer in mumbai. how much stress is there on the markets right now because of the exit of the governor? just when you thought the , comes a surprise exit from the governor late last evening. the fact of the matter remains that this opens up the issue of independence and autonomy. operationally, this doesn't eyange much, but the quakk question that remains is, who next? he will have to perhaps when the perception battle that he has not seen as a yes man of the

government. he will have to restore the confidence of the community. if you look at the child centered relations of the how to bank, is it 50% deal with dollar dynamic and 50% domestic, or different? i think most international investors are concerned about the issue of the bank of india. the timing of the result is curious. he chose to exit on the eve of the state elections and also chose to exit at a time when there are these board meetings scheduled later this week. that sends a signal that all is not well with the administration . they will have to work doubly harder to make sure that they , someonew man

respected by the financial markets, and secondly, they will have to act quickly because usually, this process takes a couple of months. government may not have that kind of leverage. tom: what does he want out of all this? does he want his own central bank, a bank with independence? it is exactly became kind of power play happening all over the world between governments and central banks. think the government that came into power in 2014 believes they can steamrolled decisions in this country. they pretty much lost out on the

important states in india. questions'll raise the over at his reelection in 2019. some of these decisions will have to be reviewed. what the state elections mean for 2019, there isn't a very clear trend coming out. a perhaps they will get a lot more flexible towards allies and economic strategies. francine: thank you so much. harsha there in mumbai. coming up, plenty more on the markets. this is bloomberg. ♪

♪ "bloomberg surveillance this is -- this is "bloomberg surveillance" live from westminster.

now let's get the bloomberg first word news. reporter: british prime minister theresa may may be gambling that running the clock down to a note yield archer might change the , pushinger brexit deal off almost certain defeat in the house of commons by delay in today's scheduled vote. it is now likely that vote won't happen for at least a month. berlin and visiting the hague to hammer out strategies ahead of that. secretary of state mike pompeo blasting russia for sending warplanes into venezuela. two russian bombers, a cargo jet, and a long-range passenger jet have landed at an airport outside caracas. 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. back to you in westminster. francine: thank you so much. vote on thening the brexit deal and vowing to reopen talks with the european union, u.k. prime minister theresa may is on a tour today after the pound to the lowest since 2017. is the chathamre house director. welcome to the program. what is the level of angst right now in the markets regarding what form brexit will take? >> it is pretty significant. the level of angst, the markets have responded negatively over the past few years, but it goes much beyond brexit. it is the question mark over the whole global trading system.

any glitch in that, increased tariffs and so on, make it difficult for analysts to earnings will pan out. i think the level of asked is significant. the global concerns around trade are weighing equally hard. francine: what does that mean for pound? is the brunt of volatility going to be in pound, or could it impact other assets? >> i think sterling clearly is under pressure, but a no deal brexit is not priced in at all. there's no telling where the pound to go if that happened. the next fewver weeks. other assets can of course be impacted. on thes and risk assets straddleome side will

are on as fixed incomes the tightening cycle. tom: are we getting to a point where the city is at risk? there's been assumption that the financial system of london will survive. is that at risk given what we have seen? it certainly is at risk. there's been complacency in london around that because many staffed as't initially feared in anticipation of what the ultimate deal would be. if theresa may's deal pans out, it is less good for financial services been traded goods. if it is a no deal, all bets are off. a lot of sdis are already being held back. we've seen flows out of u.k.

equities that will just continue i think. saw eurosterling yesterday really separate and do their own thing. do you predict that linkage will stay? that if we get weak sterling, we get weak euro with it? guest: over time the euro can go if some way, before the short-term clearly the markets a no deal brexit is bad for europe. it is worse for the u.k.. for time it will be easier the euro to re-appreciate against the dollar than the sterling. talk to me a little bit more about the markets. you talked to me about stagnation. what does 2019 bring? guest: it is very difficult to say right now because the

economies are slowing. widening. spreads are we've seen asset markets drop. what impact that will have on consumer confidence in conjunction with brexit and the trade war is difficult to say right now, but at a guess i would say that economies are slowing. therefore, the central banks will take their foot off of tightening. robin, how should we view the trade war between the u.s. and china? is this something that will be sorted out, or be entrenched in how they do business? is that the trade war between the u.s. and china is here to stay for quite a long time.

i think does a conscious decision is been taken not only in the trump administration, but shared in u.s. congress on both sides of the aisle and many former administration officials, as well as bush administration officials, that china's rise needs to be stemmed because it is becoming competitive to america around the world. those kind of deep supply chains we assumed were going to be in the global economy are now starting to be challenged. u.s.-euthat in with the tensions still relevant, and a donald trump that you never know which way he's going to go, but he keeps all his cards on the table. that's not gone. it is not in a healthy state. the we are seeing are here to stay for a while. francine: do you expect trade tensions to last for the next 20 years? house of the markets be position themselves? years,n't know about 20

but i think five years absolutely. the pendulum has not yet swung far enough. companies that have deep supply chains have to restructure the way they operate. domestic companies depending on the tax regime structure they are in. climate will play an increasingly bigger role in the question of assets in a number of sectors. utermann,as thank you for joining us. are outhe protesters here saying all sorts of words that aren't appropriate for radio or television. they are here every day, but the shock of these flags in front of

this parliament really speaks to the people, doesn't it? >> the shock is that the last time i came in the one of these shows with you, you had as many flags contesting them. you just had the big yellow bus wordslongside with the about brexit i can't repeat. i think there is a different mood. there's a deep sense of unease in the united kingdom that we are not getting it done. i know you got to run to a busy new york day. what i find extraordinary is experiment through multinationals. what is the investment tone of multinationals going forward?

in the same, or will it forever be shifted in europe? >> i think it is forever shifted, to be honest. ,hatever deal the u.k. gets even if it is a norway plus style deal which is currently being talked about, i think the uncertainty that's been introduced for multinationals in europe as to where they will invest is very significant. i think the only way you're going to get car manufacturers or capital goods companies investing in the u.k. going forward is if real wages really dropped very significantly. the only thing that's going to stop that from happening is really if we remain through a second referendum. francine: thank you so much as always for giving us some of your time. termann there.

later, we will be hearing with philip hammond and be back with robin niblett. up about 10 coming minutes from now. this is bloomberg.

♪ francine: this is "bloomberg surveillance" from westminster today, trying to figure out the implications of brexit on your markets. also talking about global trade. tom: hearing the noise of the protesters. robin niblett is with chatham

house. right now an important conversation with the managing director of the international monetary fund, david lipton of the united states, as the imf adjusts to the new populism in the world. david, thank you so much for joining us today. lateral, myof trump way or the highway. how do we get back to some semblance of a multilateral discussion? >> we are so close, but yet so far away. it is good to see both of you. i think it is really important, in order to manage risk and make the most of opportunity, that countries of the world work together. i think everyone at least realizes that. the question is how do deescalate trade tensions and returned to dialogue. there's certainly a lot to be gained. it is important to advanced

economies. it is extremely important for emerging and developing economies for whom global integration is really their future. i am hopeful that we can go forward. it is very notable that in buenos aires, g20 leaders for the first time called for reform of the beauty a -- of the wto. that would be an important step to take. i identified george h.w. bush with a multilateral america that looked outward and not inward. we need to get that dialogue jumpstarted again worldwide. does it happen at the ballot box? does it happen among elites? how do we jump start this discussion? i think it starts with some common sense talk about what are the stakes, so the people, whether they are leaders, elites or voters, understand why this is important

, and can begin to be more supportive of cooperation. it is really what is it stake here. we have many risks in the global economy. we will surely have another downturn. is it ation is garden-variety down toward or a more -- garden-variety downturn or a more serious crisis? there are so many opportunities with new technology for a better future, but we can really only read those if we work together -- only reap those if we work together and have a broader understanding of the situation. francine: david lipton, what are the chances of a downturn? the beginning of a downturn, let's say, in the next 18 months? what role do china-u.s. trade tensions play? guest: it is very hard to know exactly when downturn will come and what will be the

precipitating cause, but history tells us there will be another downturn. i think it also moves us to realize -- it also behooves us to realize that international policy may be more potent this time. interest rates are still so low. fiscal policy doesn't have as much room before because debts are higher. in many respects, we may not have strength to respond that we had before. to fixeally important the roof while the sun is shining, to try and put off that downturn and make sure it is not a severe one. that future is not deterministic. it is something in the hands of policymakers. . francine: if you look around the world, what region worries you the most? of whatrope because

we've seen in france and brexit, or is it further afield in emerging markets? guest: trade tensions, if they are not diffused, and if we don't return to dialogue, could lead to sustained trade impediment, changes in global strategies, reorientation of trade, and even fragmentation of the global economy that would affect most everyone. i do think it is important for europe to deal with the issues at hand. progress has been made, but there is more to do to improve the architecture in europe so that europe can be stronger and play a more important role in global leadership. i think those are important matters as well. on the first subject of trade tensions, it is very encouraging that china and the united states appeared to have called it kind of cease-fire. let's hope that that is fruitful. tom: david lipton will continue

with us. one final question to robin niblett of chatham house, what does it take to get back to wto, to multilateral that imf and other institutions are supposed to do? how do we shift from a moment of populism? is it simply we need the economic growth to pull us away from populism, back to david lipton's world? >> i don't know if we can rely on economic growth, but there are some steps being taken. there is another side to the trump trade added and that -- trump trade agenda. number one, eu governments are making big pushes to open up trading. they've made a big deal with japan. they have a deal on the way with singapore, australia. the eu is trying to point in a different direction. and japan have

joined the u.s. of the wto to try and take on what state owned entities are able to attract. there is work under the surface, behind all the tweeting from president trump, with progress. francine: we will be back with david lipton. we will also speak to the centennial director of research. we will talk also about france and the concern about impact on gdp. this is bloomberg.

♪ tom: good morning, everyone. "bloomberg surveillance" from london. francine lacqua and tom keene. we welcome you to a united kingdom and complete political disarray. the prime minister across the north sea one more time, speaking to europe, and that her trip back to england at a

fractured tory party. down now in our studios the river thames -- is it up the river or down? francine: down. tom: -- down the river thames is david lipton, imf deputy director. was lookingurch oh at the price of greatness, which is responsibility. what do you and madame lagarde want from these nations? what is the responsibility you need from nations across the imf ? >> i'm also aware that spiderman's uncle urged him on with the same words, so it is quite applicable. i think it is on countries to work together to overcome the

risk that global economies face to make sure the next downturn is not too severe and to take it manage of the opportunities that come from technology, and to deal with longer-term challenges. findok to all leaders to recognizeies and to that some of the discontent, some of the complaints that people are expressing that lead to the kinds of political development we seen are legitimate concerns about the impact of globalization, the impact of technology on people's lives. to shape work together new solutions, they have to take ordinary people are affected by events of the global economy. tom: david lipton, thank you so much for joining us today, with the international monetary fund

their, first deputy managing director. francine, we got so much more to talk about here. the protesters behind us, and the real tension to me is how does theresa may come back to this united kingdom? francine: it depends on whether she gets a deal. we will really look at every step of the way on her whistle stop tour, whether she does have any concessions, but every party now thinks they can get their way. it is very difficult to have some sort of commonality. we are back. this is bloomberg.

♪ tom: this morning there is only one story for those of the

political and financial world, the failure of exit -- of brexit. this tuesday all of this united kingdom stand exhausted. the prime minister travels across the north sea in a final attempt to avert a collapse of her government. may, we presume, will be greeted by silence on the continent. "bloomberg surveillance" from london. tom keene and francine lacqua. this is the greatest crisis in the modern history of the conservative party. i thought that gave scope and scale. francine: it does. i'm looking forward to the speech of hammond. we also had a chance to speak with the foreign secretary, talking about the need with many people believing and not believing that we need to protect the u.k. from a no deal brexit.

what is significant is that now, because of where we are in the kind of messiness of it all, every person and every party now think they can get the brexit they want, so there's very little commonality. tom: it is beautiful here, a warm winter day. they have no idea what a real winter is in london. but in this beautiful setting, i said the nation is exhausted. is that right? are the people exhausted from this? francine: i don't know how much the nation follows live by blow the brexit negotiation, but a lot of people have been reenergized because they see this kind of u-turn from the prime minister as a possibility of getting the brexit they want. that is tricky to see how we get out of that. tom: of course, we will always look at the markets. in new york city, our first word news. pemmaraju.

uma: president trump meeting with the top democrats in congress over the wall with mexico. if they cannot reach a deal, there could be a partial government shutdown on december 21. when they met a year ago, they could get -- they couldn't agree on a spending plan. the russian woman accused of as an undeclared agent in the u.s. has entered a not guilty plea, signaling she might admit guilt. she was a gun rights activist acting on behalf of the national rifle association and republican party. president macron boosting

the minimum wage and abolishing a controversial tax on smaller pensions. oil seeing its biggest lost in two weeks. futures little changed after yesterday 3% decline. investors are not sure how opec and its allies will implement planned output cuts. 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. raju.ma pemma this is bloomberg. back to francine and tom in westminster. tom: thank you so much. a look at equities, bonds and currencies. pound sterling is front and center here in london. don't want to make too much of it, with futures up, oil turning, and vienna really front and center.

onto to the next screen, if you would. i don't think i've got a next screen. francine: it is my next screen. [laughter] european shares actually rallying, u.s. shares reversing. i think there's a lot of investors trying to figure out the prospect for success in the american-chinese trade talks. pound up. tom: it's rebounded a little bit. right now we want to begin a conversation linking international relations in all of brexit over the investment out -- ih was mentioning earlier the idea of game theory. that's easy. it is robert frost in america.

you go this way, you go that way. that is out the window for brexit. choices, too many change aren't there? sooner or later, once we get close to the end, i think our minds will focus. the other option, if you look referendum, second getting rid of theresa may. dramak we need a bit more . we need grandstanding by theresa may. there is no other option. the option is theresa may's deal . key decision is in the market or not any market. how do you make that, given all

the noise we see? >> it is too risky to be taking big bets either way, so i am neutral on sterling, neutral on u.k. equities. but ultimately the issue here is still, if you had a referendum today, 54% of people would still want to leave. is split almost exactly down the middle in favor of a no deal or this deal. .here's no majority remain actually has more votes than any of the other options, but it was still not quite get a majority. and there's no majority in favor of any of the options. people's second preferences, ultimately what we are going to have to get to his people in parliament or the nation, rising and going for their second preference. when you look at second preference, over 80% of people support the deal. francine: what does it take for people to focus minds and go to the second preference? at the moment, every member of

parliament is talking their book. is it a market crash? is it the realization that there could be a no deal brexit and the crash out? >> i think it is markets. pressure from the markets always helps to crystallize the mind. francine: which we have not seen. >> not enough. at the end of the day, we are getting closer to the deadline. francine: number three. >> the political declaration is about the backstop. that is where we are. the issues we had yesterday before the drama have not changed and are unlikely to change. tom: what is the incentive for the eu to assist prime minister

may towards a solution in her united kingdom? >> the legally binding dimension of the backstop doesn't change. politicalk around the declaration. it is political. there is political concession, at the end of the day. legally the backstop remains binding. , doesne: but is this deal it make the uk worse off than when it was in the eu? why is this the only option? >> first of all, it took six months with david cameron and the majority of parliament to pass legislation to get the referendum down. we don't have six months. secondly, which question are we going to ask? do you want to stay?

do we want to go? do we want theresa may? we are not there the question whether we are better off or not i think at this point is irrelevant. clearly the u.k. would that be better off because you are losing access to the single market. the question now is just trying to make the exit as smooth and painless as possible. the only option in my view is theresa may's deal. francine: what does it take for the market to have to correct? is that really the only thing that focuses parliament? >> i think the markets kind of work to this out, although some people are clearly still scared. the ruling on the ability to revoke article 50 came out monday. the probability of there being a no deal brexit has dramatically fallen in my mind. the likelihood of that happening i think is basically off the table. were we to get to march at

there's still complete gridlock in parliament, they can just revoke article 50. it's clear there's not a majority in parliament in favor of no deal. tom: give me a chart on sterling, if you would, in new york. frame sterling as the litmus paper of this debate. obviously we are going to go down to 121, 122 if we get that news, but where is the opportunity right now in sterling? >> i think sterling is going to go higher over the next few months. it could be choppy in the meantime, so i wouldn't trade it. but ultimately, the only two options are either that you go , or there is a referendum that would either lead to may's deal or end up with a remain vote. given all that, the likelihood is the sterling needs to go higher. nue as weill conti go through the morning.

eurosterling showing a very different dimension as well. we want to make you aware of an important speech. the chancellor of the exchequer will be speaking at the bloomberg local regulatory forum at 9:00 new york, 2:00 p.m. in london. this is bloomberg.

♪ tom: good morning, everyone. "bloomberg surveillance" outside parliament in london. the prime minister across the north sea, try and once more to come to some agreement with the eu, and then she flies back to a

fractured tory party. youre thrilled now to bring -- robert lorde -- william hague said this is the most important moment for conservatives in modern history. i don't think winston churchill would agree with that. where is your united kingdom right now? >> well, we are not in 1940. that is the most important thing. nevertheless, the issue is hugely entangled in history. one of the things that makes it very difficult for people to understand what's going on is the question of leaving the eu has become entangled with the irish problem.

as well as with the part of fix -- with the politics of the conservative party. tom: we are not in the 17th century. i would suggest all i have seen is pretty much outside of robert skidelsky's moment. there is a misunderstanding of the past. what lessons can we take from the irish question, the land question, the catholic question? what can we take from the past and bring forward to come to a successful resolution? >> how fragile the irish settlement is. that question has dominated english politics at various times for 150 years. the problem is that if we leave the customs union, which is what reopenspean union -- it the whole border question.

logically you might say the way to incorporate ireland into any settlement is to just , but thate trade deal hasn't been offered by the european union. , when weric reasons joined the european union, we try to do it on the basis of just a free trade deal, and they it must stay inside the customs union. francine: it was always going to be this way. you can't have one border for one side and a different order between the u.k. and france. >> totally, yes. the problem is that in this country, we never had any real debate about this. on ther had a debate u.k. within the european union, a meaningful debate. it's been very partisan, very ideological. still people out there are talking about all sort of

options which are totally unrealistic, and now we are facing this crisis. >> i agree with that. in the referendum debate, the irish issue was not prominent at all. it gradually became more and more prominent, and finally came to dominate everything in an extra merry way -- in an extreme your way -- in an extraordinary way. by: we just had an analysis mark carney and the bank of england about the economic downturn we could see, maybe we will see it in the forecast. it is not a forecast. does the united kingdom risk a slower economy and some of the harmful effects like in 1947? a slowers risk economy, but i've always been skeptical about forecasts. all forecasts, in my experience, have been wrong. tom: are you a u.k. optimist? >> i don't think we are going to fall flat on our backs. we'll cope.

in fact, the british people rather like coping in difficult situations. probably the leavers would actually like to crash out and then have a challenge they can sort of deal with. i think that is the temperament. tom: but if you don't believe -- francine: but if you don't believe in forecasts, how do you model things? >> there's a lot to be wrong with modeling. you set up a very unrealistic premise and then model to your conclusion. garbage in, garbage out. [laughter] tom: this is important. my book of the year a couple years ago talks about the disequilibrium and the certitude of models, all of that. what is the disequilibrium of now?d kingdom right when you look at the mix of politics, economics, and simply culture and society, what is the disequilibrium right now? >> between economics and

culture. economically, of course we are better off than the european union. but it don't think the people who voted to leave mind about that. they feel that their cultural identity is being challenged or undermined not just in the european union, but globalization. tom: we have a world-class historian here. to a risk going back chronic malaise in the united kingdom? >> it is not a risk, it is a challenge. [laughter] suffer, even in the best case scenario of theresa may's deal being approved. the economy is already suffering. we seen the numbers. how people are going to be is going to depend on a whole lot of variables. there is more political than the

social, what is going to affect how this country looks at the world, how it looks at migrants living here. .n the economic side, i agree people don't have very much historical memory. nearly ast suffer much from leaving the european union as we suffered from the collapse of the banking system in 2008. people have forgotten about that. tom: we have to leave it there. thank you so much for joining us today. we will continue with wolfango. an important day for the united kingdom, certainly in financial markets, with sterling at a 126 level. this is bloomberg. coming up, the former british ambassador to the european union. stay with us.

♪ francine: welcome back, everybody -- taylor: --uma: welcome back, everybody. secretary of state mike pompeo blasting russia for sending warplanes into venezuela. bombers, a cargo jet, and long-range passenger jet have landed at an airport outside caracas. pompeo is calling it "two

corrupt governments squandering public funds." the u.s. senate's efforts to directly punish saudi crown prince mohammed bill some on best mohammad bin salman -- mohammad bin salman for the death of a journalist will go into the new year. senators may pass a nonbinding resolution declaring him responsible for that murder. federal reserve chairman jerome powell trying to help insulate central-bank from political a number ofng measures designed to increase transparency and build public trust. president trump criticizing powell and the fed for raising interest rates. meanwhile, congress has been suspicious of the fed's power for years. the world's biggest advertising group plans to cut 20 have hundred jobs, a little under 2% -- 2500 jobs, a little under 2% of its workforce.

this news prompting shares of wpp to rise to the highest since april. 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. pemmaraju. fallon, u.k.chael conservative member of parliament. from london, this is bloomberg. stay with us, everybody.

place, the xfinity xfi gateway. and it's strengthened by xfi pods, which plug in to extend the wifi even farther, past anything that stands in its way. ...well almost anything. leave no room behind with xfi pods. simple. easy. awesome. click or visit a retail store today. francine: this is bloomberg surveillance.

i am francine lacqua at westminster green. a google chief executive will have to defend the internet giant against a barrage of assertions and allegations at his first congressional hearing today. bloomberg's washington correspondent kevin cirilli joins us from washington, d.c. how does one prepare for this type of investigation? kevin: he has been consulting with all of their lawyers ahead of rehearing. it will be brutal. i have been speaking with members of the committee and he is going to be facing difficult questions, most notably from conservatives who are going to raise concerns that the platform has censored conservative speech and from democrats who are concerned that google has essentially said they would be willing to build a platform with the chinese, meanwhile they are not cooperating with the intelligence community in the u.s.. francine: thank you so much.

our chief washington correspondent kevin cirilli. we are back you're talking about brexit. facing almost certain -- pushing up certain defeat in the house of commons while delaying today's brexit vote. take a listen to some of the debate in parliament yesterday. >> is clear this house faces a much more fundamental question. does this house want to deliver brexit? >> no. gave ahe answer she moment ago can she tell the house whether a single of the eu leaders she spoke to indicated they were prepared to renegotiate article 20 of the backstop protocol? in the absence of any such commitment, isn't canceling tomorrow's vote merely postponing the inevitable? >> listening to those views, it

is clear that while there is broad support for many of the key aspects of the deal, on one issue, the northern ireland backstop, there remains widespread concern. as result if we held the vote to, the deal would be rejected. we will therefore differ the and scheduled for tomorrow not proceed to divide the house at this time. >> bringing back the same botched deal next week or in january, and can she be clear on the timing, will not change its fundamental flaws and deeply held objected -- objections across this house which go far wider than the backstop alone. mr. speaker, this is a bad deal for britain, a bad deal for our economy, and a bad deal for our democracy. our country deserves better than this. ,> even though i voted remain

the moment i took up the responsibility of being prime minister, my duty is to honor the result of that vote. francine: the u.k. government spokesperson was briefing reporters a moment ago, reminding people the u.k. parliament will meet on the brexit deal before january 1 and the cabinet will defeat on -- will meet on wednesday. mike, we were talking about the volatility in pounds and how the market will look at it. is anything priced in on the european side? if we do have a crash on the european side, let's say there is a hip-hop, what happens to your -- is a hick up -- is a hiccup, what happens to european markets? >> it is a hit for the european economy.

about 3% of gdp. that would take a hit. it would probably not be enough to cause a recession in the eurozone. in the u.k. would definitely cause a recession if you had a no deal brexit. it would be ahead to markets across europe and the u.k. and the euro you would expect a trade lower against the dollar. francine: what does this mean for mark carney? >> i think they need to wait on the deal before they go. improved you is are looking at a u.k. economy where wage growth is going up and unemployment is low. under that backdrop they will want to hike rates next year. let's not -- francine: let's not forget to get to brussels. our own reporter is there. his or anything they can give theresa may?

>> we just heard from jean-claude juncker who said this is the only -- the u.k. parliament should know better and just take the deal. if you look at the history of the european union, the european constitution, brussels has tweaked language in the past to get a deal through the finish line. i would not be surprised if we get new language. the bigger question is when will we get this? longer?be wednesday or to showpean union wants that leaving the union is difficult and painful. francine: who is on theresa may's side? she is doing a whistle stop tour around europe. germans benefit from having the u.k. stronger and closer to the eu? she has been in the

netherlands and will meet one-on-one with angela merkel. this is something that annoys the european commission, this has toat theresa may institutions and speak one-on-one with merkel. it has not worked in the past because the eu 27 has stayed united. to beh as brexit has got painful, no one in the european union wants the u.k. to crash out because this will have the economic repercussions for the u.k. and europe and there is a sense in 2019 that the eu once to focus on the european elections. for the u.k., brexit is everything. for the european union is one of many issues. francine: you were saying that this is the only deal on the table. this is the only deal we could say. do you think we will see leadership challenges to theresa may. what another conservative prime minister do a better job?

the leadership challenge is there. -- she is out, we have a new prime minister. the deal is still the same deal. they are not going to change it because there is a new face in town. in terms of that transition, that change of leadership, being able to i do not think it will be helpful and be a further waste of time. francine: do markets move if we see manufacturing out of the u.k.? mike: i think it is so close that people will wait.

most people can probably work out that the probability of a no deal brexit is low. there is simply no majority in parliament for having that hard border in ireland. if you accept that you have some kind of brexit, then the population, the 65% in favor of the deal. i think we will end up with this deal or no brexit at all. once the politicians realize that they will be inclined to back the deal. francine: emmanuel macron is using so much support by the minute. does he want to help the u.k. or is he too busy with domestic issues? wolfango: he is busy with domestic issues. he took a hard line on the brexit. the same applies to the prime minister of the netherlands. the dutch played hardball there as well.

it is a desperate diplomatic tool. you always open the door -- we will see more drama. late in the night. , thee end of the day conception -- the concession -- it is meaningless but at the same time potentially something you can use. francine: thank you all for joining us. .aria tadeo and mike bell behind us in the house of commons we're hearing from the chancellor of the exchequer answering some of the questions surrounding brexit. they are also asking questions on domestic issues. coming up next, john kerr, former british ambassador to the eu.

this is bloomberg. ♪

uma: hello. this is bloomberg surveillance. i am uma pemmaraju. a settlement may be underway ending the patent dispute between apple and qualcomm. an injunction against the sale of several iphone models, singly in fridge -- they infringe on

qualcomm's patents. apple has stopped using qualcomm chips and owner pays the company licensing fees. high-profile american business ofools taking honors in nine the top 10 spots in bloomberg businessweek annual rankings. that risk -- that list has stanford is number one, followed and m.i.t..vard, the only non-us school in the top 10 was switzerland. management chairman julian robertson waiting to see what the federal reserve this year. --earing on a panel with vonnie quinn asking him if he thinks the fed will keep raising interest rates. that violent on it. vonnie: are you looking your chops about anything you see? >> not really.

uma: that is the bloomberg business flash. back to westminster with tom and francine. francine: the u.k. opposition is urging jeremy korman -- jeremy corbyn to join the no-confidence vote against theresa may. elsewhere in europe we are watching the budget battle with brussels. john kerr, the former ambassador to the eu is joining us. when you put yourself in the shoes of the european union,, how would they have taken the fact that the prime minister pulled the vote yesterday? mr. kerr: i think they would be surprised. the idea that the terms of what the -- of the withdrawn treaty can be approved will be disproved in the next 48 hours. it is possible there will be

some which in the declaration, some existingt in the declaration, some promise of the best endeavors to get out of the backstop. i do not think that will have much influence on the house of commons. there anything the eu can give theresa may to make the vote more palatable? mr. kerr: i think we are quite close to a political crunch. , the votegful vote that parliament is to get on the deal cannot be long postponed and i do not think the deal can be seriously changed. i think we are close to a crunch, which may involve the vote of confidence. timing,: talking about does it make a difference if you vote in the next two weeks or in january? wolfango: i do not think it

makes much of a difference. we will be wasting time. francine: they have been trying to negotiate. trying tothey've been negotiate, not very skillfully. they managed to make the opposition super united. i do not think it makes a huge difference. once we get to a vote, it is a question of how much time, whether we want to get to the edge. may be getting closer to the edge is needed to crystallize in the minds of those who are still pursuing some sort of wishful thinking. francine: i am looking at a headline from the bloomberg terminal. you can do that when you're on mobile bloomberg. china is said to move on u.s. parterre of cut that trump tweeted on. -- on a u.s. car

rif cutt -- car tar that trump tweeted on. nations are questioning globalization. we are in the middle of a trade war between the u.s. and china. where does brexit fit in? one of the underlying causes of brexit has nothing to do with europe. country, we had a long run of austerity and there were and lefto felt behind out, threatened by immigration and globalization. all of these

hear from the european commission president saying the leaders will refuse to renegotiate on the with draw agreement. i do not know whether clarification will be enough for theresa may to come back. seeking a legally binding assurance on the backstop arrangement according to u.k. ministers reaping us. we did also have a briefing from theresa may's spokesperson about 30 minutes ago saying the prime minister seeking clarity on

whether she can join the brexit discussions among the remaining eu members at the summit in brussels on thursday. what we know is she has briefed reporters at the prime minister's people have briefed reporters that they will put this boat through parliament the for january 21. in the meantime, theresa may will convene her cabinet on wednesday for talks on the preparations for a no deal brexit. i'm glad to be joined by michael fallon, a former u.k. defense secretary who joins us now. thank you for speaking to bloomberg. where do we go next? we see of parliament can be read are sure about the nature of the agreement. they are not happy with the agreement she came back with originally. it needs not just clarification, it needs to be changed. it needs to be changed in a way that reassures mps from northern ireland and other members of parliament. francine: one are the chances of

that happening. every time we hear from brussels, they say this is it, we're not going to renegotiate. if clarifications are not enough, what will happen? mr. fallon: you always hear that. you can negotiate until 4:00 in the morning. it is never final until it is final. there is still little bit of time. time is running out, but there is some time. what the prime minister has to do is come back with something that will reassure the northern ireland mps will not be treated differently and reassure the rest of us that our trade with europe is going to continue. francine: what if this is the only deal? mr. fallon: she thought it was the only deal and now she has changed her mind. she has listened to parliament and now she is going up to see whether it can be amended or improved. francine: let's speculate that

this is the only deal, what happens? does she have a leadership challenge on her hands? do we see a second referendum? mr. fallon: changing the leader will not change the problem, which is that the deal will not pass parliament. unless it is improved, i do not think it has any chance of getting through parliament. francine: by delaying the vote, is theresa may weekend -- weakeneed? she is going around europe and seeing whether it is possible to try and demand this agreement. francine: what is unclear to me is the fact that now parliament revoked -- andy a no deal brexit will not happen.

and a no deal brexit will not happen. on the other side, we are postponing the boat and nearing the march 29. mr. fallon: i do not think there is ever going to be a no deal brexit. there has to be a deal on some things, whether planes can fly and food can be imported. i do not think there's anybody who wants no deal at all. we have to go on trading and living with our neighbors and we will need some agreement to make that possible. francine: it could be a mistake. could you see a crashing out not done on purpose? mr. fallon: i do not favor that and a lot of us will be working hard to avoid that and support the government. we have to do this in a grown-up way and that means finding some way through that. that might be delaying the moment of exit if it takes a few more weeks and months. i would not object to that. i think it is more important we have an agreement we are comfortable with. francine: what are the chances of a general election in next 12 months? mr. fallon: i cannot see mp's on my side voting for a general election.

we have to make the best of it. we do not have a majority but we have to get on with it, not just delivering brexit but the other commitments in our manifesto and ensure that this country, which is always regarded for its stability, we have to reassert that until the world we are in business. francine: it seems from the outside that the people who voted to remain have opportunity to change the course of brexit. it seems the brexit fears are more entrenched on the kind of brexit deal they have. how can parliament come together? mr. fallon: it needs to come together. both sides of more entrenched. both sides seem angry about everything. that is the case against having a second referendum. wouldis no guarantee it be any more decisive than the first or any less divisive than the first. somehow, parliament has to come together and find a way through that. the present agreement does not give us enough to do that.

that is why i think she is right to try to improve the agreement she originally came back with. francine: thank you so much for joining us. that was michael fallon, former u.k. defense secretary. in the last five or six minutes we saw a headline out of china. this is impacting the markets. china is moving toward cutting its trade war tariffs on usa cars. this is a step brandished by donald trump during the trade talks in argentina. that was then called into question, saying did he really make that deal with china. we seem to now have confirmation that indeed this is the case. we will have more from westminster throughout the day. this is bloomberg. ♪

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may travels all over europe to discuss a deal. jpmorgan now sees a 40% chance of a no brexit. emmanuel macron's u-turn. the french president caved and opens the door to a wider budget deficit. china gives an inch. .hina said to move on tariffs secretary of treasury steve mnuchin and robert lighthizer talk to the chinese. welcome -- david: daybreak.""bloomberg i'm here with alix steel. s&p futures have moved before that. is this a step or is this just grandstanding, and easy concession to make? a little bit.