level, and with this talk on automotive tariff production back to previous levels. the americans have done that with trump saying in a reuters interview maybe he would be this ceo ifive up it would move towards a deal. that'll stands -- that sounds positive. the reality is there are big challenges that are highly unlikely, even impossible to get addressed between these countries in three months or longer. as a consequence, trump can pretend both sides can make progress, but when we get period we will not be in a much better place. risks,in terms of global is that the preeminent risk in politics? is the endggest risk

of u.s. led global order, that is a meaty thing. americans can no longer call the shots, and the chinese are writing the biggest checks and aligning countries toward them bilaterally, that is the transformational moment. a very dangerous one if you think the global economy will get softer over the coming years. in the near term, the u.s. and china and how the most important economies later each other, that is what everyone will pay attention to. bremmer, thank you very much. francine lacqua, good morning. francine: good morning. we are at westminster. on will be later voted on, we heard that the vote is expected to be later on.

i am joined by graham brady. he is the man that gave us the news this morning. what is the procedure now? >> the procedure was triggered by 15%, the conservative party asking for a confidence vote. once that was reached, it was up to me to inform the prime minister and discuss and consult with her. i did that with her last night. she was keen to move ahead as quickly as we can. she will speak today. in the house of commons at 5:00, and after that meeting at 6:00 and 8:00, a ballot will take immediately counted afterward, and results announced soon after that. francine: how awkward is the timing? >> i think it was the prime minister's view that it was

beneficial not to wait. there had been significant speculation mounting. we have had speculation about this for weeks or months now. this week it had been building considerably. that in itself was becoming a distraction from the serious business of government. we could have agreed to make the announcement and hold a ballot next week. the prime ministers judgment was it was better to proceed quickly to resolve matters. the roles that bind my conduct say i must organize a ballot as quickly as is reasonably practical under the circumstances. we could not have done it sooner than tonight, but it is practical to do it tonight. we have to allow colleagues who cannot be present to appoint proxies. i know we can organize a fair and proper process.

francine: when will we know the choice? >> the decision will be announced tonight. the ballot closes at 8:00. a counting will take place after that. i anticipate we will make an announcement to be read soon after. aancine: have you seen conservative party so divided? >> i think these events and processes take place from time to time through history. and i think we are doing the right thing on processes available to us to resolve matters as quickly and clearly as possible. to pute: i do not want you on the spot, but what changed in the last two weeks? there was a rumor about leadership challenge that did not come to fruition. >> i do not think i should speculate about the motives of my colleagues.

many have been making public comments. i am sure during the course of the day at more will, and there will be a lively debate. francine: because the ballot is secret, will people say one thing about another? >> that would be true on any secret ballot. francine: we should have results as early as midnight? >> definitely before midnight. i would be surprised if it took us an hour to count. it would be something in the region of 319 votes. francine: what is going on now behind us? is it lobbying? are the parties trying to muster votes? >> i think the prime minister made a statement outside downing street. members of the government and the media are making comments. there will be a lively discussion going on in the tea room. usual hubbub of politics

will continue. francine: graham brady, thank you so much. good luck today. .hat was graham brady we will have more from westminster and on brexit. we are looking at the pound sliding, and there is an important empty. -- mp. we saw cable hit a high as theresa may was speaking. let's get back to this a no-confidence vote, theresa may basing this about to oust her as leader. >> graham brady has confirmed he has received 48 letters from conservative mps. there will be a vote of confidence in my leadership of the conservative party. i will contest that vote with everything i have got. nejra: she faces the fight of her political life, throwing the u.k. into fresh turmoil, and brexit into disarray. the ballot will be held between

6:00 and 8:00 tonight. joining us now, themos fiotakis, head fx & rates strategy, ubs limited and stephen crabb, mp, uk house of commons. welcome and thank you for joining us. i know it is a secret ballot. and do tell me one thing something else, but the you plan to vote for or against the prime minister? stephen: i am going to support the prime minister, it is not good for the government to be eating itself. we have a serious job to do, and this is a reckless and nejra:.ulgent why has this happened now and more crucially, if theresa may , andget through this about people vote as you are, will this make it more likely that her deal can get through parliament if a vote comes back on the deal in january? stephen: we are in a fluid situation with the deal. we have yet to see what european

counterparts say. i think they want to find a way through this, and for the deal to land successfully in parliament. my party is deeply divided at the moment on how we deliver brexit. there is consensus we need to deliver on the referendum results, and division about how we do that. the prime minister's plan for all of its faults has it grounded in reality, and is the only credible plan on the table. to command alan b majority. what i will say to my colleagues look is take a long hard at what our purpose is in government, and how we deliver brexit. nejra: if we get a new leader, the articles can be delayed? stephen: it can be delayed. nejra: will it be? stephen: that will be a difficult thing to do. the wing of my party that has

precipitated this leadership vote of confidence today are chomping at the bit to get on with brexit. they do not want to delay on brexit. if they are serious, the road we are going down, having the prime minister in these negotiations make brexit less likely. is beingat pound trade taken away? we are seeing cable hit a session high? themos: i think the pound has been working off a base case where the parliament does not perceived to have the mandate or the desire to move forward with extreme solution and a hard brexit. that sends the market worried about a situation that prolong bigger, and the bailout the accident more likely. to the extent that the developments here highlight

these decisions are being may is perhaps, the only outcome that keeps the conservative party united. and this makes the discussion about the deal even more imminent. i think the market will bring the base case forward. this is why the pound is a rallying. having said that, it is a long way between now and the ultimate resolution of that question. we will see ups and downs in the process. , in terms of the next steps here, outline for us where this could go. i know you said you will vote for the prime minister, but talk us what we will see. stephen: i think she will win tonight, but there are question

marks around the margin. there is no question that my colleagues feel anxious and unhappy about the direction of things at the moment. there will be a significant number of my colleagues voting against her. if she does not win, or if she chooses that she cannot carry on fighting if the margin is too narrow, then we are into full leadership election territory that will play out in the weeks ahead, it will be a huge distraction from the business of government and brexit. you will see names and faces cropping up as challengers. nejra: we are talking here about a no-confidence vote in leadership. how concerned are you about a no-confidence vote in the government? stephen: that is something that the labour party has been talking about, but jeremy corbyn has not made a move on that, given monday's events when the decision was taken to shelve the vote suggests the labour party

are nervous about playing back card. what that will serve to do is unite the conservative party. i do not think they have an appetite for general elections either, so that would serve to bring together the divided factions. nejra: how united will the conservative party be beyond this vote if the outcome is as you predicted? stephen: that is a difficult question to give a simple answer to. there is a big division in the party about the way forward on brexit, a significant core of the party wants a clean hard brexit. another wing of the party believes in economic competence and protecting key industries and our economy could do not want to go down that road. ultimately, this is where the split could happen. nejra: if the prime minister loses, who would be the biggest contenders? stephen: i am not going to speculate on who those would be. we have a lot of talented people

in and out of the cabinet. i think the primus or will win tonight. mp, ukstephen crabb, stephen house of commons, and themos fiotakis, head fx & rates strategy, ubs limited mp, uk house of commons stays with us. this is bloomberg. ♪

>> given everything that is going on, it is the only sensible thing to do. chosen seen that we have to spread our activities.

that is really sensible thing to do. nejra: that was credit suisse chief executive themos fiotakis sank --tidjane thiam saying the bank it will prepare for a hard brexit. let's look at u.k. assets. reactions we are getting, there will be a no-confidence vote in theresa may's leadership of the conservative party. higherwe have seen cable and hit a session high as theresa may was speaking. 5.32.e up 0.4%, 12 eurosterling is worth watching too. when we heard about the delay of the vote, we sell the 10 year gilt yields flattening. let's talk more about market reaction to may's confidence vote and brexit with themos

fiotakis, head fx & rates strategy, ubs limited. we were talking about cable earlier, and getting the impression that traders might be sitting on their hands until they get the outcome of this vote tonight. if theresa may loses, it is movected we can see a 3% lower within days on cable. by the risks to the downside of the upside? themos: short-term, i think this story has proven we cannot -- the market moves in an and his apparent tory way -- in an anticipatory way. nowum-term, i think between and the time the ultimate isstion is addressed, which which solutions will we go for, no brexit, hard brexit, or the deal, and who will make that

decision, the parliament or the people, until we get to that point, there are ups and downs to go through. generally speaking, crises follow a path of escalation, and we have not reached the climax yet. between now and the three months, i see downside risk against the euro. it is the cleanest way to think about it. a big part of it is the euro and the dollar. nejra: could we see parity on eurosterling? themos: yes, in a negative outcome sterling can go even further. nejra: i want to ask about gilts, we showed the gilt yield moving higher two basis points at the moment. the point was made when we got the delay of the withdrawal agreement vote that the yield curve flattening could become inversion in the next six weeks. i suppose your view on that depends on how you think the bank of england will react to the outcome of brexit.

themos: any kind of simulation we run, even in moderate .utcomes is a high-yield that is why there is a high bar for the inversion of the curve. it is not impossible the curve flattens rather. you have a risk off outcome in the early stages of something that looks like we are closer to a hard brexit. it is not impossible. in that case, the pound would .epreciate a lot that will put the bank of england in a more difficult place given what they have communicated. there are some hard brexit outcomes that may require a less dovish bank of england than the economic conditions require. nejra: inversion not looking likely, but we could see flattening. noise as wemuch

have talked about, what for you are the key things you need to get right to get your positioning right so you actually can make money by the time we get the final brexit outcome, if we get it by march 2019? themos: i think you need to signatories, the markets are pricing different outcomes. if you look at domestic stocks, at banks, there is a not onophic scenario, the basis of sentiment, but on the basis of fundamentals, discount a large downside. you have a moderately middle-of-the-road outcome, there is upside in those places. same thing holds for yields. the pound relative to other link, thethe weakest path of least resistance, and in a bad outcome it can appreciate and alleviate some economic pressures more than it has space

to appreciate in a good outcome. we are recommending our clients to buy options upside in domestic stocks, and downside in the pound to prepare for both scenarios. that is if you do not want to go through the volatility and the noise of the next three months. if you really want to trade, escalationd crisis happens, and we have not reached the climax yet. nejra: thank you, themos fiotakis from ubs, and you stay with us. coming up we have the no-confidence vote. the christmas tree of steering the view of 10 downing street. this is bloomberg. ♪

nejra: this is bloomberg surveillance. i am nejra cehic. themos fiotakis is still with us. let's talk about what else is happening in the market, it is a risk on session i'm a we are treating that to the positive sounds we have had on trade. in terms of the volatility in the past few weeks, where do you stand on where the markets go from here? themos: i think if you look at the whole year ahead, it will be a volatile year. but the base case is still

strong. you of our models say should see opportunities to buy. all the signposts that will make that assessment change have been better, more positive. , the fed chances of hikes have been priced down and is moving in the same direction. nejra: themos fiotakis from ubs stays with us. theresa may says she will fight a no-confidence vote everything she has got. this is bloomberg. ♪

nejra: economics, finance, politics. business "bloomberg surveillance." huawei ceo has

been granted ale and vancouver. vancouver. president trump telling reuters he would be prepared to e in the case of it it helpedo ignore -- secure a trade deal. he also threatened to shut down the government and his border wall is not funded. if we don't get what we want one way or the other, whether it's through you, military, anything you want to call, i will shut down the government. i am proud to shut down the government for border security because the people of this country don't want criminals and

people that have lots of problems and drugs pouring into our country. >> at least three people have been killed and more than 10 wounded in strasburg. local media saying the suspect of a 29-year-old man who had already been considered a security threat by the authorities. the city center was closed off for pedestrians and traffic. building onnt lockdown. she indian prime minister' opponents are seeking -- seizing on momentum. meanwhile, the new governor of the reserve bank in india often sought rate cuts during his time at the finance ministry.

then exclusive interview, ceo of the bombay stock exchange at the appointment and saying investors can be reassured of the central bank's independence. >> i have no doubt in my mind of you will have people coming back to the markets. the country looks 7.5% growth going forward. >> the former malaysian prime minister has been charged over the tampering of a state audit. he is accused of altering the report to protect himself from legal action. the ex-president of the fund, accused of abetting him. both men deny the charges. the u.k. government has failed to follow through on a pledge to overhaul a visa program popular with wealthy people.

access to affluent foreign nationals if they invest at least 2 million pounds in the u.k.. the home office has confirmed it has not been shut down. 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. nejra: thank you so much. the u.k. prime minister says is she will fight a vote of no-confidence in her leadership. out in mynda i set first speech outside this front door, delivering the brexit people voted for, building a country that works for everyone, i have devoted myself unsparingly to these tasks ever since i became prime minister. i stand ready to finish the job. inra: francine lacqua is

westminster this morning. francine: thank you so much. we came as soon a fan of the confidence vote was taken place. am pleased to get a little more insight from one of our u.k. government reporters. we were hearing that something could happen, but we have been talking about a leadership challenge for weeks. why now? 48ty: because they have letters. of an possible to know whether she will win or lose the vote at this moment? is impossible to know because it is a secret ballot. this people could be supporting in public, but privately vote against it. francine: if she loses, her will run or stand against her?

kitty: it is quite a short process. are probablyvolved the former brexit secretary, loads of people once it. -- want it. francine: can you see any way in which the prime minister is emboldened by this? people have the confidence in her, they can't ask for another confidence vote for 12 months. kitty: that is right. if she wins the vote of confidence tonight, she is immune for another 12 months. if you have 48 members of your party who don't like your direction or deal, you are still in an awkward position. she might win, but even so, her authority is what the way.

who knows what is when do happen. francine: thank you so much. back to you in the studio. willeene and myself, we have special coverage starting in the next 20 minutes. our very own government team spreadsheet. -- nejra: definitely want to keep them around the bloomberg news coverage. bloomberg was the first with the skip in the delay of the vote. theave talked a lot about pound and ftse through this hour. in your global view and when you look across asset, is brexit an isolated risk where you give recommendations on u.k. assets, or is it informing your view of risk in the market in terms of

looking at a global portfolio? >> i think it informs the view for the global portfolio, primarily after the effect of brexit on european assets. if we didn't have all this risk and noise, or is all this risk and noise was about to disappear because of some kind of good outcome, the euro would not be as low as it is here. bunds would not be as low or as flat as they are now. that would have an impact on european risk sentiment of global bonds as well. i think it matters at the very least, tactically and is a relief, if it all proves to be a less punitive outcome than the market expects. nejra: on the weakness in the more to do onnot some of the softness we have seen in the eurozone and concerns about italy and now potentially france?

themos: if you look at the euro-dollar job this year, the vast majority of risk can be explained a lot more by the drop in european rates or the repricing of the expectations of the ecb, and global growth softness as opposed to just the fed. time, when you look ahead, you have a number of growth factors for europe that were punitive at the last year, vanishing and making european growth not extremely robust, but stronger than it has been this year. i think the market can reasonably anticipate this. you also have an ecb that would likely normalize policies. that is the path of least

resistance is the data falls in place. risk?s brexit is a the risk premium for politics as their. italy's case,k in the risk premiums are already there. if anything, the france situation probably makes things probably less tricky. nejra: a number of people have said that. is there a trade to be made for where you would be long btp's and short o.a.t.'s? theos: the steepening of sum a core of parts of the narrow lower risk periphery compared to things like the bunch curve, has been a very poor before us.

i think it is very volatile to trade at current levels. i do think you can trade this in a very good way going forward without having been involved in these very volatile shifts in european terms. that to me is euros less. -- euro swiss. these daysthe franc is moves related to italian risk premium. if these risks relax, this was will probably week and going forward. franc will probably would weaken going forward. i think it is hard to stand in

the middle of a moving market. trade andr recommendation are base case for the year, is that the curve steepen's from current levels. if there is a big risk to global bonds are u.s. bonds of from current levels, which i think u.s. yields may be close to a peak and real rates may have already peaked. the rest of the view is that bunds are way too low here. there is steepening to be done in european stocks. nejra: thank you. up next, we will have the latest i had of the no-confidence vote in theresa may tonight. that is next. this is bloomberg. ♪

francine: "bloomberg surveillance." you are watching -- you are watching "bloomberg surveillance." there was quite a bit of market reaction after we had the vote of confidence. it will happen this evening and we should have the results before midnight london time. good morning.the world's largest clothing chain is entering the christmas season resisting pressure to cut prices. its struggle to reach targets. the google pause has rejected claims of bias. he is also stressing the company's roots.

lawmakers grilling him on capitol hill yesterday on data information. he says google has no intention right now of launching a search engine designed for china. >> if i walk over there and sit next to mr. johnson, and carry my phone, does google know that i was sitting here and i moved over there? >> you are welcome anytime, judge. >> yes or no? am shocked you don't know. i think google, obviously does. -- the final price will be $13 per share after the company says it sees sensitivity in the range. later today, shares will make their debut. backt suisse plans to buy

as much as 3 billion shares in the next few years. it also says it intends to raise its dividends as part of plans to distribute at least half of the income for 2019 and 2020. in an exclusive interview, the ceo says the bank has chosen to spread its activities in preparation for brexit. >> given everything that is going on, that is the only sensible thing to do. we have seen that we have chosen to spread activities. >> that is the bloomberg business flash. much.ne: thank you so joining us now from westminster is the director of the national

institute of economic and social research. as always -- i have been away from so long -- for so long, against even speak. or you surprised about the confidence vote? >> i think we should only expect the unexpected. it seems the whole political sentiment is being asked questions since the financial crisis. we have a political party that is also asking difficult questions and trying to engineer and etc. may european union. is it we can the economy and investors pull out? >> what we have seen from the , since we referendum had the vote to leave, there's been tremendous concern in the andomy over where and how what form of exit will be engineered.

we got some information in november about the actual deal on the table. we still don't know whether that will actually happen and if they are going to end up in a no deal exit, or something approximately, according to the plan. possiblyncertainty, 6%-10% lower otherwise than it would have been. activity, evened though we haven't actually left the european union yet. we aske: every day, whether theresa may can stay on as prime minister. if she gets the vote, is a plus for the country? jagjit: i think the plus would be some sort of deal. a deal, economically speaking is better than no deal. whoever can engineer a deal so that businesses can plan and households can continue to think about the future and away with less uncertainty than we have seen in the last couple of years, that would be helpful. francine: what the likelihood of the u.k. crashing out.

saying the u.k. can unilaterally revoke article 50. does that safeguard this country ? jagjit: great question. the difficult question is really, what is the signal sent by the population in the referendum? the signal sent was that there were severe economic dislocations in and around the country that need to be addressed. staying in the european union, leaving, we have well-established and elephants -- analysis of the impact of the country. there are deeper set problems about what's the country we are speaking need to be addressed. francine: is there a higher or lower chance of the u.k. crashing out? we have a

constitutional crisis and people say we are leaving and we don't have a deal. the people and businesses need to prepare for that? jagjit: the odds have been significant throughout this year. that is very much the same as it has been. been. with the businesses have to do is plan for eventualities. they have to think that even the most likely option is still back at some sort of deal will be engineered, there is a significant possibility there could be a crash. importers have to think about what they need distributed across the country. francine: are they ready? jagjit: there is evidence they are getting ready. the good news is that having up limited a very severe stress tests to the financial system, that looks as though that is ready. it looks like the financial system is able to supply that. francine: thank you so much for

coming on bloomberg tv. coming up on bloomberg surveillance, more on brexit from westminster. we also have a full pounds check. this is bloomberg. ♪

nejra: economics, finance, politics. this is "bloomberg surveillance." check on the markets. we have been seeing pound strength in this session. the pound popping particularly after we heard from theresa may. will face a no-confidence vote encouraging her party to vote for her, saying it is only going to increase brexit uncertainty. cable trading at 12538. you want to be watching the eurosterling as well. the 10 year yield up to basis 120.s, back above we dropped to as low as 116 on the 10 year yield following the deferral of the vote on the withdrawal. the ftse 100 on the main front.

ofher on the context generally higher markets. perhaps of the markets are doing right now is sitting on their hands ahead of the slowed, but also perhaps a touch of optimism coming through at the prospect of theresa may perhaps winning this vote and that having a little more leeway to push her deal through parliament. we don't want to speculate too much because everything is in play as our politics reporters keep telling me. the stoxx 600 up 1%. we have had optimism around some headlines on trade. crude oil bouncing strongly drawdowns.ata on let's get a check on the markets and what is moving. seb: big day for british politics. i want to start with that trade story. we have seen a continuation and rebound for proxies.

trump saying he would intervene in the huawei case to get a trade deal. bys is a stake being built management. options here to include a sale. finally, sales disappointing. sebastian salek, thank you so much. we continue in the next hour, francine lacqua tom keene are live from westminster as the christmas tree up skewers 10 downing street. this is bloomberg. ♪

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people voted for, building a country that works for everyone, i have devoted myself unsparingly to these tasks ever since i became prime minister, and i stand ready to finish the job. the u.k. prime minister is not backing down. resilient. the pound takes higher amidst brexit chaos. credit suisse buyback, the bank confirms it will repurchase $3 billion of shares over the next two years. we will hear exclusively from the chief executive. this is "bloomberg surveillance." a special edition from westminster. tom and francine here throughout the day. found out today that there was a confidence vote.

the timing as theresa may was meant to go to the eu and speak to brussels could be quite negative. tom: we are scheduled to go to brussels this evening, we may go or we may not depending on the movable parts in london. for me, the most important part of the morning was your conversation with sir graham. explain him and why his committee is front and center. francine: he kept on repeating that this is procedural. he was the man that received he had received 48 letters from conservative mps to call for this confidence vote. he was step telling me when the vote takes place. tom: so much other news, the credit suisse news is a bombshell. there's that tragedy in strasburg overnight, another terror attack. francine: we will have to look at the applications of the presidency of emmanuel macron as he deals with this terror

attack. let's get straight to the bloomberg first word news. authorities ofs, strasbourg, france are trading the shooting that left three people dead as a potential terror attack. a french news agency reported that the shooter was wounded by a military patrol. a televised confrontation between president trump in the top two congressional democrats over his demand for a border wall with mexico. the drama have -- may have raised the chances for a partial democrat== -- government shutdown. the president kelly nancy pelosi and chuck schumer he would be the want to shut down the government if he doesn't get money for the wall. the votessing in on she needs to become speaker of the house.

in canada, a judge has granted bail to the ceo of huawei while she awaits possible extradition to the u.s. the court decision is the start of a long legal process. it will determine whether she is that the u.s. to stand trial. meanwhile, president trump saying he would intervene in the case if it helps when a trade deal with china. a trade go with china. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine: thank you so much. story.tay with our top theresa may will face a no-confidence vote tonight after a lawmaker received 40 letters from mps yesterday. the primehrows minister into an interesting

time. thank you, all of you. i just give you a promotion. this is great. you did some great bets. i'm kidding. let's start with you because there is a lot of political turmoil. could the timing have been better about the confidence vote? david: it couldn't be any worse. , likek this is a tantrum a few toddlers running are on supermarket having a hissy fit. is a goodow why this idea or in the national interest and why anyone could do anything better. i think what colleagues have just failed to recognize is that the majority of the house of commons is to leave the european union but do so with a deal.

they can never win a vote. the mps that but a letter through saying that theresa may is not the right person to deliver the vote they to loseo, if she were the confidence vote, who would rally the conservative party and get them back on track? simon: in the first instance, she is not going to lose tonight. in answer to your hypothetical aestion, unless you have general election, which i could detect no appetite for. the arithmetic of the house of commons does it matter. -- doesn't matter. formathematics do not allow the bucket nearing type of politics that some of my colleagues seem to be favoring. me: what is fascinating to is the possibility of almost three parties.

and them of labour tories it split up into a more conservative you. is that where we are headed? not.: i hope i joined my party back in 1985 as a schoolboy. it is the party love deeply. i think conservative values and principles are the broadly write-once for our country. i hope people don't think -- right onces for our country. there are divisions and all party. -- in all parties. i think this is part of the problem. i know it doesn't fit in terribly well with the desire to have a black-and-white political narrative. there are so many views on what brexit should be, what it looks like and what it feels like. to try and command a majority for that is always good to be a

really difficult job to do. i just hope this sort of tantrum is not a long-lasting endemic problem in the tory party wakes up and moves on. tom: what is the mistake the prime minister made? preferred ifd have she had said very clearly, rather than having the new deal is better than the bad deal, because there are some of my party who believe having no deal is a good deal. i wish she had just said, we won't support a bad deal, but we will work our socks off for a good deal. if it takes a little longer, we will do it. i.e., we won't be leaving without a deal. i think of that had been hammered home a little more clearly, that would've been a good idea. each of these arguments has a reverse quote because people couldn't then turned around and said, you have given away

negotiating strength. tom: i am completely confused. francine: this is the foreigner. pound, itk at the fell and now it is rising. are the markets assuming that theresa may is going to win this comfortably? david: i think the markets are still quite complacent about the risks associated with the whole brexit process. it may well be the case theresa may secures the confidence vote. this will give her some cover because of that will prevent her from being challenged again for a 12 month period. it doesn't change the arithmetic within the house of commons. it was quite interesting one theresa may came back with the

meeting she had with donald tusk. the fundamental challenges are still there. francine: are you shorting u.k. assets today? david: we are short sterling. haso think that sterling got further to fall and that the skew is to the downside. i do think the market is not pricing in an enough of the tail risk, including that of a disorderly no deal brexit. there's a lot of complacency, including within parliament about this whole process and that they can easily go to the brink enforce the european union to back down. i think things are going to get worse before they get better. we've also been potentially reducing since the summer because it has been obvious we are going to get to this crunch point, the sterling credit asset

we have in our portfolio as well. presume the prime minister will jet off to europe once more or is she going to stay in the united kingdom? simon: if she wins tonight, we do expect her to fly out to brussels on thursday looking for a better deal. earlier, the result is likely before midnight tonight she is probably going to win. she looked very weak on tuesday and once she emerges tonight with a big win, her position will be strengthened and she will have that manifesto to move forward. tom: that is the second time i have heard this, that she is expected to win. explain once more if she wins, the good news that it is for the prime minister. rules wed the peculiar

have a tory party, having challenged once, she cannot be challenged again for 12 months. that gives her a year's window. tom: to do what? simon: i think to say to the tory party, if we are serious about being united and staying and government and making sure we don't have the calamity of a hard, socialist corbyn --ernment francine: you are not wrong, tom. the composition of the procedure, if she gets through, if there is a confidence vote for her, she cannot be challenged for 12 months, but it does not mean to say that parliamentarians can vote on her policies. simon: i think the prime minister is going to win very convincingly. i think that will be a turbo boost to the deal.

and her before brexit. everybody -- and her view for brexit. expected -- told to expect the result. we don't have teenage tantrums. tom: i am totally lost. simon: i never say no to lunch in carriages. i think maybe on a different day, though. , coming up next will look at pound and pound volatility. this is bloomberg. ♪

francine: this is "bloomberg surveillance." tom and francine from westminster today on the back of this brexit vote. we were told about 19 hours ago that theresa may will be challenged by her mps. we should have the results before midnight. tom: we really haven't said a sterling stability, it is doing quite well. broke, i when the news was with the credit suisse chief executive, and at the time, pound felt quite sharply.maybe there is no a little bit of betting on the market that theresa may get through this comfortably. joining us now is a bloomberg international government editor.

talk to me about the timing of this. it seems pretty mea it seems an -- rosalind: the things i never nice. we have had gossip about her in the last few months. in a way, it will allow her to clear the air. if she wins, there cannot be another vote on her leadership in another year. either way, the challenge remains for her, hazarded a deal that parliament -- how to get a deal that parliament will agree to. francine: is this just another piece of turmoil for the chief executive or are we going to see london and the u.k. lose investments in the back of political turmoil? market and tothe

the executives won't like it. that gives tonight, certainty in terms of leadership for the conservative party for next year. ultimately this is all delaying, britain's final exit and will lead to a lot of investment for the next two months. tom: what is it due to the confidence of the united kingdom? rosalind: business and markets do not like uncertainty. the idea now that perhaps brexit even gets ripped up and started again, for the crash out with no deal at all. whatever it is, business and markets can get on. tom: ice also christmas parties last night. they begin the new year, if she is extended for one year, that must begin for business, writes? particularly, if

there is some sort of plan, march 29, what does that look like? they can adjust to that. if you see a confidence of that to loses, we should have names may be in the next 24-48 hours of who would challenger.who would be the best bet for the pre-brexit cap ? rosalind: there are a number of names being tossed around. possibly boris johnson. no matter who would take over .they face exactly the same challenge how can you get a deal that europe will lead to, parliament will agree to and how do you get certain concessions out of europe at this point in time? brussels is not inclined to give the u.k. much more. francine: team coverage throughout the day. we will have plenty more from westminster. we will also talk traffic and

travel. we will stick to the chief executive of the international air transport association. a lot of scaremongering that planes did not take off as expected if we crash out. we will discuss that. this is bloomberg. ♪

francine: this is "bloomberg surveillance." tom and francine from westminster today as we try to figure out what the next step for theresa may is.

mp.ust found an we will find out tonight by midnight whether she wins or loses the confidence vote. tom: sterling has some support this morning. francine: let's talk about the conservative party and what comes next. let's bring in andrew. he is one of the politicians here we like to talk to to understand a little bit more about what is going on. with the next step? andrew: i can't speak for other mps, that i will be voting no confidence in the prime minister. i've had my letter back of no confidence back in july. i think where we have arrived at today was inevitable once the prime minister drops going for a free trade deal and went for the checkers proposals. i'm not surprised, that i am disappointed that we have ended up at this. francine: are you surprised it has taken so long to get 48 letters?

they got the 48th yesterday. andrew: it may have gone over that threshold by a number.we don't know that . i think one of the problems has been if the prime minister survives the confidence vote this evening, that she will be immune from further challenge for 12 months. that would mean that potentially, she could be leading us into another general election. colleagues have to ask themselves whether that is an outcome they're looking for. tom: you study genetics, what are the genetics of the conservative party right now? what does that mean for people that want to leave. they really lose their voice if she is forward one year. and are: -- andrew: i think we are trying to save brexit. i'm not happy. the east midlands region voted to leave by 59-41.

this region of brexit at the prime minister is pushing forward, is not the brexit we promise to the british people. francine: who do you want us prime minister? andrew: let's get over the vote this evening and see if the prime minister remains. francine: it is no good toppling her if you don't have someone who can unite the conservative party. the party- andrew: will unite behind whoever is there. who can get this through parliament? does it have to be somebody like dominic raab, boris johnson? andrew: it has to be someone who has cabinet experience. it is a limited field. there is a lot of talentet out there.

i don't know who is going to stand.we haven't gotten to that position yet. tom: how does the united kingdom hasomy move forward if she a one-year advance with this turmoil in the majority party? where does the confidence dissipate to? andrew: i'm hoping we can have a new prime minister. tom: what is your prediction? we have had a number of conversations this morning that almost assume she will win. you get 315 different visions of the future. you haven't such a weight money answers to get a definitive answer when the votes are counted. francine: if she gets through the, confidence vote will you support this prime minister? andrew: with the withdrawal agreement, we are going to lose the support of our confidence and supply partners, the democratic unionist party. andgovernment is very shaky

we probably heading for a general election. francine: so you won't support her? i can't say i put a letter of no confidence in the prime minister, and the next thing say i'm probably going to support her. i'm not that sort of politician. francine: thank you so much for joining us. david.ack with neil and are you expecting much in volatility on pound from now until this evening as we try and figure out exactly who will vote for him against her? you're goingt sure to get a huge my volatility because i think you have to be a pretty brave investor to be trying to trade the news flow or chatter and gossip around a vote where we will know the result by the end of this evening.

i will say that we are by do have more of these conversations. quite a possibility is that the labour party might submit an motion of no confidence in the government. even if theresa may does come through this challenge, she may face another challenge as well. this doesn't resolve in any shape or form the challenges facing the u.k. government in securing an orderly brexit. tom: as we go to this evening's vote, had is the lobbying occur within the house of commons? what is the exact process of conservative leaders of any ill, what is the process? the various sides will be gathering together and grabbing people in the corridors trying

to convince them to lend support to either side of the argument. she gets knock-down, they're never going to keep our down, like this on. today, there will be a lot of discussions, but it looks like she will stay in the job. francine: neil and david, thank you so much. tom: this is fascinating. two polar opposites in the same party. thatine: what struck me is one of the mps was saying that he thought the party would rally behind her if she got the confidence vote. not so from the latest politician we interviewed.

joining us now is the chief executive of avianca. first of all, brexit questions. ready to deal with the no deal brexit? >> for the brexit, we established a report recently, you know, mentioning all of the issues that have to be dealt with. what we understand from the negotiation, and we are not part of this negotiation, the probably be minimal measures of what we call a safety net to ensure conductivity between u.k. and the rest of the world, particularly the u.k. in europe. twoarch 31, normally, the parties should implement measures that will temporarily during the transition period

ensure that a place will be able to take off and to land in and from the u.k. we hope everybody will do at least the minimum to ensure that conductivity. so for passengers, you should have your flight. this is also, if we have a hard brexit, even if we have a no deal brexit, parties are figuring out so that planes still land and leave heathrow. alexandre: these measures should be applicable even and particularly in case of a no deal or hard brexit. if there is a deal, of course, andks would be easier should go more smoothly. but what i was mentioning, the safety net measures, the minimum requirements, should take lace even in the case of a hard brexit. talk to me a little

bit about how you see it for airlines in 2019. we talked about jet fuel and the price of oil. how are you expect to get to look? what are the passenger numbers telling you? would add some of our forecast, cautiously optimistic for 2019. we expect the airlines to make billion.ound $5.5 next year we will have a growth around 6% in terms of demand. i return on capital should exceed our cost of capital for the fourth year in a row. optimistic,ously even if we see some areas of concerns. the oil price, the trade war,

the tariffs that could be imposed on some goods. because this industry relies on open borders, open to trade and to people. there are areas of concern, but we are reasonably optimistic. york andkeene from new from america. i noticed a difference in airports in america. think laguardia under construction, jfk. i think we have one good airport in denver. what does iata need in terms of aircraft and airport construction? what do you need out of washington to build better airports in america? in america, as in many areas of the world, the infrastructure issue is a big issue for airlines. we need enough capacity for airports and for air traffic

control systems. we need affordability. we need efficiency. what we are asking the american authorities is to continue to have an efficient and affordable with enough capacity for infrastructure, especially for airports. what they're doing to modernize and upgrade some airports in new york or denver, as you are mentioning, for the airlines is good news. good news for us. we are expecting the americans to continue to improve their infrastructure. tom: thank you so much, alexandre de juniac. iata. we have some breaking news. this from turkey. they will start operations within syria within days. this is a broad, southern border of turkey, with all sorts of issues, with refugees there as well.

right now we need to go to our first word news in new york. actually -- francine: actually, let's bring it back. mr. erdogan talking on turkey. to matt hancock. thank you for making the time to talk to us. does she survive this come of the prime minister? >> i hope so. i think all conservative mps should be supporting her. clearly, a minority able to call this vote of confidence, but every tory mp, every government mp needs to be looking deep inside themselves and saying, what is in the national interest? at this key moment in the negotiations, we should be backing the prime minister. i very much hope that will happen. francine: does everyone in her

cabinet support the prime minister? >> as far as i know. yes, quite right. there is a reason for that. and that is we are trying to land this deal and we need the prime minister there in their making the arguments. tom: what i see as the ugly london you this leads against everybody else. have you seen any wavering away from the elites of london toward leaving? also in the guardian today, an article saying there are fewer leave people. do you buy that right now? >> i don't think so. rural part ofvery supportive inery leaving. they voted to do want to leave, despite my enthusiasm for remaining. very clear desire to deliver on the results of the referendum, which i also feel democratically

required to do. francine: what is the chance of a no deal brexit and what does it mean for medicine supplies? >> there is a chance of a no deal brexit. francine: 30% or higher? >> i'm not what up at a number. there are all sorts of contingencies we have to deal with in the house of our limits, and this is one of them. in the case of the difficulties at the border, we are doing every thing we can to make sure there is a flow of medicines. even in the worst-case scenario. and i think so long as everybody does what they need to do, the form suitable companies, the governments of course, then we will build have that unhindered flow. --d cinco matt hancock, francine: matt hancock, thank you for being with us. maria joins us from brussels. tricky foris pretty the eu summit.

maria: it is very tricky. the biggest question mark at this point is that whether or not she's going to get concessions, it is whether she will make it to brussels tomorrow. remember, she was due to be here tomorrow. it is the big talker. will she have a job i thursday? theink that comes to show chaos. the bottom line, what i hear from the european union, we go back to square one, this is not about the trade deal. it is about the u.k. being so divided and the conservative government being so divided. that many different visions about what they want to see. the european union feel they are still negotiating with many, many factions. will let you cap the nations. maybe it is 17, maybe it is 25. -- they all of the same pay? are they all of the same page?

maria: they think the long-term sometimes this gets lost in translation in the u.k., is to preserve the single market. it is what it is. this is the crown jewel. they think they want to help her get this deal because nobody wants a no deal. but it is not really at any price. the priority for the european union is the single market. is notll tell you it about the trade deal at this point. it is the fact the u.k. still has not made up its mind about what kind of relationship they want to have with the european union. that is two years after the vote. francine: maria, thank you very much. they're from brussels to discuss up to jalal come of this meeting. we're going back to david riley. david, if you look at industries in the u.k., we were talking to the health secretary matt

hancock. talking about supply shortages, of planes not landing in heathrow. can you bet on what industries could benefit from a hard brexit? is that something you want to go down? situationhink in this where you're describing, it is a no deal brexit, so there is that transition period, no arrangements in place for continuity. there are even issues around continuity of contract in financial markets and in terms of insurance contracts. what i would say is fundamentally, this is ongoing negative impact on the u.k. economy. i think steering clear of retell sector. i think some of the banks, particularly those who are most domestically exposed, have been underperforming in the u.k. and i think that would continue to be the case. i think in a very disorderly brexit scenario, those are the

sectors in particular that do very poorly. you also have things like holiday operators as well with a much weaker sterling and a hit to household income. so it is hard to see particular winners if you're looking for safe havens. it might be, for example, in the utility sector. but you also have the potential overhang of a change in government and a government coming in to office that might be looking at some form of renationalization of those sectors. there are not many places -- francine: thank you so much, david riley. coming up, we will talk a little bit more about the economy. we will talk about what impact this could have on investment in the country. more next.e plenty this is "bloomberg." ♪

this is "bloomberg surveillance." special coverage of brexit live from westminster. let's stay with brexit. theresa may faces a no-confidence vote tonight. we have been talking about it all day. what surprised you the most so far? tom: the fair amount of confidence she will win this vote, which was her tenure out at least a year. she cannot be threatened at least for a year. francine: the market is positioned that way. i would mention the sterling strength. if you speak to some of our reporters, they say we just don't know even though there is an assumption that she should be able to when the confidence.

.oining us now, ann pettifor of bankhief economist of america, merrill lynch. thank you for sticking around or joining us. what do worry about now? is this a benefit for theresa may? if she wins the confidence vote, she can negotiate with a little more authority with the eu or does this show the divisiveness in the turmoil in the conservative party? ann: i think of what it reveals is the degree of political chaos, but also that i agree that i think she may well win and that may be why the markets and sterling are fairly relaxed about this. do you expect her to win? is it almost impossible to know right now?

the market is definitely thinking the prime minister has this one. ann: in the absence of an alternative candidate -- there is no clear alternative to her -- there is no figure that has risen above the others. i think the market is right in saying -- predicting she will win. the question will be, the degree to which she wins, but how many votes and whether or not that strengthens the rebels on the back benches or weakens them. that will be the big issue. tom: give us an update on bank of america, merrill lynch's view on the united kingdom economy. is it a precipice of continued growth or slowdowns or true recession? where does the u.k. economy fit toward this political debate? >> what is happening now is we are probably seeing the first that uncertainty is through the economy.

they have underperformed the rest of europe for a number of quarters. notrisk is uncertainty is resolved fairly quickly, i would say in a matter of weeks, we get a further slowdown as we get into 2019. to your first question on what is going on today, i think the theresa mayus if winces so tonight, does not necessarily give you more visibility on the brexit process, which is really what matters from the point of view where -- economic point of view. if she loses the vote, you probably get into a higher probability of fairly negative outcomes. i know the market is positioning itself for a positive outcome today, but the range of outcomes is unfortunately skewed toward a further slowdown. ann: can i jump in here? sorry. . wanted to say that i disagree

i disagree with the general view that the slowdown is entirely down to this brexit process. there is no doubt it is having impact on the british economy, but there's also wider impact. we have been looking at the british economy since 2014 and it has been weakening since 2014, which was two years before the crisis. furthermore, there is a slowdown in europe and a potential slowdown in the united states. these are all impacts on the economy, in my view, to a greater extent even than the next two years if we do get a deal because there is going to be a transition period and things will pretty much stay the same until well after the transition period. however, if we do get a chaotic no deal, then the story changes. we will continue. moecc and we gille

are at westminster here for this important day for the united kingdom. we will continue. please stay with us. this is "bloomberg." ♪

good morning, worldwide. this is "bloomberg surveillance." fromstminster green across parliament, the contentious day for the united kingdom and important day. francine lacqua and tom keene we have a terrific, david riley, .nn pettifor, and gilles moec you seem very fired up about this vote. if the prime minister wins this vote, how do she gather in her contentious fractured party? afraid, tom, that is something that i don't know. but if she wins, it will strengthen her position.

the really big issue is that there is no alternative plan for what to do other than the no deal plan. that is in law already and is the 29th ofccur on march. that is the only firm thing that we have. what we lack is an alternative plan, either a referendum or a softer brexit. these are not on the table at the moment. the only thing on the table is the fixed arrangement to leave on march 29. so between now and then, the prime minister, if she does win tonight, will have to put immense pressure on her party to come to some agreement on the next steps. and the next steps cannot be, she will not wanted to be a no deal. tom: david, do you adjust and outlook for 2019, not only off the turmoil of the last 24

hours, but just the chaos of politics of the united kingdom? the you have to amend the 2019 view? isid: 2019 view that we have for broader global risk assets. and despite the turmoil and volatility around the u.k., i think that is largely a local issue for the u.k. and not one note is going to be meaningful for global markets, ultimately. i think what it does underscore is the unpredictability of ofitics or unpredictability policy. i think that is going to be an theing source in europe and united states of market volatility. we need to get used to more of this kind of uncertainty. time wet is all of the have in this hour. david riley, thank you, ann .ettifor, and gilles moec

i have to turn to my colleague isncine lacqua and say, this the greatest crisis in modern history for this conservative party. francine: so we're just getting some breaking news. i'm listening to you but also looking at the screens. brady whoand from mr. interviewed just about an hour ago saying tory leadership, if she does lose the confidence vote, we would have the context avenue leader by next tuesday. the time is very short. there is a lot going to be going on in the next couple of days. this is "bloomberg." ♪

♪ tom: this morning, the men in gray suits have arrived.

have had enough. prime minister may faces a vote of confidence. the u.k. faces constitutional crisis. strasburg and france must respond. washington, ae in contentious conversation. good morning. this is "bloomberg surveillance." we are live from westminster. we thought we would be slow. last night, it shifted. francine: we found out about the confidence of this morning. were trying to determine whether they have the 48 letters needed from conservative mp's. let's recap. tonight there is a vote. by 10:00, we should have account.

voting conservative mp's whether theresa may has confidence. , she is safe from a no-confidence for 12 months. if she loses, names will be put forward and the conservative heart he will vote. tom: this is crazier than american politics. francine: maybe italian politics. tom: we continue with first word news. >> good morning. and strasburg, france are treating a shooting that left three people dead as a potential terrorist attack. a gunman opened fire at a christmas market. a news agency reporting the shooter was wounded by military control.

turkey's president said his armed forces will launch a new operation in northern syria in days. they have threatened to attack kurdish militants. turkey views them as an extension of a terrorist group. a televised confrontation between president trump and the two democrats. the drama may have raised the chances for a partial government shutdown. for someecause money federal agencies runs out on december 21. nancy pelosi and chuck schumer telling trump he would be the one to shut down the government. a judge has granted bail for the cfo of huawei. she was arrested on suspicion of violating sanctions on iran. the decision is the start of a legal process that will determine whether she is sent to the u.s. to stand trial. he would trump said

intervene if it helps to win h radio with china. -- to win h radio with china. deal witha trade china. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. tom: thank you. equities, bonds, currencies, commodities. pound sterling. some remarkable stability. i want to emphasize that. markets removed from this political debate. ,he major exception is sterling holding up nicely, 1.2539. we sell 1.24. -- saw 1.24 as well. francine: markets are taking the news that theresa may will face a vote of confidence from the conservative party in stride. the pound strengthening. it gained as ministers rush to back the prime minister. the prime minister vowed to contest the vote with

"everything she has got." we are speaking with a cross-section of gentlemen and ladies from parliament, the house of commons. the labor member of parliament -- i am not butchering that? what is so important as i look at the cacophony of the republican experiment in the united states, and maybe the labour party is not much different here. there is a battle within the party of how to respond to this conservative crisis and a battle about the future of the labour party. can the labour party use this tory crisis as an opportunity? >> i don't think we should be using it as an opportunity. we should put the nation and the country first. we are in a crisis. we are trying to withdraw from the eu, but can't agree on how to do that. , thet we had a mandate people wanted to start this process, three years later, we have no idea what they want now.

this is creating huge uncertainty for markets and businesses. if people think we leave the eu with an agreement and that will be the end of the matter, we ofl have three to four years negotiations on the future trading relationship with the eu. we don't know. yesterdayuest with us spent 100% of his time on the irish question, the backstop. what i find is the unspoken demographic and almost generational debate of all this. i know it is a contained tory discussion, but how do you see the nation shifting in this political balttle within the u.k.? >> advanced economies are dealing with globalization and work in how you get it to deliver for middle income people in our countries. we are seeing the traditional

left-right and the class affiliation and identification is gone too, and i'm not saying things are totally irrelevant come of but your age, where you live, a city or town, all of these things are playing out and disrupting politics. brexit is a symptom of that, not a cause. francine: the vote is happening tonight. if the tories decide to topple their prime minister and a pro-brexiteer such as boris johnson come in place, what happens next? do we go to fresh elections? >> it doesn't matter to the parliamentary arithmetic. for us too majority leave without a deal. if any prime minister tries to pursue that course of action, there is likely to be an explosion politically. probable,is turmoil

that we crush out? >> the clock is ticking. i believe parliament has tools at its disposal to stop that. for example, if the government withdrew the article 50, the notice we gave the eu that we wanted to leave comment that would enable us to result for political situation, or can we have more time to sort out our democratic -- by revoking article 50, that means no brexit. >> that's right. francine: there was a referendum. brexit to want happen, but i don't get to determine that. the people have to determine that. you have gridlock here like you but if youru.s., politicians can't sort that out, you have to go to the people. corbynat does jeremy have to do today to provide renewed leadership for the

labour party? >> come out and say our politics are broken and we need to check in with what the will of the people is in 2018. tom: thank you so much. eric nielsen with us well a unicredit. also bank of america merrill lynch today. david, what will you be looking for? you have extensive knowledge of how we will look at this today. what would david merritt be focused on? checking mp's backing theresa may or voting against her. we will have a clear sense of where that vote will go. i think that thing to look for

tonight will be the margin. remember whend to margaret thatcher was subjected won, butrocess, she resigned. could a similar thing happened to theresa may? that is conceivable. where does that number said, a resounding victory, or she will have to consider her position? tom: eric nielsen, i come in with atthrow and end up some fancy hotel and say i went to the u.k. you know i didn't. tell me how you see the entire nation, north britain, west britain, the midlands? how does the rest of the nation the these elites in london? >> it is a tough question. people are confused.

for anybody who reads the papers and is interested, confusion and frustration really, regardless of what side you are on on this debate, frustration with political leaders is pretty profound. up today?why is pound it was down when we found out about the confidence vote. did the market assume theresa may wins the confidence vote and it's strengthened by it? >> that is point. betweena choice continuation of the mess, but less so, because if you win, as you said, she will be protected for 12 months. crisis,rther or deeper but it looks to most people that it looks like she will win it,

and that means, certainly there is a good chance with the decent is probably more determined to stay on than thatcher was. so she stays on and is pushing ahead come and now she has a mandate to push her deal through. i think that is what the fx market is saying if there is any way of interpreting what it is. francine: to make an important distinction, this is a conference vote for theresa may by her own party, conservative mp's voting on her, but you could see the house of commons votes against the government and you still have another political crisis, even if her own party can't kick her out for the next 12 months, is that right? >> that's right. ,argaming she wins tonight maybe by a convincing margin, that will still not placate her

party. 's, do theye tory mp feel strongly enough to vote in the anti-government motion of confidence brought by the labour party. the labour party said they would table no confidence. maybe they will do that after this vote tonight, then theresa may entire government be in danger. remember speaking after the initial brexit vote about the flows of money in and out of the u.k. has us an update on how fdi been into the u.k., the flows in, the flows out, how is the u.k. doing on its current account balance? position oftural needing constant capital inflows from the rest of the world ome as the u.k. is a platform to get access to the

rest of the eu through the single market. it is just a logical code collusion -- logical conclusion, if the capacity to access the european market is falling, then the appeal of u.k. as a platform starts diminishing. at the moment, there is no real issue with funding. you would probably want to look market, which has remained stable. one of the issues we are facing is the markets are currently ,etting on fairly good outcomes and it is very recently that they started looking into no-deal solutions. you know and understand brussels. you know and understand the eu. how would it have been taken on the other side? theresa may will travel to brussels this evening. if they wake up to this no-confidence vote, does it mean

they have more sympathy for the prime minister and it will get her a better deal, or new difference -- or no difference at all? >> the europeans want clarity, closure, and are probably ready to offer warm words if that can help get the deal through. oftensue i find that is ignored or misrepresented in the u.k. is what ireland represents in all this. the reason why the eu is absolutely convinced of the need to hold firm on the backstop its you -- issue, which is why the deal is not going through, because if you give up on that, you are favoring the interests of the nation leaving the club to the detriment of the nation, ireland am the remaining in the club. i think it is basic, but that seems to be lost on a lot of commentators in the u.k.

the eu will not let the republic of ireland get into a complex position out of the negotiation words aseu, so warm much as you want, but the key issue will never go away. of: i wish we had the two you for another hour. there is so much to talk about. do you just assume the various populisms of europe continue on in 2019, that we just need to get used to all of this turmoil? >> we probably need to deal with this. the key issue from a market point of view is whether the various brands of populism managed to converge or not. italy is an isolated case. wherethe only big country the populace from the left and right have managed to get into government together.

france, which is very much in focus now, there is a push in favor of a populist on both sides, but the conversion between them has been impossible. the yellow vests could have been that point of convergence, and that is white emmanuel macron was right to stop it with a decent fiscal package to make sure this convergence could stop before it gets poorly problematic. ly problematic. ,om: we are at westminster protesters in the background. alwaysarge number, but focal. coming up on bloomberg radio, the perfect time to speak to adam pozen of the peterson institute for international economics. dr. pozen on fed policy, america, but his former service to the doe.

let us look at the images of westminster. ♪

tom: good morning. outside westminster, the house of lords and the house of commons. let me show you the most important thing for bloomberg surveillance in the u.k. the oyster card. t. -- card.

francine: tom has not been on a subway for 40 years. tom: that's how we move around amid this turmoil. we turn to the turmoil in washington with kevin cirilli, bloomberg chief manners correspondent come and particularly manors in the oval office. i want you to move forward what america witnessed last night with the speaker, the good senator from new york, and the president. how do these three fractious parties move forward? kevin: they were setting the stage yesterday. it was pure political theater with the exception of mike pence , who did not look too thrilled to be there. they don't have a deal, but they will get to some deal. the president digging in on immigration. he wants that $5 billion for the wall. right now that is at $1.3

billion. democrats said absolutely not. chuck schumer it an "temper tantrum." nancy pelosi demonstrated how she will govern with president trump. , isident trump for his part don't see how this hurts him. in digging into the wall, getting more money for the wall, on the cusp of a victory on criminal justice reform, i don't see how this hurts him. he is playing to his base. speaker policy must play to her base with her vote engine you wary. in january.r vote how is her based doing, shrinking, expanding? the base is stable and president trump clout within conservative circles. in terms of the legislative forecast next year, you saw

yesterday inside the oval office, which was a surprise to the speaker and the senate minority leader, and reporters as well, what you saw was the new washington for the next two years. thatine: we are hearing trump and the democrats are so far apart they can't agree on the terms of the debate. does anyone have to give in, and if so, who? kevin: from a policy standpoint, many folks say the democrats have the upper hand. kevin:look, there are republicao are retiring who don't want to stick around and have a vote on the government shutdown over the holiday. january 3 is when democrats take control. you have a shifting mathematic calculation here in terms of where things go. if you think speaker ryan wants to count votes and keep the government open on his final week in office, i don't see that.

finally, in terms of actually getting a deal in the senate come the present needs to pick up about 10 democratic votes, and i don't see where it gets those votes at all. tom: right. thank you so much. , our chiefli washington correspondent on the this december, the lame-duck congress as well. i was talking about driving in from heathrow. i was thinking about you and your substantial optimism about europe, the political economics of this experiment. has your optimism been fractured with all we have seen, the shock of the emmanuel macron news, the yellow vests in paris, what we are seeing in the u.k.? has your optimism been broken? >> not broken. moderated, maybe.

my optimism has always been founded on a few this is a political decision, a political process, and therefore it is incomplete, but will be fixed along the way. there are heavy political forces , italy more than anything else. , italy started to speak in a more positive tone to your saying under no circumstance would italy want to leave. i don't know what drives him. but certainly this is making it more complicated for the of theirs to engage in any risk sharing, the private sector or whatever, then you have emmanuel macron, who is now quite busy on the domestic side, and the germans are sitting back. the dutch are in there now with

the group of small countries. youcine: i was going to ask , do you not worry more about france and italy? italy was a problem child until we saw the protests. now emmanuel macron is backing down on some of the things he wanted to push through. >> i worry more about italy. the french economy is fine. the political fabric is what it is. i would think this, the opinion polls and france are far say what was done was the right thing and appreciated, in the sense of the fiscal package. longer-term, in france, i would like to see who the key opposition to emmanuel macron will be. middle,leaned the whole and you only have extreme alternatives.

down, onlyy he steps two terms, right? what then? tom: thank you so much. ,e have much more to talk about our entire brexit team working on this story in the u.k. for your morning briefing on bloomberg radio, karen and nathan will brief you on the events in europe, the events in washington. we are at westminster. ♪

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leave no room behind with xfi pods. simple. easy. awesome. click or visit a retail store today. francine: this is "bloomberg surveillance." let's get straight to first word news. >> good morning.

if there is a government shutdown this month, it is on him and he would be proud. from president trump during a confrontation over money with nancy pelosi and chuck schumer. some government agencies ran out of money december 21. president trump predicts the public would revolt if congress in peaches him, telling reuters "it is hard to increase somebody who has not done anything wrong and has created the greatest economy in the history of our country." he denied he broke finance laws with payments to two women with whom he allegedly had affairs. hello is closing in on the boats she needs to become speaker of the house. she hasg has learned promised opponent she will set an expiration date on how long she will he speaker. five democrats are now signaling they will report the veteran lawmaker.

the trump administration plans to take action targeting chinese hackers and spies. the justice department will indict a number of alleged hackers it believes works for chinese intelligence and attacked american technology companies. a debate continues over the theft of intellectual property. 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. francine: thank you so much. to contest as said no-confidence vote from her party. the eu is formulating a response. joining us now from brussels, maria, do we have any idea if the prime minister is going to brussels or it is now unlikely? >> good morning. you can see this stage is set. eu leaders think she will be in brussels tomorrow. by now, they have come to the

idea that she is in government, but not in power. she is a weaker prime minister than they expected. it was obvious she would lose the vote, and now she has had her own lawmakers turn against her. they will now come to the realization she is weaker than they thought. it, ite: if she wins means they can't challenge her for the next 12 months. is this something the eu would welcome? does it strengthen her hand in the negotiations? >> they would welcome this. that would give her a gear to negotiate this. theyan eu perspective, think the problem is not so much the x stop, the technicalities, the trade details, but the fact the u.k. has been divided and they don't know what kind of relationship they want with the eu if she gets to stay

unchallenged for another year, that would make negotiations go better from an eu perspective, but the question is whether that new deal would go through the u.k. parliament, which looks unlikely, because the backstop has got to be in there from the u.k. perspective. francine: thank you so much. joining me at westminster is an mp for the conservative party. thank you for joining us. you support the prime minister. do you welcome the vote of confidence? is a logicways there behind that because she only needs to win by one vote and she is secure for the next year, because we cannot have another vote for a year. dobe honest, we could without the uncertainty. francine: wish you get it or lose it? -- will she get it or lose it? >> it has been relatively silent

today. i do believe she will win. she only needs to win by one vote. francine: is there a conservative effort, is someone loving the other mp's to get it through, and is this a last-ditch attempt to get rid of her? >> there have been movements i the erg to get colleagues to put letters in. they have been saying they are close to the 48 letters to trigger a vote. they just managed to get over that mark this week. givenunfortunate timing the for minister has been talking with eu leaders to do the very thing they have been asking her to do, looking again at the backstop. it is bad timing in many ways. francine: if she gets the vote of confidence, the people who wrote the letters will support her? >> some people have lost

confidence in the prime minister. i don't agree with them. i don't think there is anything she can do. that is separate from getting the votes through parliament for the withdrawal. that is why this is such a distraction. francine: there are moving parts. you look at all the potential outcomes and everything seems difficult. if she were to lose confidence vote, who is in the best place to win the vote and the hearts of conservatives? >> that is a difficult question. if she decided to stand down, the person who replaced or would have to be a unifying figure. francine: who? >> there are a lot of people who think they are, but they are incredibly divisive. the choices and not particularly wide open. maybe someone not on your radar at the moment. francine:the choices and not woa

pro-brexit mp? isthe reality is the party behind leaving the eu, so everybody is a brexiteer. that is party policy. there are a couple of exceptions out of the 315 mp's, so it would not have to be an arch-brexit campaigner. they are the worst person to be the future prime minister. there is more to do with an brexit. francine: you think she will get through the vote, is this because it has taken us quite some time to get the 48 letters? not thats there is much of a general revolt, or am i reading this wrong? >> you are right. 15% of the party has triggered this vote. whoe will likely be more will vote who have not publicly announced yet, but i would be surprised if it would be a much larger number. i think she will get through the vote. i think she will carry on as business as usual and focus on the withdrawal agreement. francine: thank you so much. for midnservative mp

worcestershire. let's get back to our guest. do you expect more pound volatility next week? >> yes, without a doubt. this country is unfortunate in a deep political crisis. it is about to implement intergenerational change, which we believe is bad for the country. nobody is suggesting that from an economics point of view that this is -- so as we work herself through this, i think we are in four months of volatility in the markets. that is bad for business because you don't know what to invest in , how much money you want to bet on the future. francine: we haven't talked about what governor carney can do and the boe can do.

this puts them in a tricky situation. if you have this level of political turmoil, it will be difficult for them to hike rates. surprised bye been the communication with the boe lately. it sounds like they are threatening rate hikes. copying oft like a the fed, normalizing rates without really reflecting a lot on this enormous earthquake, potential earthquake, in front of us, so i find it difficult. i think the government they will not go ahead with the rate hikes unless there is a miracle coming down from the heavens and brexit does not happen and everything is beautiful, but it would take a miracle, so i am quite confused about what the boe is trying to say these days. this country has a

current account surplus. when you look at the economic things, is there an ideal level for pound? what needs to happen for us to get there? you misspoke. it is a deficit. francine: current account deficit. >> exactly. have, indeed, the biggest current account deficit of any major industrialized country. there are some technicalities that explains part of it that suggests it's not as bad as it they need to continue to attract capital from abroad. if you are not part of the european system to the same extent, and populism is taking over to a large extent, the attractiveness of london as a place to park your money and some of the tax deals given out

for some will presumably evaporate, i assume. i think the answer is it is harder to attract the money. therefore, there are downside risks to the pound. we had a discussion yesterday if pound could go to parity. someone said to the euro or dollar? >> i think you could see parity to the euro, the dollar is a push. francine: thank you so much. coming up on bloomberg radio, we speak with adam posen. he will have a question or two on what the boe can do next. that is at 8:00 a.m. in new york 1:00 p.m. in london. this is bloomberg. ♪

francine: this is "bloomberg surveillance." also caught up with the leadership of credit suisse today. it said it would be buying back as much as 3 billion francs and shares. the ceo told me about the banks plans and his views on the global outlook. >> we have worked hard to get in this position where credit suisse is a staple bank with a strong balance sheet and generating capital. capital toreturning shareholders. to 1.5 billion,

that's about 2.2 billion, for which you can expect something similar next year. , 3.5ding on the conditions 24.5 billion return to shareholders, that is equivalent to what we did in 2017. them and areapital pleased to have reached that point. francine: shareholders ask for more buybacks, you can do it? of economicunction and market conditions. these numbers today are prudent. they come up with discussions with the regulator for next year to which has been agreed with our main regulator, so it is reasonably safe. i am not known for holding capital, so any excess capital will be issued. francine: talk to me about the headwinds and the market conditions, with a get worse?

>> three things. , we had been long into an expansion, so thinking has been about protecting the bank against the downside. what did we do? 50%.t risks by 40% to we cut costs, making the breakeven point lower. we can stand a drop in revenue and remain profitable. re-raised a lot of capital. we dealt with our issues. that leaves us really with low risk, low-cost of capital, which i believe is a good position to go into a difficult environment, because everybody knew after the growth thatof things will turn come and am afraid we are getting to that point now. francine: this is a market correction or worse? >> it is a market correction. we are positive about growth, albeit at a lower level, which

drives our ability to make profits. we have turned credit suisse into a wealth management machine. profits this year will be 20% higher than they were in 2015. we had 60% of her business in the investment bank, we now have profits higher. so we have much higher quality structure of earnings. we have higher profit. the deal at the right time, and now agilysys in the safer position. in ad now that leaves us safer position. latest ahead of the no-confidence vote later today next. we are live in westminster. this is bloomberg. ♪ loomberg. ♪

see any never want to

insurance policy -- francine: this is "bloomberg surveillance." we are just looking at a live shot. this is the house of commons. shortly answering questions from lawmakers. we understand that the opposition party leader jeremy corbyn will field some questions. a very busy day for theresa may. we are expecting that no-confidence folk this afternoon. we found out 7:30 a.m. london a committee have received enough letters from mp's trying to topple the prime minister. so there will be a vote by conservative party mp's later on to see whether. the prime minister within facebook leadership battle or not. our u.k. government reporter joins us.

and i've guess from unicredit is still with us. does she have the numbers to win the confidence vote or not? >> that is a question for the mp's this evening. i was just at an event with david davis. he would not reveal whether he would vote for her. will make somehe concession tonight when she speaks to the committee and say she will get rid of the backstop , which is what they are asking for. the chances of her doing that are slim. francine: they can ask everything they want. she needs to get the eu to agree. why did we get that 48 letter yesterday? why did they not wait for the prime minister to come back from brussels? >> actually in many ways the week to week is playing out in the same way that it would have been any way. we were expecting those letters this morning. that would trigger an

no-confidence vote. she saidened instead she conceded and said she wasn't going to win. i'm going around europe and to brussels, and people said that is not good enough for us. were going to put the letter in any way. francine: were talking about brexit and the markets. pound 12541, they are expecting her to win the confidence vote. what happens if she doesn't? >> chaos. we go from a situation where the potential would be slightly less too much chaos and a real possibility this could end with a hard brexit. i would expect both sterling and almost any u.k. assets to selloff, may be potentially very dramatically. francine: thank you. you are trying to call

mp's to find out which way they will vote. are they organized? the people trying to topple the prime minister, do they organize so they actually lobby others to vote for them? rg are verythe e organized. we know some remainers have , but a favor of remain lot of people are floating around the middle and may be could be persuaded either way and aren't sure. they have a lot of things to consider, the conservative party, the country in the brexit , all of these things will be going through their mind, and they will be waiting to hear ,hat theresa may will say whether she can say anything different. francine: if she loses the vote, we will have two votes, the conservatives will vote on two names by december 20.

>> we could have the first vote by tuesday. one of the mp's was saying this morning on radio we could have a new prime minister by mid-january. that is coming close to january supposed toeone is announce were having a no-deal brexit. francine: were getting breaking news out of brussels. leaders this thing the will discuss a no-deal brexit. i don't know whether that means they are preparing or this will happen. what does that mean? difficult served conservatives care what comes out of brussels? there is a lot of infighting on what kind of brexit to deliver. >> absolutely it matters what comes out of brussels. it is how you interpret what is coming out of brussels. whenrexiteers will say they say that, that is posturing, a negotiation tactic,

where is remainers are saying they are serious. francine: thank you very much. we have prime minister's questions starting shortly. we understand prime minister will be fielding questions on her leadership challenge. we have a vote of confidence this afternoon. we are expecting the have an answer on whether the prime vote of will win the confidence or not by 9:00 p.m. london time. the pound is up. the conversation will continue. this is bloomberg. ♪

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put our country's future at risk and create uncertainty when we can least afford it. alix: may will fight on. theresa may says she will contest the vote of no-confidence. trump shutdown threat. president trump says if he doesn't get the wall, he will shut down the government. a new trade hope. president trump said he would intervene in the huawei to get a trade deal with china. david: welcome. i am david westin here with alix steel. the action is in london come in the parliament. were looking at parliament now. were waiting for prime minister's questions. it will be this evening where she fights for her leadership with her own party, the conservatives. alix: either way, how do you move ford from something like this? what will she say, and how much he will she take? it will be brutal. david: