bloombergs is daybreak middle east. the brexit deal is dead unless they compromise. speculation mounts about a second eu referendum. investors see jay powell and the fed hiking this week, but will the pace of rate increases slow in 2019 as recession risks mount? the crude collapse continues. oil falls again as hedge funds refuse to buy into opec's production cuts just yet. and demonstrations across france by the so-called yellow vest movement appeared to lose steam after emmanuel macron's

confessions. ♪ manus: this is an daybreak middle east. welcome to the show. i'm manus cranny in dubai. is the bubble losing air? what is the stock market telling us about the u.s. economy, down the lowest since april? get ready for a crisis. partial government shutdown. in terms of the flow of money, millions of dollars has been pulled from the mutual funds in one week. we've not seen that since 1992. crude oil collapsed. the market is not buying the opec cuts. they are cutting their bets to the lowest since 2016.

cable down .5%. is it that the second referendum is on the way? surely may should have told merkel or macron the brexit deal would be dead long before this crisis. bank of america, merrill lynch survey, investors are braced for u.s. growth slump, a halt in the fed hikes, duration -- duration crossed into net long exposure for the first time since 2016. let's get your first word headlines. we do this every day. we rang a bell. ryans. interior secretary zinke he will meet with the trump administration amid federal investigations over his political activity and potential conflicts of interest. president trump announced the departure following a news report he notified the white house of intention to resign. trump will nominate a new interior chief next week.

obamacare has been struck down by a texas federal judge that insurersertainty for of millions of americans. about for action by top democrats. president trump's said it's a big victory by a highly respected judge. demonstrations across france by the yellow vest movement drew half the number of last saturday's protesters, suggesting emmanuel macron's concessions dented the momentum. on monday, they announced the package to reduce minimum wage and raise tensions -- pensions. president erdogan heard an audio recording in which one of the killers of jamal khashoggi allegedly said i know how to cut well. turkey has shared the recording with others and will pursue the case. khashoggi was killed in istanbul in october.

global news, 24 hours a day on air and at tictoc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. i'm christine burke. this is bloomberg. manus? manus: theresa may has warned emmanuel macron and angela merkel that the brexit deal is dead unless they compromise. that's after the european leaders rebuffed her request for help. meanwhile, the idea of a second referendum is being privately discussed with reddish ministers raising unprompted. even theresa may has floated it as a possible outcome. director and cio is here. i've not given you a difficult job than. by the way, we put this into the dtv library, not that anyone needs to understand the scale,

but we have it in the dtv library -- gtd library. you've said a soft brexit is your preferred probability outcome, even after last week? guest: that is correct. but wewer than before, need to keep in mind any time eu is involved in negotiations, there's a tendency to go down the wire. it's like a last-minute softening of conditioning's by the eu is still possible. there are other options on the table. and then the second referendum, which is growing. manus: would a second referendum add additional market risk to sterling? would it add cross asset risk because, again, the polls are so unpredictable. would it add to this? guest: parliament can't decide,

let's let the people decide. it could be good tactics for may because the remainders will be in favor, but hard brexiters would be against. they probably wouldn't take a chance so it could be good for her. manus: that could be good for her. in terms of the possibility, you talk about a norway option. the one thing that comes to mind comes back from brussels, more or less, anticandida at the moment. it -- empty-handed at the moment. it would strike me it needs to get delayed. you have a no-confidence vote, you have prevarication over what deal can get through. do you think it's an inevitability? guest: we saw provisions being voted on by the eu on that. it looks like an extension is getting around. we have no more visibility than before.

it's still very uncertain. this is why we see the pound going down, exporters outperforming. manus: we also have the bank of england this week, and the market is readjusting its view in terms of what the bank of england can actually do. we're expected to hold rates. let's look at the overall probabilities. we are beginning to fade probability of aggressive hikes next year. we're going to get new growth targets in february. these rate hike expectations, our survey say if there's a deal, the bank of england could go in may. would you agree with that? guest: they need to take mobile context into account. maybe we can discuss later. if you look at the u.s., next year it's collapsing. same can apply to u.k. definitely there's a deal. if there's no deal and the global context is worsening, they can't afford to hike. manus: we will talk more about

the global context. there's a lovely discussion on the bloomberg. this is oppenheimer versus commerzbank. they talk about eurosterling. they would say sterling has most of its toxic political news data. the euro does not have the same level of toxicity. it could rally. 85,sterling could rally to 87 because of that political differential. is there a basis for that argument? guest: i would say if you look at eurosterling, it's not because it was great in the u.k. or europe, there's a risk on both sides of it. that could be the case again. manus: we'll talk about those risks in terms of what comes next. 8983, what does it take to reprice those highs on the year?

still ahead, legendary oil trader. some know him as god. why? watch bloomberg's a specific conversation with him later this hour. up next, the fed is seen pulling the trigger at this week's meeting, slowing the pace of hikes into next year amid downside risks. this is bloomberg. ♪

manus: this is the fed's big week. the economists surveyed by bloomberg said they would pull the trigger on another hike before slowing the pace of increases next year. as the risks to the american economy mount. u.s. stocks close the lowest level on friday. just how much might jay powell and his colleagues take the recent market volatility into

consideration when making their decision? is the managing director and cio. suggests, 70 sent probability of a hike next year. is that underpricing the propensity for gradualism? guest: if you look at the markets, 10 basis points for next year, and 10 basis points decreased next year -- by 2020. the market is getting dovish. the fed is on autopilot. job market is very strong. wage growth 3%. unemployment claims are at a low. they need to hike. on the other hand, we know gross is going to soften next year. they should be a bit more dovish, and probably the

doves are overstimulating where the market might be under stability. the truth is in between. manus: let's talk about the growth prospect. the data is indicative of 3% growth. the bloomberg survey is year for everybody to look at now. this is the probability of downside risk. they're rising more than 50% every quarter since 2017, we've had rhetoric about rising risk. where are the cracks in the u.s. economy? guest: we have seen some soft data, which is indeed pointing toward some sort of slow down next year. we also know the global context might put some pressure on u.s. growth at some point. there's trade war risk. we see fiscal stimulus next year. a no deal between the u.s. and china, the trade war might offset these fiscal policy

stimulus. so it's unknown in terms of how much the slowdown will affect u.s. growth next year. we also know the fed is known to be noble. again, they have -- known to be nimble. again, they have a plan. manus: this is one chart i thought was pretty interesting. a chart for sentiment. the spread is the most negative in two years. this is the american association of individual investors. and of the bull bear spreads, you're looking at sentiment really beginning to shift. have you shifted at all in terms of positioning? or is your sentiment moving in this direction? guest: our view is that we are in a secular bull market in the middle of a cyclical bear market. the good news is that we had to reset of earnings expectations, a reset in those evaluations.

we also have a reset in terms of sentiment. it was too optimistic, and now the market is gradually pricing in the fact we are positioning liquidities, plus economic uncertainty. now it's getting priced into the market. that's setting the ground for some upside next year, but still with higher volatility than we seem since last year -- we've seen since last year. manus: we've had a number of indicators from the u.s., from europe, a number of factors affecting the pmi. possibly, the fed softer dollar possibly, and lower oil. versus this kind of data rolling over. could those trifecta of factors put a flow under this? miserablefriday was and the chinese data was fairly appalling on friday, as well.

guest: are we going into recession? our view on this is no. we have real interest rates, close to zero. global growth is expected to be above trend, above 3.5%. and what is really important? as you pointed out, what we are getting is lower oil prices, lower bond yields, oil growth is 3%. the u.s. consumer is expected to do reasonably well. at some point, we should see this soft data again going north. manus: thank you. billionaire richard branson says that brexit is probably the worst thing that's happened to great britain in his lifetime. we bring you our interview with him. this is bloomberg. ♪

manus: billionaire richard branson says brexit is probably the worst thing to happen to the u.k. in his lifetime. he's also concerned about the effect of trade tensions and protectionism. he spoke to bloomberg from california after his galactic spacecraft hit a milestone by reaching atmosphere for the first time. >> i think it's dreadful. it's just so sad when you see people talking about, let's just look after our country. i remember kennedy talking about the importance of looking after each other, trading with each other. and that has worked for many decades. , they thinking countries will not thrive as a result.

we need countries like america and britain, the sort of slightly more civilized countries that don't lock up their country -- lock up the people or kill their people to work together for democracy on a global scale. yeah, very said. very said -- very sad. very sad to see trade barriers grow up. >> already closer to brexit after this week? >> brexit is perhaps the worst thing that's happened to great britain since i was born. brexit would be an absolute disaster for great britain. these 50 tory mps calling for a hard brexit, they're basically calling for not quite the bankruptcy of britain, but something close to it. already of england has sai

seeing a 10% drop in gdp in britain, which is massive. i hope sense will prevail. the ideal thing would be a new referendum, or for the house of commons to get together and first of all, stamp out a hard brexit. but in an ideal world, put us back to be part of the european union, where great britain was doing extremely well. we went from the greatest gdp in europe to the worst just since the announcement of brexit. the pound went from 154 down to 123 since the announcement. if we had a hard brexit, we'd see parity with the dollar. we wouldn'ttic, have holidaymakers wanting to travel to america. they wouldn't be able to afford to do it. so hopefully sense will prevail. >> are you preparing for the

worst case scenario in terms of how messy things can get? are you making business decisions? do you think that's the mentality of the rest of the business community there studying themselves for? >> i don't think we can prepare for the worst. it's that dire. the ports of dover are going to be completely clogged up with qs ueues stretching miles and miles. the collapse in the pound is going to torpedo virgin atlantic, an airline we spent 35 years building. there's nothing really that companies can do to prepare for a hard brexit. it would be devastating. founderhe virgin group richard branson sharing his thoughts on trade, and brexit with bloomberg's haidi lun and

shery ahn. under armour shares lost value after long-range forecasters disappointed investors. sluggish demand for the athletic product and rising competition continues to pressure them. discussedd president their turnaround strategy with bloomberg's scarlet fu in new york. >> by focusing around the athletic performance space, focusing on a specific consumer segment, we're going to authenticate the brand for a time.eriod of if you think about growth opportunities, that's what we laid out, putting the foundation in place to really start to continue to accelerate growth in the out years. a lot of that growth is going to come from international. that's where we have an opportunity to grow the brand, laying out a plan to go from 25% to 42% international. the other story was the

transformation was a transformation of not just growth in top line, but greater shareholder return. we made it clear our long-term plan is about 40% eps cater. it's about getting to 20% are why see, and -- are why see -- ryc. it's so we can invest back into the brand, driving that specific focus point of view, which ultimately we believe will halo into other consumer segments. scarlet: as you refine this business model, are there sports or categories you should not be in? not exit, but turned back on? >> we did that with a line called uaf. going back to the earlier point, style and destination is everywhere. it's what the consumer expects. we need that across the board's. when you say sharper focus, we

took investors through four aspects. we evolved from head of apparel, head of footwear, head of accessories, to nine distinct categories. we talked about our training initiative, core sports initiative, which is baseball, basketball, football, and golf. we also talked about sports style footwear. we're playing in these other places. we want to make sure we can outfit that kid or young man or woman, but the thing that makes under armour beautiful is it's something you can wear off court also. we expect to be on a lot of christmas lists this year and making a bigger better 2019 will make things easier. scarlet: it's about the people. that's for corporate culture comes in. a lot of new faces. you've got issues with expenses. how does restructuring your shift impact your culture? >> our leadership, today, our

top 12 leaders, a third of them, eaders, a third tenure plus. i look at that makes, and i think it's healthy. year two through a three-year transition is what we laid out. commitment tos being both structural, the strategic, as well as cultural. we want to have an inclusive and everest workforce, something that makes people feel like they are getting a superpower. under armour is an empowering brand. the strength has to come from our team. we've got an incredible base to work from. any company wants to be better than they are. under armour is no different. but we are not starting from zero. we have an amazing leadership team and a lot of things will impress us as we set metrics to look forward.

how are we driving more women across leadership? we have tremendous leaders in our team right now. this isn't a starting from base zero. scarlet: let me ask a final question. there are things you can control and things you can't. look on of exposure does your apparel or footwear have with the tariffs in china? have you prepare for it? >> our sourcing strategy, we are in a good position across a balanced perspective. we need to be because we do business all over the world. we have 18% of our sourcing in china, but that's not something that started recently. that's been a five-year strategy to make sure we drive a sourcing strategy that's balanced. manus: that was under armour ceo and president speaking to scarlet fu on strategy. coming up, oil fell last week and is down almost a third since it's october high, but the

so-called trading god expects prices and demand to rebound. we bring our exclusive interview with him. that's next. this is bloomberg. ♪

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dubai.8:30 a.m. in you're looking at a live shot. it's a beautiful day. the dollar index closed up .25% on friday. lots of markets to contend with. christine burke is standing by to bring you the first word headlines. christine: theresa may has warned angela merkel and emmanuel macron the brexit deal is dead unless they compromise. the idea of a second referendum is now b