francine: malaysia versus goldman. the lender faces criminal charges relating to the 1mdb scandal. $1.7.could exceed no referendum rerun. theresa may's team pushes back against a second brexit vote. the fed is set to hike this week. slowing economies and volatile markets. ♪ francine: welcome to surveillance. i'm francine lacqua in london

and these are your markets. 600, .3%,n the stoxx we are also seeing volatility on the markets. we will see how we and the year. yield, 2.8 year nine. the dollar is edging lower after a slow week. .1324.ro-dollar, 1 asof down. will be watching retailers closely as the christmas season is upon us and that is when they do the bulk of their sales for this quarter. craigak to a u.s. senator gardner as threats of a u.s. government shutdown loom. before we go to all of that, let's get to first word news.

here is viviana. malaysia has filed criminal charges against units of goldman sachs for filing what it says are false statements relating to 1mdb sales. inaysia will seek fines excess of 2.7 billion dollars of allegedly misappropriated funds and $600 million in fees received for the deal. charges have also been filed against goldman employees and goldman says it will vigorously defend against the charges. has forged a deal with populist leaders that submit a revised budget deal to the european commission, leaders agreed on a new package to send to brussels following talks there ran late last night. italy will submit a deficit 2.0 4% of gdp, proposed last week by conte bank. president trump's shakeup of

white house staffing continues as the fight over the border wall continues. down.inke will step the u.s. president is said to be considering a possible replacement for wilbur ross ahead of possible government shutdown later this week leaving u.s. politicians on both sides of the i'll say it is up to president trump to resolve this. president trump should understand, there are not the votes for the wall in the house or senate. he is not going to get the wall in any form. protests have been taking place in budapest against the hungarian prime minister. thousands of demonstrators converging on headquarters of state television yesterday, demanding independence and a free press. police are using tear gas to keep people away after state officials recruit used a request

-- refused a request to go on air with demands. is said to be pushing the sun to call a shareholder meeting to discuss governance. has written to nissan to say last week's indictment create significant instability. the board is scheduled to meet later today. mario draghi has commented on the rise of populism, defending decades of european and monetary heegration, listing what sees as successes for the market and currency. everyone hasot benefited. lower prosperity in some countries was due to domestic policy choices and an incomplete monetary union. the challenges have become more global in nature and need to be tackled together, not alone. this is even more true for

europeans, both that they level of their nations and for the continent. >> global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is "bloomberg." francine: thanks. theresa may will attack supporters of the second referendum today as she explains why leaders rebuffed her last week. may accused tony blair of undermining her negotiations by pushing for a second vote. ubs and banks lombard. thank you both for joining us. where does this go? when are we going to have a vote and our markets going to be volatile until then? it is our expectation we will

not see a vote until january, until parliament returns. it is unlikely to happen in the next couple of days. it looks like further uncertainty. francine: what is your take? i think that is pretty much right. i think we are not going to get any vote before it reconvenes. orentially, mid-january onwards and i think it is likely we are going to go through multiple rounds of voting until we reach some sort of firm conclusion. be, it isis going to difficult to forecast at the current state. there is one line of thought and i understand it is difficult to predict. vote asap and it

gives her a little more time to negotiate with brussels and have a second vote. january, iss it to that playing with fire? dean: the longer we have run the clock down, there is a risk of an accident, meaning no deal. it is an accident because it is not my belief that is the will of parliament to see that happen. you are right. it does feel that if she is to get this through, it will take more than one vote and renegotiations and time is against it. francine: what is the chance of it being a mistake or no deal? i think it is far away from being the base case and the reason i say that is it is becoming apparent that parliament has no preference to see this happen. look atntarians will

ways to prevent no deal happening. , if mrs.ts to a delay may cannot be agreed. at this stage, no deal does not seem most likely. francine: what is the probability of a no deal and is that priced into the pound? vaseleios: well, i think it is low. droppedob -- significantly since we had that ruling that gives the u some leeway in good faith -- gives the e.u. some leeway in good faith to revoke article 50. a lot of doom is already in the price. is at multi-month lows which tells you that the hard brexit premium is in the price. a softer brexit

deal, whether we get up by march doubt we there is no are going to see a meaningful rally in sterling. if we go down the route of hard brexit, it becomes difficult to valuations because you do not have any concrete anchor. if we go down the road of no falling would see cable to 115 or lower. francine: thank you both. dean turner and vasileios gkionakis. fed, how much the could market volatility play into the decision? years since china opened. the slow down as policymakers set next years economic targets. we will discuss china, we will discuss trade. this is "bloomberg."

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economics, finance, politics, a beautiful view of st. paul's. the sun seems to be out in london. london.cine lacqua in let's get to the business flash. here is vivienne or tonto. viviana: gorgeous. sse has pulled the plug on the second-biggest steel to create the second-biggest utility provider. it says it is not in customers innogy. to merge with

the company says it is expected to be both property and cash flow positive. plunging after it cut its cell growth guidance on a significant deterioration. the clothing retailer cutting its sales outlook by 15%. shares and other online retailers are lower this morning as the gloom spreads to internet sellers. engineering company abb is to sell 80% of its power grid unit two had touchy at a deal valued at $11 billion, -- to at $11 at a deal valued billion. the unit makes energy systems and would leave abb focused on automatics.

that is your business flash. francine: it is the feds for a quake. big week.e -- fed's u.s. futures pointing positive today, stocks close up friday at their lows level since april. takeuch might jay powell market volatility into consideration when making their decision? pause itshe fed to double-barreled blitz of higher interest rates. this is an opinion piece in the wall street journal well worth reading. what do you expect the fed to do? it is not all looking rosy out fed may slowthe

down its hiking and the markets are trying to reprice everything. ok, if we look at what has happened over the past couple of months, we have seen down because of the jay powell comments being fairly close to neutral. are going toect we get a hike because they like to get these out of the way. in the press conference, there is going to be a reiteration that the fed does not have any intention to go into restrictive territory. theywould like to ensure maintain in the neutral area. our view is we will see three hikes next year. are in favor of a lower pace of tightening. if the fed would like to do that, one way would be to lower as wellan of the dots

as tweak the language where discusses the gradual rate increases. it will shift the market to expect an interest rate margin and it is stated pendency. francine: what is your data dependency that you're looking at? more risks to the u.s. economy but worldwide, it is not looking great. that is a fair observation in terms of recent sentiment in most countries have taken a hit. although we have growth slowing next year within our forecast to 3.6% at the global level, that is a pretty good outcome for the economy.

patch now andft that is likely to have an influence in the outlook for the rates. the underlying picture seems robust. when he writes an opinion piece saying the fed has blitz, is this an investor that worries that the fed have to normalize? dean: it is where our the fed relative to normal rates? for what it is worth, our view has changed and we have taken one fed hike out of our forecast for next year. two nextly expecting year and that will be a reflection of the softer patch we are seeing now. francine: this is a question we are asking which is what assets

are most likely to move if president trump's legal troubles worsen or improve? is there a proxy you look at? well, i think you look at the currency market. whenever we have had flaring up, political concerns about trump's position in the government, to what extent it is being threatened, the dollar has reacted. dollar, the at the dollar-yen in currency space. i suspect equities would not fare well if any political concerns regarding legal issues would be to flare up and we might have seen some small rally.

in bond space, that will be dictated by what the fed is doing. in terms of the market outlook, our expectation is this soft patch we are seeing will prove to be just a soft patch and looking forward, we are expecting markets can get through it. political noise will remain high and that is going to have an impact on sentiment. is that the fundamentals underlying the a prettyonomy point to decent outlook. francine: thank you both for joining us. gkionakis and dean turner stay with us. a shakeup at trump's white house for what could be a pivotal week in washington. this is "bloomberg." ♪

francine: this is bloomberg surveillance. welcome to a sunny london. i'm francine lacqua in london. a sunny but cold december morning. besident trump's seems to reset with political and legal setbacks. his former lord has promised to testify to congress and say -- his former lawyer has promised to testify to congress and say the president trump ordered hush money to two women. is stephaniew

baker who has been following the administration from the beginning. what is the latest in the investigation? weekendarned over the that mueller has requested an after trumpth trump had responded to a set of .uestions rudy giuliani appeared saying over my dead body. it looks like there is a standoff over whether or not trump will sit down with mueller. there has been no subpoena issue. in the wake of michael sentencing, we have got months until he goes into prison. there is a chance he will testify before congress.

there is more we could learn from there. francine: how likely is it we will see a government shutdown? it is looking likely, there is a standoff, no plan to avert a shutdown. due to vote on anything until wednesday which does not give them much time to come to an agreement. funding insisting on for her is wall. -- for his wall. there is not much support for that plan. $1.3emocrats have offered billion for border security, not for a wall. both sides seem to be digging in their heels. this has offered to own shutdown, saying he is not going to give up and less he gets his border wall -- unless he gets

his border while funding. i do not see how they're going to come to an agreement. francine: there is a lot to talk about. we will get back to stephanie to talk about some of the changes in the administration. up next, malaysia versus goldman. finesvernment will seek related to the 1mdb scandal. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." turning now to one of those top stories.

malaysia has filed criminal charges against units of goldman sachs involving what it says were soft the statements. goldman says it will vigorously defend against the charges. how bad is the situation because of these criminal charges? become a real scandal for goldman because it is also the first criminal charges the bank has ever received in relation to an mdb. this time, it is against the institution itself. goldman doesn't really have a big presence in malaysia. that is not what's at stake. in a wider picture, it's the global reputation of the bank. francine: how many people are implicated? we seem to understand that malaysia is seeking fines in excess of $3.3 billion. that seems huge. >> the number of people

implicated, there were quite a few dozen implicated in malaysia. we know thegoldman, , one partner has been arrested and one partner has put in leave a goldman. goldman has said these are the actions of a few rogue employees. now that malaysia is going after the bank itself, it will have to defend itself as an institution. francine: thank you so much. let's get straight to the bloomberg first word news. iana: the italian prime minister has forged a deal with populist leaders to submit a revised budget proposal to the european commission.

leaders agreed on a package to send you brussels following talks that ran late last night. will submit a deficit of 2.4% of gdp. shakeup ofrump's white house staffing continues. ryan zinke he is to step down. saying thatsident he is considering a possible replacement for wilbur ross. u.s. politicians of both sides of the political aisle say it is up to president trump to resolve this issue. >> president trump should understand there are not the votes for the wall in the house or the senate. he is not going to get the wall in any form. viviana: theresa may will attack supporters of a second brexit

referendum us explains to parliament white eu leaders rebuffed her of the brussels mls week. -- last week. >> supposing we had another referendum and the remain sign won by 52-48. let me tell you that if there is another referendum, which i don't think there will be, people like me will be immediately demanding it is best-of-three. viviana: 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. china's efforts to cut the burden of solvent companies has kicked into high gear.

a china's top planning body has called on local officials to help clean up the debt. let's keep the conversation on china. and looking at the concerns over china. we have talked about the mountain of debt for many years. bankruptcy now surging with a call to recall zombie companies. is it getting worse? >> the debt question has been lingering for some time. when it comes to managing the process, it is well within the capabilities of the chinese authorities to slow the impact on the economy. we can't escape from the fact that this is all part of the ongoing rebalancing we are seeing in china anyway. it is going to continue for a number of years. , as they stimulate domestically is a that situation get worse? >> that is the interesting

question, have you contract the amount of debt in the economy without solution inc. monetary policy? we do believe it does have an impact on chinese growth. we expect growth in china to slow next year. we have also got to consider what is going on in terms of the trade front, how long that lasts and whether it escalates from your. 6% growth in a global context is still a pretty good outcome. they are still a pretty good contributor to the global economic growth story. it must have huge impact on a lot of emerging markets that relied on china's generosity in the past. dean: indeed. a lot on the u.s.-china relationship. time is a big influence on the wider region.

when we are looking at e.m. , they are pretty uninspiring for next year. if you look at the year ahead, what are the three main topics you're looking for? that we havest is got to get used to a world where global growth is going to give up that weaker than what we have been used to. to around 3.6% next year, that is a bit of a slowdown. the second thing we have to be aware of is what is happening to the monetary policy backdrop. there is a lot of focus on rates at the moment. let's not forget what is happening in qb space. 2019 will be the first time in nearly a decade that central banks are withdrawing money from the global economy. francine: we focus so much on the fed maybe not tightening more. a function ofalso

the fact that central bankers have a bit more confidence in the strength of the global economy right now. things recently would suggest that we err on the side of caution in the short-term. ultimately, central bankers will continue this path of centralization. that is a reflection of the confidence that the recovery is sustainable. francine: buyer beware if you're looking to buy in london. brexit is an the only thing to watch in the housing market. same thing if you are selling. we will discuss that next. this is bloomberg. plus, we will also look at the retail sector. ♪

francine: theresa may have pushed back against the idea of holding a second brexit referendum. this comes after eu leaders failed to find a way to make her deal more attractive to. leaders. the prime minister will give a statement to parliament today where she will basically discuss why she couldn't renegotiate with the eu, why she failed to get assurances she needed on her deal. is there any way she can get this agreement for parliament? >> thank you for having me on. the discussions are continuing. they need to come to a conclusion. parliament was anticipated not to back the deal in the form

that it had reached in the middle of last week. she is trying to make some changes to that. it is clearly important that that is brought to a conclusion soon and is put before parliament because it seems to grasp the need to nettle and set out what parliament is willing to endorse. francine: if she can't pass or withdrawal agreement, is there a case to be made that we need a second referendum? greg: one of the reasons i think a deal is important and business in the pay and internationally -- u.k. and internationally has backed the deal she has negotiated is because it brings to an end the uncertainty that has been hanging over the british economy for at least the last two years. the downside of a second referendum is that it would prolong that even further.

i hope that parliament will be able to endorse a deal. it needs to be a good deal. no deal would be a disaster. whether it is the prime minister's deal or if parliament is not going to approve that, parliament should set out what it would approve. francine: this is i guess a catch-22. it is unclear to me whether you would completely back away from a second referendum where this is still a possibility. at this is not the deal that gets through, what is the way forward? greg: the prime minister's deal is still the best and surest way to be able to leave the european union on the 20th of march that allows us to continue to have an effective trading relationship. i have supported it, businesses supported. i think that is something i hope my colleagues will back.

i they were not to, parliament has a responsibility to look at what alternatives are there, it may be in so doing that they will conclude that while it is easy to be a critic of the steel, the alternatives -- this deal, the alternatives are not without their problems and faults. i think there is a prospect for an agreement being released. mpscine: 117 of her own voted against her. is it a 50% -- 15% chance that the deal goes through or smaller? greg: at the moment, what you have is a proposal. many people have adopted critical positions in of said they are not going to support. i think one of the advantages in parliament, acting with

responsibility and seriousness and examining, what are the practical alternatives, is that i think it would reveal that what is being proposed and what has been negotiated, actually fiars a lot more strong -- fares a lot more strongly than some of the alternatives. for parliament to change its demeanor from being a body of critics to being participants, i think is a change that would be desirable, and that i want to play my part in bringing about. francine: you have also announced a package of workers rights today. how do you make sure this is enforced? does the body that you want to put in place have enough teeth to crackdown on rogue employers, and how can you ensure that this isn't reversed when brexit happens? greg: when of the strong parts

of britain's reputation globally, it seems to me is being a place of high standards. whether that is for investors, where they can invest with confidence or in the workplace. with youonomy changes, to make sure those changes -- standards keep pace and go beyond many of the basic standards that the european union requires. what we are setting out today on enforcement is that we are proposing that we should have a labor market enforcement body that can make sure, not just a good employers and vast majority of employers in britain are good, that we have seen reports of a very small minority of employers who do a disservice to whors in their sectors, abuse the statutory rights that we should be provided to their workforce. a new body, matched with the

teeth to enforce it, we are quadrupling the penalties that are available for the breach of employment regulations, that we should upgrade that level of protection as well as holding to the british model that matthew taylor, the author of the report described as being so successful in generating such high levels of employment in this country. francine: what do you think is the probability of the u.k. leaving the eu without a deal? if it does, are these well-intentions put in place, is there a danger that they go down the drain? have the commitments we made on workers rights are being introduced today. they are part of britain's long-standing tradition of being a place of high standards. when it comes to no deal, my , is i think it would be a

disaster for britain. i think it wouldn't destroy ourfoundations of much of prosperity that comes increasingly in recent years from advanced many fracturing and services that are allied to that. overwhelming is an view in parliament that no deal is not something that we should accept. that is why, going back to the earlier part of our conversation, i think it is not born for parliament to a certain and require a deal. francine: one final question, should in pews get a vote -- mps get a vote? greg: when it comes to the deal that the prime minister has proposed, it is the policy of the government to be supported officially. if it came to a discussion of

alternatives, something as important as this, is a most members of parliament would regard the responsibility is elected representatives to put the national interest first. i'm not sure this is such a binary issue. i think in practice, this is going to be a vote in which everyone votes according to their honest assessment. yes.ine: that feels like a we will get you back in the studio to discuss it at length. thank you so much for making the time to speak to bloomberg. brokers have been quick to blame the uncertainty around brexit for the slump in london's property prices. if you look beneath the surface, there are a number of factors declines are matter. -- no matter.

thank you so much for coming on. when you look at the headwinds, there are quite a many headwinds despite brexit or on top of brexit. neil: london is caught in a global volatility at the moment. money being moved overseas has really affected sales here. that has been the main thing keeping house prices steady at the moment, new-home sales coming through. secondly, there is a volatility around share prices, in particularly in the tech sector. is what you have an effect on east london houses next year. people have been using massive gains in order to be able to afford a home when faces like facebook and amazon, etc. have fallen into takes around the middle of the year. happens, in prime central london? neil: the 50 year of a downturn

now. so far, there has been no sign that things will take off. the danger is people may be standing on the sidelines wondering whether the pound will fall harder. we have an example today of a house that was 125 million pounds,, repossessed by the bank and sold for 15 million pounds to a buyer. discounts of 17.5%. francine: thank you so much. it is a brilliant article. i suggest everyone goes to read it. up next, retail apocalypse. we will get today's biggest movers, next. this is bloomberg. ♪

francine: this is "bloomberg surveillance." what it stated bloomberg business flash. utility lsc has pulled the plug on the uk's second-biggest energy provider saying it is not of the best interest of the country to merge its retail unit with that of energies and power. they will now focus on other ways to separate the retail unit. the company says this is expected to be both profitable and cash flow positive this financial year. abb to sell 80% of its power grids unit in a deal valuing the entire business at $11 billion. abb saying it will return a billion dollars to shareholders via buyback.

that is the bloomberg business flash. francine: thank you so much. let's get straight to the biggest market movers. here is annmarie. annmarie: today is all about retail. and started this morning with asos, now down 40%. looking at some 15%. quite a big gap. they are citing significant deterioration in november. a disaster start and it hasn't just been asos. next is down some 3%. zalandose down 4%. retailers are really what is weighing down the market today.

annmarie with the very latest on your markets. we continue in the next hour. tom keene joins me out of new york. front of a government shutdown looms. -- threats of a government shutdown loom. i'm looking at a little bit of volatility. a lot of talk about what the fed will do in 2019. i'm also looking at crude, 51.16. a full roundup of your made market moves. this is bloomberg. ♪

malaysia francine: --

versus goldman. the u.s. lender faces criminal charges over statements related to the scandal. and otherse banks could exceed $2.7 billion. theresa may's team pushes back against supports of awarding of a second brexit vote. she faces parliament later. this is "bloomberg surveillance." tom keene back from his travels. we are also getting eurozone inflation. this is significant because we did hear that they would be revising them down. this is the case. november inflation down. matter howms that no much mario draghi tries, it is difficult to see that kind of inflation staying in place and really gripping in the eurozone. tom: today, it is a statement

-- data dependency that term and powell has. we will look at this inflation and your markets shortly. let's get straight to the bloomberg business. news theresa may is going on the attack against supporters of a second. brexit referendum she will tell parliament today that it would be a catastrophic breach of trust. she will also explain my turnedn union leaders back her attempts to make the brexit deal more attractive. the italian prime minister has deal. deal -- budget to lower the deficit target a little more than 2%. the deputy prime minister says there will be no change to two of the populist campaign

promises. top u.s. senate democrats is a it is now up to president decide whether there is a partial government shutdown this week. he says he will not sign a budget deal to give a number of government agencies open if it doesn't include $5 billion for the border while in mexico. mexico.in judge in texas ruling that the affordable care act was unconstitutional. that decision will need to survive the higher court to have any impact. the white house has confirmed that it will stay in place during the appeals process. 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. tom: let's do a data check. right now, it is a quiet market. futures flat, 10 year flat.

euro, there it is under a 113 level. oil not doing much. nothing going on. francine: with you have a little bit of breaking news out of standard chartered. we have to keep a very close eye on this, it may have a knock on effect on some of their biggest rivals. i'm looking at stocks. pretty much mixed. treasury yields are pretty much study of around 2.9%. pounds.ing at theresa may rolling out the fact that there is a second referendum. markets don't seem to be 100% convinced, she will speak to parliament of that other later and will hopefully have a little bit more news on the timing of that vote to parliament. tom: this is sort of after the trip. it really comes back to the heart of the economic matter.

i've centered on the irish question and the troubles. those worries. here is u.k. gdp. that is not brexit in the middle, that is a 20 year span. here is the crisis we always this regression of slower u.k. growth, i would suggest is the heart and soul of every debate i saw, whether it was the future of britain, the backstop in ireland. it is simply weaker, economic growth. francine: well done. christmas comes early if you are a partner of tom keene. economic data is what we look at day in and day out. if you look at economic data being strong, financial conditions have tightened and we see similar conditions not stopping the fed from hiking rates in march. thank you to hillary for sending the chart to me. very good.

a lot going on today. francine: it is a big week for global central banks. economists forecast that the fmc will order another hike this week before slowing the pace of increases next year amid rising risks to the american economy. a billionaire investor urged the fed to stop it double barrel blitz. writing, we believe the u.s. economy can sustain strong performance next year. it can ill afford a major policy error even from the fed or the rest of the administration. thank you both for joining us. let me start off with you. overall, of a right that we can't afford a policy mistake, or if he just worried about what kind of markets he will be left with? >> i think it is a situation

where the markets are certainly looking for the inflection points and fed policy rates. if you look at the forward calendar spreads of debt 2018 to 2019. the moves are helping the case for a higher euro.in terms of what you have just highlighted in terms of financial conditions, i think that is a very key and put to where the fed is at the moment. powell is certainly starting to emphasize the data dependency. we still think it is going to be 4 rate hike next year, though we do think there is significant risk that there will be less rather than more. francine: what is your take on what the fed does next and is there a concern that they will hike too many times next year? concern.s our we believe they will hike this week. if they are really data dependent and listen to the signals coming from the financial market, they will stay positive for maybe

one or two quarters and see how the data developed. see the fede to probably step back a little bit and see how the economy evolves with of the current interest rate level. the way we see it, we have a high debt level in this society. i think that should be more prudent and not too aggressive on the rate hike. may be more flexible and deal with asset price inflation's instead of broad-based interest rate hikes. i think that is probably a better approach going into 2019. op-ed, whatat the everyone misses in the punchline is this is not about stanley, it is about kevin warsh. how much dissent is out there for the path that this set is going to take? greenspan really didn't allow dissent. i get that.we are not like the bank of england .

how much dissent is there out there into wednesday? kamal: our client base is a cross section of opinions. believeeeing those who the isn index, the late indicators, the animal spirits within the u.s. economy are still suggestive of a fed that to continue to hike. for those who could share the concerns that they have been thatssing, also the fact financial conditions are tightening. i think the split will be apparent in the fed minutes.we are expecting a lowering of those dot plots the densely to 2 next year. kevin warsh is someone who came to the fed out of morgan stanley. a lot of people were like, maybe not. all of a sudden, the guy got

major credibility. is this about positing -- sing about the financial system or greater dual mandate economics? kamal: i would say it is probably the latter. there are two things the fed has bydo, it has defined policy interest rates or balance sheet. memories still run deep from 2007 two 2008 when the market was handing into able. concernsthere are some that the fed needs to continue to signal that policy tightening remains. it can also signal and potentially strengthen its forward guidance on the balance sheets. i think if you look at the ecb as well, as it is highlighted.inflation is weak

, growth is slowing. policy is going to be tightening into next year.it doesn't really conform with the mandate that ecb has stability. what would a policy mistake actually look like on asset classes? a classic policy mistake would be, in our opinion to hike to aggressively and 2019 because the discounts future growth. that is what i am saying that i think it would be much more prudent to hold back on rising interest rates. the situation today is quite different from the situation in 2007. the amount of dollars floating around his massive. i know the fed does it relate to leave negative feedback from the global economy into the u.s. -- ify, but i think they

a tightened too much, they will slow down growth considerably in emerging markets. i think it is naive to not believe that there are negative bad loops into the u.s. economy. tom: very interesting as well. warsh, -- we-- will continue with kamal and peter. coming up, we are thrilled to bring you -- this is the interview of the day, if you are wondering about the mysteries of technology and overlay on the economy. paul is with us. we will do that in the 8:00 our. -- hour. from london and new york, please stay with us. this is bloomberg. ♪

viviana: this is "bloomberg surveillance." the retail boom in the u.k. is spreading online. plungingares of asos the most in 4.5 years, cutting its sales guidance. the news is dragging down shares of other u.k. retailers such as marks & spencer's. for europeanday miners. bhp announced a special dividend that will be paid next month.

malaysia has filed criminal charges against goldman sachs links to the the troubled state investment fund.authorities say goldman misled investors when the bank bondroceeds from one mbd sale it arranged would be misappropriated. the firm could face fines well in excess of $2.7 billion. goldman says the charges are misdirected. that is the bloomberg business flash. tom: thank you so much. with us is kamal and peter. within the bond shall of kevin warsh's sa in the wall street journal, they go global. powell, central banker to the world and did china -- to china? kamal: i don't big you can never break the link between what the fed does and the rest of the world. there is a backdrop of the

slowing global economy. china's numbers last week were week, european data was also week. you also have the political headwinds of trade wars. i don't think any central bank can be completely insular to international events. if the fed think there is going to be negative feedback of the weakening china into the u.s. economy. obviously, that would be one of the factors that the fed board would have to take into account. functions thatn chairman powell is dealing with now, normal in textbook reaction functions, or are they making it up as they go? : peter i think the fed is getting to the stage of the cycle where we know the terminal rates a neutral rates are approaching. we have been told that for a number of months now.

. i don't think it is logical that the fed is now looking at what the next steps are other grounds to take things a little bit more slowly, to cause, potentially. i don't think we're in that mindset yet. you have the overland trade wars. i think this is relatively a textbook reaction from powell. court pc is still in and around 2%. the fed can be patient if it really wants to be. francine: what does this mean for dollar dynamics and 2019? peter: the way we view it is --t the world can of afford a stronger dollar. we think we are overextended now in the u.s. dollar and could see a weaker dollar going forward.

it would help a lot if china pushes through with more stimulus to help support their economy. , if that the rebound happens, it would ease some of that debt pushed into the u.s. dollar. because china is so much connected trade wise with europe as well, it would pull europe a little bit out of the current mud it is stuck in. the dollar and credit flow of the easier. tohink that is the best way be positioned going into 2019. francine: very quickly, in terms of equities, what is the one thing you want to be invested in at the start of 2019? peter: it is a very difficult year. the risk of a policy mistake as high. i think it can be quite binary next year. we are leaning towards a positive year and they are basing it on china have a more

ammunition to stimulate the economy. it could very well come this week. an announcement around the new year or early next year. that happens in some of the most cyclical economies. we are betting and setting up decisions up for that rebound. i want to play devil's advocate here. we are quite worried to say the least that the credit transmission is broken in china. that potentially is something that could, maybe china is going to be more conventional steps from previous stimulus and pushes we have seen simply because the banks are probably getting to the limit and some of their abilities of fixed in credit. francine: thank you so much. rose, foreigneon affairs magazine editor. we will talk geopolitics.

this is bloomberg. ♪

>> good luck. after what they did to flynn and no sentence for him, 14 days of for papadopoulos, i did better on traffic violations. they are a joke. over my dead body, but i could be dead. tom: after brexit and brussels in london, it's good to come

home to a politically stable united states of america. joining us is stephanie baker. chris wallace talking to mr. giuliani. i guess it is about a shutdown, but if we can look at the expertise of law and your considerable abilities there. i'm going to give you an open question. what are you looking for this week in the legal derby of the president of the united states? senses, youn some have to put mueller in his investigation aside. very hard to predict what his next move is. we are the sentencing of michael flynn this week. we learned that he is still try to get a sit-down interview with the president, which we saw a rudy giuliani batting back. a fig has to focus on the fact that we are facing the prospect of a government shutdown on friday with no plan b on the table. we waiting for one side to that down. they don't seem to be in the mood for a compromise.

i think we are getting a window on partisan battles we will see play out next year. tom: i don't want to catch you blind here. if we have a government shutdown, is mr. mueller shutdown in the process and staffing and paying of people in his investigation? stephanie: that is a really good question because the shutdown will affect about a quarter of the government, i think a third of federal employees. it will affect the some department of justice employees. it is supposed to only affect nonessential employees. whether or not mueller and his team are affected is totally unclear. the fact that it is happening just before christmas i think does make the impact of a shutdown less harmful. many people were planning to take that time off anyway. and hisow that mueller

team seem to be working 20 47. i'm not sure at this point. tom: thank you so much. that shutdown calendar item is friday as well. much more on that from kevin cirilli in the next hour as well. much more to talk about. the wall street journal really going after the fed. how about a former secretary of health and human services? dr. tom price in the 2:00 hour. york, this and new is bloomberg. ♪

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"all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. unstopand it's strengthenedting place, the by xfi pods,gateway. which plug in to extend the wifi even farther, past anything that stands in its way. ...well almost anything. leave no room behind with xfi pods. simple. easy. awesome. click or visit a retail store today. francine: this is bloomberg surveillance. tom and francine from london and new york where it let's get to first word news. has said itresa may would be a crowd a strop it

breach of trust to hold a second referendum. she is accusing those of campaigning for another vote of undermining negotiations. may will explain why leaders rejected her attempts to make the leader more attractive to lawmakers. making it clear the president will not sit down to answer questions from robert mueller. giuliani telling fox news that such an interview would take place over my dead body. president trump's submitting written answers to mueller's questions last month. a senate committee will release a report this week of the first study of russian efforts to help elect donald trump. studied millions of social media post. it relies on data provided by companies such as facebook and google. a new poll shows the number of americans. the economy will get worse is the highest in five years. according to a survey, 33% say

the economy will decline, up from 20% in january. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is "bloomberg." francine: thank you. theresa may will attack supporters of a second brexit referendum today as she explains why leaders rebuffed her last week. of accused tony blair undermining her negotiations by pushing for a second vote and said it would be a catastrophic breach of trust. ross g us now is emma thomas and kamal sharma. thank you for joining us. what do we know about the second referendum? is it never going to happen? theresa may used to stonewall when she was asked about a second referendum.

what we're saying in recent weeks is she is starting to is ae more with why it terrible idea and the background is that we know that a couple of people say it is the only way out. rudd is seenend, as a potential rival to make, she wrote an article in which she made clear that the deal is dead. she said we have got to reach out across parties and find a compromise, which was a sign of just how gridlocked the situation is. this loyal minister is saying that may's deal is dead. the second referendum, the taboo has been broken. even a few months ago, weeks ago, is something that people

are talking about within the cabinet. denied theybour were plotting a second referendum. francine: is there anything that theresa may can offer to mps to get the vote through? we do not know when people will take place. it looks like she could have a couple of weeks to move things along. emma: she did not really get much from brussels. wereiday, the communique tougher than we had been expecting, the nice bit was deleted. anything thatt will placate mps because what they hate is the backstop and the backstop is there to stay. what next? one of the things she was saying was that she was selling it as a partial victory and saying talks will continue. friday,t we learned on

is that magog merkel -- got acron in a m room and said if you do not give me something new, i cannot go further. francine: it is not a negotiation anymore. that thehe likelihood u.k. exits without a deal? kamal: zero. i am close to certain we will end up with a second referendum and maizeexit predicaments are the results of incompetence -- are not the results of incompetence strategy but the results of brexit. they are undeliverable by the and the union negotiating partner that has put out its negotiating position. we do not know what we want and

what we do want we cannot get. nothing is going to change that. one way or the other, we will have no brexit in the future. tom: wonderful to speak to you from new york. one thing i learned in my trip to london was the hard work of our brexit team, it is a days a week. i was reading the irish times, trying to figure out the irish thought thisi essay was on on the history that you know. thatis a morning must-read lloyd george had conjured up the .rish question out of existence john major spoke of the ignorance of the brexiteers and their cheerleaders about the

border. how peopleerstruck do not want to talk about the backstop. do i have that right? emma: absolutely. brexiteers do not want the backstop in the deal and the backstop,because the what was meant to be a solution, has become a solution that affects the u.k. that is why they hated because in order to avoid a border between northern ireland and great britain, the solution was to put the whole u.k. in that. the game theory? what is the choice conservatives have on the backstop? emma: that is a good question, isn't it? want the standard free , that deal is

available but only available to great britain, not northern ireland because of the commitments the u.k. made. it is hard to imagine a solution and that is why lots of solutions rely on technology yet to be invented. francine: what is your take on what shape brexit takes at this point? sony: the key point that this will take place before the 23rd of january, the press this talking about alternatives rather than may trying to sell the deal. about the ember red commentary. we are constructive on sterling. we think the path leads us to some kind of softer brexit and the 21st will be interesting to see where parliament takes the debate. oslo, there is a view down the continent of europe,

how did the continent duet brussels last week? they stood by ireland, they stood united, behind every single thing they have repeated from the start. oft is this idea circulating a norway plus option might be on the table. i live in norway and this is not even a stable option, even in norway, which is a country with no grand colonial history, the thation within the eea is norway has lost sovereignty. they think it is worthwhile and even here, it is likely the labor unions are going to come out next year or the year after and say we need to renegotiate the deal. even in a tiny country such as norway, the inferior notion of a keeps all thech

obligations that the you member has to have without a seat at the table, that is a nonstarter for the united kingdom. i do not think any sort of softer option of brexit is a realistic one. the only arithmetic that works is one where we stay in the union because every other option is either coming up against the irish question or against the notion of loss of sovereignty. francine: thank you so much for joining us. as theresavoted and may says, the second referendum would be a breach of trust. thank you. i am glad tom figured out how much you work hard. kamal sharma stays with us. in the last few minutes, we had eight tweet from the u.k. member of parliament tweeting

parliament has been evacuated after a fire alarm. we will keep you updated. coming up, theresa may will update the parliament on brexit at 10:30 a.m. we will following that closely. -- we will be following that closely. this is "bloomberg." ♪

francine: this is bloomberg surveillance. you are hearing from the leadership at nissan, giving a press briefing, after the board

leaving the carmaker without a top official absent enters -- as it enters the fifth week, escalating tensions with partner renault. thechief executive saying board will continue to talk about choosing the next chairman. they have established a special committee for improving governance and they are ready to brief renault. the tensions are simmering. the holidays, imagining mr. ghosn still incarcerated, is the right word, is something. let us continue on with the newsday which moves to wednesday with the fed meeting. let me bring up the druckenmiller essay in the wall street journal. no ocean is large enough to insulate the u.s. economy from slowdowns. the leadership team faces the most difficult challenge since chairman bernanke confronted

2007. can is a time for choosing the u.s. economy can sustain strong performance next year but it can ill afford a major policy error. the dollar.dound on kamal sharma with us from bank of america. what is your dollar call right now and how was that linked to the choices of chairman powell? kamal: we think the dollar will come under pressure in 2019. looks morerm outlook challenging for currencies to appreciate. has priced in quite a significant amount of tightening. the market is looking for a dovish powell. risksare asymmetric building. is that enough to end the distress of the dollar? probably not. some a acceleration

of free patch ration flows by corporate america. we expect that -- some acceleration of repatriation flows by corporate america. we expect that to continue. not necessarily u.s. policy, but it is about what other central banks start to do and we expect given the ecb has ended qe, to start firming up its forward guidance on the rate hike. tom: let me look at the dollar. this is the dollar index, a good set of mathematics. it is an elegant chart with a set of high or low's trying to get through this new dollar strength. look at the dollar, i am sorry, it is the emerging-market headache. wasought the debate over em remarkable. what is your call on em

currencies? kamal: we are constructive into next year. is of the fed starts to signal a pause should be good for the global economy. everything hinges on what china does for the asian currencies. the expected recovery in china has not materialized as we had anticipated. 2019ink that happens into and should that roadmap prevail, that should set up a better backdrop for emerging-market currencies. francine: what currencies do you like? korea.we have liked latin america has been something we have been focusing on because of the reform measures. at more ofre looking a contrarian view. we think the yuan should

appreciate. francine: what is the one thing you want to stay away from? is there a currency that looks overbought? the swiss franc remains overvalued. it provides the ideal risk of hedge for european centric woes. if we do see of alleviation of seey -- if we do alleviation of italy, china-u.s., the swiss franc could come under pressure. they have made it clear they are not moving interest rates. they have lowered their interest rate forecast. offersk the swiss franc value for the downside. tom: very good. kamal sharma with us from bank of america. to drive forward at this conversation, stanley , he weighs in

tomorrow. this is "bloomberg." ♪

viviana: this is bloomberg

surveillance. i'm viviana hurtado. standard chartered has a deal to separate its private equity unit and for bill winters to exit. the majority of its private equity portfolio will be transferred to london intermediate capital group. jaguar land rover is not commenting on a report it will cut thousands of jobs as part of based turnaround -- as part of a turnaround strategy. the carmaker will outline the measures next month. jaguar land rover is owned by india. asianors say of emerging stocks will be the best-performing asset class next year. that is according to a new poll from citigroup. citigroup says preference make sense if you anticipate a weaker dollar. the asian stocks beat out u.s. equities as the most favored market. that is the business flash. francine: thank you. filed criminal

charges against units of goldman sachs involved in what it said was false statements made in sales.n to 1mdb bond goldman sachs said it will defend against charges. the bank shares are down in premarket trading. joining us now is the kuala lumpur bureau chief. how bad can the charges be? the amount that the fines can amount to our large. the fines are large but there is also the risk of reputational damage to goldman. we spoke to one lawyer who said the risk is to the financial standing of goldman as an institution in the eyes of regulators worldwide. the in malaysia has been hard. he said goldman has fallen short of any standard. he has gone against goldman in terms of the standards and the compliance and regulatory

compliance. outcine: when do we find what goldman sachs will have to pay out. could this go on forever? yudith: there is no set timeline. it is going to go on a long time. there are a lot of hurdles ahead , furthermore, how is malaysia going to bring goldman to the courts. these are going to play out in malaysia. all of these things are up in the air. lloydis the question of blankfein, whether they will be brought to malaysia to face charges. malaysia, within goldman sachs, within singapore and hong kong, if all of this works out, can goldman sachs leave malaysia?

why do they need malaysia? honestly, goldman's presence is limited. know that they have some asset management operations here. they do not have much presence in malaysia. that is not so much of a risk. now it iss that becoming a global story and the scandal has spread. it is not just a malaysia story and it is a risk to the institution. tom: thank you so much. we have got so much more coming up, the druckenmiller bombshell in "the wall street journal." it is that time of month to synthesize international relations. we do that with gideon rose of foreign affairs. articles about

where we are going, who will run the world. gideon rose does not have an answer but boy, he will make you think. kevin cirilli, who will run the government after the shutdown friday? from london and a beautiful new , the infrastructure of the third world when you hit the runway at jfk. what a shock. churning, indeterminate this morning. this is "bloomberg." ♪

tom: this morning, a former fed governor lectures chairman powell.

this wednesday, just say no to a rate increase. beware a policy error. onto wednesday, the chairman is data dependent. draghi's say ignore disinflation. college shutdown friday. will president -- call it shutdown friday. will president trump be the grinch who stole christmas? our world headquarters in new york, francine lacqua in london. from our world headquarters in your, francine lacqua in london. how was theresa may's weekend? francine: she is getting ready for her speech to parliament later on. are expecting her to say a second referendum is no good because it will break the trust. there, i learned, i could barely keep up with

brexit. francine: that is not true. tom: i am trying. thank you for your help. in new york city, here is viviana hurtado. oniana: theresa may is going the attack against supporters of a second preference -- brexit referendum. she will tell parliament it will be a breach of trust. may will explain why european leaders turn back her attempts to make the deal more attractive. a budgetconte has made deal with populist leaders aimed at averting a budget crisis. it lowers the deficit target to just over 2%. matteo salvini says there will be no change to populist campaign promises, income for the poor and a lower retirement age. top u.s. senate democrats say it is up to president trump to say whether there is a partial government shutdown this week. he says he will not sign a budget deal needed to keep government agencies open if it

if it does not include $5 billion for a wall on the u.s.-mexico border. chuck schumer says there are not enough votes in either house of congress. a federal judge's ruling striking down obamacare will not have an impact on health care coverage for now. a judge in texas ruling the affordable care act was unconstitutional but that decision will need to survive reviews by higher courts to have impact. obamacare will stay in place during the appeals process. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is "bloomberg." tom: thank you. quiet markets and before the wednesday fed meeting, why not? flat equities, yield curve flat. do you like this? oil saves the day. i am watching sterling.

what do you have? francine: a little less flat because stocks are mixed. the stoxx 600 down. benchmark yields are flat. and of course looking at pound, as theresa prepares to speak to parliament. os, a big retailer popular amongst the younger generation, down 40%. the people are calling it the retail apocalypse asked asos cut itsfter guidance. tom: let us go to the bloomberg. iran the gauntlet trying to get through the stores. the gauntlet trying to get through the stores. trying to nudge gdp higher, 20 years of gdp. and theit is britain

irish question leading onto weaker economic growth. what do you have. it is financial conditions weakening, economic data has been ok. at financial conditions, they have tightened and similar conditions did not stop the fed from hiking. tom: very good. it is that time of year where i do my lecture, what do you put under the stocking of every smart mouth college twerp. you take the price of a martini and you buy a print subscription to the most important magazine in international relations. theon rose brought us international relations of the president of the united states, of france, of germany, and of china. who will run the world? gideon rose joins us.

congratulations on a strong year. in what irap up noticed is senator warren is speaking about foreign relations. she is a democratic candidate. very democratic foreign affairs policy on will run the world? nobody knows what post from foreign policy will be like. you have contenders trying to make their case while not being so specific they will annoy other constituencies. everyone is feeling this out. senator warren has her manifesto in her issue and what she is , yes, io send with that am progressive, i believe i enough in the broad consensus of what american foreign-policy has

been that i want to go back to some democratic liberal internationalism although in a less militarized way. tom: we have got the eagle over here. a dragon.at is that is the backdrop. tom: this is the dragon of china. any smarter on chinese foreign-policy than the last time we talked to you? gideon: i may not be but anybody who reads our package will be. the package is a look at the declining challenger -- declining champion u.s. order and say, what is going to be the future of international order? is it going to be a continuation of the resurgence of the u.s. dominated order that we have seen the world strive with during both the cold war and post-cold war or is that ending and will china dominate nachos

-- not justarrival the pacific arrival the u.s. for global leadership? notu.s. can take it back to really or china has locked in its success, get used to it. they are going to dominate. not all of us can be right. be fascinating to watch which arguments will prove correct down the road. tomcine: i am disappointed did not start to sing to a beyonce song with the question who will run the world. is it going to be an arms race, space race, different factions? gideon: to a certain extent. , it madereading over me realize there is a lot in common. you guys spend your day providing information, trying to predict an imprecise future in

the markets. this is the international relations version. a lot of smart people with the best data trying to connect the dots so you can get purchase on what is going to happen in the next year. we are about as wrong and as right as the market agnostic aiders. the numbers give you guys an illusion that you can predict what is going to happen. we do not have that. you can look at the arguments. i the arguments that team usa is better than team beijing. by theconvinced arguments that team usa is better than team beijing. does present she only want to be seen as a reformer -- does president xi only want to be seen as a reformer? gideon: that is a great question. the answer is no.

one of the great realizations is the west has underestimated what china has accomplished and what the regime is managing to continue to do. he hass no question consolidated power and is trying to create a domestic system that will last and be a different kind of system than the one the united states wants to see. who will be able to make their system last? tom: gideon rose is here. wonderful effort by foreign affairs magazine. coming up, equity markets and the value, maybe there is a new value out there, to talk to gideon rose and christopher pause.i and the fed on ♪

viviana: this is bloomberg surveillance. let's get the business flash. the retail gloom spreading from bricks and mortar stores. shares of a sows plunging. sos plunging. the news is dragging down shares of other retailers such as marks & spencer. for europeanday miners, shares rising after bhp announced a special dividend to be paid next month. the stocks make up about 50% of the stoxx 600 basic resources index. malaysia has filed criminal charges against units of goldman sachs link to 1mdb. they said the bank misled

investors when the bank new proceeds from the bond sales it arranged would be misappropriated. the firm could face fines in excess of 2.7 billion dollars and the 600 million goldman received in fees. goldman says the charges are misdirected. deal to chartered has a separate its equity unit, ending a two year deal to exit that business. the private equity portfolio will be transferred to london intermediate capital group. that is the business flash. thank you. i guess we should do the markets with christopher grisanti. we have got to look to the fed meeting and the druckenmiller essay in the wall street journal. grisantis christopher and also with us is gideon rose on international relations. he is doing a lot of economics. let us look at the essay.

a former fed governor. this is something. i want to emphasize that. no ocean's large enough to inflate the u.s. economy from slowdowns abroad. the new fed leadership team for this is -- faces the most difficult challenge since ben bernanke confronted the shock. this is a time for choosing. canelieve the u.s. economy sustain performance next year but it can ill afford a policy error. clarida joined us and he said it is a solid economy. is that the backdrop for this meeting? christopher: i think it is. we are getting what we hoped for. tom: it is a real debate. christopher: it is but it is also a real recovery. we have got 10 year yields back to 3.75%. we are growing into where we ought to be. that is a frightening point.

the growth will not stop on a dime. much of this, whether it is druckenmiller, king on brexit, is what you featured in a couple of issues which is the inequality out there. the professors address that. iseon: what they talk about the difficulty in getting the public to understand basic economic concepts and how they should play out. are talks about how the case for free trade is difficult to make to the public if you do not have a lot o of economic training. they argue that the trump economic policies are supported by economic arguments that do not hold up when you give

them professional scrubbing. whenhallenges, what do do the public gets the final vote but they are not making choices that have wise consequences. thecine: when you look at world growth prospects and you think that the u.s. is on a better footing than certain economist, what worries you, is it china? christopher: you would have to have your head in the sand not to be worried about trade issues. whether the governments are going to play it wisely. we do not know. brexit is the unknown. knowing can predict the outcome. ,his move towards nationalism towards borders, towards tariffs is the most worrisome, more worrisome than interest rates. thecine: worrisome to extent where could plunge world gdp into a recession? christopher: china is the domino

we are worried about. plunge world gdp, one goes before the other. economy is more dependent on exports than the united states. if they start leaning toward a recession, we have a problem. tom: is the stock market cheap? shares enjoying buying after the correction? christopher: the pendulum swings between greed and fear. entire liferose's is fear. greed and fear is a pretty good summary of this administration. tom: where is it in the market? gideon: we are heading over to the fair side. christopher: the market is down 10%, half the stocks are down 20% or more. for the first time, goldman

sachs -- tom: are you buying shares? christopher: we are not but it is getting close. closer, you'rets getting to 90% or lower of tangible book value. tom: stock talk with chris grisanti, gideon rose. he is taking notes. we are going to come back. all in preparation for a discussion, a timely discussion with paul romer, talk to him about the technology overview that gideon had an entire issue on this year. we are going to get this good conversation. this is "bloomberg." ♪

francine: this is bloomberg surveillance. tom and francine from london and new york. attack may will supporters of a second brexit referendum as she explains why leaders rebuffed her at the summit last week. may accused tony blair of undermining her negotiations by pushing for a second vote, will say it will be a breach of trust. heh us, christopher present -- christopher grisanti and gideon rose. how is this going to play in the markets? do i have to have a buffer that we could see a no deal brexit

and asset classes could be under pressure? is thather: the problem there is no way to tell which way it is going to go. the cost of insurance is so high. opinion is that they no deal brexit does not happen and that there are too many forces forcing things towards a softer brexit. francine: what is your take? at the moment, there are about 12 options. watching the economic community wait on the fed meeting and try to predict what is owing to happen is familiar because that is what we do -- what is going to happen is familiar because that is what we do. we have to sit back and wait to see what the political leadership's will do and their choices that will affect us, whether it is brexit and american trade policy, it is not driven by logic, it is driven by

choices of political actors. tom: the dirty little secrets of foreign affairs folks, in the back, gideon rose has a million books you have got to read, beautiful rooms. andempire's new clothes one of the things i learned is this idea of north britain and west britain, the myth of scotland linkage, how fragile is that? oneon: when you put stresses systems that are unexpected, you see new cracks. what is happening with ireland is fascinating. theyises issues that thought were settled and when you try to unravel -- all the stuff shows that healthy lateraling gauge meant is more complicated than people think. -- healthy lateral engagement is

more complicated than people think. can you people say within your research that the good friday agreement is at risk if they screw this up? christopher: it would be hard to imagine that at risk. is in itshat ireland relation to the u.k. and europe is backed friends and center is something that i do not think was front and center in the discussions about brexit but is one more complication that has to be resolved. tom: what is the corporate aspect of ireland? is that true? stuff iser: the tax not as true with ireland being part of the e.u. the fascinating thing for those with irish background is that ireland is the economic

driver of those islands. tom: are you irish? christopher: have my mother is irish. me: can you get my -- get you two tickets? christopher: it is no longer as clear as it was. francine: let me break up this music revival. breaking news out of theresa may's office, denying there is a discipline that has broken down. we understand the vote in parliament will be happening in early january according to the spokesperson for theresa may. we will have more on brexit and your markets. this is "bloomberg." ♪ ♪ there's no place like home ♪

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

♪ unstopand it's strengthenedting place, the by xfi pods,gateway. which plug in to extend the wifi even farther, past anything that stands in its way. ...well almost anything. leave no room behind with xfi pods. simple. easy. awesome. click or visit a retail store today. tom: thank you for being with us as you stream on twitter, one of the many ways to find our

conversation. podcasts as well. francine lacqua in london, i'm tom keene in new york. let us get a briefing. theresa may says it would be a breach of trust to hold a second referendum on leaving the union. she is accusing those of campaigning for another vote of undermining negotiations. it may well explain why leaders rejected her attempts to make the deal more attractive. a u.s. senate committee will release a report that says the russian efforts to help elect donald trump. they studied millions of social media posts. it relies on data provided by companies such as facebook and google. student loan debt reaching a trillion almost $1.5 dollars, almost double what it was in 2009. loans that were dispersed in

2012, have defaulted at a factor greater than any other longer. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is "bloomberg." tom: thank you. weekend, the messaging from the washingtons, here is mr. giuliani in support of his president. >> good luck. after what they did to flynn? no sentence? 14 days for papadopoulos? i did better on traffic violations. they are a joke. over my dead body. i could be dead. giuliani, former mayor of new york city on fox news. kevin cirilli joins us with us -- joins us in washington. if we get a government shutdown, does that. mr. mueller -- does that stop mr. mueller?

kevin: their operating on different tracks. a government shutdown would forecast ahead of the new democrats taking over. are likelyse folks going to have to testify in public and in private hearings and in congressional hearings. it is important to note if you're watching this from europe that the investigations are separate from what happens with mueller. michael cohen pleading guilty to lying under oath and found guilty of that and he is sentenced to three years. week in washington, how important is it for the president? is he hunkered forward to a golf trip or is this going to be like president-a-thon? kevin: in terms of his

priorities, there is a looming government shutdown and that will dominate the chatter. the president has dug in in terms of the wall. this is a mathematical calculation. hard-pressed to find which democrats would get on board. right now, they are at an impasse. francine: how long will be shutdown be there for? in the past, it was a couple of days. is this different? kevin: it does feel different. january 3 is when democrats take over in congress. what will that look like if the government is shutdown? knows spirits in terms of the optics, it could get tricky -- no one knows. optics, it could get tricky but at some point there is going to have to be a compromise.

this is the first test for a new dynamic with nancy pelosi and president trump. tom: thank you so much. christopher grisanti with us and gideon rose, who provided leadership this year with issues hitherd to withe america? would: the big question be how do you solve the problems that led to the discontent that led to trump? america has problems in its economy and politics but it is clear that the answers being put forward by the outsiders do not work. ist we are looking for now somebody to chart a new agenda that will address the real problems in some constructive way.

people denying problems and giving forward answers they do not work. -- if wee knowledge we have problems. how do you make the new system work for everybody and do that in a way that brings social peace rather than conflict? nobody is putting that forward. about thesting thing next congress will be is there any constructive movement forward about positive solutions to real problems. that is what i am looking for. francine: it is almost like a catch 22, how do you do that? it used to be called political leadership. what we are looking for our leaders who will do that rather than copy what the last guy did. the one thing that makes me hopeful is there has been in the last couple of decades an

infusion of new leadership, barack obama, donald trump. establishment that there is a hunger for something new and different and what we have not had is somebody who matches the outsider passion to change with the insider knowledge of how the system works and what can be done. thecine: if we go back to trials and tribulations of president trump with legal whetheres, depending on the legal challenges get better or worse, what asset class moves ? is it dollar? christopher: i would point out we have always thought that cash is a viable class. is of our best performers cash. long-term, even in turbulent times, terrific companies will make you more and switching asset classes

diving in and out of speculative currency. tom: these comments are important and they go to london and everywhere else where populism descends, which is the place of middle ground. are their middle republicans in washington? tom: they are not. they are on the outside. you just advocated for theodore roosevelt. you want an operator who is a progressive, someone who wants to address challenges. gideon: we are living in something that looks and acts like a second gilded age. produce?the age it produce the progressive movement and reform the cousin otherwise the system -- because

otherwise the system was going to spiral out of control. tom: in your lead essay, it produced world war i. is not only your ?ilded age shift but what about gideon: no one thought we would be discussing the rise of nationalism in a serious way. we are not there yet but we are starting to head in that direction. the question is -- we have drifted for the past couple of years -- we are going to continue to drift -- at some point, this question of, do you cooperating and go back to a competitive international system . thought weething we had learned in the question becomes are we going to relearn the lesson. what churchill said

about the soviet union and nuclear talks. people have to realize that jawjaw is better than trade war. tom: we will see. i want to touch on the markets in a moment. the essay saying to the fed, pause. tom price, the former u.s. secretary of health and human services. look for that today. from london and new york, stay with us. this is "bloomberg." ♪

viviana: this is bloomberg surveillance.

let's get the business flash burn had touch he is making its biggest acquisition ever. -- business flash. is making its biggest acquisition ever, agreeing to buy abb, turning it into the top global provider. abb will become more focused on robotics. jaguar land rover is not commenting on reports it will cut thousands of jobs next year. the carmaker will outline measures next month. investors saying emerging asian stocks will be the best-performing asset class next year according to a new poll from citigroup aired that preference -- citigroup. the asian stocks beat out u.s. equities as the most favored market. that is the business flash. thank you.ncine: oil holding near $51 a barrel.

rights ifrategist anyone doubted opec is in charge of the organization, the last 10 days have proved it. for an sad result organization that once made government tremble. this is just the nature of the beast. you also have that oil from the u.s. >> you do. you also have an organization that produces about one third of world oil. this is an organization that prides itself on being there to look after the interests of its members. when at last met, ministers sat down in a meeting, locked in a room, no press, trying to agree

what they were going to do for 2019. at the end, they had no agreement. they came out the evening of thursday, it looked like the deal was going to fall apart just says the one did in early 2016, with the members unable to agree. morning, the russian oil minister arrived and go straight in, occupies the office of the secretary general. for those of us who were there, this was symbolic, these bilateral meetings generally take place in the hotels where the delegations are staying, not in the secretariat. the iranian oil minister, followed by the saudi oil minister. it was only then that opec was

able to make a deal for its own out that, -- output, never mind russia. this organization failed to make decisions. francine: what happens in 2019? agendas.have different >> they do. this has been the difficulty at the heart of opec. different members have different needs, different aspirations, different populations, different oil reserves, different agendas. they have an agreement for 2019. they are going to cut output. the market is waiting to see whether they follow through. there is skepticism. ended up's have bearing the brunt of this in

volume terms as they should be the biggest producer. , ifs the small countries you look over the life of the deal, that have borne the brunt of this. tom: thank you so much. a thought-provoking essay. , gideon rose and christopher grisanti. the oil price has been inelastic. is there value in oil or not? do not think so and the reason is that fracking has changed the game. pokes its head above $60, they keep lowering the cost of pulling the oil up. we have got new pipelines in the permian. do factored to analysis on a linear equation basis, the coefficient was that they cut costs.

they cannot do that again, can they? it is not a question of math. the advanced industrial world has its problems. i would not want to be a research rich economy going forward. tom: can they cut price? christopher: yes. we're down in the permian field to lower them $40 a barrel. that is bad news for opec. they are like the wizard of oz. gideon: fracking upended the energy markets. the next thing will upended. you need to do way road trip in the spring up to western canada. it isat a mess that is

remarkable. you could do a whole issue on that. christopher: that gets to his point is when they can figure out how to get that oil out, there is another was war. it is going to be the countries with the most technology and not opec. tom: brilliantly said. i can see a foreign affairs issue, all canada, it could be an issue next year. gideon: let's take their banking system before we take their resources. tom: grisanti and rose with us. later this morning, cory gardner will join in the 7:00 hour, a spirited discussion, the unique demographics and politics. this is "bloomberg." ♪

frombloomberg surveillance

london, from new york, we welcome you. how about a chart which goes to the druckenmiller essay? thes almost my chart of year, twin deficits, the long-term disinflation of the real rate, here is the trump election and we are barely up to a real inflation-adjusted fed funds target. nti with us.grisa the hawks want to raise rates just to raise rates. christopher: i would not say just because. the economy is like a steamship that has a lot of momentum. tom: the real rate has come up. what are we waiting for? christopher: we should raise rates. we are just back to neutral after being below neutral.

the ship will keep going and we should have higher rates. the president said we should it lower rates and everybody got upset. are sayingy hairs it, they must be right. there is room for the economy to grow. economy isf the growing as the fed is expecting, where do you see it in the data? as i mentioned, you have got consumer confidence and unemployment hitting if not record highs, generational highs. they last for 12 or 18 months at least. yeare going to see the 10 start to go back up, start to see the inversion go away and i think the fed will raise. i'm confident they will raise this week. francine: what about weakness in the housing market? christopher: that is to be expected as rates go up.

stabilization and people get alarmed and we shall see. seethesis is that you will not record strength but it above trend. -- but above trend. that weis this angst never clear markets. things have gone -- we have avoided catastrophes. even the unraveling of the fed stuff has not played out. the dangers have not materialized. can that be continued? have we gotten lucky and how long can we continue to be lucky? thathings following a path we can expect to continue? christopher: the markets predicted eight of the last 10 recessions. we are predicting a slowdown. tom: it remains to be seen.

thank you so much. gideon rose, foreign affairs magazine, a great 2018. christopher grisanti, he owns four stocks and none of them have gone down through the crisis. the german two-year yield negative. that is interesting. the pound with a lift today, on u.k. gdp. francine: theresa may's speech today. do not miss it. tom: stay with us. this is "bloomberg." ♪

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arguing any second referendum will do damage. reserve meets with an increase. obamacare on life support. rules theurt affordable care act is unconstitutional but turmoil in industry.care welcome to "bloomberg daybreak: i'm david westin. >> it supposed to be a quiet week before people go away. >> it's not so quiet for goldman sachs. little problem. from malaysiaal filed criminal charges. if no criminal proceed instituted against the accused they are underlining system.ncial this is not