my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. ♪ >> waste of time. the president storms out of the white house meeting as talks with the democrats collapse. the latest fed roommates indicate the best the latest fed minutes for just patients on fad minutese latest suggests patients on policy. minority leader jeremy corbyn says he will call for a special election if theresa may's deal fails. ♪

fran: good morning, everyone. these are the markets. 300 is down, and it seems like the revenue we saw goingst couple of days, into today, a couple of people trying to figure out what the trade talks mean. if we get an agreement between the u.s. and china, what that means for their portfolios, and trying to figure out what the shutdown means for the u.s. economy. 1.27,und is at probably the biggest story as you get ready for the parliamentary vote on tuesday. jeremy corbyn is expected to speak later on. yesterday was the first time that oil went above 60 this year. coming up on bloomberg surveillance, we speak to the

former u.k. commercial secretary to the treasury, jim o'neill, formerly at goldman sachs and now at chatham house. first let's get to the bloomberg first word news. had come of indiana -- hi, viviana. >> shutdown talks have collapsed over president trump's continued assistance of a border wall funding. the president tweeted he asked nancy pelosi if she would approve funds for his border wall if he reopened federal agencies for a month. she said no, so he walked out. democratic leaders insist the government must give up on the wall before talks begin. >> she said if i open up the government, you want to do what i want. that is cruel. that is callous and that is using millions of innocent people as pawwsn. then a few minutes later, he slammed the table. when it leader pelosi said she

do agree with the wall, he walked out and said we had nothing to discuss. >> the latest fed minutes show policymakers are taking a cautious approach to rate rises. fmo see members have the view that the current environment of muted inflation means they can be patient about further tightening. the minutes show some officials favor no change. in an exclusive interview, the president and ceo of the federal reserve bank of boston ways --weighs in. overtime,s is that in the u.s. economy will be strong. and that the financial markets were recover. i also realize that my forecast can be quite wrong and that the financial markets have a different view, at least the last couple of days, it has been quite negative and quite volatile. so i have to take the financial market considerations into account. 2018 may have been the worst

christmas for u.k. retailers since the financial crisis. in december, sales fell 4.7%. it was a better festive season for the uk's biggest retailer, tesco, topping the highest estimates for sales growth. same-store sales growth of 2.2% over the period. the department store leader says that were targeting further cost savings. retailers issued a profit warning, blaming mild weather and weak consumer confidence. wrapped up onhina extended three days of mid-level trade talks in beijing. president xi jinping's government is committed to buying more goods from the energy and manufacturing products. the meeting is set to have laid a foundation for the resolution of the conflict. the u.s. will decide on the next steps after officials report to

washington. global news, 24 hours a day, on air and at tic-toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. hortado.ana this is bloomberg. ♪ isncine: prime minister may considering a plan b. she will try to take control of what happens next. her office says she will provide certainty on the way forward if her plan is rejected. opposition leader jeremy corbyn says he will call for an election. joining us now is jim o'neill, former commercial secretary, and also worked at goldman sachs. jim: good morning. francine: what could happen now between today and the deadline? jim: i actually spoke in the house of lords today, we just

talked about it last night, and we are having to adjust because of what is going on in the comments. -- in the house of commons. i hope and i think that last commonsamendment in the makes the likelihood of crushing out herder. what happens to the prime minister's bell, i think is not quite as straightforward as what would appear to be the case this morning. lords today,of there was more support for this bill than i expected. the house of lords is a generally more -- francine: conservative. jim: more rational than the house of commons. so that surprised me. playssue is, if she can't the threat of for her brexit,

the other alternative is a second referendum or seeking a , so i think she is going to try probably the next tactic, pick on the crazy brexiteers and say, if you push it like this, i have to have another election and we are all potentially in trouble. i think that is our strategy. i don't think it will work the riyadh it don't think it will go thrown tuesday -- you don't think it will go through on tuesday? jim: that for strategy. i think she will go in probably to lose, with a big margin, and she is hoping that it will get sandwiched, and brussels will say, even more warm things. and she brings it back, the dup and the brexiteers will given a .it, then they get closer

but i am not sure she will be able to do it. francine: how many votes can she ?ctually put jim:, and it will take to do it? i think with this amendment, it becomes really hard. unless there is some very zz, threeechnical whi days after losing the first of outcomes she has to say what her plan b is. francine: what do you think it is? jim: your guess is as good as mine. she appeared to have vehemently rolled out all these other things. if you look at what was leaked extensions of, article 50, that appears to be the preferred one this time yesterday morning. whether the amendment passing has shifted that, i don't know. francine: an extension has to be tied into something or would the

e.u. just given extension? jim: from what i understand, we could just say that we will either revoke it or we want an extension. but the e.u.. will not want to extend it be best beyond june, because of the e.u. elections. raise thet would possibility that we will be effectively ignoring what the people said. francine: is that a civil war, is at the yellow vest moment? jim: intellectually, i describe myself as an unexcited remain er. u.k. gate inner out of the e.u. is not the most important thing for britain's future. our productivity numbers have just been published, they were dreadful, again. way worse than even the most severe brexit departures.

and we need to get on with that stuff. my view is, let's just do something and stop this dominating. it is making our democracy not work anymore. but that is very much a personal view. that thespect is probability of a second referendum, which i've been to -- i lean to straightaway. cover nearlyst said, let's have a second referendum. i am not sure of the wisdom about given the fragility of -- francine: would it be a referendum on this deal, would it be the same question as of that time? it was 48-52 the other way, so what do you say? jim: it could cause a lot of , the pollsoil suggest that.

another complication is if you put in different questions. i think you have to somehow, if you are going to do it, you need to have questions that make people have a view on the way we leave. it is undoubtedly the case of the people didn't have a clue. francine: do you think they have a better clue now? jim: they might not. most educated people didn't know the difference between a single market and a customs union. and they might not actually be bothered. but if we are going to have a great ounce about it myself, but if we were come i think it has to have something different. because otherwise, it is questioning our democracy. francine: what do you think is a chance of crashing out? what he think is a chance of a general election and a second referendum? , on those three, i think crushing out his the least

likely. francine: 10%? jim: 10%, 15%. francine: ok. powerfule are so many voices in the house of lords, when we voted the other night -- the amendment will be sent back when they vote in the commons for.t will get support 10exit i am not sure how no. can push brexit. i don't really have a confident view on the probabilities, but i think the referendum thing, by default, is growing slightly. because of my difficulty answering, that is probably why wouldn't rule out the possibility of her bill going through on something like a third about. i wouldn't completely rule it out. francine: jim, thank you so much. he stays with us.

, president trump storms out of the white house meeting as talks to end the impasse collapse. details, next. this is bloomberg. ♪

♪ francine: president trump ended an attempt to resolve a partial government shutdown when he stormed out of a white house meeting with congressional leaders, calling it a waste of time. he blamed house speaker ness it --osi and majority leader minority leader, chuck schumer for being unable to negotiate. >> in the brief meeting, we

heard once again that democratic leaders are unwilling to even in , to resolve this partial government shutdown or address the crisis in our southern border. >> it is cold out here and the temperature was a much warmer in the situation room. our meeting did not last long. that in aso sad matter of hours, just a few days, many people, many federal workers will not be receiving their paychecks. what that means in their lives is tragic, in terms of their credit rating, paying their mortgage, paying their rent, paying their car payment, their children's. tuition come at a rest the president thinks that maybe they can just ask their father for more money. this, ourfor more on senior writer, stephanie baker, joins us. stephanie, what happens next? stephanie: it looks like they are digging in their heels and

either side doesn't have much room to maneuver. lindsey graham has floated the possibility of reviving an idea that came close last year, which is giving young, undocumented immigrant a path to citizenship in exchange for border wall funding. but i think we should note that the proposal -- we should note of the proposal with some caution because of the situation has changed a bit. of democrats campaigned on the wall. it would be hard to see how they can clampdown in exchange for that. the settingp would increas himself up for could've is in setting himself up for criticism from his base. the only way out of this is for ofmp to declare a state emergency, even though it is

likely to get bogged down in the courts as democrats challenge the legality of it. francine: thank you very much, stephanie. so, what does a shutdown mean for foreign policy and for the u.s. economy? still with us, jim o'neill, from chatham house. we have been hearing about the shutdown. this year, it feels different. how long can it last? jim: i don't quite understand the constitutional issues in parliament, so i am clueless. the stock markets or the major markets are kind of down, despite a very dovish fed, which is not a great sign. francine: you think there are starting to worry about politics? jim: it might be that they are worrying about the political situation. it is interesting that the dollar, so far it has weakened further, which it should have done on the back of the fed's statement. markets may be beginning to

be beginning might to smell the sign of a genuine political disruption in the u.s. for trump, this is a huge thing. being, weird the guy is it is a big thing. i don't know whether he will be much ado it. francine: does this make it likely that he wants to do the trade deal with china? jim: he looks likely to lash out generally, and that raises the risk. to my mind, it increases the china, itwhen increases the likelihood of a deal, but also increases the likelihood of him saying, no, we're going to ring china. that is how i will get my support -- we are going to --ruin china.

i had a five day rule that i adopted years ago. the stock market was up five the first five days of the year. historically, that suggests that it will be a bit volatile. francine: ok, we will be right back. jim o'neill stays with us. mourinho for the white house, maybe he could run brexit, who knows. china hails these trade talks as extensive and more detailed. that there seems to be more evidence of a slowdown. we talk more about china, next. this is bloomberg. ♪

♪ francine: this is "bloomberg surveillance, i am francine lacqua. we were talking about china in relation to the shutdown. what is happening in china? lord jones: i have a piece out -- and jim: there is more confirmation that the chinese consumer has been slowing. that is not persistent. francine: so this is not linked trade?

jim: it is particularly not linked to trade, and that is much more worrying than anything else going on in my view. because a lot of places, germany being perhaps the best example in europe, have indirectly been a major beneficiary of the rise of the chinese middle-class consumer. brings as slowing, it whole new challenge to aspects of the world economy. one of the reasons underlying may never ending medium-and long-term optimism is that the chinese consumer. there is no one else in the world who can replace it. india is down the line, but china has been happening now. francine: we saw car sales, we saw apple slow down on are there any other indicators? jim: the latest retail sales december, it is the weakest it has been in a decade. also auto sales have fallen sharply. there is a lot of evidence that

the chinese consumer slowed. i didn't worry about the gdp in china slowing because of the chinese consumer was hanging in. now the consumer is slowing. the good side is that at least it is something you would think the chinese policymakers should be able to do something about. that if the chinese consumer is resistant to that, it brings a whole new dimension to some other things markets have been wearing about. francine: jim o'neill stays with us. up next, we bring you our weekly brexit show. we talk about the deal and possible outcomes with former u.k. trade minister, lord digby m jones. this is bloomberg. ♪

♪ francine: welcome back to our weekly brexit show. i am francine lacqua here in

london. >> 2018 was the worst christmas for u.k. retailers. according to a british retail ansortium, sales fell 4.7% in december. it was a better christmas for tesco, the uk's biggest retailer, easily topping estimates for sale growth, 2.2% over the period. the department head says they were targeting further cost savings. --nwhile, car parts and retailer, issuing profit warnings and blinged weeks consumer confidence and a milder winter. if parliament rejects theresa expected, deal as this is what one analyst had to say. >> the odds have improved on that going from about 10% are year or so ago, to maybe 40%, maybe even more. but we are in uncharted territory.

anyone who has to run a business in these conditions, it is very difficult. is aesult, the uncertainty very significant reduction in investment. >> meanwhile, the u.k. based in glaxosmithkline says it is ready for the country's e.u. withdrawal. >> we have known for some time. we have until the end of march. august it, there's a bit of uncertainty. we have been preparing with the british government very strongly of a whole variety contingency plans to react >> after bloomberg's -- that is your bloomberg's brexit will attain -- bulletin. francine: it is likely that parliament for reject theresa may's deal next week. overy corbyn is said to go a speech today that is expected to call for a general election

if theresa may loses the vote. jim o'neill of chatham house is still with us, and lord digby m jones is with us as well. mr. jones, you voted for brexit. do you feel the people of britain have been cheated? lord jones: by do. -- i do. i am quite happy with things like immigration and taking quite a few rules from brussels. --t i would love to do is ive a reformed europe, so feel that the political class of the country, be it story, labor, liberal, government, nongovernment, have met the people down. jim: with you back her bill? on onenes: i would vote exception which is possible to

achieve change. i think the deal is a good deal. take it from brussels, what we delighted that we have sovereignty on our borders. i want my government to run it. francine: so the parliament and government delivered? lord jones: with one exception. on the backstop, you can't say that europe has a right to say yes or no to others coming out of the e.u.. i don't care what anyone says, the french will say, i will let you.o if give me the fishing the spanish will say yes, you can go, if you give me gibraltar. we had a chance of getting them to do something on that, because you could have said that there would be no deal. but when you have a parliament and say,d two days ago there will be no deal, it is like saying, i will buy your , -- it was an

abrogation of responsibility to the united kingdom. francine: but does it help investors? know, that there is no possibility of a hard brexit, right? lord jones: you are negotiating with one of the greatest negotiating machines of all time. what you do is wave the white flag two months before, you must be mad. jim: kind of. would the british auto industry -- it has become -- how on earth does anybody in think that in your strategy works and something doesn't go wrong in the last minute? >> no one of those companies

want anything but stability and predictability. the company that need to kill more than we do is germany. we are the most profitable destination for their experts. francine:'s parliament not safeguarding the u.k.? would you have been happy with the u.k. crashing out? >> the point is, parliament is at a time whend europe can just keep saying no. for some reason, to quote this is hypocrisy. in the beginning of the lord today, i was surprised that -- mores more deal

support for her deal than expected. parliament has have to find something that they will agree on. what can't be forgotten is there is a large number that don't want to go with him. if there is common ground for some kind of agreement, that is what they will have to ask more. >> i would hope that if they are looking at the thick end of defeat, that they would look at people who don't want that. francine: this rich hill go through next week?

she should be going back and saying i can deliver this. the problem is, you can't do they can just say you guys in parliament will just keep giving in. francine: if you have to choose between parliament and a second referendum, what would it be? >> i do not want a second referendum.

my worry is that we are such a divided country. my worry is

francine: is we have a second referendum, do you think the vote will go the same way? the result could be the same , the with one caveat voters are getting younger. , youyou have got is wouldn't believe. we aggregate responsibility to the people. francine: how do you teach feel the best way out of this is? you asking me what i think is the answer, i think he is onto something. you get people of the labour

deal,saying, you have my is not part of my field i can give you part of it if you don't like it. what is also interesting is that that creates greater public possibility of some open split in the labor ranks which is in the bazaar politics of it, not done. francine: we need one hour on him. this is bloomberg. ♪

francine: this is "bloomberg surveillance." volkswagen set a new sales record in 2018 as u.s. deliveries recovery. the u.s. recovery is significant because it was the center of the scandal and is the german maker 's largest unit. volkswagen set a new sales record in 2018 as u.s. deliveries recovery. joining us now is the head of sales for volkswagen passenger cars. as always, thank you for giving bloomberg a little bit of your time. china has reported the first auto market contraction in 20 years. of that make you nervous about the strength of the chinese consumer? first of all, i think the 2018 result shows that we have

been able to compensate some of the incurred weakness of the chinese market, which it started to appear in the second half of imports.to strong we were quite happy that our position was strong. we are sure and positive that our position in china was meant to strengthen even further in the years to come. francine: what do you expect for and is then china, slow down because of trade or something much more deep-rooted? years of steady ,rowth in the chinese market 60% of all buyers of new cars are first-time buyers.

there is a huge underlying demand potential in china. where very optimistic that there is an increasing slow down attention between the u.s. and china, creating some nervousness in the chinese market. where optimistic the chinese recovery will be the same in 2019. bet will still probably nervousness in the first half of the year. in the second half, where optimistic the market will come back and we will see some strength. we just launched a huge series of suvs this year in the second half of last year. francine: i also want to talk about electric cars in china. how do you see that going? how often or how quickly will ev represent 20% of vw sales in china?

it is obviously a strong plan of the chinese government to transform the government. volkswagen is well-prepared. we will be launching a wide array of electric cars in 2019. in 2020, the full electric car family will be in full swing in china. where getting well-prepared for it looks like an brand in china, which is well-prepared for an electric future in the company. can brand is so strong and has so much trust with the consumer, technologyinced our will provide a unique toortunity for volkswagen even further strengthen opposition in the market in china.

europe's often pretty difficult gyrations. is it now back to normal? >> yes. we have been able to overcome this issue fully until your end. cars produced and delivered to our customers, that is done year-round so there is no stock standing still. the customers are getting the cars finally. we have prepared ourselves well for the year 2019. taken some variety of our product program to make it easier for the customers and our engineers to do the work. with increased capacity. makeull team is behind to sure we don't have recurring problems in the second half of next year. francine: have used the brand in

the u.k. market given brexit? year, we sold 200,000 cars in the u.k.. we increase our market share in nikkei last year and are always looking ahead to a resolution. i know you just came from a very heated debate. we do hope that we come to a more stable outlook for all industries on both sides of the channel. i think it is the benefit of everybody engaged to have stability, accountability and free trade as much as possible between the eu and the u.k. we are optimistic that in the end, we will come to a resolution here. it will probably be an interesting first quarter. where obviously prepared to take any challenge.

our position in the market is clear. the population in the u.k. loves volkswagen. it is an important market. kit is the second-biggest for the brand in europe. we are obviously very keen to come to a stable market for us. francine: they gave very much for your time. leaders say they are not looking at nationalization. a place back against italy's populist political leaders. we will talk about italy and the banks next steps. this is bloomberg. ♪

>> we are very consistent with our dual mandate. at a time when forecasts are telling us that more than likely we are not going to have a bad outcome in terms of both the unemployment rate going down in

gdp being relatively strong, at the same time financial data has come in weaker and is implying a bigger slowdown in the economy. when we have these differences, i think we need to get a little more understanding as to why they are different. my guess is over time, we're going to see that in 2019 the economy is went to be reasonably strong. the financial markets will recover. i also realize my forecast can be quite wrong. i have to take those financial market considerations into account. francine: that was the boston fed president speaking exclusively to bloomberg. administrators for the struggling italian lender said they are not looking at any nationalization plan. that statement pushes back against italy's populist leaders

who have sent state ownership of the bank is the government's go. joining is now is the european finance editor for bloomberg. what happens next? ross: the administrators have made it clear, they are working on a solution that involves making it a better quality bank in hopes that some of the bank will want to buy it or merge with it without any sort of interference from the government. that is what they are focusing on right now. francine: can the government step in international is it? -- and nationalize it? >> the short answer is no, probably not. the closest thing to nationalization that italy has is -- they have to convince the

european authorities that the bank was systematically important, so important that it's failure would cause all kinds of knocked down e ffects to the banking industry. europe already rejected that sort of plan for banks with a larger market value. it is really hard to see a scenario where they can step been in that way. certainly, they can't directly nationalize it, as was done shortly after the financial crisis because those assorted moves were banned by the eu. francine: why is such a small bank causing so much political uproar? : that is a good question. it certainly gets a lot of ink for such a small lender. it is a very politically sensitive topic. the bank is very important in , a region very important for matteo c

salvini. tos government is in pains show the advocates of small guys and small investors. that runs in contradiction to the idea that they don't want to be seen as taxpayers during a lot of money at the bank. now, it is hard to see a scenario that won't be in some way similar to what the previous government did. francine: thank you so much. we continue in the next hour. tom keene joins me out of new york. we will talk brexit, pound, the shutdown and president trump. this is bloomberg. ♪

francine: theresa may suffers

her second defeat in today's. jeremy corbyn says he will call for a general election of her brexit deal fails. ae president of storms out of white house meeting as shutdown talk with democrats collapse. prepared to cause. the latest fed minutes reveal a cautious approach. good morning, everyone. good afternoon if you are watching from asia. this is "bloomberg surveillance." quite a lot going on on brexit. i'm surprised pound isn't moving. looking at your shutdown and i wonder whether it is maybe the kind of day that the market is trying to worry a little bit about politics. the verbiage we are seeing out of westminster and sterling holding on. notice before headlines as well.

for to cut thousands of european jobs. i believe we will touch on that right now. viviana: just as he said, job cuts will be part of ford's plan. they will cut 1100 jobs at one of its german factories. the trump administration is pushing china to deliver on its promises after three days of trade hawks. the u.s. noted china agrees to buy more u.s. goods and agriculture products. president come storming out of the white house meeting with congressional leaders to resolve the partial government shutdown. he called it a waste of time. the president blaming nancy pelosi and chuck schumer for being unwilling to negotiate over border wall funding. these lawmakers said it won'

discuss portable funding until the border wall reopens. theresa may is openly considering a brexit plan b. for office says she would provide certainty on the way forward with her plan is rejected. jeremy corbyn says he would call for an election. there was a surprise election winner in the world's biggest producer of cobalt. democratic republic of congo leader -- it will mark the first transfer of power by ballot box since congo gained independence from belgium nearly 60 years ago. 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: thank you so much. does is going to be a huge deal into 2019.

how are some of these companies going to write side? what is interesting, off of ford , yesterday, i believe they introduced their new explorer model. old car fora huge, ford motors going back to 2011. they seem to be a little behind. francine: especially in the again -- you can -- u.k. i was speaking with the leader of data and him -- one of the poorest counties around london. he was remembering the heydays of ford. he said one of the troubles of the county was the displacement jobs with onehave

of these big companies. tom: it is a nuanced day to check with finally pull back. cap futures at -105. euro above the 115 level. brent. much to talk about in this hour, particularly on 10 downing street in westminster. there is spreads nicely above $60 a barrel. sterling, it with barely given all the uproar. francine: i wonder whether it is because they don't know how to read it or if they are waiting to have more clarity. we are seeking and a of reversal in global markets. to do your rally that some soaring.uities up is

oil heading for the first drop in two weeks. maybe one of the underlying concerns, theresa may is openly considering a brexit plan b amid growing signs parliament will reject the deal she is reached with the european union. her off the session will provide certainty on the way forward if her plan is rejected. jeremy corbyn says he would call for an election. thank you all for trying to make sense of the markets we are seeing. what happens next? it seems that theresa may is weaker by the day. lordspoke to the house of and he was surprised at how much her deal had appeal in the house of lords. can see get it through? ma: i think no one is

expecting her to win next week. the question now is, what happens next? what we are seeing is parliament being assertive and making it clear they don't want no deal. perhaps the plan b won't necessarily be up to may to decide what the plan b is. we are also seeing members of her cabinet. it was a few months ago that they came up and said we should seek a deal across the chamber. we are seeing more and more cabinet members making it clear they don't want no deal. i think more and more people are they want a deal. >> i think the problem is that there is a unified view that

parliament don't want to know deal, but there is a lot of clarity asking where we go forward. i think that is the difficulty. when you to see the skill of defeat on tuesday and trying to gauge what the path of the future direction of the parliamentarians is in order to try and facilitate the reaction. ofwe do see that paring back the hard brexit scenario, we could see a little bit of sterling upside. it is very much watching and waiting to see what the parliamentarians do. tom: with modest crisis in washington and the united kingdom. we all fall back on the date calendar. there's a vote on tuesday among what happens after that? i've read three articles this morning. i couldn't figure it out. what happens after this important vote? of yesterdaysult in parliament, what happens now ,s that three days later

january 21, the government has to come back and say what is plan b will be. something theresa may will help from the european union.what we have reported overnight is that brussels is not terribly keen on offering anything concrete. perhaps once she has been defeated, if there is any clarity, perhaps they might be willing to come up with something that may or may not get it over the line. the labour party has said it will try to trigger a general election. after the vote on tuesday, you could conceivably end up with a confidence motion. last time, we were saying the same thing and jeremy corbyn decided against it at the last minute, presumably because they do not think they would win it. what's next? you could end up with a second

referendum, a general election, are putting this angel back to parliament. or you could end up with an extension. tom: i am trying to extend my stay in london. also with us is ben richard carrin -- richard. synthesize your confidence in the markets and investment. making aour motors $54,000 adjustment in europe. how fragile is confidence in europe, in the city given the political uproar? justi don't think it is confidence in london that is fragile, i think it is globally. overall, people are much more concerned about the global

as we see weakening in data points across the u.s. things like brexit, uncertainty in italy and issues in france situation either. -- don't help that situation either. tom: way will continue that conversation today. emma, thank you so much. ben with us as well this morning.the news flow already extraordinary . ford and there and climate of 54,000 across europe. mark aboution with fixed income and how it bounces off of assets. this is bloomberg. ♪

viviana: this is "bloomberg surveillance." this series chairman has raised its bid to keep the retailer in business. verge ofon the liquidation after the rejection of an earlier offer. steph curry has a great to a multiyear partnership deal with a japanese e-commerce company. curry'sitle sponsor for basketball camp. that is the bloomberg business flash. tom: thank you so much.

it is a frenzy of the federal reserve communication. chairman powell be speaking with david rubenstein on bloomberg. that will be an important event in washington. another important event when michael mckee space to the fed official. ee with eric rosengren. thehere time to get to point where we are consistent with our dual mandate. are time when forecast telling us what unlikely we're not going to have a bad outcome, in fact, a reasonably good outcome in terms of gdp being relatively strong. at the same time, the financial data has come in much weaker and is implying a bigger slowdown in the economy. when we have these two differences, i think we need to get up at a little more understanding as to why they are so different. my guess is that over time, we are going to see that in 2019, the economy is going to be

reasonably strong. financial markets will recover. i also realize my forecast can be quite strong and financial markets have such a different view. i have to take us financial markets into consideration. tom: see that interview across bloomberg digital. us.and jeremy with and you cunningham at capital economics aggressively markdown his euro gdp numbers. is the analysis of the economy ahead of the central bank's or are they going to catch up rapidly? y: i think it is chair we are seeing an lower rate of

growth in lower markets. i think that is going to have an impact on central-bank policy. i think it is going to be in the context of the fed. boardd say very much on those comments. we will also underlined the fact that i think we are in a patient period in regards to set expectations. i think we will begin to see the negative expectations of the economy in the eurozone. that is going to provide a little bit of a headwind for the ecb as well. i think it is fascinating that we continue to see employment growth continuing to be very strong both in the eurozone as well as the u.s.. do you markdown your revenue view, do you go down the income statement and look at ford motor or whatever and marked on your operating income view? how do you actually deal with what jeremy just said? ben: i think you have to look at

what is priced in. right now, there is not a major recession priced in. if you look at some of the more cyclical parts of the market, you're probably expecting markets to come down in terms of percentage points. it gives some degree of headroom. that is what we are looking at an asking ourselves given what we see today, is that likely given the outlook? the outlook is certainly slowing. we don't see anything as apocalyptic as that. francine: on a day like today when we have a very dovish message, why is the rally taken apart? my: we had a very difficult december. there are a number of factors driving this down. trade wars, concerns about brexit, around chinese economic expansion. i think we have seen modest

positives since we started this year. to some degree, all of those elements could move much more favorably. against the backdrop of the global economy of 2018, is relatively well. i think it is possible he could start to see the show get back on the road to send a great. degree.me a case of looking at those ford numbers. i think it is very much the case that there was a degree of pessimism imbued into the market expectations. with taken the view that we don't to the trade tensions and impacting the markets over the last quarter really extending into something really serious and systemic.

of the political dynamics, we don't to those as a .ystemic risk for the eurozone it isn't going to be a great year for growth, but i think it is going to be a significant downturn or major correction that perhaps the interpretation we enter the year with. francine: thank you both, been in jeremy. conversation with -- we will talk about dollar. this is bloomberg. ♪

tom: good morning. not only brexit uproar, but shut down in washington. saturday is a record shut down. about the idea of goes to city. -- ghost city. it is a direct impact of not only washington, but the 800,000 people outside. a huge body outside washington,

including the second-largest urography, which is texas. -- geography, which is texas. this really gets in the way of market strategy. how long is long for you on a shutdown? we're just jeremy: about to enter uncharted territory on duration. from a market perspective, how long is it before the date of performance is going to weigh on consumer confidence and expenditure. there are political dynamics in play and it seems to be the case that the pr war is perhaps being lost for the president. is the united kingdom -- has the united kingdom government ever shutdown? maybe in 1412? francine: may be in 1412 or

1444, but not in recent history. if you look at the way parliament has worked. tom: it works? francine: because of the finance could it be that we crash out of the u.k. and suddenly we can't raise taxes? jeremy: i don't think we're going to that magnitude. argue, the u.k. government is paralyzed and impacted by the same continuation of a lack of policy perspective. francine: but we pay our civil servants. jeremy: and people pay their taxes. there may be headaches for the government by the amendment to the finance bill, potentially, but i don't think we're talking anything like the sort of dynamic we are seeing in the u.s. it underlines the structural

difficulties and scenarios playing out in the u.k., which makes it very difficult for the non-u.k. participants to really understand the financial markets. tom: we will continue. jeremy and ben. much to talk about. we will further the discussion and conversation this morning. this is a familiar voice. representing the skill of business at the u.s. chamber of commerce. this is bloomberg. ♪

♪ "surveillance," lots of said speak going on. francine lacqua in london, i am tom keene.

viviana: ford will try to return to profitability in europe by cutting thousands of jobs and do not rule out the possibility of closing european factories. they will try to reduce employment through voluntary members. jaguar land rover will cut as many as 5000 jobs in the u.k. calls talks with democratic leaders on the government shutdown a waste of time. democrats call him petulant. the president stormed out of a white house meeting. he blamed nancy pelosi and chuck schumer for being unwilling to negotiate over a border wall. they will not discuss border funding until the government reopens. tom steyer will not run for the democratic presidential nomination and will focus his money and energy on trying to

impeach president trump. for a campaignup and put $120 million into the midterm election. mexico's finance minister says the peso can go higher than the dollar. >> i believe that it could be further down to 19 pesos per dollar, less than that perhaps. when i say 19, i say in the short-term. i would be very optimistic, if i -- that ise average different. viviana: global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. hurtado.ana this is bloomberg. china's factory inflation slowed in december for the sixth straight month, rekindling fears of an economic

slowdown, just another signal the world's two largest economies are feeling the pain amid ongoing trade issues. thank you for joining us. how do we know this is a slowdown linked to trade? doubt trade isno starting to have some impact, and we are seeing it in the factory sector. sentiment is down in china. key manufacturing gauges are in contractor he territory. the ppi in dis-inflationary territory. that means pressure on their profits. it would make their debt more expensive to repay. when ppi is heading in that direction it signifies weakening demand.

prices will have an impact on ppi. when you take it all, china's economy is slowing that is not expected to turn around in a hurry. francine: what happens when the yuan gains past seven per dollar? enda: that is been the key psychological level traders and investors have been looking to. if it did go over that mark, it would be another hit to sentiment and would perhaps undermine confidence in financial markets as investors look to pull their money out. what is happening at the moment is the yuan is strengthening back to its highest level since july. it is being helped by the fed going on policy, taking the pressure off the yuan. it appears somewhat stable. but we valuept, immensely your wisdom from hong kong and the way you grind it out every day, how is asia, how

is china, from your ,onversations with president xi how do they take the chaos in washington? how does that filter through? enda: a lot of people are watching it through the prism of confidence in the global order. confidence in the role the u.s. plays across the security umbrella across east asian societies, and it is raising confidence in the u.s. financial markets. people deal with concern where the u.s. government is headed and the lack of bipartisanship in the congress. it is yet another and on to the worry list -- add on to the worry list people have about where the world is going. curran, our chief

asia correspondent. still with us, jeremy and then. this is basically a yuan watch chart. do you expect more strength? jeremy: yes. it is decelerating that is part of the overall plan and whilst we need to focus on the slowing down, growth is more oriented toward the services sector and we think the currency will strengthen. our reassessment of the chinese growth story i think will encourage dollar-yuan to trade back into the 65 area. francine: you are not expecting it to touch seven? jeremy: seven is an important level.

that number will remain unchallenged and we see no reason to assume that level will go away. tom: i have asked like five times this week. are there reaction functions normal or does china work within a whole different architecture than other linkages of politics in central banking? jeremy: you should not lose sight of the fact that in most impactes we consider the of politics into the broader policy agreement. china being less of a market orientated economy has a somewhat different dynamic so there is a different interpretation that needs to be kept in mind. the authorities are generated or governed by the prospects of keeping the economy rolling and providing significant degrees of economic momentum to maintain stability. there are some factors in hand,

the chinese authorities are governed toward the maintenance of a study and productive economic environment. tom: is there an opportunity there? we are hearing a little bit about a beat up em. nothing is beat up like chinese equities. is there an opportunity? ben: when we look across the european markets, the sensitivity to the chinese economy is quite high for sentiment and profitability, particularly among the industrial sector which has been sold off for the last year. they are pricing in a significant slowdown globally and if we see some signs of stimulus, which we have had some announcements on railways, that would be positive. across a large swath of european industrials. dealine: if we had a trade

, would it be enough to give a leg up to european equities? ben: absolutely. the content of the deal is not as important as the fact that there is a deal. i think the fact that the dollar is weakening and china is having a more challenging time is helpful. we are not going back to like mid 2015 with the fx slice and reserves. will be positive for european markets and broader global equity markets. tom: much more to talk about in politics and the effects on the market. jeremy stretch and then richie will continue with us. we drive forward the conversation. we spoke with a democrat from laredo, texas yesterday.

ohio, truly a bellwether state. tim ryan, the democrat of ohio in the 12:00 hour. ohio, truly a bellwether state. from new york and london, this is bloomberg. ♪

♪ morning, bloomberg "surveillance. go we will be on the green next week's schedule depending on what prime minister may does. maybe we will be on the green eight days next month -- next week. we will migrate to india. story to talk about a that got a nice splash in the united states. to me, tohrowback almost colonial time, which is an opening up of the cast system

for labor in india. is this as big a deal in india as the united states? >> it is a big deal. we believe it is a big deal by opening up reservations or conservative -- affirmative action for the upper caste. economically disadvantaged as opposed to castes, this is an attempt to reach out to a section of the population that is traditional. signaling that no political party really wants to take this on, the timing of this move is significant. it comes a few months before the national elections. they will have to make these noises to gain the confidence of the voting community.

tom: how does this play to mr. modi and his style of capitalism in india? the battle of india, who will do 6%, 7% economic growth, how critical is the labor component and culture of india linked? india is the fastest-growing economy in the world with plans to overtake the united kingdom as the biggest and so on. none of this is because of the modi administration's doing. they have not quite worked on the ground and he does not have much to show as he goes into elections. he had to work up some sort of a formula on the cast situation and reach out to traditional world banks on one hand, and the speculation is right now that

there will be a package to appease the farming community which is in great distress. the link is interesting, because the objective is not about economic uplifting but about political benefit. francine: what is the biggest concern for investors in india this year? you mentioned the elections. the policy if prime minister modi does not get elected will change? is it central banks? what is it? harsha: abbvie numbers are looking great on the markets -- headline numbers are looking great on the markets. hawkishshifted from a stance to a neutral stance. new jobs are not growing fast enough and new project investments are at a four-year low.

we do not know what kind of political combination will run this country in 2019 and that means investor sentiment and climate is being defined by local factors, and the uncertainties today are what the , for the next three months for indian markets and -- are as are a local bunch of local factors, the election being the most important. tom: thank you so much for being with us. let me tell you about g tv . this is how you get the advantage if you have a bloomberg terminal in your morning. you are bored, you read six research reports, and you need to get the brain going. you can see the charts, pages of them, and you can steal them over to your bloomberg.

let me say that again -- theft. you can steal francine the clause gorgeous -- francine y axiss gorgeous double chart. ♪

♪ this is bloomberg "surveillance." the partial u.s. government shutdown could delay two of the most anticipated ipos of the year. neither uber nor lift they have commented -- lyft have commented. saudi arabia's state run oil company will probably issue its first ever international bond this year. they were looking to finance this deal to buy a petrochemical giant. the sale would force them to disclose their accounts to investors. for british retailers, the holidays were about survival of the fittest. marks & spencer reported stronger food sales although the clothing business is still in a slump. sales fell and it is in talks

with lenders about refinancing. that is the bloomberg business flash. francine: thank you so much. ,nto the u.k., but not brexit we will talk about some of the retail figures. greg's.nfamiliar to i will be sure to bring a vegan role next week when he is in london. ben ritchie and jeremy stretch are still with me. we had some pretty strong figures from quite a lot of retailers. are they holding up? ben: it is a question of expectations and the general retail sector, expectations are low. if you look at the numbers from marks & spencer, they were enough to move the share price up relative to what people were expecting.

some of the stronger players have a nash where they are not beinghe with a are not challenged by online -- where they are not being challenged by online, you see a more positive performance. francine: what is doing well? the ones that have cheaper goods or the high-end? how do you become different in this oversaturated market? ben: it is a question of value or being premium and very distinctive. you have to have a compelling long island -- online offering and a retail store. , you gotn the week really weak data coming from your physical stores but your online is growing. that is challenging to work with because you have an awful lot of fixed costs. it will be optimizing that fix while continuing to

build out that online presence. competitors are attacking you at the most profitable points while you have to manage your legacy business. francine: shares in u.k. retailer greg's, who is a baker, are continuing their momentum raisedhey were raised -- their key pretax profit. from a group that sells 1.5 week andausage rolls a the vegan role was unveiled about a week ago. us.r whiteside is joining are you brexit immune? -- roger: we don't know. we are having to live at the uncertainty. we are a fresh food retailer so there is not much we can do in

anticipation of disruption. we can take some action to protect ourselves if there is some disruption at the poll. we have to wait to see what happens and act accordingly. francine: what are you selling most? what are you getting so right? roger: it is interesting. and was a difficult year that we were knocked off core early on with the beast from the east, with very bad weather in the early spring. then we have the hottest summer since 1976 which brings our business under pressure and we struggled to keep ourselves positive. we managed 1.5% positive sales for the first half. once the weather settled down, the strength of the business started to come through in the second half, and finished very strong indeed.

we are seeing good momentum in the business and it is broad-based. we have seen improvements in the year whether the shops were located on high street or non-locations. clearly, the high street is under pressure. use francine says i don't greggs. like abeen down there zillion times on the sausage baguettes. you have a vegan sausage roll that you claim has not cannibalized your pork sausage products. how did you do that? how did you overlay a vegan products overtop of the quality things like sausage baguettes? great you sit down in a take strategy room and work all that out. we see that there is demand,

growing demand for vegan products. i have been trying for some time to find one we were happy with and we found one that our taste panel says was nice to eat, so we thought we would give it a try. it has gone ballistic. tom: we are showing a bunch of healthy food. put up a chart, this is the most amazing chart in retail. flames,or down in jaguar losing 5000 people. your stock performance is the envy of the united kingdom. what is your business model to make other u.k. companies do well? roger: it is not an overnight success. the business has been around 80 years and we tried to change during that time. we started from a strong position, great products at fantastic prices. whitesidege, roger

with greggs. it is a very difficult choice. do we do to yet claridge's or go claridge's do tea at or greggs? francine: let's do both. guests,nk you to our ben ritchie and jeremy stretch. harsha subramaniam, thank you for joining us. in our next hour, marquis saul of pimco -- mark kiesel of pimco with your new low yields. ♪

♪ this morning, crisis at the white house.

marty robbins' cowboy donald trump says bye-bye to washington to head to the border. there is crisis at 10 downing street. sophistry at the house of commons. he is holding court and rakes precedent. -- breaks precedent. ensues.haos silence this morning from northern ireland. how about the markets? there is an economic slowdown. central bankers will speak today carefully. this is bloomberg "surveillance." live from new york, i am tom keene, on my way to london with francine lacqua. -- a wonderfuls, article from mi ross thomas, it needs translation.

francine: no one really has a clear picture of what happens next. there is a vote. you are coming to cover the vote next tuesday. what happens next is the government has three days if it does not get past the house of commons to have a plan b. we have no idea what that could be. i do not think it is lost in translation, just the situation is extremely fluid and uncertain. tom: i want to emphasize, it has been a crazy day for news flow. david rubenstein in conversation with chairman powell, that happens later today. our first word news with indiana hurtado. viviana: ford will try to return to profitability in europe right cutting thousands of jobs. a do not rule out the possibility of closing european factories.

it will try to reduce employment through voluntary measures of possible. the bbc is reporting jaguar land rover well cut 5000 jobs. -- will cut 5000 jobs. the trump administration is pushing china to deliver on its promises after three days of trade talks. china agreed to buy more american agricultural goods and products. beijing says it lays the foundation for resolution of the conflict. storming out of a white house meeting with congressional leaders to resort -- resolve the partial government shutdown, calling it a waste of time and blaming nancy pelosi and chuck schumer for being unwilling to negotiate over border wall funding. they will not discuss order funding until the government reopens. theresa may is openly considering a brexit plan b. there are growing signs

parliament will reject the deal she has made and will try to take control of what happens next. opposition leader jeremy corbyn says he would call for an election. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana her to otto. -- viviana hurtado. tom: equities, bonds, currencies, commodities, futures take a pause finally. 1.15.ro still euro with a lift. brent, average, the dow, 51.97. sterling does not move off the uproar in london. francine: as parliament takes more control, maybe there is an underlying belief in the market that we are away from the scenario of a hard brexit. i am looking at the stock

rallies taking it break -- taking a break. what they are worried about is unclear. dollar edging higher, oil dropping, and bonds rising. tom: we are making an effort to cover the fed and we are advantaged with michael mckee. he is out on the road speaking with fed residents. -- presidents. thee are trying to get to point where we are consistent with our dual mandate, and at a time when forecast are telling us that more than likely we will not have a bad outcome and likely will have a good outcome in terms of the unemployment rate drifting down and real gdp relatively strong. the financial data has come in much weaker. differences,these

i think we need to get a little more understanding of why they are so different and my guess is that over time we will see in 2019, the economy will be reasonably strong and the strong and the unemployment rate will drift down from 3.9%, and the financial markets will recover. i understand my forecasts can be were wrong -- and a wrong and the market has a different view, so i have to take those considerations into account. , and manyrosengren fed speakers including chairman powell today. with now, we stay on plan harm bundles from unicredit. joining us from the west coast and we are thrilled to have onset, mark kiesel. now is the mood right

within your trading floor? mark: the bond market has rallied quite a bit as markets take out the fed this year. tom: were you positioned correctly to see price up, yield down? mark: we have not had a material different view with the market on duration and yields are at the far end of the range. we think the fed will go one or two more times. uncertainty is slowing the global economy down. china is slowing dramatically and the global pmi is down. we think the bottom line is that profit earnings estimates will come down so it is hard for equities to rally when earnings are slowing. tom: for tv and radio, we go to the drama right away. a pet for theith united states of america. -- cut for the united states of

america. mark: every year we are adding to the debt and every year we are spending beyond our means. the treasury curve is extremely flat and what does not make sense is that there is no risk premium built into the yield curve. our biggest bias at pimco right now is not only will yields rise but the yield curve will steepen. there is no risk premium built into the yield curve right now. francine: what is the number one thing you are watching out for to give you an indication that the fed will not hike this year? is that a possibility? has it been priced in? harm: i think the market is getting a bit ahead of itself. we have seen repricing of fed expectations over the last three months of about 100 basis points , so we have seen eric rosengren and chair powell later, is solely a reaction to the finance market volatility because

economic data has remained pretty strong. the levels are more than solid. we are on a sugar high and normalized it in terms of data. one thing that got the fed really nervous is the financial markets and we have to see how the stock market develops to understand the next three to six months. --ave always said that close growth will slow down in the second half of this year, so the opportunity is closing. i think we probably get one or two more hikes. because: would this be of the trade concerns that we are seeing market volatility? does that not hurt the consumer? harm: the economic performance in the u.s. is still very strong and financial markets, if we talk about equity markets, they have been expensive. valuations have been high and

they have normalized. i agree with former chair bernanke when he said on friday, what we are seeing is more normal volatility. we have not seen anything like it for the last couple of months or years. something like that used to happen more frequently. tom: news flow extraordinaire this morning. harm than halts and mark kiesel with us. linking in fixed income in the economy, we will do that and a lot of politics as well. kevin cirilli is scheduled to be with us to start his day. mike rounds from south dakota will join us. where is the senator from kentucky? we will talk about that as the government is shut down. this is bloomberg. ♪

♪ mrs. bloomberg "surveillance." lampertairman at a raising the retailer in business. the hedge fund has made an offer of five alien, covering -- billion dollars. sears is on the verge of liquidation after injection of an earlier offer. steph curry agreeing to a multi-year partnership with a japanese company that sponsors the golden state warriors and as the title company for his basketball camp. two of china's power players in

new york are pulling back from trump tower. china's biggest bank plans to reduce its space in the building when it's least expires in october. hna selling the office and from trumpur blocks tower because of national security concerns. tom: it is not funny, it is a shut down. ontakes a vengeance not only a shut down week three but possibly know paycheck. here is humor from dana milbank at "the washington post." our strategy has to be more byzantine. of george soros funded migrant caravans back 1000 years ago. to scale up trumps border wall will need 51,200 towels --

people,nd 10.2 million it's various chores -- pouring hot oil and dropping rocks on invaders, pushing away their ladders, and pulling ropes to operate the tour salon catapults. democratsu think the will do about it including steny hoyer? kevin: i will ask him in the eleven o'clock our. it was remarkable to have congressional leadership in the situation room for the second time in a week and the president gets up and walks out. i have got my eye on senate republicans like senator cory gardner who is up for a tough reelection in 2020. they are starting to forecast that they might be ok with having some of these government down,es that are shut reopen while these border wall

talks continue. that is a devastating blow for the president if that actually materializes, because it shows that republicans in the senate are not with him 100%. tom: i watched the ballet on cable news last night and mitch mcconnell looks like a wax museum figure. where is senator mcconnell on this debate? he is a key figure, isn't he? kevin: no doubt. he has always played the best chess game, particularly in times, better than paul ryan. in terms of the democrats, what you have is a different sort of landscape where the staffers i talked with on the democrat side , they do not want to be negotiating with vice president pence because they feel the president ultimately does whatever he wants.

i think what you have seen with leader mcconnell is that he could be banking that this could really backfire on democrats if -- and the president, but maybe not senate republicans -- if this thing continues on and on. francine: what is on and on? how long can it last? kevin: the president is suggesting he is in this for the long haul. i was speaking with folks who deal with this white house , and they, yesterday suggested the president seems to be timing it quite perfectly with his state of the union address in just a few short weeks. mind you, the issue of emergency powers that he could use at the border, timing that around the state of the union address. it could be an interesting couple of weeks. francine: at what point does it

hurt the president's popularity, or does it? is it counterproductive? does it make him look strong or weak? kevin: to his base, hardline supporters, they believe this will help them. , they believeft this will help the left. this has been an engaged on the left and right type of times that we are living in, in washington. where it starts to really matter as if the president were to see his approval ratings dip into the 20's. we have not seen that any evidence of such. tom: kevin cirilli, thank you. you see speaker pelosi and steny hoyer behind her, the house majority leader. an exceptionally timely conversation today. this is an extraordinary moment for the united states of america

and it is great to have the filter of mark kiesel and harm bandholz who has enjoyed being a foreigner in a strange land. yourg from germany and excellence in american economics , where you prepared for this? harm: when i came here first? no. we went through quite a bit since then. we went through a financial crisis. , it islitical drama tough to understand for outsiders. for foreigners, we learn more and more about it because this is a drama that has been going on for years. tom: what does it do to economic growth? there has got to be a tangible effect on the fabric of society. mark: we think it will impact growth. we grew last year about 3% and we will probably grow 2% to 2.5% and we could hit the low end of

that range. we think growth will be between 2% and 2.5% but we could go to the lower end of the range because it is impacting business and consumer confidence. it is only a matter of time. tom: this is critical, off of capital economics, taking their euro paul down to 1% gdp. francine: overall, how much does this actually impact some of the other data? does this have an impact on, for example, some of the issuance, some of the other things we are seeing? period,after a certain after a 40 day shutdown? is it too soon to say? mark: equities and credit spreads are your leading indicators. the leading indicator is really profits and profit growth, and profit growth is coming down.

the global economy is slowing. the united states economy is coming off what we call a sugar rush. as profits slow and confidence gets hit, that will impact labor market numbers and the capex numbers will weaken also. it is only a matter of time before we see this in the real economy. francine: thank you to bar -- harm bandholz and mark kiesel, both staying with us. sales vice-chairman, they will ask him about the dollar dynamics around the shutdown at 3:00 p.m. new york, 8:00 p.m. london. ♪

♪ >> society made their homes here -- francine: speaking now in wakefield, u.k. opposition leader jeremy corbyn says labor will vote against theresa may's deal. joining us now is david merritt. what happens? on tuesday, there is the vote. what happens if she doesn't get it? ur now confirming if -- and if it is and if but we all expected to happen -- they will take a no-confidence vote in the government, which could

possibly take place wednesday morning. the numbers will be tight because she has a minority government. the dup has said they will vote down her deal but for a confidence vote, they will rally behind the government. their has said this is first preference and after that, a referendum. maybe by next wednesday we could the in the position where the idea of a second vote could be possible. francine: what would have to happen for that to take place? david: theresa will come back to commons with another plan. what does the house of commons want? vote,our wants a second it will not take many tory mps to come around. the mps are being able to drive the direction of the government with amendments and motions, and the government will have to follow. they will have to table a motion

for the opposition that could be passed. francine: david merritt has been covering and leading on the brexit debate. one of the things we want to make sure we have nailed is whether there is a second referendum come up there will be an extension on the e.u. side. -- 78 eight days away days away from march 29. we will be covering what jeremy corbyn is saying about the brexit deal. this is bloomberg. >> keep pace with e.u. rights in standards, combined with efforts of a radical government will allow us to make the fundamental changes that are so badly needed in our country. ♪

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important steny hoyer interview in the eleven o'clock our. we will speak with the junior senator of south dakota current we will do that in a bit hurt we say good morning to all of us. pimco, harmof bandholz of unicredit. you are legendary for the single research integer, a claim years ago on saudi arabia, and you have been looking at the bargaining power of trump and xi, who has the upper hand? harm: i look at relative performance of the pmi's, right? into this.ught we thought maybe the u.s. loses less than china. the second was it is all relative, and in the middle of the year, summer, last year,

when the u.s. continued to grow very well. kept going up, china was eating the pain, the china start market was down, so the u.s. was winning. we heard from the u.s. administration, a growing threat to china, $200 billion, all chinese goods. bargaining power has peaked in october but it has come down in line with the u.s. stock market, president trump's approval rating, and the pmi. i do not think it is a coincidence when the bargain was down, they agreed to the 90-day truce. less pressure from the u.s. i think the u.s. is more easily looking for an agreement them they were before. tom: do you have any sense of real gdp in china? i do not have a handle on it. mark: this is where we may have some insight. we have 60 to analysts all over the world. i do conference calls with our

people over the world. w in a lot of cyclical companies, etc. the author think that -- the other thing that goes with your chart, six month ago, it really hit the cyclical sector, like autos and housing in the united states. i think you are under something, that the stock market is in fact causing trump to want to get a deal. you look atrm, when renminbi, is that the perfect stress indicator for the chinese economy? harm: there are a lot of structural elements. short-term movement, it looks like they reflected the threat of the trade war. continues to move in line with what is going on. for probably the short-term, it is a good indicator of what is going on. francine: all right, thank you

both, harm bandholz of unicredit, mark kiesel of pimco both stay with us let's get to the bloomberg first world news new york city. let's get to the vienna heard auto. -- viviana hurtado. g.m. -- thousands of jobs will be cut. ford has struggled with an aging model lineup, and a shrinking market in the u.k. is leading to it. billionaire's tom steyer will over the money o next two years on trying to impeach trump. he wants to put $120 million into the election. can go a little higher against the dollar. >> i believe at least that it will be further down, even less

than that, perhaps third when i say 90, i am saying in the short-term. , would be very optimistic perhaps i hopefully am wrong, i see the others are weighted different, and it is different. viviana: global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. am viviana hurtado. this is bloomberg. francine, tom? tom: thank you so much. washington,, california, texas, their subtle employees. do not forget south dakota. maybe a thousand civilian employee, -- maybe 3000 civilian employees. i am watching south dakota. the senator, mike rounds,

joins us. what is the impact? sen. rounds: it certainly is an impact, not only those looking at a couple of weeks without pay but also those who they serve. i have worked with the good people who control the -- who work at the control towel in's -- control tower in sioux falls at the airport. they doing a hard job to begin with, but when they are doing overtime, that leads to tough things. with healthl services, they provide health care for native americans. they be critical of what provide sometimes, but nonetheless, they are the first people on site. we have a number of people who provide day-to-day services that you sometimes take for granted. tom: one of the interesting ounds,, senator r

about you, you seem to be in rare form in the senate. how will you move republican leadership to that. everyone is looking to senate republican leadership. where are they? they look like they are missing in action? sen. rounds: i would disagree with that assessment. i think was senator mcconnell has said is correct. he is prepared to move, but there is no reason to move until there is a deal between house democrats and the white house. remember, we had passed a short-term continuing resolution unanimously out of the senate. it went to the house, but at that point, it stopped. we leader has made it clear are prepared, but there is no reason to send them to the freight until the time those -- fray until the time those folks are ready to sit down for a resolution. we certainly have to get past this point. tom: the theme this morning -- executive privilege. you have been an executive. how much privilege does the president need in addition to

what he is doing in his term? sen. rounds: with regard to which particular issue? issue you want -- pick any issue you want. the president wants a unilateral approach. should we expand executive privilege? sen. rounds: no. the president said he will compare with a mission, and i think it will find any individual who will work with you, he will negotiate with you. he has a style of negotiating in which he wants to win, but nonetheless, he is prepared to negotiate. what you are finding now, that people have to be aware of, if we have a binary solution in terms of method for louisiana the president. when you -- in terms of nancy president carried of president wants a border security system that includes a barrier. elosi says you may have one that includes a barrier, but we do not. we have to resolve that before we can move forward.

francine: right, senator, good morning for london certainly border wall be good, yes or no? sen. rounds: you have to define what a border wall is, first. if you are talking about a border security system, yes. can it be improved? absolutely. does it need to be approved? yes. because if you do it correctly, you can make for easier trade, back and forth the border easily in a simplified fashion, but you have to have the right type of facility in place, electronic in some cases. , a barrier in others sometimes it might be a fist, -- some cases, a barrier in others. sometimes it will be a fence, sometimes it will be a wall. francine: do you think he should bypass congress? sen. rounds: he has the opportunity to do that. he decided earlier not to. he did not take it off the table. he told us it is still an option. i do not know if he would do

that. there are a couple of scenarios that he might do that. if he were to declare the national emergency and assume he that move funds around for purpose, there would be no reason to keep government shut down. whether or not the courts would agree with that would be a secondary issue that would also have to be resolved. tom: mike rounds, it is like a dynasty, like the kennedys, like the bushes, like the rounds in south dakota. sen. rounds: [laughs] tom: your brother is leading on opioids in south dakota. the president talking about people from mexico, people from south america, do you buy it? the rounds family is leading the discussion. sen. rounds: it is true that with regard to meth and opioids, it is not just a lavrov issue, it is an -- it is not just an issueissue, it is a rural

also. i want to high schools and talked about how meth would make you ugly. studentsr, we found who were using meth, and that is unfortunate. tom: senator, are you blaming people who are coming over the border for this rural tragedy, or is the president off the mark? sen. rounds: the president as talking about one issue of concern. most certainly drugs are coming across the border some are coming across because they can find a liberal area and come across -- a rural area and come across. some come through a legal port of entry. we have got a lot of people who make a lot of money because they can bring drugs into our country, and a thing we can do to stop that flow, the better off we will be. we even have people bringing in drugs from other countries through our mail system. alaska taken steps in will of years to stop that, but there is more work to be done, and most certainly, you have got to have a secured border.

can we get to a point where it will be a barrier or not? that means speaker pelosi, who has her mission in life, and the president, who has made commitments for the next election process, both feel that they are right. they will have to find a way to resolve the issue. when you have got strong leadership in the house and you have strong leadership in the presidential arena, but to have to at some stage of the game find some common ground. tom: senator, thank you so much. mike rounds of south dakota. we will continue with economics, finance, investment. lots to speak of, including david rubenstein. you know him from "peer to peer" on bloomberg. that in the 12:00 noon hour today. please stay with us, with mark kiesel at harm bandholz, this is bloomberg. ♪ bloomberg. ♪

viviana: this is "bloomberg surveillance." urtado.viana h breaking news from target, the retailer sends holiday sales were up 57%. . 5.75. for british retailers, it was about survival of the fittest. they reported stronger sales, although the clothing business is still in a slump. sales slumped.e chair it is talking with lenders about refinancing. two of the most anticipated ipos of the year, neither uber nor lyft have received comments about their offering. bloomberg business

flash. tom: thank you so much. i am guilty of being equity centric. we will show you the chart. down over a zillion years. how about the bond market? ,ur single best chart unicredit. it is a series of different yields, the 10-year from eisenhower, all the way up to the volcker, 10 percent, 12%, 13% yield. have we broken the disinflation here in recent months? is actually an interesting chart, because if you look at long-term history, the government percentage, the economy has come down, rates have come down. while we are ramping down our spending, that is a function of global qe. two i do not need the

decimal points, but do you have yieldst when lift in really begins to unhealed yet it goes to our debt and deficit? when will we get in trouble? mark: we have to look at what yield will slow the economy down on 10-year, between 3% and 3.5%. we went up above 3% briefly, and the economy slowed sharply. tom: do you agree, harm? harm: it is all gradual. i am still unsure about thresholds. they slow down a little bit. they will come down -- they would have come down anyway. francine: ok, where do you see, mark, treasuries going this year? mark: i think the fed will raise rates another one time or two times. i think we will get a trade deal, and ultimately the u.s.

economy can grow at 2%, 2.5%. the unemployment rate likely will come down a little bit more. they will retest 10 years back up toward 3%. at the same time, inflationary expectations have come back down. if you approach 3%, 3.5% even on 10-year, we would be buyers of wants at that -- of bonds at that level. outlook,have a similar a fed outlook, one or two. hikes we have a similar view on treasury. it is a good opportunity. francine: is there an indicator, harm, that you are looking into the market? i do not know whether you believe that one of the first signs of something going bad in the economy could be a market moving, but is there anything else in the data and we should be much more might love? is it housing? indicator, which

is two or three years, we have been working for some time. it has an impact on our forecast. tom: continue, harm, please, please. harm: [laughs] in terms [laughs] availablely indicators, if you test them all come all the indicators that are out there, if you want to make a forecast for the next year or so, then there are not many indicators that are able to beat the yield curve. tom: is that a bit of a germanic humor, making a recession joke? harm: do we have humor? [laughter] tom: he brings up a serious question. can you predict a recession over the year? anyimco, do you have confidence you can get out in front? mark: you want to look at ism below 50, a tightening in the credit conditions, particularly banks slowing. you want to see a slowdown in earnings growth.

you want to see the confidence numbers start to deteriorate. you are starting to see a few warning signs. and generat -- in general, we think the economy is, overall, going to continue to grow. harm: the imf has admitted that itself only predicted 5% of recessions over the last 25 years or so. so we are very cautious. francine: all right, thank you very much, harm bandholz of unicredit and mark kiesel of pimco joining yesterday. in the meantime, this is what you to do. if you are a bloomberg customer, you can logon to bloomberg and go to your g tv . tom looking at u.k. retailers. i am looking at threshold for yuahn. this is gtb -- for yuan. this is g tv , and this is bloomberg. ♪ d this is bloomberg. ♪

francine: this is "bloomberg surveillance." tom and francine from london and new york. we have talked about the risks. today, the focus is number

three, cyber. eurasia said this will be a turning point in cyber competition with the u.s. taking specific steps to protect itself. joining us from washington dc, , d.c., paul. who is winning in 2019? paul: [laughs] i do not think it is in terms of winning. it has been about 10 years, if you remember, since we had things like the cessna virus out there, a pretty serious piece of malware that went against industrial systems and iran. since then, we have had a lot of issues, a lot of data, in 2017, we had the big virus which ended up causing a terminus amount of damage commercially around the world, son -- sort of an

unintended consequence of malware that went around the world that damaged a shipping company, a lot of money, billions of dollars. the change we see this year is the more assertive position that the u.s. is taking on cyber deterrence and trying to take out the message that some of these things will not be successful anymore. francine: the commerce department, you believe, paul, will also locked down, vito a lot of the technology. what kind of the technology will be shut down. ? shut down? paul: the challenges more about the u.s. government's overall deterrence and the willingness to use more offensive strategies. the government came out in october with a new cyber strategy, and in the strategy, they are looking to unleash, for example, the u.s. cyber command, allowing them to take action in response to. some of these new cyber actions. . that is the piece we are.

concerned about the consequences are still unclear. it is how the u.s. uses is superior cyber weapons to respond to an attack, for example, on u.s. infrastructure. ul, thrilled to have you. you are absolutely definitive on the china-u.s. technology relationship. speak to all americans today. can we trust the chinese not to steal our technology? paul: wow. what a great question. i think it is a complicated issue here. china has risen as a technology power through a combination of intellectual property thefts, in the cases of cyber theft in particular, u.s. technology, but at the same time, china has also come up the learning curve on a variety of technologies, particularly semiconductors, artificial intelligence. obviously the u.s. is very

concerned about china's rise and is putting in place new regulatory structures that control china's access to u.s. technology broadly. triolo will join jon ferro and myself on radio in a little bit. "bloomberg surveillance." we will drive forward the conversation. harm bandholz with us, mark kiesel as well from pimco. much more coming up. interview of the day, i will suggest tom steyer with our kevin cirilli later on today, and then david rubenstein, a conversation of the chairman of the economic club of washington. there is a record shutdown saturday. this is bloomberg. ♪ this is bloomberg. ♪ place, the xfinity xfi gateway.

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automobiles. china promising to buy more goods from the u.s. orms out. st the president walks out of a meeting with meters in the latest -- with leaders in the latest negotiation of the shutdown. thejay powell speaks with economic club of washington today. fed they get the patient chair or the one on autopilot? david: welcome. i am david westin with alix steel. reporters with the meter or something until they can get the funding? alix: did you know in the d.c., you cannot get married right now? david: in the district itself. they had