♪ francine: judgment day for may. volatility spikes as the prime minister faces the against decision in years. stocks climb as chinese authorities say they will continue slashing taxes to support growth. in jpmorgan and wells fargo are up today after seeing an encouraging outlook yesterday. good morning, everyone. good afternoon, if you are in asia. this is "surveillance." i'm francine lacqua, live at westminster. later today, parliament will vote on theresa may's deal.

the government may suffer the worst defeat in 95 years. i will be speaking to several guests in november, and we will also be live in paris, where we will speak to the founder and chief executive of hedge funds number capital. but first, let's check in on the markets, as well as get data out of europe, with nejra cehic. nejra: we have the data out of germany. 2018 gdp growth, slowing to 1.5%. we are looking at the weakest in five years for gdp growth year on year for germany. this is just coming through after we had some concerns in these markets about slowing global growth, when we got the trade data from china yesterday, that has implications for germany and europe. that said, it's a risk on tone in the markets today. europe is rebounding from losses yesterday, and it looks as if the u.s. could do the same, if you take a look at what's happening in futures.

the risk profile is playing out in dollar-yen as well. space, you are seeing some of the riskier currencies bid, aussie, new zealand. cable is giving up some earlier games. 1.2876.rading at if you look at the risk reversal pricing on sterling, there is a suggestion that in the markets, they are expecting an extension of the article 50 vote, may be a delay of brexit. the 10 year yield moves lower. butis tracking equities, also higher above 51 earlier ahead of inventories data. now let's get your first word news with viviana hartog of. anna: u.k. lawmakers are voting on the eu withdrawal deal , 70 of the prime minister's publicly pledging to join apposition members. may is set for what could be the

biggest parliamentary defeat for the british government in 95 years. diplomats from both sides are working on the assumption that brexit will be delayed. canadian prime minister justin trudeau -- he was convicted and given a death sentence for drug trafficking, after a one-day retrial, according to statements from the intermediate people's court. it's reported that the lawyer is appealing the sentence. china is reportedly up to some state-run enterprises to avoid business hits to the u.s. and allies. a regulatory body overseen by 100 government run companies told some firms to only take secure company issues meant for overseas use if traveling is necessary. chinese executives are becoming more cautious when traveling after the arrest last year of the hallway cfo. swedish social democrat

leader has one day to resolve the unprecedented political impact. the democrats made a historic deal to form a new government, but the leader of the left party, whose votes are also needed, is demanding changes to the agreement. new allies say the deal isn't up for negotiation. a late vote on a new prime minister will be held on friday. saudi arabia's sovereign wealth fund will develop the bulk of the kingdom was planned renewable power project, turning it into one of the region's biggest utility investors. saysaudi energy minister the public investment fund will be responsible for developing 70% of the kingdom's renewable power, as the country moves away from oil for generating power. inthe renewables will come and encourage scale, which will not happen overnight, and utilities and stationary applications that does not, in

conflict with all , primarily toil transport chemicals. that will continue to grow. the follow from the u.s. government shutdown has saw airports closed terminals and services due to lack of staff. some security lanes are closed as the tsa grapples with absenteeism. there is no clear resolution in sight for this dispute. president trump is indicating he won't sign a stopgap measure without the funding he's demanding for his border wall. global news, 24 hours a day and at @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana are taught in. this is bloomberg. francine: viviana, thank you. a moment of truth for the u.k. prime minister. parliament will begin voting this evening on legislation that will affect the course of u.k.

politics and the economy for years to come. at this point it's not a case of whether she will lose, but by how much. joining us now, the senior economist at baron berg, and the managing director and head of research at tenure intelligence. thank you for joining us. what are the chances? zero? >> zero. francine: but it's a question of how bad she loses. what would be a good win for her, losing by 100, 60? >> i'm not going to answer your question, only say that we should not get obsessed with these numbers. the numbers are important, but they were much more important in december. did manage to get rid of and can't challenger until the end of the year, so the number is not as important as he might think. francine: depending on the numbers -- do you agree with the sentiment that we should focus the numbers? >> we are bogged down that since

this vote is expected to fail, if you are a conservative on the fence that what back theresa may, you could have your constituents to vote for this deal the second time, but for the second time i voted for it. there's party politics. francine: if she loses by 200 or 200, weseems like -- may be looking and general elections or second referendum. >> i think we are jumping too far. the numbers are important, it's clear. not as important as they were in december. but again, there's is still no majority for anything else. we still don't know where the labor role would go for no-confidence. if they do, they will fail. lots of theater, lots of grandstanding, nothing has really changed. this is a very long journey, and we might go to the very last

week of the process. francine: but march 29 isn't far out. >> there are two key trends which explain the noise and u.k. politics th. there's a pro-eu majority which is doing its best to get a softer brexit outcome and avoid a hard brexit. second, the conservatives are bound together by the threat of jeremy corbyn winning an election. we don'tconcerned that yet see a majority around the softer brexit outcome. it's not the nature of you keep politics to do things in advance. the thing in front of parliament's nose is theresa may's deal. we will soon know if the parliamentary majority, which has acted against her hard brexit, can form a soft brexit. francine: are you suggesting there's another deal on the table that we would get in the next couple weeks? >> i would expect theresa may to run the course of her deal, which means a second vote next week.

thereafter, parliament will decide essentially what outcome it wants to go for. if you don't decide an outcome a deal with the eu, it's a hard brexit. that is what we have to watch. you need something to avoid a hard brexit. my bed would be that the eu will signal the u.k. can have any of the deals that are off the menu, there probably is a majority in parliament for one of those under the pressure of the situation. francine: how do you see it panning out? what she put a second vote to parliament, or if we do see that, can they negotiate them? >> we notice she has to come back and present plan b, what she will not have. she will come back and say there's no majority, so we will go back to brussels to get a better deal. that depends whether we see some movement in parliament.

the parliamentary initiative here is the big question. francine: what is the deal that parliament would vote for? >> as of now, the only majority seems to be floating around, the majority against no deal. but between that and where we are now, there are all sorts of options in the middle, and at this point the majority is not there. --n it will be up to make these will take time. we need to get to a point where fear of the no deal brexit is whichbut not that high, will crystallize the minds of some tourists. eventually we have the european council at the end of march, where she might try to get some more concessions. francine: what is the possibility of a no deal brexit? 20% -- i thought legally parliament is doing everything they can to avoid it. >> you need to introduce more

than that to replace the law. the law is the u.k. leaves the eu en marche! 39. you need a deal to prevent that, otherwise you have the nuclear option, which is to unilaterally draw out. the most likely scenario from here -- francine: or extend it. >> or extend it. the most likely scenario for me is theresa may ultimately will lose on her deal. she may have a second vote next week, and then she may request from parliament consent to implement all the necessary andcies for a hard brexit, dominic grieve has been active in this regard, introducing legislation which says if parliament rejects the prime minister's plan for no deal, we suggest you go for a customs union or a second referendum. only at that point, when parliament gets a chance to express itself, will you find there's a majority. but two things like to happen first. first, theresa may have to take the deal off the table, and second, the conservatives will

have to defend themselves against the confidence motion, which will likely be put forward later this week by the labour party. when they realize the snap election will happen, they will switch their focus from the election to how do we avoid hard brexit? that is when you get the backing. francine: and if there is a vote of no-confidence from jeremy corbyn, with the -- >> i'm sure corbyn will put it forward. he knows that if he loses, it lays the pressure on him for labor to adopt a second referendum idea. he is playing for time, but if he puts forward the motion -- francine: i have a million other questions on the market, but what are the chances of a second general election? lower than 20%? >> definitely lower. francine: we will come back to you, they both stay with us. coming up, we have a full roundup of your brexit news, and

china says it will cut taxes to help support a growing economy. what does that mean for the outlook of global growth? can brexit moment of truth. we are back here at westminster is theresa may braces for what could be the worst defeat for a british government in nearly a century. live coverage from westminster continues. this is bloomberg. ♪

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economics, finance, politics. this is "bloomberg surveillance," live from westminster. now to the bank of england. economists are slowly pairing expectations for any policy actions from the central bank in 2019. governor mark carney a knology that brexit could change everything. so how are investors supposed to price in the next move? joining us now, our guests, still with us. we went through the politics of it. what happens for mark carney? you could go for a no deal brexit, and then inflation -- >> i think that's unlikely. i know the bank of england signals what could happen in a hard brexit, that it may have to hike interest rates, but more likely than not the demand side hit from a hard brexit would be larger than the supply side hit. in the end, i think the bank of england will have to promise the markets to provide all the

liquidity it needs to be priced, then shortly thereafter do more qe. but the base case, there's 80% chance we end up with some deal or soft brexit, in which case the bank of england is behind the curve, and will have to step up the pace of rate hikes, because of inflation and pressures. what could slow the blank everyone down are expecting -- the bank of england down are increasing signs of tightness in the labor market. francine: there seems to be consensus -- we will go to the wire on this brexit issue. what does it mean for the finance sector? what does it mean for investors? if you are a banker, you just move people out. the banks cannot afford to run that kind of risk. volatility, uncertainty is going to go down to the wire. it will be a prolonged waiting game. it will be a circus like what we got yesterday, but we might have to go down to the wire. brace for that. francine: it means much more

volatility. >> we will not have to wait for markets -- we will have to wait until march 29 for markets to do the necessary adjustment to a hard brexit. if indeed parliament votes down the deal and has not decided alternative policies to avoid a hard brexit, we will start to see the market adjustment. that would mean the pound lower, probably on bets that the bank of england have to stimulate demand. francine: all right. you both stay with us. next, china will cut taxes to help support its slowing economy. china, next.ss this is bloomberg. ♪

♪ this is "bloomberg surveillance." i'm francine lacqua in london, at westminster. stocks gained in asia after china says it will cut taxes at large scale to support a slowing economy. they say they will remain flexible as the challenges become more complicated. this statement follows a series of weak data from exports, factory prices reigniting fears of global growth. joining us now, enda curran, our chief asia correspondent.

what is the significance of these tax measures? >> well, francine, it's important on two fronts. firstly, it's a recognition that the economy is slowing down, perhaps more than anyone anticipated. we saw that across the industrial sector, retail sales, and now this latest move to cut taxes. jpmorgan estimates they are working around $300 billion usd. it's not immaterial. the second takeaway is that it's a shift away now from the old playbook, the ones you are familiar with in china in previous growth cycles, rolling out lots of debt, infrastructure spending. we know that has left a legacy of debt and credit in the economy that authorities are trying to get a handle on. that is why they are now singing things,the tax side of pushing into a nuanced measure. it's not an example of how policy measures are sticking to that approach, it's all about

measures to make lending easier, and measures to cut taxes for household run businesses. francine: enda curran, our chief asia correspondent for bloomberg. we are back with our guests. when you look at some of the reforms, the stimulus that china is putting in place, does it automatically mean reforms take a backseat? >> we have seen it before. we haven't seen much reform, especially about things the market has been waiting for a that is certainly one of the risks, absolutely. they are playing the usual game of more stimulus to try to get the growth back while there is the risk that others -- francine: we focus quite a lot on the trade war. what if it was something much more significant from within china? china's underlying growth

rate is slowing is a catches up. this is normal, and that has to be held in the context of its 6.5% growth target, which in the long run is unsustainable, compounded by the aging population issue. that you would do a short downside stimulus, just to boost the mystic demand. -- it doesn'tle have an inflation problem, it generates a lot of domestic savings and can control capital slide. this short-term demand-side stimulus, i would expect, for the foreseeable future, probably while supply-side takes a backseat, will last until we stop pouring about china, until the authorities stop worrying. i think we are until late 2015 scenarios, where we have to watch this series of stimulus until it works, and then late this year or early next year we will refocus on trade war. francine: thank you so much. we have a little bit of breaking news. nejra: yes, francine. similar data out of germany from

the statistics office, saying that the german economy grew slightly in the fourth quarter. it is important because we've been on watch for whether we would get to quarters of contraction in germany and therefore a recession. we heard earlier that the german economy slowed to 1.5%, the weakest in five years. momentum has been slowing in europe's biggest economy, and that is the focus for markets, as well as brexit. it is the moment of truth. parliament will begin voting this evening on legislation that will affect the course of u.k. politics and the economy for years to come. live coverage from westminster continues. this is bloomberg. ♪

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union, but we are not living europe. we want to ensure we get the best possible deal for britain. every vote for me is a vote for stronger and stable leadership. no deal is better than a bad deal. what we are working for is to get the best deal for the united kingdom. i reached a deal with the 27 other eu member states. there will be a choice between a deal, no deal or no brexit. the british people just want us to get on with it. face the risk of leaving without a deal or the even bigger risk of not leaving at all. there are some in westminster who would wish to delay or even stop brexit. the only deal on the table is the one mp's logos on. vote on. francine: will have plenty more

on brexit a little later on. the vote is set to start at 7:00 p.m. u.k. time. na: the canadian prime minister denouncing as arbitrary, a chinese desperate on one of -- death sentence on one of its sentences -- citizens. it is an extreme concern to us by the government, as it should be to all of our international friends and allies, that china has chosen to begin to arbitrarily applied death penalty in cases facing a canadian. china is reportedly asking statement enterprises to avoid businesses to the u.s. and its allies about 100 government run companies.

extends to theo u.k.-canada-australia and new zealand. chinese executives are becoming more cautious after the arrests last year. to cut taxessing to help support the slowing economy. a statement saying the measures will be targeted as small business and manufacturing. separate data from the pboc showing loans in 2018 increased from the previous year. arabia's sovereign will develop the bull of the kingdoms bulk renewable project outcome.

that is us the country moves away from oil for generating power. it will take time, into utilities and stationary applications. all conflictot at with the energy next. we're still primarily into transport and chemicals.that will continue to grow . : the honor of huawei breaking his silence. huawei breaking his silence.

-- she is now in canada facing extradition to the u.s. 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. thank you so much. kenneth a moment of truth for the u.k. prime minister's brexit deal. parliament will begin voting this evening. at this point, and is not a case of whether teresa will lose, but by how much. just to recap, you don't believe this is a moment of truth, you believe it will run and run and was still have a wealth of options. what is the eu playing at? do they want to help out theresa may, or other just running down the clock? >> they are in a bit of a waiting game.

we saw a letter yesterday. there was particularly nothing new there. no one like the backstop. the olympic even as short as possible, but will have no concession there -- they want to keep it as short as possible, but they will have no concession there. for the time being, brussels is not going to move. francine: can they give concessions? >> i think it is unlikely. start open it up and modifying the text of the backstop, which is what theresa may would need to achieve, you will have other members of the eu one thing that little bits of change, too. from the eu point of view, they view the deal theresa may have as a this book agreement that the pay has managed to agree to try to pacify brexiteers.

the u.k. needs to make a political decision, whether it is may's deal or an alternative deal. once lite has made the decision, you decide between the u.k. and brussels. is it possible that parliament simply takes over the negotiation process? wolfango: i think they will struggle to do that. the numbers are so fluid. i think the problem more constrained on the prime minister. with him are you going to engage? the withdrawal deal is done and that is it. where they can play with it is a political declaration, where we can add a few lines here and there to try to ease some of the brexiteers. the role of parliament is about constraints. if the political

declaration is seen by the european court of justice of the legal text, will that get it through parliament? : as of now, certainly not. again, if you look at a political declaration, you can interpret that in many different ways. when you talk about corporations and what that means. --re is room there for we're still not there. we need to wait months likely for the european council meeting in march. i have a different view from kallum. i don't expect significant development over the next few weeks. francine: what is the likelihood of a second referendum? because youeasing have a two thirds majority against a hard brexit that may

be willing to execute the nuclear option, which is to simply withdrawal article 50. that cannot stand on its own without the second vote. i see a rising chance of a second referendum and probably a 25% chance the u.k. remains inside the eu i think what the market is focusing on is not whether or not theresa may passes her deal, but what comes after. shaping up forbe an alternative option. there is a risk that theresa may faces which is parliament votes to take this out of the prime minister's hands. she may be inclined to go whatever the majority wants. francine: if there is a second referendum, what would it mean for the citizens of the u.k.? will we see protests in the street? doubt.: without a wolfango: i don't think so.

with still have to address this question. it's took cameron six months after winning the election to pass legislation for a referendum. given where we are over there now is difficult. francine: thank you both for joining us. coming up, stay with us for full coverage of today's historic brexit vote. aming up, we also speak to big investor in south of europe. will ask him whether brexit changes his calls. this is bloomberg. ♪

francine: this is "bloomberg surveillance." more fromve plenty some of your brexit calls, the let's get straight to the bloomberg business flash in new york city. : the billionaire founder breaking his silence as his technology empires fas -- faces its biggest crisis. his eldest daughter is not gender facing extradition to the u.s. the u.s. justice department says all online gambling is illegal

in the united states. the ruling reversing its position from 2011. the coalition, backed by a billionaire, lobbying the justice department to reconsider the earlier decision, clearing the way for states to allow online gambling. citigroup offered hope the worst is over, for its bond trading business after the toughest corner for the unit -- quarter for the unit in seven years. the after the cfo says trading environment was starting to improve this month. earlier, citi reported a 20% plunge. california governor gavin newsom is making changes to the board at pg&e corporation after the company said bankruptcy is the the casele option in against last year's fires.

month, and expects to file for chapter 11. francine: thank you so much.let's turn our focus to european risk as well as brexit. is the chiefw executive and founder of hedge fund amber capital. thank you for giving us a little bit of your time. have what seven european assets. assets.ern european are you still bullish on southern europe? so.es, very much i think there is a lot of skepticism out there on the politics in southern europe and europe in general.

i think what the events in the u.k. show is that probably, parliament will stop the brexit deal, but also parliament, if it agrees on one thing, is no hard brexit. i think a solution eventually will be found. i have no idea when and what type of solution, but i think that is good news in general for european assets and u.k. assets. ourink in southern europe, italian politicians that came into power with the big bang and what it to revolutionize things -- wanted to revolutionize things, were hit with the realities of the banking sector and realized there is no miracle solution there. i think that is also quite positive. i think that a healthy dose of realism helps. francine: when you look at your

investment action, what have you done to protect yourself in case of a no deal brexit, or something unexpected, and what are your priorities for 2019? during the a number of sectors we think look very interesting. despite some earnings in versions, the sectors are way overcompensated for the earnings revisions. they look very interesting and very promising for 2019. we like telco. that has had a major downfall, a lot of skepticism out there on their plans. -- capex plans. there is a lot of value in a number of media assets that we own. there are structural challenges there, but i think they are

being way overpriced by the markets. cyclicals, in general, i think people have done cyclicals -- dumpe cyclicals in a very aggressived fashion last year. recession, go into a they are due for a major balance. someine: when you look at of the possible market wraps, are you expecting more of a correction? we are still wearing about credit. i think credit is the one area that is an issue for us. there has been a tremendous amount of liquidity pumped into the system. there has been a case for yield. corporate credit looks very stretched. looks very overpriced in a number of countries. the u.s., in particular

corporate credit,, there's a lot of leverage in the system. that can be a problem for financial markets this year. in europe, i think less so, but still, if you look at equities versus credit, clearly, the risk reward is much better on the equity side in europe. francine: thank you so much for joining us today. i look forward to actually catching up in the studio here in london. brexit, we are here on the green and will be here all day following that vote from parliamentarians. we are now joined by the former secretary of state of education. what do you think will happen today and why do you think a second referendum is the best option? >> i think the prime minister's deal will be baited against by parliament because for people who voted against brexit, they

don't think this deal delivers th brexit i wante. want. brexit they the deal will be voted down. i think parliament will be in favor of anything. i think whether it is this deal or a harder version of brexit or no deal, i think parliament will vote against all of those things. it parliament can't make a decision, with still have to find a direction. my view is that you have to trust people to do that. francine: there are 10 questions on the back of it. will people not feel cheated if it is 58 --- 50-40 in the other direction? justine: i am saying we now have a choice between three different routes, to take the prime minister's deal.

people don't seem to like that. or you can do a hard brexit, a clean break. many people will say this is what they wanted. or you could keep the existing deal. these are the three choices a half. it parliament can't pick between people.normally, a referendum has two options . it is how we elect mayors in britain, police commissioners. this isn't unusual, but i think the eu could easily get a people and have them make their choice. people andack to have them make their choice. do we get an extension , if there is a second referendum, would it take six

months? you are right in that unique astrology and then you realize how much time you need. when you look at this, i think there is a consensus that you did pass a bill and hold a referendum in 22 weeks. some people think it could be faster, but that will be around 10 or 11 weeks, and around the same period to actually test the question independently and hold the referendum. click could be talking about a referendum by the end of june. -- we could be talking about a referendum by the end of june. much.ne: thank you so hard brexit coverage continues all day. up next, we will get a check on the markets. tom keene joins me here from westminster shortly. this is bloomberg. ♪

francine: -- nejra: economics, finance, politics. this is "bloomberg surveillance." we are focusing on the crucial

vote for theresa may. our guests this hour have been saying don't focus too much on the numbers. is it going to be 60 votes or 200? the city is saying stay away from pound trading today because you could he swings of 10% in either direction. the 100 some saying vote lost margin is the line in the sand. it may loses by 100 votes are less, the pound could hold its current levels. we were about 129. we have given up those gains. it is hard to know how much of that is down to the dollar side because you can see the pound holding up against the euro. the 10-year gilts yield is holding up. let's take a look at what is happening in global markets. we are seeing risk appetite today in global markets. the stoxx 600 rebounding from losses yesterday. it looks like the u.s. could do the same judging by the future.

wti has been tracking what is been happening in equities. it is on the front foot today making a comeback from losses. yields, about the gilt the 10 year treasury yield is moving as well. we are actually seeing yields move lower on government bonds across the spectrum. we are below to 17. dollar-yen tells you something about the risk picture as well. we continue in the next hour. tom keene and francine lacqua our live from westminster. this is bloomberg. ♪

francine: judgment day for theresa may. sterling volatility spikes as

the prime minister could face the biggest parliamentary defeat in 90 years. chinese authorities say they will continue slashing taxes to support growth. bank earnings dip. jpmorgan and wells fargo are up after citigroup encouraging outlook yesterday. this is "bloomberg surveillance." it is a pretty exciting day. tom and francine from westminster today.that though is taking place at 7:00 local time. i haven't heard anyone say that she can win this. tom: and what is a starkly original for a for a foreign or is how complex the number of parties are as we go to the vote. i don't think there is an american equivalent hearing that papers are filled with this site, that side. alsoine: i do think it is

a little bit confusing for the british people. we haven't really seen this before. tom: it is original. francine: it is fairly new to everyone. get straight to the bloomberg first word news in new york city. may, todayeresa faces the worst government defeat in parliament in 95 years. the question now is not whether the brexit plan loses, but how badly? at least 70 members of her conservative party publicly pledged to vote against the measure. the brexit agreement will be close to death. states,the united republican leaders punish iowa congressman steve king for comments about white supremacy and white nationalism. decisiona political that ignores the truth. on capitol hill, lawmakers are trying to figure out how to

end the partial government shutdown. house democrats plan votes on two stopgaps spending measures. president trump says he won't find any measure that doesn't include money for a border wall. the internal revenue service plans to call back about 45,000 employees. they haven't been allowed to work during the shutdown. the union says the employees will be used to process talx returns. they won't get paid until the shutdown ends. 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. thank you so much. we do data checks and look at equities, bonds, currencies, commodities. futures with a list.

-- lift. sterling, really quite awaiting some of the choices to be made tonight. , ifcine: looking at pound you look at market participants, half of them say they are dependent on the vote. like wolfan someone go or kallum who say it doesn't matter how much a list by, you have to go back to square one. 128.70. to have heris set brexit deal rejected and what could be the biggest parliamentary defeat for a british government in 95 years. thank you both for joining us. first of all, do you think pound

moves on whether she loses the vote by 200 votes or 60? or do you think if she loses it, she loses it? >> when i think of the extremes, i think there is some -- i think a narrow loss, the market will coalesce around the view that she will be able to get the deal through. i think the market would take that relatively well. if you get a big loss, the risk is that you move into the challenge of a no-confidence vote in the uncertainty around that. of the extremes i think there is, some scope to move. as you are indicating earlier, sterling has been stable for a while because the truth of the matter is that we are stuck in this limbo land. francine: how much do we know

she will lose the vote by? what we know now is that 70 of her on lawmakers have said they will vote against it, plus some allies in the dep. that is looking at possibly 150 or more lawmakers voting against the steel. , anything over about 60 from what we understand is what europe will say is too big. it is all about whether it is less than 60 or if it is 150 or more. over 150, the deal has to be toast. tom: this is fascinating. between the drums and bells, i can't hear a word rosalind is saying. one of the things buried in all of the newspapers, what you are doing on brexit is the idea the prime minister could resign tonight. is that actually feasible? she is and: -- rosalind:

actually safe from a no-confidence vote for a year. daughter. father's she has very much got that sense of civic duty. she is determined. tom: let's explain this again. she is the daughter of a minister. there is this unique british sense of duty to the way she goes about. rosalind: very much so. she wants to get this deal through and get her job done and then she will step off. the question is whether labour comes out tomorrow and trusted push a full confidence vote. tom: i haven't even figured labor out yet -- labour out yet. what does this mean for the city? pimco have to make a lot of decisions.

army invaded rationalization of are we going to be in the city or me to europe? mike: i think the city has been making plans for various outcomes. i think most major institutions the position of european operations as well as london operations, which gives them more flexibility. the institutions of the city will deal with whatever we are delivered. i think the truth of the matter is that most of us expect there to be some kind of resolution or delay. that is why you see the planning, but you don't see the accelerated news flow you would expect if everyone was really expecting us to go no deal brexit on march 29. is no deal really off the table or is it still a 20% chance that there is a crashing out, a no deal brexit? mike: there is still clearly a

chance that we have a no deal brexit. most institutions will have that in their planning. us, both market participants and chief executives would argue that the onspect of a no deal brexit march 29 is a relatively low probability event. any business have to go through risk management, which is to accept the fact that is a youibility, and therefore have to have a backup plan in the event that we do go down that route. i don't think many people would say it is their central expectation. most people would expect there to be some stalling if we are going down that route, but i think most of us have plans that we would enact in the event we were faced. -- faced with that particular

dilemma. it jeremy corbyn were to -- it is another thing to torpedo your own government. if they bring down the government, there is a real prospect of an election. betraying the tory party to join labour is big news. even if they vote against the deal, that they would then vote to insult their own government. francine: thank you. andill be back with mike rosalind. coming up, we speak to load the people on brexit. i'm looking forward to speaking to the leader of the dup. this is bloomberg. ♪

viviana: this is "bloomberg surveillance." stakeholders are trying to reach an agreement as the bank retailers should live on. it would allow a number of sears stores to stay in business. america will play a major role in driverless vehicles, but vw is committed to owning the software that controls the cars. today, vw and ford will hold a teleconference.

some staff of a french bank will stay on to help manage an unwind existing positions in new york. it is the latest step to move away from commodities. that is a bloomberg business flash. back to westminster. tom: thank you so much. it is decidedly in the present tense. we are thrilled to have you with us on the future of this fractious nation. the liberal democrats over decades have played a unique position. what are you going to do today and what are you going to do in 2019 and 2020 two great a more cogent discussion to the nation? going to votere against the brexit deal because it is a bad deal for the country, and because they think

there is no brexit deal that is going to be anywhere near as good as membership of the european union. we fought very hard on that issue at the last general election. with the first to suggest that there should be a people so on that deal when it happens. that is not proposition that by many mps. i think there is that wider point that you mentioned which is, how to get past this and create the country people can live in, and what are the causes of brexit. for the last 2.5 years, brexit has been so all-encompassing for the government, that there has been no -- tom: this goes back to the beginning of the labour experiment, and now you forward to a conservative party falling apart. goal to take people away from the conservative party? jo: this is about the best future for the country.

i'm sure there will be political fallout because you have a conservative party and labour party divided on this issue. i'm working with people of all parties on how do we stop this and get the people vote with the option to remain so that people have a chance to choose a better future. also, i think we need to work together on how they make our society better and fix the economy so that it generally works for people. francine: doesn't parliament need to deliver a brexit? this is what the people voted for. jo: they did vote for brexit, but what does that mean? we had the meaningless phrase for so long that was brexit means brexit. the difficulty we are in today is that because what was put forward in 2016 was a vague proposal.

nobody was saying that we might end up following the rules. francine: i'm looking for the calls for a second referendum, it is not changing. vote, we have a people they will be a campaign and the job of those who want us to stay in the eu is to have that discussion. i think the different thing is about saying, now that we know , werexit will look like have got to have these negotiations. just checking back with people and saying, you voted in 2016 for different reasons. now that you can see what brexit looks like, are you really sure you really want this brexit? in america, we enjoy two parties and relatively calm government. that is a joke. i am stunned looking at the charts in the telegraph and with bloomberg on brexit.

it is a fractious nature. i want to know where the liberal democrats stand next year, where she resides today or tomorrow or whether there is a new election. what is your selling point to remain? what is a selling point to leave? jo: we want to remain in the eu because -- tom: there aren't liberal democrats that want to leave? jo: there are 11 members of parliament voting for theresa may's deal. we have got 100,000 members up and down the country that want to stay in the eu. is there any divisions within parliament were there are shades of gray, away from the chaos of the conservative party's five and six variations?

thelind: this is actually fundamental question. perhaps that is what the british defense secretary is saying is that the british navy could buy apal's in a straight of gibraltar. what are people looking for? does it have influence in the world, especially with donald trump retreating from being the champion of the u.s. does the pay have a role to play? is anybody actually thinking about this? jo: we should. have always been our best and strongest when we have worked with other countries. that is why our leading role in the european union is so important. absolutely, it is about what it means for jobs, but also what it means for our place in the world. at the moment, it is an

world.in it is more important than ever that we are working hand-in-hand with our european neighbors. tom: this has been wonderful. we have that much more coming up. francine wanted more cowbell, so that is what you hear in the background. the drummer did not go to the school of drumming. john taylor of stanford university on roles and discretion. westminster,n at this is sort day for the united kingdom, this is bloomberg. ♪

francine: tom and francine from westminster today. this is "bloomberg surveillance." we have talked a lot about politics, where talked about the various options, the possibility ofla -- the possibility of labour calling a vote of no-confidence. when you look at the various options for parliament and the probability of a notice brexit, and all the other possibilities, what do gilts move on the back of? mike i think they can move on the back of a variety of outcomes:. if you go down the no deal root,

-- route, i think we and others would take the view that the bank of england would cut rates as they have done in previous rounds of the game. i think if you go down the no deal root, you can probably see the market look at a reversal of the rates we have seen. if you can get some clarity on what the endpoint is going to be,, i think potentially you could see the bank of england try to continue with the rate cycle. at the moment, you have got growth running around 1%-one .5%. the bank of england waiting it out. the two outcomes would be clarity. francine: let's say there is clarity about a no deal route . what is the possibility of that? that is inflation and a rate

hike? mike: we would be a little lower than 50%-20%. we don't really see it being a particularly likely outcome. responsehe market would be, sterling would come under pressure. last time when we have the brexit vote in the first place, you such sterling go down by 10%. that would be a reasonable indication. the bank of england has got this challenge about what do they do? do they look at the rise of inflation or do they look through that and think about the growth dynamics of the economy for the medium-term? on the previous situations where we have sterling under pressure, they have done the latter, which is to look for the short-term influence. arvest guess is that that is what they would do the next time around as well. much.ne: thank you so

mike stays with us. as does rosalind. we will have plenty more on brexit and from westminster. we'll have a thing or two to say when they talk to arlene foster of the dup. there trying to gather number of votes by which theresa may will lose her vote today in parliament. this is bloomberg. ♪

>> it will be one of the most significant votes parliament has had. it doesn't look easy. many roads remain open. many, many questions as we head towards march.

tom: good morning, everyone, from the green in westminster, francine lacqua and tom keene. this is a historic day for the united kingdom. much going on before tonight's vote. we'll see it at 7:00 p.m. and on into the 9:00 hour as well, with many different outcomes predicted. francine, just to sum all this up before we get to the minister from scotland, we really don't know what's going to happen tonight at 7:30. there's a real mystery. francine: there's a mystery, but actually consensus is it's not something really surprising. they need to see how much she needs the vote by. there seem to be some concessions possible on the european side. if she starts losing by 100, 150, it's unlikely the e.u. will give enough concessions. tom: you know i pulled rank here. i mean, it wasn't with you, i was arguing with the rest of our team. i said i am thomas ross keane, which means we need to speak to

a ross from scotland. we do that with the scottish national party's leader, ian blackford, joining us from northern scottland, away from he had inbrow. s the belief the same in edinburgh? ian: you know, we're pretty distraught with what's going on. we see ourselves as european, and we've benefited enormously with membership. when you travel around the highlands, you will see signs all over the place funded by the european union, roads, bridges, harbors. they recognize that i live in a rural place, and it's fragile economic place, europe has been fantastic for us. many people from europe come to work in our industries. we're distraught about losing our rights as european citizens. in fact, we're not prepared to do it. tom: i can't tell you're

scotland. from "game of thrones," met jon snow, i can't remember. what i do know is essentially it's the middle of nowhere, and yet in other parts of england, people in the middle of nowhere said we're going to leave. that's still the major shock here. a lot of people said leave, even distant from london. can they be changed in their thought? ian: i think the whole problem for me about where we are, we now know the consequences of brexit. francine: do we? ian: yeah, we do. i don't think there's a good thing. it's going to cost jobs. it's already happening. we saw the impact in the financial markets when we decided to leave. the pound fell, food prices increased. people have become purer it as a consequence -- have become poorer. francine: with all due respect, the doom and gloom that we were told by the people that were trying to campaign hasn't happened. i'm looking at the polls, and

if there was a second referendum, the outcome may not be much different. should we not just get along and try to figure out a brexit that would get through parliament? ian: the u.k. has fallen to the bottom of the leak. investment has stalled. so there is that impact which is there. all the economic analysis, whether it's from the u.k. government, just any economic institute says that we are going to be poorer than we would be if we stayed in the european union. francine: is there a danger that by trying to remain in the e.u. actually force a no-deal brexit? ian: no, because no deal would be catastrophic. no rational person would want that. the prime minister and government has the opportunity to rule that out. that's why what i'm asking parliament to do tonight is to use article 50. take the fear away. the way the prime minister has characterized this, a choice between her deal or no deal is actually dishonest. we don't need to be doing that. we need to be more grown-up

about this and say, yes, there are alternatives, whether hat's staying in,these options are there s. tom: a great job of giving you different opinions, the complexities of this brexit debate. when i look at the backstop, which is clearly associated with ireland, and i think of almost a kind of backstop for scotland. i understand it's not the same, but there are going to be real permanent damage in that distance from london. describe the permanency if we have some form of lead. ian: all of us understand the circumstances in ireland. we fought very hard for the good friday agreement. it's delivered peace. it's really important there. by the way, we can fix the backstop very ease fill we stayed in a single markets and customs union. the u.k. government has created this problem. i think the fundamental point is that if we can have a deal

that respects the difference says in ireland, we can have a deal that respects the scotland to remain. there's something very important here, because we had a referendum on scottish independence in 2014. we were told if we stayed in the u.k., our rights as european citizens would be respected. that's changed. the scottish government has a mandate from the people of scotland to have a referendum if we so choose on independence for scotland. one thing is clear. we're not allowed to be ourselves in the passenger seat where theresa may drives the bus off the cliff. the people of scotland have to have that opportunity if they so choose of determining if we stay in the european union, but as an independent nation. tom: one final question. what do you want from mr. corbin? if we have a response from labour. ian: for goodness sake, man, get off the fence. your voters, your members don't wish to leave europe. you actually need -- francine: but does he want to leave europe? ian: he wants to leave. that's the point.

i'll say this. if he doesn't recognize the impact of brexit and the impact on his voters, he will pay a price. he's a very silly man doing what he's doing. he needs to recognize the leadership means that you have to take responsibility. tom: francine and i look for a remote from scotland. we're thinking the third week of july. francine: let's do it. ian: come and see nuts highlands, you're very welcome. tom: ian blackford joins us. we've got much more coming up. right anyway in north korea city, with your first word news, here's viviana hurtado. >> where and you francine are, that's the u.k. prime minister theresa may's last-minute plea to support her brexit plan, don't appear to have worked. she's set to face the biggest government defeat in parliament in 95 years today. at least 70 members have made conservative party are expected to vote against the measure. several e.u. officials say a defeat by more than 60 votes would mean the brexit agreement is close to death, and

negotiations would be in uncharted waters. president trump's choice to be attorney general is trying to convince lawmakers he won't interfere with special counsel robert mueller's investigation into russian interference in the 2016 presidential campaign. tonight the senate begins two days of confirmation hearings on william barr. he's released his opening statement. he promises he would let mueller complete his work. the agency that provides security cleaners at u.s. airports will start relocating the officers on a national basis. why? to deal with shortages during the shutdown. some security lines at airports in atlanta, washington, and houston are closed due to absenteeism. yesterday it took some passengers more than an hour to get through security in atlanta. china is making tax cuts its key weapon against the economic slowdown. today senior officials promising the tax deduction says on a larger scale are in the pipeline. j.p. morgan chase estimating the total impact will be about $300 billion, or 1.2% of gross

domestic product. global news 24 hours a day on air and on twitter, powered by more than 27 owe journalists and analyst from more than 120 countries. i'm viviana hurtado. this is bloomberg. tom, francine? rancine: thanks so much. he canadian prime minister let's get back to look's executive editor. we also have a little bit of news from china on taxes to try to help the economy. but first, on the spat between canada, it's not only canada, but the u.s. and chinese executives. is it going to get much worse? we also have a warning from china not to send executives from state-owned companies to the u.s. and its allies. >> canadian citizens being

caught in the middle and about companies and how they plan to trade. huawei has really become the poster child globally, and so we think active t for tat behavior, and now this gentleman suddenly being sentenced to death. china says its companies are doing nothing wrong. it's saying it's abiding by the law and people coming to its country need to abide by the law. but equally it's protesting the detention of the thank youway ounder's daughter. so what we're seeing is this is focusing on the company's behavior and no indications it's going to get any better. francine: who de-escalates this? who's the adult in the room? >> well, we saw is overnight that the huawei founder has come out. he usually doesn't speak in public. he's come out and made comments. he personally praised the u.s. president and said his company is assessing the need in the broader trade conflict. he's appealing very much to the u.s. president directly, saying if you can go around all these other people and just get to

donald trump, perhaps there can be a conversation and a deescalation. he's definitely trying appealing directly to the u.s. president. tom: my reading in the american media, there's a question of this is the price of a frack advertise u.s. foreign policy. it can be canada, the united kingdom as well. are there senses in our reporting that canada needs mr. pompeo to assist in this really serious matter? >> justin trude awe has been quite authorize active with a number of countries, saudi arabia being one. there's been tensions. there's been separate tensions between canada and china. canadian foreign policy tends to be more the promotion of western liberal values that stopped in the u.s. under donald trump. but does he very much need the u.s. to help him manage this situation, because the canadian trade relationship with china depends on it.

tom: fascinating. rosalind, thank you so much. the news flow just extraordinary as we focus on the shutdown in washington, and, of course, this momentous moment for the united kingdom. with that, with the many different opinions we're trying to bring and you good conversation here at westminster, david davis will join us, the former u.k. brexit minister. this is bloomberg. ♪

francine: this is "bloomberg surveillance" live from westminster. tom and francine here. let's get back to the u.k.

prime minister theresa may, seeing her brexit deal rejected in what could be the biggest parliament defeat for a british government in 95 years remember. the voting starts at 7:00 p.m. local time. joining us is the director of the u.k. and changing europe initiative. thank you so much for joining us. when you look at some of the concerns, there's like a 20% probability still possibly baked in the markets with people telling us we could see a hard brexit. there's almost no chance this vote gets through parliament. what does parliament want? how do we know what they would actually vote on? >> you've hit the problem there. parliament knows precise what will it doesn't want. it has no idea what it does want. at the moment, it's clear there's a majority against no deal, against this deal. there seems to be a majority against the referendum. but actually it is proving very, very difficult to seek agreement. for all this talk about parliament taking control is fine, but parliament needs to

know its own mind if it's going to do that effectively. francine: we're 72 days away. what happens till march 29 when the u.k. is meant to leave the e.u.? >> that will depend hugely on the scale of the defeat today. no one thinks she's going to win this vote today. the crucial question is how much she loses by. if she loses by what is seen as a manageable amount, what will happen next, they'll go back to brussels, might arrange a special european council, might provide her with an interpretive letter is what they call it, lodged with the u.n. that provides more clarity, and she will hope that the period of a week and a half between this vote and the next vote will be enough to force m.p.'s to start to panic and come down on her side. tom: if we see drama tonight and tomorrow, when we can all make it up, there's six flavors in the newspapers this morning, what is the outcome europe wants if we see constitutional instability in the united kingdom? >> what does the e.u. want? it wants this deal to pass. tom: it's not going passes.

what's the next step? >> well, at that point, i think europe is as confused as the rest of us. i don't think there's any great appetite amongst the european governments for another referendum here, because that simply means more uncertainty. i think there's a wariness about having to negotiate with jeremy corbin. there's no other option. tom: this is critical. one of the things really emphasized is the level of the world is going to come to an end if this thing ends, no deal in all of that. is the e.u. have the same fears that remains here that there will be a permanence to this crisis if we get a no deal, or do they feel that on a micro economic basis every trade idea will be worked out over time constructively, a la boris johnson? >> no, i think the e.u. has real genuine fears over no deal, partly because there's a billion pounds they really need for that budget that they're not going to get. i think broader fears, too. if you think about the politics of no deal, these talks break up acrimoniously. if the u.k. walks away leaving the republic of ireland to

suffer a severe economic shock, the political implication says will be huge, because both sides will become more hostile to the other, and that might feed into things like security corporation. that will be very serious indeed. francine: what's the most elegant solution here? >> the quickest, needest solution is for the deal to pass. after that, i suppose the easiest path would be to have a general election. the problem is if we both parties go to the people saying we respect the outcome, it does very little to solve the brexit impasse. tom: is there too much parliament, too many flavors? there's five, six, seven parties in parliament. do you have a yearning as a professor not towards the u.s. system, but towards a simpler parliament of another time? >> to be honest, i don't think the problem is the number of parties in parliament. it is the fact that the big parties are profoundly divided over brexit. the problem with brexit, it's not a left-right division, it's a value valuation. tom: where are the liberal democrats in this? we spoke with one of their leaders within this hour. do the liberal democrats

re-generate themselves off of this debacle? >> well, they hoped they would, but the election of 2017 -- tom: so they didn't, yeah. >> they didn't, for a variety of reasons. one is because the leadership hasn't been great, but also i think when you have profound ideological divisions between the two big parties, as you have now, our system goes to them. francine: does this actually change the way that parliament has? is parliament now becoming stronger than the executives in government and is it going to be staying like this forever? >> well, this will certainly have implications, but the fundamental driving force isn't parliament's assertiveness, it is the fact the british people can't settle on a party. it wants a majority. if we had an election today, chances are it would lead to the same sort of situation with no party enjoying a majority, and because our system is designed for majority government, parliament can exercise its muscle when that isn't there. francine: do you really have two parties that are united? it seems like you have a

coalition of huge. >> well, i think you have two parties that are divided in a number of ways. what unites the conservatives is a profound of jeremy corbin. when push comes to shove, if you end up with a vote of no confidence, it's very hard to see conservatives siding with the opposition. tom: do you see the power of the professor? he comes on stage, and the drumming stops. it's a miracle. [laughter] francine: i know, keep him on. he director of the u.k., we'll talk a little bit more about market positioning in 2019. also coming up, citi group's global political analyst. that's coming up at 10:00 a.m. in new york, 3:00 p.m. in london. she'll talk brexit, china, and the e.u. this is bloomberg. ♪

francine: "bloomberg surveillance" on the field in westminster, tom and francine, as we cover the brexit vote in

parliament. that vote on theresa may's deal with the e.u., voting starts at 7:00 p.m. u.k. time. now, we have a lot of other news, first china, with a tax to try to soften the blow for its economy. and as we look into the start of 2019, we want to look at positioning in what the markets ould do next, plus get back to ur analyst from pimco. >> the reason is two-fold. one is that you have -- you've got the chinese attempt to stimulate the economy and how much they can do with that. and then, of course, you got the trade situation. so i think china is very important. chinese growth is a very large part of global g.d.p. you can see the knock-on effect of some of the trade dynamics with what's going on with some of the european data. so i think china is very important, yeah. i think it's one we all need to

keep a close eye on and think about how, you know, how the managed slowdown that's been going on in china for a while can influence markets and how they can respond to that. francine: mike, what do you like on the markets right now? is there anything you're buying? if there's a correction, a dip, would you get back in? >> i think we've seen a lot of volatility in the markets over the last couple of months. i think part of that really related to low liquidity over the year end, so there's a lot of volatility across all bond markets. you get potential recession risks coming up again. i think we both think we're in imminent risk of a recession really, so really, what we've been trying to do is to take advantage of the opportunities that have arisen. you've seen supply side come back through again this year to date. we've been on debt for a while, but that doesn't mean if you start to get some of these

deals that have been coming this year at concessions, that's the kind of thing we can do and reflect the fact we think maybe the markets will get a bit more balanced growth profile as we move through. tom: one final question if we could, and this goes back to the legacy of the pimco total return fund. are you clipping coupons or is there an opportunity for total return for pimco this year? >> there's always an opportunity for total return. i think part behalf we do is try to seek out those opportunities. you know, we are a bond investment management firm, so obviously debt that's been under a bit of pressure the last sort of 12 to 18 months, and i think when you look at where 10-year treasury notes trade now, a pretty big rally, but i think we for a while have felt that the fed would get into this neutral range of 2% to 3%. they're bang in the middle of that. i think we can see a bit more volatility over the year ahead as we go through the rounds of

uncertainty. but i don't think -- we think there's plenty of stuff we can do. tom: thank you so much for joining us this morning. you hear the bells of protest, the drumming in the background here at westminster am coming up, eileen frost her speak to a critical voice for ireland, and also david davis is scheduled to join bloomberg later today. on economics and finance, john taylor will join us from stanford university. we'll also talk to u.b.s.'s global chief economist. stay with us. this historic day for the united kingdom, this is bloomberg. ♪ i am a family man.

i am a techie dad. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience.

my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. tom: this morning, quiet in the markets as there's signals from

too big to fail american banks. citi group reports weak trading results. j.p. morgan this morning will do expense control, meaning more firings. there is quiet in washington. the government in shutdown. the president, he served fast food to the gentlemen from clemson. and this historic day in london, in an expected defeat not seen since 1924, prime minister may fights for survival. as a manner of honor, will her government fall late tonight? good morning, everyone, this is "bloomberg surveillance." we're live from the green at westminster. i'm tom keene. with me, of course, holding court, queen francine. this is a really historic moment, maybe a little theater on my part. maybe she doesn't resign tonight, but it is possible given a substantial defeat. francine: well, there are a lot of people asking if there's a substantial defeat, 200 votes, for example, how can she actually stay on? tom: how can she go back to brussels?

francine: exactly. there's no procedure from the conservative government to get a replacement, because remember, she won that vote of confidence, and so she's safe for a year from the conservatives. so it would be up to labour to make the government small, but there doesn't seem to be enough advertised. she would have to resign herself. you hear her and her sense of duty, we feel like it's unlikely. but you're right, it could change. tom: it could change and have a profound effect not only for the united kingdom, but for all within their combined economy, u.s. the u.s. and the continent of europe as well. right now in new york city with our first word news, here's viviana hurtado. >> as you were discussing, today british prime minister theresa may faces the worst government defeat in parliament in 95 years. the question now is not whether may's brexit plan loses, but how badly. at least 70 members of her conservative party are publicly pledged to vote against the measure. several e.u. officials say it's the margin of defeat is more than 60, the brexit agreement will be close to death. and here in the united states,

republican leaders punishing iowa congressman steve king for comments about white supremacy and white nationalism. they rebuked and stripped him of his congressional committee assignments. king calls that a political decision that ignores the truth. staying on capitol hill, lawmakers are trying to figure out how to end the partial federal government shutdown. for the first time, a group of republican and democratic senators meeting to discuss possible ways out of the impasse. house democrats planning votes on two stop gap spending measures that would open up closed agencies. president trump saying he won't sign any measures that don't include money for a border wall. and the internal revenue service plans to call back about 45,000 employees. they haven't been allowed to work during the partial federal government shutdown. their union says the employees will be used to process tax returns, but there's a financial hook. they won't get paid, at least until the shutdown ends. global news 24 hours a day on air, powered by more than 270

journalists and analyst in more than 20 countries. i'm viviana hurtado. this is bloomberg. francine, tom? tom: thank you so much. we do data even here in the green at westminster. equities, bonds, occurrence success, commodities, one screen for me today. i'll let francine talk about the importance of sterling within the vote. a little bit of a lift to the markets this morning. francine: all eyes on sterling, and we turn to the key brexit vote, but stocks overall in europe advancing. i'm looking at a little bit of sentiment on the market. tom: sterling ebbing in the last few hours. francine: we saw a chart sent that the volatility, the future position on volatility on the pound is much higher than emerging markets. i'm going bring that up later on, but overall, we're seeing a little bit of lift to the market because of china's efforts to try and combat the economic slowdown, and then, of course, we're trying to figure

out exactly what all of this means for oil. i'm looking at oil, some of the recent losses at 51.18, tom. tom: we have a conversation with many diverse opinions on leave and on remain as well. it does help to speak to someone with great experience on trade policy. of course, for years at lehman brothers, with their work across all of the united kingdom government system as well. you have the added advantage of working within government. how paralyzed is the united kingdom government right now? >> actually, i don't think it is. i think the government itself, the actual executive, but there's also civil services just getting on with life. and their default position is actually preparing for no deal exit, although they don't want that. tom: when you say prepare for no deal exit, there's a truck that's got to get over to dover, they're preparing for that kind of logistics? autopsy for whom the beth tolls, it tolls for me.

but i don't expect any major problems, because quite honestly, this has all been weaponized, not least of all of dover route, which is so important for truck trade across the european union. as the deputy minister has said himself, we're not expecting any great difficulties. you know and i know -- tom: how do you respond to boris johnson saying, it's going to be a mess, everyone agrees, and then we'll move on to some new normalcy. can you support that idea? ruth: i don't believe that a no deal brexit would be a terrific mess. i think there's disruption. i'm not saying there wouldn't be because business would have to get used to a new relationship. francine: have to renote 9 trade deals? >> if we leave without a deal, if this withdrawal agreement falters, basically 55 percent of our trading already under w.t.o. rules. francine: that's 55% that isn't. >> 65% is, and some of that is

preferential, but 50%, want least of all the united states and america is basically under w.t.o. rules. we go from 55% to 100% of our trade under w.t.o. rules. yes, it's difficult because of trading across the customs borders, but i think they've been grossly exaggerated. the truth is that if you go with withdrawal agreement or no deal brexit, it's a no-brainer, no deal brexit. the withdrawal agreement is so poor. francine: how much would it take to negotiate some of the trade deals? >> once we're out, i think it's a matter of getting together with the commissioner and saying it's in your interest to have a trade deal. it's in our interest to have a trade deal. let's get on with it. francine: what about the deals with the u.s.? >> although obviously the e.u. is still our biggest trading partner, because 45% of our trade is with them. but they've got a great trade service. tom: you are an expert at this. let's take a real world

situation. gucci has to move shoes from italy over to the united kingdom. do they fix that in one day or two days? >> i think the truth is, of course, most of the trade is actually on the customs, is done electronically, it's done by computer. i'm saying to you that i think gucci or whatever has to adapt to the new situation, and that is why i think there would be some disruption. but they would adapt. and also, you think about it, we go on and on about the automotive industry in this country. and all parts are brought in. a lot of parts come from other countries now. francine: when i have the grocers telling us that they're stockpiling, this is not scare mongering, they're just stock piling. are you not worried about them stockpiling? >> there will be some disruption, i have no doubt about it. we will have to adapt. the truth is there will be the cost of trading across the customs border, not least of all getting tariffs, until we can actually have a free trade

agreement with the e.u. but we have a choice. we either have the with w draul agreement with all its horrors or actually go for a no deal brexit. francine: i was at the airport, one side is the french, one side, and it's a nightmare getting the rental car from one side to the other. this is the reality. we don't know what kind of disruption we would face and for how long. >> i think the truth is that over there, your initial question of what's happening in government, and i said the government -- i actually think within the civil service itself, it's having to address these issues, and by the way, the european commission, they already have contingency plans. they came out with a document in november, another document earlier this year to say when it comes to things like aviation, this was right, they're already got contingency plans in place, because they don't want massive disruption for people in the e.u.

tom: we're keeping score on the bells and drums. the drummer went to the school of drums and got an ffment he's not making it. but the previous professor had no bills, and ruth brought two bells with her. there are two bell interview. francine: plus a triangle. >> it's dramatic or something. for whom the bell tolls, it tolls for me. tom: very good. francine: and keep going. six hours and still going. tom: i feel so hemingway. francine: plenty more from brexit. joining us is the global head of economic research. thank you so much for joining us. where do you see the vote today going, and what kind of brexit deal will we end up with? >> well, your guess is as good as mine. it's pretty clear that she'sness going to win the vote, so the question is by how much does she lose. we've been saying anything less than 150 would probably be sort of a margin of era that she can

still try to correct. e'll find out. tom: within the management of u.b.s., and i don't want to you speak for the executives, but how critical is this vote today for the strategic planning of the city? >> i don't think we're going to get any clarity tonight. i think the general expectation is that nothing gets resolved today. we're going to go through a process of numerous maneuvers and votes to try to figure out what parliament is for rather than what it's just against. the clock is clearly ticking. so i think the baseline expectation that all the banks have is that we will leave by end march, and so the banks are all prepared for that. tom: thank you so much for being with us from queen street, as we are in are in westminster. much more coming up. thank you for joining us. of course, we look to

washington and the shutdown as well. it's my interview of the day. our conversation with the leader of ireland, arlene foster. look for that this morning across all of bloomberg. please stay with us. from the green at westminster, this important day for the united kingdom, this is bloomberg. ♪

>> this is "bloomberg surveillance." let's gets the bloomberg business flash. tops on the latest sears takeover bid from eddie lamb period of time, continuing late into the night. stakeholders are trying to reach an agreement if the bankrupt retailer should live on. lamb period of time valuing his deal at more than $5 billion. it would allow a number of sears stores to stay in business. volkswagen still hasn't decided whether to work with ford in developing self-driving cars. the c.e.o. saying america will play a major role in driverless

vehicles, but v.w. is committed owning the soft waiver that -- the software that controls them. the e.c.b. telling bank lenders they need to cover all of their nonperforming loans within seven years, according to a report in an italian newspaper. still a person familiar with the matter says the central bank did not broadly tell the eye italian banks they need to boost their coverage. the health insurer's revenue also was better than expected. united health reaffirming its guidance for this year. and that's the bloomberg business flash. tom, francine? tom: thank you so much. we welcome you to the green from westminster. the protesters with bells ringing and drums, leave means leave, and, of course, the voices that remain with e.u. flags. right now we turn to the other great moment in the atlantic, and that is in washington and

the shutdown. seven cirilli, our chief washington correspondent, kevin, a shutdown is about images, maybe t.s.a., it may be the president under that portrait of lincoln serving fast food to the clemson football team, but it may be the image today of the senate and house actually getting together and speaking of some agreement towards an end of shutdown. is that possible? kevin: it doesn't appear so. in fact, both sides are so dug in right now the president really has no incentive in order to negotiate some type of shutdown. yesterday the president went to norbles, where he doubled down in terms of claims he wanted to get $5.6 billion for the wall. i was speaking with some staffers to speaker pelosi yesterday, and they feel she's negotiating with republican senators because, you know, she's trying to break some of the support. you saw that a little bit in terms of senator lindsey graham breaking away, or at least

floating the idea of having the government reopen while they continue to negotiate over border security. tom: well, this is critical, kevin, because i think there's confusion within the media. can we get to some form of partial relief or total relief without the president weighing in? kevin: no. i truly don't think you can. unless there would be a veto-proof majority, the president has said he would want to use emergency powers. two weeks from today, two from the president's state of the union address, and now all questions become, will he try to use the emergency powers before or around that state of the union address? i mean, talk about a stalemate. you've got the president serving mcdonald's hamburgers to the clemson tigers last night at the white house, because he doesn't have the budget for food to host these type of events. so i mean, if washington can't get any more surreal, there you have it.

francine: kevin, talk to me about the fact that actually the president had to deny he ever worked for russia. i mean, this is very unusual. have we come to this? kevin: unusual being an understatement o. saturday night the president called in to a fox friendly show with judge janine to refute allegations of the "new york times" and "washington post" reporting that the f.b.i. had opened an investigation into him having been a russian agent, either knowingly or unknowingly. and then got the "new york times" tweeting, live tweeting that fox news interview, saying that he never directly denied it. o then the white house press secretary sarah sanders wakes occupy monday morning with a complete firestorm at the white house, and you've got the president taking off for new orleans, and he says that he's got to get out in front of this, because this tweet went viral that he never denied it, so he's got to say point-blank i never worked for russia.

that's the moment in washington, d.c. that's very unusual, by the way, as an understatement. tom: yeah, kevin, i think this is beneficial that the fegs lost, because i can't imagine your philadelphia eagles having mcdonald's meals at the white house with the president. i mean, it wouldn't be appropriate. kevin: i'm devastated by the loss, but i will tell you, i eat a lot of fast food, tom, between us. tom: oh, you do? kevin: i do. i'm a huge mcdonald's fan. tom: this is what's called too much information. francine: yeah, never admit that in public. tom: no, you go with the number two value meal, because then you get a fresh hamburger and you say no ketchup, and then you get a fresh hamburger as well. kevin cirilli, our chief washington correspondent. much more coming up. an important conversation with a democrat from maryland, ben

cardin. look for that later today. this is bloomberg. ♪

tom: good morning, everyone. from westminster green in london, this historic day for the united kingdom, francine lacqua and tom keene. the voter later tonight. i'm thinking 9:00 p.m. new york time maybe you'll see the depth of the vote.

don't you think like 9:00 p.m. tonight? francine: yeah, another 10 hours to go. tom: a lot more going on, not only the shutdown, as we just heard from kevin cirilli in washington, but a global slowdown. you see it most clearly in europe. of course, china front and center with headlines there as well at queen victoria street this morning. arend kapteyn joining us. open question. how big, how great is the slowdown in europe? >> we've run a global model which is currently tracking at about zero. i think the consensus was for q-4, about .04%, so 1.5% or so with the consumption. we're actually at zero. we're seeing a major deceleration in q-4. we got the german full year number this morning, so the good news you can back out what q-4 is implied, and it avoided the recession. we're going to get the actual q-4 number, so this is still an

estimate. they're missing largely the december data. there's a major slowdown, and what we think is behind it is about 75% of the weakness seems to be coming from variables that are heavily correlated with the global trade cycle, and europe is exposed to that. what does t of it, dr. draghi need to do here? can he be assert and i have help, or does he just simply ask? >> i think this is giving him cover to do the extension. i think obviously they have an assumption for 2019 of 1.% growth. we're not going to get anywhere close to that. so just on the statistical carryover, the down side risk forecast is 30, 40 basis points already, and they're probably going to have to pencil in a much lower growth path for the quarter in 2019. so that really implies something that's maybe much closer to 1% than 1.7%, which is below where they would

estimate potential growth in theory, that would impede the trajectory, because they're starting to reopen up an output gap, which could delay the liftoff. when you speak to councilmembers, they sort of argue that you're going to have volatility around, and we're not too worried about it. it does gives a little bit of cover to do the extension. that does not expire until mid 2020, but really -- sorry, go ahead. francine: yeah, it inflation take hold in europe in 2019? >> yeah, so what we have is a big drop in headline because of oil prices. wages are still tracking about 2.2. as long as wages don't go down, and the labor market is still tightening at the margin, then it should start to slowly show up. core would only go up by 20 bits or so a year, which is going to take a while, because you're at a normalized stated. but the headline is going to come down very sharply. that creates a communication ssue for them.

om: thank you so much, arend kapteyn. a fractious protest here. much more loud and fractious than we've seen before on this important day. coming up, david davis will join us, former brecksity secretary, an important conversation. look for that on bloomberg. ♪ place, the xfinity xfi gateway.

and it's strengthened by xfi pods, which plug in to extend the wifi even farther, past anything that stands in its way. ...well almost anything.

leave no room behind with xfi pods. simple. easy. awesome. click or visit a retail store today. >> welcome back to bloomberg surveillance. i am matt miller in london.

counting down the hours to brexit vote, seven and a half until parliament gets to move. let's get to the first word news. >> theresa may's last-minute don't appear to have worked. she is set to face the biggest government defeat in parliament in 95 years today. 70 members are expected to vote against the measure. a defeat by more than 60 votes would mean the brexit agreement is close to death and negotiations would be in uncharted waters. president trump's choice to be attorney general is trying to convince lawmakers he won't interfere with the mueller investigation. two days of confirmation hearings on william barr. he would leted mueller complete his work.

the agency that provides security screeners at u.s. airports will start we look officers on a national basis to deal with shortages during the continuing partial government shutdown. someteeism has closed security lines in washington, d.c. and atlanta. cuts its keyng tax weapon against the economic slowdown. promising taxls reductions on a larger scale are in the pipeline. j.p. morgan chase estimated the total impact will be about 1.2% of gross domestic product. global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. bloomberg. joining us from westminster green is bloomberg's u.k. politics reporter.

we are trying to figure out what happens after the vote. is our most important interview of the day. francine: if you were to predict what happens next. i know it's going to be difficult. if she loses by 200 votes is that it for the deal and is it salvageable if it's between 60 and 100? the first thing the government is going to want to get out of the way is the vote of no-confidence labor has been going to table. that could obviously lead to a general election. by a smallerst margin she may be hoping she could negotiate with the eu.

francine: if members of parliament from within her own party vote against her, how many would be able to do that? itif they came from any side would be odd to the hardline brexiteers or the hardline remains side. it's not that they just have to vote once. they would have to do two votes to get that general election. are the members of parliament removed from their constituencies right now? in america when you have votes like this, they are being lobbied the different business groups. is that occurring here? >> absolutely. i went to that -- voting with most gusto for brexit. the mp's says she can't act the idea of a second referendum.

even though her labour party potentially would support. tom: it's absolutely amazing the story away from london. brexit was a protest vote by people who feel like they've and neglected and want their voice to be heard. what's interesting about the brexit vote is it is different to the traditional way that people vote. the system allowed for a different kind of result. this was very much about everybody who voted having their day. aside from those in scotland who voted overwhelmingly for remain. if you go to a hard brexit than obviously that's a disaster. we did a modeling exercise a couple months ago.

that's a very small probability. i think near-term nothing much is going to happen until we get some clarity. if you secure a withdrawal agreement i think you get a bit of a relief. sterling. rally in we have that in our baseline assumption. dollar sterling at 1.37 by year-end. francine: what will we see on the pound? >> quite a bit if people think it is a consequential vote. it's very difficult for people to take big positions. the other thing that i think is quite complicated is you have to have some certainty about what otherwise it's very difficult to actually take a position. if this is going to drag on and it's very difficult to think for investors to take a position here.

tom: take us through what we are going to see tonight. 9:00 p.m. london time. going to be doing at 9:00 p.m. tonight? and on to midnight? >> are you asking about how the vote is going to happen or after the boat? -- vote? tom: what do you expect to see at 11:00 tonight? it's that simple. >> people are being very coy. the next thing we are going to find out this morning is what amendments are going to be made to the bill. if they choose amendments that could enhance theresa may's defeat or lead to parliament even taking control of the parliamentary timetable these could be quite significant events for what's going to happen next. it really is an hour-by-hour play out at the moment. the vote of no-confidence is

quite likely. whether that happened tonight. tom: i believe it's 112 members of the party have abandoned the prime minister. did that number increased this morning? -- increase this morning? people are saying, i have gone into the abyss and i see what a new deal breaks it would look like. way of getting brexit is to support her deal. there have people that -- have been people that switched back. francine: if there is a new deal -- no deal breaks it, what about the economics of germany and france? >> our estimate is that the cost to europe is going to be about 1/5 of the cost of the u.k. the first 18 months we think the u.k. takes a 200 basis point hit to growth. for europe that's about 40 basis points. not what it needs right now if they are tracking at zero.

much.hank you so we will be working through the day and into tomorrow morning. coming,t much more jonathan ferro and paul sweeney on bloomberg radio joining us on rules and discretions. the choices for central bankers. stay with us. from the green at westminster, this is bloomberg. ♪

>> this is bloomberg

surveillance. willr nissan chairman remain in a tokyo jail. a japanese court has rejected his latest application for bail. he has already been in jail for almost two months on allegations of financial misconduct. want to keep questioning him while they build a case against him. launch a freewill streaming service next year. the service will be supported by advertising and there will be an ad free option available for a fee. and an unusual story. a highly unusual meal at the white house. president trump picking up the tabs for the fast food extravaganza as he acknowledged

the clemson champions. maybe some of those brexit sausages. francine: i wonder whether theresa may will see parliament afterward. let's get back to china. we did see the markets listing a little bit on hopes that china can actually master its slow down. where is china in terms of your top worries for 2019? is the main worry that they try and stimulate the economy and therefore back away from some of the reforms they promised? over the trade tensions and the impact that

has. in terms of china's response whether that response is affect it or not. read than getting credit stimulus we are getting a lot of quasi-fiscal stimulus. it takes a while to legislate. that's what the nervousness is where exactly is china going to bottom. if you were to look at the markets worldwide and there -- is that a test psychological lever or does it mean much more? >> if it starts to move too much and you see local strength to take their money out of the country it's going to remind people what happened in 2016. i think that would be a big stress event for markets. so far things look relatively under control. key gauge of a

domestic confidence in china. more broadly i think what people numbersing at this tsf because they are hoping we're going to get traditional credit stimulus and our view is you are not going to get that. that's a key litmus test for investors. francine: if we get some kind of china deal -- it doesn't matter if it's smoke and mirrors as long as we get something the markets will rally. three monthsw that down the line we are not back to square one? >> when people talk about a deal the best we can hope for right now is that besides keep talking and we don't escalate to 25% tariffs. the problem with that outcome is it doesn't resolve anything and if they keep talking it just prolongs the uncertainty that everyone is struggling with. if we do actually get a de-escalation a

obviously the markets would fly. francine: what do you think the size and impact of the 2019 tax cut will be in china? >> our estimate is similar to what you mentioned earlier. 1.5hink there's about percent of gdp in augmented fiscal deficit expansion. that is pretty close to what they did in 2014. this is serious money. francine: coming up, wells fargo chief financial officer will be talking to us a little bit later figuresf course we have from wells fargo and jpmorgan. they should be out very shortly. this is bloomberg. ♪

matt: welcome back. breaking on jpmorgan. reporting earnings that missed the analyst estimates. jpmorgan coming out with fourth-quarter eps that was the dollar 98. we were looking for 221.

also fixed income and currencies and commodities revenue was well below the streets estimate. the estimate was for two point two $9 billion. this confirms a trend that we have seen starting with jefferies and citigroup as well. let's take a look of these earnings results. what do you see from jpmorgan here? >> provisions from credit losses that are higher than analysts expected. the six income trading revenue was well below analyst estimates. that's a trend we are seeing across the board. see whating to want to jamie dimon has to say about the health of the consumer. we want to know what he is saying about loans expanding. it's the forward-looking

guidance that's going to matter. the fixed income we are going to want to see moving in a positive direction this year. macro matters from the largest credit card issuer in the united states. i want to get back over to francine the in westminster. -- francine lacqua in westminster. francine: looking forward to the conference call. former u.k. defense secretary. thank you for joining us. you have never really believed in this deal. you thought it would deliver nothing that people wanted. >> it's a poor deal and i guess it's going to be defeated and i guess as a result the european aion will wake up and give us better deal. we want to leave. we want to leave on friendly

terms and that means you do -- the deal has to be improvement. thinkne: how much do you the prime minister will lose the votes by? >> there has to be an agreement. it's in the interest to have an agreement as much as it is in hours. this has to be sorted out. there's plenty of time although it's late and in the end brussels has to give us a better agreement. francine: how can the eu no what parliament would vote on. ? >> the agreement needs to be improved. the famous backstop in northern ireland once to be taken away. nobody wants that. as to the likely terms of trade for our businesses. if the agreement can be improved and we can leave unscheduled at the end of march.

>> she has been elected as leader of our party. francisco what are the chances of a no deal brexit right now? >> we want to avoid it if we possibly can because that involved higher tariffs. disruption in the south of england and so on. as the weeks passed there is a greater danger of that. there's still two and half months ago and there time to send the negotiators back. francine: investors want to know the chances of a no deal brexit. >> clearly the chances of no deal have risen. there is still time to sort this out provided brussels rethinks

the agreement. francine: would you postpone article 50? >> i hope not. we might have to. the timerefer to use for brussels to listen to parliament and get that agreement improved. so that parliament here is satisfied. francine: that was the former defense rick perry and conservative mp. we still have some important divisions of jpmorgan. matt: absolutely. the trading income that missed the streets estimate was already a concern. i want to get to ken lyons now. you have had time to look across the jpmorgan numbers. the most glaring headline is the miss on fixed trading revenue. what does it mean to you?

criminal for the upcoming quarter which is the strongest quarter for jpmorgan. we are in a riskless environment. this was really a cute in december for the fourth quarter. it was really driven by investors on the sideline. matt: jpmorgan was the least worst performer in terms of its stock. do you think since this stock can get sold as much last year it can be -- >> we see it as a quality play for the large banks. it executes a very well. and most of ranking the categories that it participates in. below book value.

view fore cautious next year we think it's a safe haven. other banks where you need that delta to really move it higher. i don't think cities earnings yesterday makes it that attractive. on hist we would focus goldman sachs. matt: everyone wants to hear the outlook from jamie dimon. what do you want to hear on the call? >> the u.s. economy is very important because it is 65 to 70% of the revenues for jpmorgan. we want to hear that business is sound. the consumers very healthy. money in their pockets.

so the real economy is fine and perhaps the financial markets weakness over worrying for 2019. that's the big debate. matt: we see the shares falling 1.7%. thank you for joining us. leon -- ken -- 10 leon. to 1.86revenue was down billion dollars. we were looking for $2.29 billion. up next we are going to hear from arlene foster, dup leader. this is bloomberg. ♪ amazon prime video is now on xfinity x1.

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that's how xfinity makes tv... simple. easy. awesome. alix: the uk's meaningful vote. parliament members prepare to

vote on may's brexit plan. china promises large-scale tax cuts while germany is hit with its weakest growth in five years and jpmorgan's big mess. david: welcome to bloomberg daybreak. i'm david westin. was it allalix: related to that one hedge fund? apparently that's not the case. you have to wonder if these banks got really hurt by some website trades. david: first quarter epa's seven to 90. first quarter adjusted. estimate.e --