francine: sterling surges, the pound strengthens after theresa may considers brexit bill. jeremy corbyn seconds -- supports a second referendum. kim jong-un arrived in home only to meet with president trump. can they agree on a binding deal? plans to cuttered $700 million of costs. the chief executive speaks exclusively to bring -- bloomberg. >> the cost cuts are part of a broader plan. we are focused on getting returns above 10% by 2021, which we are well on the way to doing.

francine: good morning, everyone. this is "bloomberg surveillance ." i'm francine lacqua in london. looking at the euro stoxx 600, stocks down 0.3%. we had a couple of disappointing numbers from industries, but overall, the optimism when it came to the u.s. china trade yesterday fading off by today and we are looking to hanoi or president trump is meeting the president of north korea. per pound, we saw a nice list. 1.31. -- couldn't envision delaying brexit and jeremy corbyn said he could support a second referendum. coming up on "bloomberg surveillance," more on our conversation with the standard chartered chief executive. we talked m&a and strength in emerging markets.

let's get to the first word news with viviana hurtado. >> kim jong-un arrived in hanoi for his second summit with president trump. the u.s. leader flies in later on air force one. on the hope to build previous meeting, but not even the white house is expecting a breakthrough big enough to convince pyongyang to surrender its nuclear weapons. besides haven't even agreed on the meaning of denuclearization. -- viceral reserve rice chair is the latest voice to warn on the dangers of yield curve in virgin but has right now, the u.s. economy is in a good place. we are cold that thoughts on the direction of fed policy. >> the only thing that matters, are they going to open -- go up and are they going to go up a lot and fast? my guess is they will raise them a little more, but i never thought they would go up far or fast and i still don't. >> india says its fighter jets destroyed a major terrorist camp

in pakistan more than 300 militants were killed. tensions between the rivals are with anespite -- attacking kashmir earlier the month. kilometerswas 80 inside the de facto border with pakistan. a judge to hold elon musk in contempt for violating an agreement to get tesla approval for social media post that could impact investors. they claim he breached the deal with a tweet about teslas production outlook. he corrected it a few hours later. musk has since hid out. he said "the sec failed to read tesla's earning transcript." global news 24 hours a day, on-air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries i'm viviana hurtado. back to you in london. may ise: theresa

reportedly considering a delay to brexit, stopping the eu leaving the union next month. she had long said they would on schedule.c another major u-turn, jeremy corbyn has decided to back a second brexit referendum and the said --minister the unity of the 27 has been remarkable, and i think this is an example where you see the value added of the union when it is very cold outside and exiting the union is very challenging, if possible at all. francine: for more on brexit and on our top stories, the head of economic research at barclays. and a brexit editor joins us now. i am struggling to make a difference between what is really policy of theresa may and what she's using to get her vote

through parliament does she really want to delay? >> theresa may definitely doesn't want to delay and she will definitely try to get the deal through parliament in time for march 29. she was facing a walkout from her cabinet, from the board of government and almost certain defeat in parliament on wednesday. to no dealis opposed so basically what she is doing wednesday,of accepting their demands now and saying parliament will have a vote, an opportunity to prevent no deal if it doesn't get through. you could argue it two ways. the wheels are coming off brexit and it will be reversed, or more likely, it is a tool to focus the minds of the brexiteers. they don't like her deal because it is a watered-down version but they would like less for brexit to slip away from them.

it is a risky strategy and we've only 31 days left, but coupled with the announcement from the labor party -- francine: is that a big concession? to keep the party together? come jeremy corbyn has back and back to a public vote but even in the statement yesterday, it was buried down amid lots of other calls for the kind of brexit they wanted. to thehours, we had labour party making clear they didn't agree on what the ballot should say so yes, jeremy corbyn is backing a second referendum carried a majority in parliament remains to be seen. the defections of recent weeks have basically forced jeremy corbyn into this policy. a move,: we saw significant move on pound and we did this chart looking at some of the revisions for sterling forecast. what is priced in that the moment? he made ther when

announcement yesterday for a short period, the pound went up and then came down again. markets are uncertain as things about -- as uncertain about things that we are. investors like no deal brexit taken off the table and that is increasingly the case. that is motivating firmness in pound but it is not that much yet. there are some people that say if we went into an orderly exit seeario where markets can what the outline is for the next two years, pound would go further. if there was a delayed by 21 months, how would markets take that because it would mean no certain outcome? christian: true. for the economy, it would probably mean prolonged weakness because we see business investment as weak.

i don't think business investment would jump on it and say we have a two-your investment, we will invest. the longer it gets delayed, the less risk of a hard crash out we have because it will get watered-down. maybe we have a second referendum, a general election. the pound would like it. francine: christian keller and emma ross-thomas stay with us. next, trump and kim, the sequel. vietnam prepares to host the leaders for a second summit. we are live in hanoi next. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance ." president trump and kim jong-un will meet following their historic summit in singapore last year. kim arrived this morning and trump is expected this evening. stephen engle is on the ground for us. what is the atmosphere like in hanoi and what are we expecting from the two leaders? do we have a definition of what do nuclear station -- denuclearization is? >> so many questions, of course. the atmosphere is carnivallike. there are t-shirts being made of trump and cam and flags handed out along the motorcade route this morning. and vietnamese and north korean flags.

as mr. kim arrived in his stretch limousine and the police escort as he went to the hotel, which you can see in the distance on the other side of the lake in central hanoi. we are hearing that the motorcade has gathered again at one of the entrances to his hotel and we are hearing keeper caps -- hearing he could perhaps go on a tour of hanoi, but there have been lots of rumors. this is unlike any summit except for the last time the two met in singapore, where we really didn't know what their schedules were going to be until the two gentleman met. we heard he might go to a samsung factory. that has been debunked and back on and debunked again. we heard he might go to a kindergarten. he might go to a cemetery his grandfather went to in 1964. the last time a north korean leader went to vietnam. lots of different rumors.

i don't want to propagate the rumors, but we are going on that right now. what we do know is he will have dinner tomorrow night face-to-face with donald trump and the big summit will happen the next today on thursday. it is tuesday afternoon in asia time right now. francine: what exactly are we expecting? there is no real expectation on a deal, but could we get some kind of armistice on the korean war and what would that mean? how symbolic would that be? stephen: yeah, you ask what kind of deal or are we going to get a deal? the question is what kind of deal if at all? in june of last year in singapore, we got a vaguely worded joint statement that talked about the two sides agreeing to work toward denuclearization. they didn't even have any commitments on what it meant or what it would entail, or what the timeframe is. we have to really look for any meet on the bones of that initial, vague statement coming

from singapore. that is what we will be looking for. the united states wants complete, verifiable denuclearization from the north koreans and the north koreans want sanctions relief. thank you so much, our chief asia correspondent, stephen engle in hanoi. let's keep it on geopolitics. there have been mixed messages on the trade talks between the u.s. and china president trump raising the possibility of a new deal with xi jinping. the prospect of nothing happening at all has raised uncertainty. let's get back to emma ross-thomas --christian keller at barclays. at the meeting between trump and kim, they need china onside for this to go well. is there a reader cross between that and the u.s.-china trade relationship? christian: i think there definitely is.

china needs to support such a deal. their influence on north korea may have become less, but it is of utmost importance for the u.s. to press north korea what they want. francine: what does it mean for markets? christian: if we look at measures of global political uncertainty, some indicate we have measures higher than the second world war. all of this political uncertainty is very high, but markets to some extent have gotten used to it and it seems with the u.s. china deal in particular that trump is switching back to -- back and forth. and trumpeaders, xi have invested a lot of political capital and there will be some deal. whether it settles the entire rivalry, that probably won't happen. delaying or taking a tariff increase off the table, making china by u.s. products, these are likely to happen. this is theristian,

question we are asking our market live blog. will trade or domestic stimulus drive chinese stocks? to you, what is driving the economy? is it trade or a deeper concern within? christian: interesting question. the whole trade issue, and the conflict with china, with the on sentiment but if you look at what drives the chinese economy, it is what they do domestically. there, the data gives room for optimism. if you look at what they did in the credit markets, if you see the liquidity that is there, and we think the pboc has been more effective than we initially thought if you look at recent data and that will help through liquidity, reduce the risk of the systemic defaults, etc.. on the domestic front, they are doing well and that is more decisive for the chinese economy. francine: christian keller, head

of economic research at barclays. we are back in barcelona where we will talk 5g and the trade conflict with the chief executive of arms holdings. this is bloomberg. ♪

francine: this is "bloomberg surveillance." i'm francine lacqua in london. arm grew quickly into the you k's largest listed tech company -- u.k.'s largest listed tech

company. it licenses chips to the world's largest technology companies. but head to barcelona where nejra cehic is at the mobile world congress with the chief executive. nejra: i am joined by the arm ceo simon segars. let's start by talking about smartphones. a lot of talk of new devices here, but the issue is about slowing smart phone sales, as well. is that impacting on business in any way? simon: fundamentally it is about the volume of chips. that has been growing steadily over the years and smartphones do form a large part of that. the last several years, we have seen a slowing and in that sector of the business we have seen a slowing. to me, 5g is an exciting time because it will provide the new

capability for smartphone users and hopefully, that will stimulate more interesting people replacing handsets and the development of new capabilities, applications, use models. nejra: i'm glad you brought up 5g. it is a big thing here. the big question over the security. can 5g devices and networks become truly secure or will it be a case of finding faults as it rolls out? new tothere is nothing 5g versus predecessors over security issues. for our part, we think of the devices themselves. how do you build a secure system on chip? a secure chip inside the device, whether it is a handset or 5g network? types of things

connected to the network, so we have put work into how you build secure chips and how you build a secure software stack on top of that so data can be encrypted on a device and remain encrypted. in terms of encrypted data, a shadow cast over barcelona is the u.s. pushing for some of its allies to drop huawei on security concerns. huawei has said there is no evidence. another thing that huawei chairman says is that it will not plant and has not planted backdoors in networks. via 5gossible for them, to access data from backdoors? simon: there is nothing 4gferent in 5g relative to . itis theoretically possible,

will come down to trust. it will come down to testing devices before they did -- get deployed into network, but 5g is no different from predecessors in that regard. nejra: let's talk about possible plans to go public. is there a plan still to go public for arm in five years? currently owned by softbank. simon: we have been a private company for about two and a half years and it has given the opportunity to invest more than we could have. the plan is to go public again. we are talking roughly a five-year timeframe for another to use theprocess is time we have to make sure we are developing the technologies for the things that will drive growth in the technology sector and when we look after that, we think of 5g. it is still in the early stages. it will produce more sophisticated devices, autonomous vehicles, ai broadly as a technology that cuts across sectors. these are many areas where we

are innovating. we will have products and they should be coming to fruition around that time frame. stephen: you are working on a lot of things. nejra: what specifically do you want to achieve before you get to that ipo? what is your top priority? simon: it is about diversification of how our technology is used. a lot of chips based on processors. the last year, about 23 billion chips. in the last quarter, over 6 billion, a record in that volume. many going to phones and lots of other things. it is the new areas of technology growth that are really interesting to us. areas where we will have to build more and more sophisticated products and if we do that successfully, we should have good growth ahead. nejra: simon segars, great to catch up. that is it from barcelona. francine: thank you so much, nejra cehic with the armed chief executive. through thefrom her

day kerry standard chartered announces plans to reduce costs by $700 million over the next three years. we will bring you our conversation with the chief executive of standard chartered, bill winters. this is what i am looking at in the markets. there is a little bit of buoyancy when it comes to pound. theresa may is considering a plan to delay of brexit. corbyn, hism jeremy stance on what he thinks should happen for a second referendum and overall, a lot of the focus will be on the trade talks between the u.s. and china as president trump meets with the leader of north korea. this is bloomberg. ♪ this isn't just any moving day.

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simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. francine: economics, finance, poilitics. this is "bloomberg surveillance." let's get straight to the bloomberg first word news. viviana: theresa may is

reportedly considering a delay for brexit. the u.k. leaving the eu next month. she has long insisted britain would leave the block on schedule. minister atnomy saying progress is needed to avoid it back brexit outcome. vanity has been remarkable. i think this is one of those examples you can really see the value of the union. exiting the union is very challenging. viviana: the nigerian president holds the edge in early election results. the main opposition claims the outcome was manipulated. this follows a vote marred by delays and at least 39 deaths. early results show he is leaving his challenger 51%-40 6% in --

51%-46%. iran's foreign minister has resigned. he a u.s. educated career diplomat. he led iran's negotiating team during lengthy talks with the west. neighbors are pushing back with military force to resolve the nations crisis. the opposition leader is calling for all options to liberate venezuela from the role of nicolas maduro. aduro's actions are those of a tyrant desperately cling to power, he says. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine: thank you so much. standard chartered has unveiled

its long-awaited turnaround plan. the bank is aiming for $700 billion in cost cuts by 2021. the cost cuts are one part of a much broader plan. while we heavily focused on is getting our returns up 10% by 2021. bank. it a superstrong can'ttell you how excited i am to be working there . are through the really hard restructuring. the cost cuts you mentioned will be part of that. does is $700 million over three years. basically allowing us to continue to fund a pretty substantial investment program we have had, and it will continue that for the years to come. francine: how do you look at this?

i don't know if i can to the hard part is gone, because the next part is hard as well. we need to clean the bank up and get it ready for streamlined growth. the next phase isn't about cost-cutting, it's about reshaping the operation for real growth. that has to do with leveraging are really great demonstrated core strength with our global international network, which is unique. it's impossible for someone to replicate. these are hard returning areas and they are not representing well over half the bank, having started for well below have to think. the objective here is continue to grow that good stuff that has been growing fast, and at the same time continuing to restructure the organization. francine: when you talk about

growth of the good stuff, this is organically? bill: this is organic. we would never say that we were never look at adding something that just fit neatly into our footprint somehow. francine: would it be in wealth management? bill: it could be. recover,gh the markets we have pretty good penetration. francine: what you actually merge full private bank into wealth management? bill: we think of wealth management as a product. they are managed by the same person. the interplay between the two is very substantial. wealth management products are also distributed through our retail channel. serves toduct that client segments. toncine: let's move it central banks.

jay powell testifies in front of congress today and tomorrow. meanwhile, janet yellen takes a jab at president trump. what does the market want to hear from powell? does it all have to do with trade concerns? we have to remember the u.s. is the largest economy. -- draghi said china needs to hook up the european economy that going. see from the testimony, it is not the place to make the statements. typically, the fed chair would try to repeat the message they

have already been given. powell is someone who speaks a bit more freely. he could be asked about the balance sheet runoff. what seems to be new is the question whether they will continue the balance sheet runoff until early next year. now, believe it will stop midyear. midi clarifies something around that in the next two days, but typically, it is something where one district messages and doesn't really convey anything new. me bring you over to my chart because this is some of the fed funds and what is priced in. is it right at market is not pricing in a cut? it seems like a pretty. big reversal from last month we look back in december and markets are pricing at some point. i think the markets are

cautious.they do suggest we are late in the cycle. therefore, markets have been consistently pressing a more dovish policy than the fed is foreseeing. francine: what are you expecting dollar to do this year? does it change on the back of the straight? do we just need to look at more domestic u.s.? christian: i think entree, the issue is, it affects sentiment of stock market. if we really look at what the central bank is really watching, is mainly labor market developments and inflation. happeningent, what is in the u.s. labor market is fascinating. participation rates are increasing. our people who were discouraged a looking for jobs are coming

back. room forthere is more people to get involved before we see the inflation pressure that typically all other cycles has come much earlier. francine: where do we stand on the impending yield curve? think an inversion of the yield curve does suggest strongly that a recession is coming. without have that yet and there is some argument this time .ecause of qe the evidence is very strong that if you have a properly inverted yield curve, the probability of a recession goes up significantly. francine: do fed members actually see that? you had conflicting reports that they actually see it as a benchmark. can they do everything they not to see that yield curve invert? christian: i'm sure they will

try everything they can, but i think it has become clear that they are paying attention to market. the biggest market indicator is when the market inverts the curve, that the market is expecting a recession. over the last 50 years or so, that has been a very good indication of a looming recession. francine: thank you so much. christian stays with us. coming up, the un security council is reporting a meeting today after deadly clashes along the columbia-venezuela border. this is bloomberg. ♪

francine: this is "bloomberg surveillance." let's get straight to the bloomberg business flash in new york city. -- the decision wasowing his revelations ey under investigation. the bank says the new firm will report results before the agm on march the 28th. new month as it will review the deal, but that is planned to take over goldcorp offers their value -- better value. >> it is a bit of desperation on their part. i don't know where they're coming from thinking they can take on a third piece of

complexity. >> this is a very carefully considered process. yet been working on it for a long time and we have engaged newmont before hand. viviana: and hedge fund veteran who won big on volatility is getting back in the game eight years after returning money to investors. a fund thatg up currently manages money for his family office, but by bringing investors, the plan to increase it to $350 million by the end of the year. francine: let's turn to the ongoing crisis in venezuela. according to a u.s. diplomat, the u.s. has called for a security council meeting today after a deadly weekend along the columbia-venezuela border. yesterday, mike pence met with representatives. christian is still with us. against the is venezuela, and we

can put that to one side, and then you have emerging markets. do the two ever meet? is what happened in venezuela stay in venezuela, or can also be extrapolated? christian: i think venezuela is a particular case. it is a credit story. things are trading very distressed. if that turns around, from that perspective, that could be a big story. story.n isolated i don't think venezuela is really affecting the rest.it could affect the oil markets depending on how quickly you think venezuela and -- venezuelan supply to go back on. a think there are a lot of idiosyncratic stories. we have elections upcoming in turkey, etc. overall, i think this is a story is traits.

trades. the fed tells us they are not in a rush to hike. they may no longer run off the balance sheet. of ecb seems to not even contemplate any deposit hikes and the come up with a total meaning we are in an environment where growth is ok. francine: but that is a gift to emerging markets. how long cannot last? christian: i guess it will last until central banks decide it's time to possibly tighten again. obviously, market still to see this yet -- markets don't see this yet. we would be to see inflation come and make central banks return to a dovish stand. fed,nk it is all about the where you can turn at some point.

-- whether that can turn at some point. that will happen for a few quarters. you have investors they feel they have at least until the end of the summer or so. francine: overall, do you pref er companies more attached to china? emerging markets are very different structurally and also where in the world. christian: one theme is we are probably emerging markets in asia have been depressed because of china. those are typically not the kerry treats. women talk about kerry themes, we are really talking about the high-yielding countries, the brazils, turkeys, south africas. despite a lot of challenges domestically, investors have been going back in to turkey because they say it is the

highest interest rates in the world and i have to participate in the. -- that. that is just the story of high-yield being offered in a world of low yield. is dollar up or down? christian: horizontal. when people early in the year were very bullish about dollar, whenever thought into this. we were also in the camp of thinking it would rise 1.10 or so against the pound. is is the problem child given some of the populist movement in some other countries but also the fact that you are dealing with brexit? christian: i think it's quite obvious that europe is a problem child. a lot of the data in germany was very weak. it the service

component of bmi is also very stable. again, it looks like more of the situation of sliding along rather than falling off into recession. where youone country neither have political will or ability to do something and the ecb being in a bind, not being able to really do much and having the leadership change later this year where no one wants to really take strong decisions not knowing where the new leadership will be privy to the year. francine: thank you so much. -- up next, the tesla boss is in trouble again because of his tweets. this is bloomberg. ♪

francine: economics, finance, poilitics. this is "bloomberg surveillance." we are just getting a little bit of breaking news on the pound. weapon trying to track any movement on pound on the back of yesterday's news on jeremy corbyn and his support of a second referendum and the

possibility that theresa may's ok with delaying brexit. you can see pound dollar rising 3.170. we were talking to analysts who said there could be a resistance at one point. let's get a check on what else is losing and markets. nnmarie: let's kick it off with peugeot to the downside. to is as they announced a plan to reenter north america. onsibly seeing more peugeots the streets of new york. morgan stanley says there is a risk of margins becoming tighter with 86% of sales in the european region. travis perkins soaring this morning. today, 3.5% tor the upside. the ceo saying 2019 will returned to profit. much.ne: thank you so

tweets about tesla have again landed elon musk in trouble. the u.s. securities and exchange commission has asked the judge to hold the chief executive in content for violating an agreement. that billionaire is accused of breaching a deal with between saying that tesla will make about half a million cars in 2019. sayinged another message that deliveries would only reach about 400,000. houses of his the situation for tesla in elon musk? >> i think this is a pretty serious situation. running a public illicit company is a serious thing.

he has close to 25 million people following his twitter account. people will be potentially making investment decisions on the back of what he tweets. to first he posted said they were going to make half a million cars. that has never been there intention publicly. the reality is about a 20% difference. some people may have thought this is an upgrade. even though it correction came about 4.5 hours later. that is so quite a window for people to get the wrong end of the stick. seriouslykes its role and will be wanting to push this on the company. francine: look at the implications of that the? matthew: it's a good question. nothing in law is black and white. with the first transgression, we saw him having to pay a $20 million fine, and tesla another

$20 million. project to be more fines. barred as could be being the chief executive officer, perhaps they could even make and take down the twitter account. i think there is still a wide range of options. francine: how is the business doing? how is tesla itself? matthew: they have gone into 2019 in pretty good shape. it's hard to overstate how important 2019 is for them. is the year they have to make a breakthrough of the model three in europe. they have got their factory in china ramping up production. any to get that production toward-million by the end of the year and they need to demonstrate the quality of the model three is up there with the premier vehicles they are going against. really important year for the company to reestablish its

credentials as a proper premium volume manufacturer. francine: thank you so much. hour.tinue in the next tom keene joins me out of new york. we'll be talking to the global head of commodity research for goldman sachs at 10:30 a.m. london time. in the meantime, we will talk quite a bit about brexit. theresa may said to be considering a brexit delay. the labor opposition leader backing a new referendum. this is bloomberg. ♪ you.

all of you. how you live, what you love. that's what inspired us to create america's most advanced internet. internet that puts you in charge. that protects what's important. it handles everything, and reaches everywhere.

this is beyond wifi, this is xfi. simple. easy. awesome. xfinity, the future of awesome. francine: us drilling served as the pound strengthens after

theresa may is set to consider a brexit delay. opposition leader jeremy corbyn now supports a second referendum. kim jong-un arrives for meetings with president trump. standard chartered starts the turnaround. the lender pledges to cut $700 million in costs. >> the cost cuts are one part of plan.whileder we are really focused on is getting our returns above 10% by 2021, which we are well on the way to doing. francine: this is "bloomberg surveillance." the brexit momentum is picking up once again. i think we should really focus on fed and possibly what a yield inversion once again means. will affect geopolitics and the relationship between trump and kim. tom: a huge day of international relations.

not only the president traveling to vietnam, but now in india, and in kashmir, there are hostilities. looking forward to our conversation with the former governor. theresa may is considering a plan to delay brexit past march 29. blueprint has learned today that she is expected to let her cabinet discussed extending the deadline for leaving the european union. she is likely to keep trying to strike a deal on time. finallys says it's destroyed a major terrorist camp inside pakistan. it is the worst escalation of fighting between the two countries since 2001. one indian officials says more than 300 people were killed. pakistani tv footage shows little but bond craters and down

trees. tensions are rising following a suicide car bombing earlier this month in kashmir. in a surprise move, the foreign minister of iran has resigned. he let his country's nuclear negotiations with world powers. he is widely seen as a proponent of engagement rather than confrontation. he was saying on instagram he was no longer able to continue to serve. showed he was undermined in his role. the securities and exchange commission asked a judge to hold elon musk in contempt for violating a settlement with regulators. he is required to get approval from tesla for social media posts and other writings. 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. much.hank you so greatly appreciate it. let's get to some data right now. lots going on. futures at negative six. dow futures at -80 with curve steepening. i have one screen today. francine, please. francine: i'm looking at pound. governor carney is also talking. -- we moved to quickly sterling options and held it for several months after the referendum. we have decided, given the coincidence of two events, one that we had to give the update for our schedule of these ons,lities, these aucti and the fact that we are appearing before the tse to move to weekly options of sterling

liquidity. a couple of other quick points of context. there is about 100 banks and building societies eligible for these options. what they do is they bid for liquidity. these institutions have prepositioned collateral with us. once the collateral is discounted, it gives them the right to bar up to 300 billion sterling of liquidity. liquidityt seeing any stresses in the market. the most recent actio we had three weeks agon, there was something, but the bidding was somewhere around the minimum of price. a few basis points above bank rate. the outstanding on a facilities right now is about 9 billion sterling -- my .5 billion sterling, actually -- 9.5

billion, actually. comes together just because of the calendar of these options and the fact that we are in front of you. >> this is nothing that should be read into this, nothing in terms of people watching should be -- >> nothing. there is no signal and it except that it is part of normal contingency planning. aroundks themselves have one trillion sterling of high-quality liquid assets on their balance sheet already. that is part of their contingency planning.we are on daily monitoring of that . this is supplemental to that. sheet,illion on balance on an apples to apples basis is

more than four times what they would have had on the run-up to the crisis. the system is very liquid, as it should be, and we stand ready to provide liquidity in all major currencies. >> thank you very much. i want to move on to discussing the uk's exit from the eu and where we stand at the moment. the potential no deal outcome is very much at the most of people's minds. you have given a very interesting speech. that he gave on the 14th of february, you said that in the case of a note deal , -- what evidence leading to that conclusion? that ii point out

completely agree with what communication in the committee has been so far, which is to say that interest rates can move in either direction. i was in favor of going little bit further and putting probabilities on it. is a judgment call that we can be certain about these things. is going tothat depend on whether or not rates go up. i take it as given that there is going to be some economic disruption from the supply-side, possibly severe. that bit doesn't drive monetary policy. what matters is whether, as a result of that disruption, you pull, which does

require monetary policies. within the framework of trading of support for the economy. , temporary overshoots and inflation of the target which is no doubt going to be the case because the fact the exchange rate to fall, and an there is a possibility of tariffs on top of that. is all things we will be taking into consideration. the risk isalance, that they hit the confidence will be significantly large. we will be thinking about keeping policy on hold or using. -- easing. given the end, proof will be in the pudding. we will have to see what will happen and respond in real time. decision making under uncertainty is what we do. why do you think that a note

of brexit is likely to be different from the way households responded? >> i think the biggest reason why it would be slightly different because previously, we were talking in hypotheticals about expectation of possible future disruption. now, we are talking about actual disruption happening. even those people who were in the camp, of i don't think that is really happening, they will update their views very quickly. >> we have asked other committees before about the benefits of being -- the more forward guidance. i'm going to ask other committee members to comment on this in a moment. this is all to help give businesses and households more of an idea to what might happen. committeerole of the

to help people involved in plan? i am generally in favor of saying a little bit more, but this is a committee decision and other committee members feel different. ofm always on the side favoring state law because i think it is helpful and i will continue to argue that case. on this, giving people guidance? point, very much in favor of giving guidance. we gave a range of guidance through last year, back in the summer we updated our guidance on qe. the guidance we are talking about here with the guidance we gave in november around our thinking that the future starts

policy and future brexit outcomes. i'm comfortable with the guidance as far as we took it. we set the policy could move in either direction depending on the brexit outcome. there was no automatic assumption as to which direction it would move in and which outcome. i think i am still comfortable with that. he has made a judgment on what he thinks of the balance of probabilities and in no deal, no transition outcome. for me, i would generally want to wait and see how the situation unfolded. in particular, he talked about the interaction. i think we all assume that a no deal transition would be quite a .ot is disruption for me, i would expect demand in

the economy to slow, but i would expect that disruption to also create challenges first to the supply-side. there is a distinction between temporary challenges. how long it would take for the digital issues to resolve themselves, but then you would expect over time and longer per iod hit to production potential. i would want to be looking at the situation as it unfolded. proof would be in the putting of what we would actually be looking at. i think two other things would lead me to be a bit cautious. the supply shocks of what this would be. very rare. we really haven't got much ago one. -- much to go on. we looked at the new zealand

example. at a lot ofking different indicators to try and make sense of what was going on. one thing that i have been noticing, and the committee has drawn attention to it is that some inflation expectations, particularly those derived from financial markets have moved up a bit, whereas they have fallen in the u.s. and euro area. some of the city survey of households on friday suggested that also household expectations of inflation are holding up even as headline inflation comes down. they were arguing in their piece that inflation expectations may be more influenced by what people's brexit expectations are. there are a lot of different things that would go into the next. i'm not in aor me,

position to kind of put a probability on what is more likely around no deal, no brexit. what would happen to monetary policy at this point. i am very much with sir dave on this. my reading of the speech, there were two elements. the first was had do we think genuinely about the effects of brexit. i am new to the committee. that is of the committee has been saying at least since i joined. a don't think there's any disagreement from my site on the general framework. where i am a little bit more has hesitant, is can we

actually make a prediction on what will happen in these uncertain times? as he was just saying, we haven't had anything like this before. the new zealand case and inflation report was bound up in oil. i am hesitant about making predictions for that reason. i guess the second way i have a slight reservation is, if one makes a guess about future outcomes, some people may interpret that is a promise about what will actually happen and then maybe some bad outcomes for that. is the outlook about interest rates is so uncertain, how can we take it that monetary policy -- these are the questions, would you have to take more urgent action in relation to interest rates depending on what happens? i think in the first that

this question he started with households and businesses. what is our message going to be to households and businesses is a no deal, no transition scenario where to go to pass? the message would be the same, which is a we will provide all the stimulus we can subject to delivery and price stability, consistent with our agreement. we will provide the support to the economy we can while keeping inflation low and stable. thathallenges was doing are a no deal no transition brexit will be inflationary. there will be tariffs. the exchange rate is likely to depreciate. , and theretionary

will be an element of the supply capacity in the economy. demand could potentially add to those pressures in the short-term. ist we have an ability to do provide some support even in those circumstances, subject to bringing inflation back sustainably to target. we will do what we can, but we shouldn't oversell what we can do. the real drivers of economic outcomes here will be what happened to the productive capacity of the economy and the reaction to businesses and households, and our foreign customers. , andther thing we can do we have done and we are confident is stepping away from the npc to ensure the financial system is ready for whatever form brexit takes. that is the case.

we have very's mechanisms to reinforce that. we just announced one of those a moment ago. we have the financial sector there to support the economy. we will provide the support we , thebut ultimately agreement given to us by parliament is to deliver inflation at a 2% level in a timely fashion. i wanted to tendering quickly -- francine: that was the boe's mark carney getting his testimony on his latest economic forecast. you can follow on your terminal all the further questioning from the treasury select committee head. tom and i will keep talking about the headlines and bring you them as we break. let's bring in bank of america-merrill lynch chief european economist.

thank you for listening to mark carney with us. let me bring you to euro pound. the first time in at least 18 months. it was a little bit of buoyancy for the pound. what i markets is seeing that they are so bullish on pound? end: we could call this the . absolute fear is the possibility of -- we have no clarity as to when the actual deadline is one to be. march is still better than where we were couple of days ago. sayothing else, i would really rall -- a relief rally.

haveine: i know we will votes in parliament tomorrow. is that it or could something happened by mistake? if we thought this was the end of the 29th of march cliff edge, happy days. a risk there's clearly between now and march 29 that something could go wrong. a lot of cabinet members are actually prepared to vote against the no deal brexit. the labour party is potentially behind a second referendum. tom: a little bit of chaos to say the least. this is chaos driving a to a better outcome, or is it just a misinterpretation? how do you interpret stronger pound sterling off of all this

news? eter: i think it is basically relief. the indications are that a no deal brexit on the 29th of march is a much less likely process. the markets have marked sterling up a little bit. the very fact that this is not completely off the table yet suggest that risk remains. a thing assets are still heavily position in sterling. how investors react. tom: i was dumbfounded by the members whof labour are in marginal districts where they could easily lose if they make the wrong decision on leave and remain. how fragile is the labour party's future? coats: there are lots of spinning around.

sitting.ere our mps the other is a large chunk of membership supports a second referendum. the parliamentary party has to balance those two problems. the problem then is that you see a situation where in peace could affect and join -- mps could defect enjoy the independent group. certainly, there are one or two splinters beginning to appear. rallied, iten pound was on the back of theresa may possibly weighing a delay to brexit, which so far she has ruled out, and also jeremy corbyn saying he would support a second referendum. are these leaders doing it because they believe in it are because they want to keep the party together? gilles: it is the number two

option. the issue was she had to choose between possibly deciding to ask for a delay or being forced by her own parliament to actually get into a delay. is probably always better to come across as someone who leads rather than someone cornered into a decision. i think it is amazing to see how may haveignations accelerated the process because it is the first time since the referendum that it is absolutely clear to the two leaders that it is very hard to keep the respective parties together to keep the entirety of the parliamentary group happy. they had to move and accelerate the move. i think it was described yesterday on tv that the move n -- it. car -- corby

is still significant. it is a significant move. it is the first time an opposition party has taken a clear position on this. i remain fairly cautious. one key issue is the length of the delay. youoesn't necessarily give enough time to change the issues around the british invitation. standard chartered has costsed plans to reduce by $700 million. to lender hopes the move will soon investor concerns after corners. >> the cost cuts are one part of a much broader plan. we have spent the last three

years cleaning up standard chartered.it is now a superstrong bank . i can't tell you how excited i am to be working there. can check this enthusiasm now because i feel like we are through the really hard restructuring we needed to do. we know we have to take the next steps to complete our journey. to cost cuts you mentioned will be part of that. this is $700 million over three years. basically allowing us to find the pretty substantial investment program we have had for the past three years and look into need to have for the years to come. francine: is this a new phase? >> i don't know if i can say the hard part is can't because the next part is going to be hard as well. what we really needed to do was clean the bank up, streamlined the organization, get in position for real growth. we took about $3.2 billion of expenses out over the next three years. the next phase isn't about

cost-cutting, it's about reshaping the operation for real growth. that has to do with leveraging are really great demonstrated core strength with our global international network, which is unique and impossible for someone to replicate. segment. on our client both of these areas are growing in double digits today. was the standard chartered chief executive talking to me early on. he didn't tony he had the flow -- he did tell me he had the full support. this is bloomberg. ♪ so with xfinity mobile

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customize each line by paying for data by the gig or get unlimited. get $250 back when you pre-order a new samsung galaxy. click, call, or visit a store today. tom: good morning, "bloomberg surveillance." an exceptional day for international relations at the president travels to vietnam.

in new york city with first word news. >> president trump's former will accuseel cohen him of criminal conduct in office according to the wall street journal. cohen will appear tomorrow in front of the u.s. oversight committee. the criminal conduct has to do with hush money payment tweeps morningstar. on capitol hill, the house vote on whether to block the declaration of the border emergency would force republicans to take a stand on how far they are willing to let the president go to spend taxpayer money on a border wall. it is almost certain to pass the house and may squeak through the senate, but are not enough to override a veto. an american tv journalist has been freed after being detained by venezuelan president nicolas maduro. questioning,amos's and says the president ordered

footage, equipment, and telephones confiscated, and the journalists held. in nigeria, the main opposition totals ares vote being manipulated. observers say the vote was marred by delays and violence. 39 people were killed. rejecting u.s. claims its 5g devices could be used for spying. huawei has a strong record insecurity. -- a strong record in security. accusation hasty no evidence, nothing. >> strong words there. global news, 24 hours a day on air and at tic-toc on twitter, powered by 2700 journalists and analysts in more than 120 countries.

this is bloomberg. thank you so much. spain goes to the polls on april 28 after the socialists failed to pass their budget bill. what impact will develop have on the economy? growth to continue this year and reach 2.2%, that is our forecast. think that will be significantly affected by the elections. took office, we invested a lot in ensuring legal stability, political stability, and financial stability. inare having good results international markets and will continue that trend until the election and beyond. francine: bloomberg's guy johnson joins us from madrid.

that was a great interview. did people believe it when she said it would not impact the economy? this goes back to catalonia and the current government. instability has been part and parcel of the spanish political scene. she does not feel it is impacting spanish growth at this point. there is a slowdown taking place but spain is still significantly outperforming the rest of the eurozone. she anticipates that will continue. the biggest challenge for spain going forward from an economic perspective, unemployment. we look at the economic data, the thing that stands out like a sore thumb, spain has high unemployment. 14.5%.

can she form a government, a coalition that will allow them to bring that number down? that remains the big problem. growth will slow. wrecks it may be a factor. the critical factor for the next government is to tackle the unemployment level. francine: do we believe the polls? i was looking at one that said the ruling socialist party is gaining traction. will they have enough votes to rule on their own? that is going to be one thing we will have to look out for carefully. the expectation is that they will look for some left leading coalition. it remains difficult to ascertain if they will do that. ae catalan story has been factor behind this. spain does not have a budget and is heading for an election because of the ongoing catalan issue the country faces. it has yet to be resolved.

that will be a critical factor in how this next government is formed and how ultimately the coalition ultimately ends up taking shape. that is the way in april, brexit still a factor. that may play into the catalan story. tom: is the public engaged in the selection and the debate toward the selection, or are they exhausted? i think the public are reasonably engaged with this process. i think you do bring up an interesting point, there is some sort of political fatigue taking place. the more times you rollover your government and the nature in which that happens provides some degree of political fatigue. the catalan story is still simmering. spain has significant unemployment.

these are factors that are likely to play a galvanizing factor when it comes to the election coming up. the more times you turn over your government, you are probably going to generate political fatigue. tom: guy johnson, thank you so much. bloomberg news in spain. with us peter dixon of commerce bank and bank of america. on the backdrop of this, without question what we have learned in 2019 is spain in continental europe disinflation. i turned to the bloomberg and i see the 10 year yield .115%. the overlay of disinflation, give us why we have disinflation in europe. >> the headline inflation is inple, due to the gyrations core inflation.

believe time, you could there would be enough pressure in the market to generate the growth that would help generate price increases. as we get into 2019 and the cycle continues to be mediocre, it is highly likely by the end of this year core inflation might not be as high as could of .een expected it wages today are the reflection of where the cycle was a year ago. be as goodly it may as it gets, and as we get to the end of 2019, they could be facing headwinds. euro-sclerosis, there is a populism in spain and the politics of the moment. how embedded is the euro-sleros is? yes, i think it is a

combination of factors. pictureook at the big macro story, what you see is an economy struggling to gain after the biggest financial crisis in 80 years. that has been compounded by a demographic slowdown. in a sense, europe is going through what japan went through 20 years ago. the growth story has slowed. the problem is compounded by this leading to fanning the flames a populism. consequence a lot of people feel they are not getting a fair shake and that is driving this. talking aboutre slow economic growth. more u.s.-sclerosis?

at howway i was looking it has moved, it has moved more to the downside in the u.s. than europe. ,he surprise is the weakness and we will know about q4 this week. the fed clearly is concerned. there are no good reasons behind this slowdown. it seems from the european point of view, it is a double whammy, we are getting hit from the lack of traction from china in particular. in 2019 we may be hit as well. francine: what happens to inflation in the u.s.? peter: personally, i think it remains relatively muted. the market is tight, and you expect compared to the previous

session, workers have less pricing power. consequence, i think inflation will remain muted. francine: thank you very much, peter dixon and gilles moec, staying with us. coming up, jeffrey r. currie, global head commodities, research partner, goldman sachs & co. we will talk to him about emerging commodities. this is bloomberg. ♪

>> this is "bloomberg surveillance." , valued atne hostile 70.8 billion could trigger a three-way fight among the

biggest gold miners. planseviously announced to take over offers better benefits. barrick's ceo disagrees. process, we careful have been working on it for a long time. , and notd before hand just one meeting. you have to convince the shareholders this deal is better than proposed. the man proposing to buy them, is the same blamed for the deal falling apart five years ago. was firmlye finger pointed --

that is the bloomberg business flash. you so much.nk for more on commodities and m&a, let's start with oil, we are joined by jeffrey r. currie, global head commodities, research partner, goldman sachs & co. this is one of the most famous get-togethers in the oil sector. let me go to the president's tweet a couple days ago that moved the market a little bit. oil is stumbling after the third rally since christmas eve. market participants wonder if trump'sl heed president call to temper prices. his tweet said, oil prices getting too high, opec relax and take it easy. the world cannot take a price hike, fragile. jeff: a little bit late.

30% rally, what is driving it is aggressive action on opec's part. we call it shock and awe. get back to a market strategy before the shale guys take over the market. was long andt drawn out over a year, and you ended up with 700,000 barrels per day of shale output. drop the production and get back to market share strategy. right, the, trump is market gained momentum, but the cuts are already in the market. francine: do the saudi's want to keep the president on track? is that more about foreign policy than the price of oil? jeff: six months ago, i would've said yes. given the difficulties encountered over the last part with the rainy and sanctions, i would say there is -- with the

ranian sanctions. disinflation on and on, where are we on global oil a demand? -- where are we on global oil demand? jeff: rocksolid. oil demand, commodity demand has been steady as she goes. we have had a significant fluctuation in sentiment over that time period. you look at chinese demand, it was up 5%, imports in january, even here in europe where you have concerns over the backdrop. french demand was up 7%, italian demand up 4%, spanish demand up 3%. i am not seeing the evidence from a micro commodity perspective there is economic slowdown. tom: what is the micro elasticity? what is the response to increased demand? part of the list we saw

going into that speech elicits was a response to tight fundamentals. you have tight supply fundamentals in a shock end-all strategy out of opec and tight fundamentals from a demand perspective. francine: this could be a major oil producer, it does not look like it will come soon. jeff: it will be years off, if you look at columbia, they saw a regime change, made an investment their minimum for two years. the damage to the venezuelan oil sector is greater. two plus years before we see big increases, we are not there yet. how do we get to the point of a regime change? you have more downside risk production in near-term, we are down 100,000 a day and it could go to 200,000 or 300,000. francine: what does opec do,

incur the rest of the president? -- incur the rath of the president jeff: their goal is this cut would last until june. given that, partially due to a hiccup. the rebound to the market could be done by april. it can be back to a market share strategy. will we see tweets from the president next year, the price is too low? balanced market. that year we have big pipes coming online in the u.s. which creates downside risk. tom: jeffrey r. currie, global head commodities, research partner, goldman sachs & co. is with us.

another tipping point, the testimony of jerome powell, fed chairman making that semiannual testimony. ,ook for that with the senate look for that at 9:45 this morning. chairman powell on capitol hill. this is bloomberg. ♪

francine: this is "bloomberg surveillance." boe officials including governor mark carney testifying to the treasury select committee. governor carney sang officials are not seeing liquidity strain on the markets. he has been quizzed for 52 minutes on the of occasions of brexit. at the same time pound is surging this morning, climbing to its strongest level versus the euro since may, 2017. this has more to do with labour's position on a second

referendum, and sources telling bloomberg that theresa may would not be willing to delay brexit to avoid a no deal exit. , that isng the market a remarkable move in sterling. at goldmancurrie sachs, let me bring up a chart , let's call it real gold inflation-adjusted. the memory of the 1980's, the china boom we had. this range shows a stasis of microeconomics in gold. how do we break out of that range? central bank buying at the top of that list. you have a lot of geopolitical risk. you combine that with a weaker dollar, china in the month of , we arebought 10 tons also seeing russia, large buying program.

central bank buying. the second is etf demand, diversification to late cycle dynamics. we are seeing negative interest rates in europe. flows on etf's are out of europe. the emerging market with the weaker dollar, we have real demand for dollar. we are comfortable with our target. tom: at the margin, what does goldman sachs research on the etf elasticities, under crisis, under a change in the belief of etf's, do you know what happens? jeff: on gold, which will be different than the rest of the etf's, it is a good substitute , the demand gold from the investor population remains robust. more so than we see in other commodities. etf's are back by physical gold

and is easy to store. francine: everyone is an expert on palladium, it is in bubble territory. jeff: you are seeing demand substitution. they are moving back to gold and other types of metals. you have not gotten to wait shortage at the auto catalyst level. palladium goes into gasoline cars, platinum goes into diesel cars. because of the vw experience and the demand for diesel dropping off, you have larger demand for platinum. you is a demand segment have to ration. we get to those physical shortages, you have to watch out for big price spikes. francine: there seems to be a difference between what commodities to are doing and what companies are doing? is that investor appetite? is a absolutely, and it fear of long-term investment, and outside of opec or shale investment, everything else is

long cycle. when you have geopolitical fear, ,olicy fear, economic fear making it ten-year horizon investment is a difficult task for many investors. as a result, the demand for everything from gold-mining, long cycles, have dropped off tremendously. , thankffrey r. currie you for stopping by. he is with goldman sachs. it is an extraordinary day in international relations and markets, mr. carney speaking in this newwe celebrate book. coming up, kashmir. ♪

want more from your entertainment experience? just say teach me more. into your xfinity voice remote to discover all sorts of tips and tricks in x1. can i find my wifi password? just ask. [ ding ] show me my wifi password. hey now! [ ding ] you can even troubleshoot, learn new voice commands and much more. clean my daughter's room. [ ding ] oh, it won't do that. welp, someone should. just say "teach me more" into your voice remote

and see how you can have an even better x1 experience. simple. easy. awesome. ♪ tom: this morning, the president bethe united states will

five or six miles from hanoi. a continuedt is constitutional and political , a secondbrexit delay referendum, and confusion made labour. and the ghost of the first kashmir war of 1947. good morning, everyone. this is "bloomberg surveillance ," live from our world headquarters in new york. i'm tom keene. francine lacqua in london. we have a discussion with the professor on his new book, and to see the uproar we once again see in northern india, this is a well-timed conversation today. francine: it certainly is. looking forward also to talk about broader themes on the macro economy and the central bank's power, or not, in 2019.

the pound has moved quite a lot. we are monitoring any headlines coming from governor carney trying to field questions on what happens in the eventuality of a no deal. markets are now believing more and more that no deal will be taken off the table. tom: extraordinary news flow today. there's the governor talking on the politics and monetary economics of his united kingdom. right now in you -- in new york city with our first word news, here's the hour to auto -- here's viviana hurtado. viviana: theresa may is expect it to allow her cabinet to discuss leaving the european union with no deal. if there is no agreement within the next month, a delay would be needed. jets are said to have destroyed a major terrorist camp inside pakistan,

the worst escalation of fighting between the two countries since 2001, when indian officials say more than 300 people were killed. pakistan denied the airstrikes did any damage. pakistani tv footage showing little but bond craters and bombedtrees -- but craters and downed trees. the man who spearheaded iran's nuclear negotiations with world powers resigned. the foreign minister is widely seen as a proponent of engagement rather than confrontation. , he said he was no longer able to continue to serve and was undermined in his role. there are new concerns about his musk's ability to keep personal impulses under control. he is required to get approval

from tesla for other social media posts and other writings. he breached the agreement last week with a tweet on tesla production. 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. i'm viviana hurtado. this is bloomberg. tom: thank you so much. on a data check, it is a joy to speak of home depot. they have one of the clearest press releases in american corporate business. ,ome depot with earnings out with share buyback and a 32% increase in dividend. that is extraordinary. nevertheless, the stock trading down 2% on may a comp sales adjustment as we go into a slower 2019. we will have much more on that. let they go to the data. negativeutures at five. i will look at west texas at $55

a barrel. francine: it is interesting when we were speaking to jeff curry, i was taking because of that president trump tweet, opec has to decide once again what side they stand on. i am looking at stocks in general. the optimism we saw yesterday is fading somewhat. pound strengthening after u.k.'s prime minister theresa may said she was considering a plan to delay brexit. tom: we are going to blow up the show here right now. we were going to wait and do the r's new book later in the hour, but we will speak to professor rajan and celebrate his new book. he is the former reserve bank of india governor. this is an important book. you look at the blurbs on the i am just going to go to the professor.

bombings, a striking analysis of our gilded age. you go right after this new gilded age, don't you? guest: yes, of course. this is a world which is extremely fraught for capitalism. when we typically thing about markets and the government, they have expanded over the last so many years together. globalization come but also global governance. increasingly more and more decisions are taken at the global level. the thirdmeans is pillar is essential for dimmer credit capitalism, the community that prepares people for the markets and prepares people to flourish in those markets. now the other part of what it does, which is collective democratic action, is moving up and saying, why are you failing me? asking the markets and the

governments. want to look at north of chicago. capitalism reigns supreme. socialism.s germanic it is all the rage now. on, craddock socialism in the united states of america -- right now on democratic socialism in the united six of america -- united states of america. guest: i think the answer is to give people the capacity to produce bait in those markets, to give them the tools they need , the learning, the education, but also be safety nets they if the markets get volatile, but we need to do that any much more effective way that we've been doing so far. ultimately the way to do it carefully is through the community, and that's what the bulk of this book is about. francine: professor, congratulations on the book.

i am really enjoying it. i especially like the way you describe populist movements. you actually say in certain cases, this could be a force for good as it is fueled by belief that the ruling party is corrupt , and can play a valuable role in bringing transparency and democracy. what happens if they don't do that? how dangerous can they be if they are not a source of transformation? guest: you hit the nail right on the head. they can go the right way and create more opposition and .pportunity for people way can also go the wrong to elect strong leaders who promise they will curtail markets and create a nirvana for roadeople, and that is the which i call the road to serfdom. we need populist movements to work the right way, which they've done in the past. pages i haved six

to read now. he is the author of "the third pillar." chairman powell speaking today. the senate banking committee will kick things off. francine, i believe of the testimony in the united kingdom. francine: governor carney is talking and answer questions from the treasury select committee. it's been going on for about an hour and 10 minutes. governor carney basically saying he believes brexit uncertainty -- he blames brexit uncertainty for businesses lost beyond march 29. and theresa may made be willing to actually delay brexit. he just added that stockpiling and the u.k. doesn't actually have the goods to stockpile anyway, so there will be little they can do to mitigate.

he was saying earlier on that businesses just wouldn't be ready for a new deal brexit. plenty more next. this is bloomberg. this february forecast assumes there is a deal and a smooth transition.

♪ sales coming up short at home depot in the fourth q. they missed estimates. still, home depot reaffirmed sales guidance for the coming year. peugeot is coming back to north america. the french carmaker stopped selling vehicles here nearly two decades ago.

the group started plotting a return in 2016 as part of a tenure plan. sales in north america will begin in 2026. the company is trying to become less dependent on europe. it accounts for 80% of its sales. a surge in shares of wayfarer this year burned short-sellers. short-sellers have more than $1 billion in market losses after wayfarer's rally. the household goods retailer jumping to its highest level friday since the ipo. soaring 40%. chinese telecom equipment maker huawei rejecting claims its devices could be used for spying. the chairman speaking at the global world congress in barcelona. >> huawei has a strong record insecurity for three decades. the u.s. security accusations

have no evidence. nothing. viviana: that is the bloomberg business flash. tom: thank you so much. the president and route to hanoi right now, and he will no doubt stay near the hanoi hilton of john mccain. our stephen engle is overlooking the heart of hanoi. it is the lake of the restored. it is amazing as vietnam greets these leaders, the history involved in the distrust of china and the korean peninsula. what will be the trust level you will observe over the coming days? stephen: that's what the two leaders want to continue to build on. usually these kinds of summits, you have the deliverables already laid out in the

pre-negotiations. really it is going to be that dynamic like we saw in june 2018 and singapore, the dynamic .etween kim and donald trump who will give concessions first -- kim and donald trump. who will give concessions first? the u.s. once verifiable proof disarm theirl jus nuclear arsenal. the history of the president in vietnam is extraordinary. let us touch on robert kaplan from five or six years ago, writing on the new vietnam that we don't know. "hanoi remains a city of nervous political calculations, the price of being a potential middle level power, a country

with its age-old neighbor and looksn as it increasingly to the united states, its one-time adversary, to help meet." what will you look for from the president as he travels to the summit and all of the emotion that is hanoi? stephen: it is a very interesting dynamic and why hanoi and vietnam was chosen as the middleman here. if you look back in the 1950's and 1960's, who did the united states fight? north korea, and then vietnam. as a bit of a hedge against the chinese, the vietnamese have warmed up to the united states. keep in mind, a lot of people don't realize from 1979 to 1990, vietnam thought multiple -- multiple.ught border skirmishes with china most people think -- multiple border skirmishes with china.

most people think china is the big supporter of the vietnamese, and they were during the war with the united states, but even today they are wary about border incursions, especially down in the south china sea. this is a symbolic place to hold the summit, and vietnam is a booming economy, averaging six points in -- averaging 6.6% gdp growth year over the last decade or so. it could be a great model for kim jong-un to follow with its economy. a lot of stake. francine: what is it like being on the streets of central hanoi? it is normally chaotic. have they moved that hustle and bustle away? we were speaking to you a little earlier. you were saying it was almost like a carnival atmosphere. are people excited to be in the middle of this history being made? absolutely. i think people are very excited.

there is an energy here i haven't felt any long time and one of these mega-asian cities, and i've lived here almost 30 years and been to annoy many times. -- been to hanoi many times. as i mentioned, the economy is doing really well, and there is a former president of a university here who happened to come up to me while i was waiting for the kim jong-un entourage to go by this morning. he said, this is such a great opportunity for vietnam to showcase to the world what we've done. yes, it is still a one party, communist ruled country, but it is doing very well and warming up to the united states, and now is a growing what they hope is peace between north korea and the united states. they are calling it hanoi, city for peace. people are excited. francine: what would be a success for the summit? is it a peace deal?

is it that they talk about denuclearization, or if the u.s. , president trump doesn't give too much away? stephen: there are very different levels of success. the lowest thing would be some sort of declaration of peace. it wouldn't be binding. it would not be a peace pact that would perhaps force the united states to withdraw its 28,000 troops or so on the korean peninsula, but it could be a step towards that with the other parties, including xi jinping of china, as well as the south korean moon jae-in. that would be the low hanging fruit that both sides could tag as a victory. denuclearization, oh my goodness. that is a headache that is going to be a long process. tom: thank you so much. stephen engle's, west of the red river in hanoi.

with thevantaged former reserve bank of india rajan.r raghuram his book is "the third pillar." what is the past that someone like vietnam needs to take to participate -- the path that someone like vietnam needs to take to put in western capitalism? solong as the party --guest: long as the party occupies the commanding height, it doesn't democracy.he tom: we've got st. mary's church in saigon, st. joseph's church in hanoi. essentially wiped out with years of warfare.

how does religion play in the third world in this third pillar and capitalism? guest: religion in many ways is a factor which promotes stronger communities, the basis for a strong democracy. and that since there is a role for religion, which is why more democratic governments want to take localism away. in some sense, you might ask what is the need for democracy in a capitalist system. what democracy does is it creates a wedge between the private sector and government, which is extremely important for company should to flourish. if democracy doesn't exist to create that, what you get is crony capitalist states. look at every capitalist state. it eventually becomes a crony capitalist state. tom: we do celebrate your "third

pillar." we will do much more this and speak on india and kashmir in a bit. coming up, an important conversation. the former united states ambassador to china, next in the 1:00 hour. this is bloomberg.

♪ francine: we are listening to mark carney testifying to the treasury select committee, saying brexit is creating tensions for consumers and businesses. he also touched on stockpiling

and whether businesses were ready for a no deal. pound climbing since it was reported that theresa may is considering a delay for brexit. let's go straight to therese rafael, one of the bloomberg's. opinion editors how should i -- bloomberg opinion editors. how should we look at this? clear thing we are seeing is policy on the side. both leaders of the labour party and labour government making it up as they go along. jeremy corbyn had to climb down over his long-standing opposition to a second referendum today. expected,y, we are will now say she supports a delay. they are clearly making it up in response to events. aancine: the likelihood of

second referendum, has it really increased? reporter: i think it has increased somewhat. a week or two ago, no one was really talking about asa friend him. talking about a referendum. we will have to see what happens when her negotiators come back from brussels. francine: thank you so much. watch out for her bloomberg opinion pieces on brexit. coming up, theresa may expected to give an update on her brexit plans later today. we will bring you the latest, and i will be in westminster tomorrow ahead of that vote for the vote on certain amendments. this is bloomberg.

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bloomberg first word news. here's viviana hurtado. viviana: president trump's former lawyer michael cohen will reportedly accuse him of criminal conduct in office. that is what he's reported to "the wall street journal." they allegedly have to do with hush money payments to a point star. today on capital -- to a porn star. today on capitol hill, the vote on whether to block president trump's border emergency. that would force republicans to take a stance on how far they are willing to go to wall.taxpayer money for a there is not enough support to override a presidential veto. an american tv journalist and his crew free after being detained by venezuelan president nicolas maduro. it was said he disliked questioning about beheadings,

torture, and political crisis in the country. it says the president ordered footage equipment and terror funds -- ordered footage, and telephonens confiscated. 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. i'm viviana hurtado. this is bloomberg. tom: thank you so much. we are so advantaged to have ragurs rh -- have with us his book, "the third pillar," but also on india. soldiers killed only three years ago in india. joining us from new delhi come our bloomberg government

reporter ian marlowe. what is distinctive about this time of hostilities in kashmir? reporter: what is distinctly new is the fact that india has used aircraft to strike inside pakistani territory. it's the last time they retaliated the border that was -- the last time they retaliated 2016, sohe border was this time elevated the response quite significantly. pakistan said they scrambled their own fighter jets, so you have two nuclear powers was fighter jets in the skies over kashmir. actually, deep into pakistan territory as well. this is a dramatic escalation of the type of activity we see in the past. francine: is this the most serious military confrontation between the archrivals indicates? could it sway votes in india's

upcoming general election? reporter: absolutely. modi has been under a lot of pressure to respond. india's general elections are in just a couple of months. attack in a huge kashmir, the worst attack on indian security forces indicates , 40 military troops killed in a suicide bombing. modi takes a lot of pressure to respond. analysts are debating what sort of military response we would see, whether restricted to diplomatic isolation or some bling fat -- or something like that. everyone figured we were likely to see some kind of retaliation from pakistan. francine: who de-escalate's this? how does it get the escalated if that is where were headed -- get d escalated if that is where we

are headed? francine: pakistan denied -- reporter: pakistan denied any of this take place. they've done something like this before. they are saying that the jets did fly over the border, but the y were saying india didn't really hit anything. that gives them the ability to go to their own people and say we scrambled the jets, and yet just being aggressive towards us. at the same time, india and prime minister andrew modi -- and prime minister modi gets to say he is a strong leader. he said today in a rally that india is in safe hands, explicitly political reference a little ahead of the election. tom: thank you for the wonderful briefing. again, the former reserve bank

rajania governor raghuram joins us today in support of "the third pillar." india enjoys a border wall, and it is what i would call a vicious wall of two layers of eight-foot hall barbed wire with a design to keep people out. what is success what -- what is the success with those walls? guest: if people want to get by the walls, they will. it is very hard to stop with the walls. tom: tell us about kashmir. there's all of the history back to 1947. what is the 2020 reality? guest: it is a tragedy which, as

you said, started in 1947. what we have is a situation whether you in kashmir are extremely frustrated with the economics of it -- the economic situation. we are seeing attempts to move the protests into something worse. ar example, this car bombing couple of weeks ago as an escalation because for the first use are akashmiri very peaceful form of islam. a young, 20-year-old boy committed suicide for the first armytaking 40 plus soldiers with him. that kind of escalation prompts the reaction we saw today with the bombing of a camp cross-border. think i've sort of gratified

nothingrespondents said has happened. tom: francine? francine: professor, would you look at the upcoming elections in india, what will people go to vote on? is it terrorism, safety, or the economy? guest: i think till now it was the economy. one of the big issues is jobs. we have too many young people looking for jobs and not getting especially there are lots of unemployed and looking for something from the government. what we seen as a wave of populist moves from both the government and nondecision parties. aw we see that at least for

little while, pre-election dialogue will move from the economy to security, with the government saying it has the right genes to meet the country. francine: can india actually ?enefit how can they use more direct investment to their advantage? guest: what you really need is a second generation of reforms. india is growing 7%, but that is not enough to grow people coming into labor. we need another generation of more for foreign direct investment, but also building the infrastructure we desperately need. to employ those people, we are getting one million people into the labor force every month. we desperately need need stronger roles, more manufacturing, and that means

hard labor. in southernalore india, how does kashmir play in what you call a chaotic democracy? certainlyhink there is a mood of patriotism which is engulfing the country right now. when soldiers get killed, the country comes together. absolutely. but i think more broadly, what we have in india is many indias, one that is the front of the world economy, and one that with fuels.wing we have to make. make the transition to a middle economy. tom: they have tried to do it in different ways. mahatma gandhi tried to do this.

what is your catalyst to dragon in cohesive and coit into more of a one nation. guest: one, with construction. if we build out the infrastructure we desperately connectivity,s to the villages emerging because they can now see a market, we get more. this is how every nation group. we need to do that. in some sense, the chinese economic and political structure . we have a great system to take us from middle income to the frontier, which i think the chinese system is not as well-equipped to do. but we first got to get to middle income. francine: what do people misunderstand about china the most? is it the way that that little income will evolve, or is it more about debt and the way it is being managed? guest: in the short run, it is the fact that there is a run-up

of debt. they're constantly going back and forth on whether they should. -- whether they should press the button. they desperately need growth to verify the legitimacy of the ruling party. in the longer term, that i think they really have to debate the role of the parking. to my mind, a centralized part is not the appropriate situation for them to go from middle income to the front tier. that is something they will have an active debate over for the next few years. tom: many things to talk about in our conversation. this is "the third pillar." it is really something. it is the capitalism of the midwest, the capitalism of the .ield of iowa it is

stay with us worldwide. this is bloomberg.

♪ " in "bloomberg surveillance new york, and london. -8.ets, futures at all of this moving forward to monetary discussions this morning. chairman powell speaking at the semiannual testimony -- i'm

sorry, i still call it humphrey hawkins. i'm going to go when the timeout chair for that. the senate a little more orderly and the fractious house, perhaps, with chairman powell this morning. let us drag the conversation here on "third pillar" back to the culture wars and the distance and loneliness of the united states of america. we can do that with raghuram rajan, with "the third pillar." we have seen a rebound. within all of your research and the work in chicago, do we genuinely see a rebound that chairman powell can talk about today? a better america? guest: not yet. i think the problem is we look at overall growth and feel confident. well, one point 7%, 1.8%.

the reality is that growth is very widely redistributed. some of the areas in the interior of the united states haven't recovered. tom: the late, wonderful alan melzer said "you must allocate as well. summersight, professor or the late professor melzer? [laughter] guest: i think the reality is that our policies cannot stay at the aggregate level because the day-to-day is at the local level. ,f you are in the steel city illinois, you have a very different experience from a few hundred miles away. tom: it is a different story than large chicago on the golden mile. guest: absolutely. in that sense, weeding more place based policies. how do you elevate the local.

this can't be from the center saying hey, invest here. essentially, some of the communities said thank you. the community has to be involved. francine: let me ask you may be a difficult question. what you think economists are so poor at predicting recessions? guest: i think because they are inherently unpredictable. i think they depend on so many things, including the very business sentiment, which can turn around. businesses can start preparing for them the get is not so often . i think the real problem is too many people expect us to have views on both when a recession is going to come and the level of exchange rate, both of which we know very little about. i want to add one more thing.

what is hard to gauge is how the fed was at the end of last year. most people thought the fed was on autopilot, and therefore everybody was pretty a recession for 2019. now the fed has backed off to some extent. all predictions has moved down. people are saying 2020, 2021. individual reaction, business action, all very complicated actions we tend to predict that don't end well. francine: what would you look at to signal an impending recession. is it the verdant yield curve, or something else? guest: ultimately you look at the buildup of inventories and that suggests deals are not as small as they might be. that is the most immediate indicator. what you worry about is also

whether it is not just a plain to.ssion, if you have it is the financial side today which is much more important. how much debt is pent-up and where some of that will create areas in certain places of the economy. tom: thank you, particularly for your comments on cashmere, pakistan -- on kashmir, pakistan and india. "the third pillar," raghuram rajan. i cannot say enough about this book to inform within our gilded age. please stay with us. this is bloomberg.

♪ u.k., talks with a cato regarding a joint

venture. andes of both oh cato marcus spencer arising in london. home depot sales rising 3.2%, missing estimates. after being the largest time homer truman store, and -- $16ed 16 billion billion plus. tom: i will stick with home depot. let's stick with a chart right now. i love to call this long to buy for. long 2x4. how about 27% a year for the last 10 years? globaln joins us, cfra director of research. this has been extraordinary story. how do they do it? give us the summary of how they

delivered massive ductal debit -- massive double-digit returns. strong, andmer was key segments of individual consumers and professionals saw upticks in their key metrics. that drove revenue. customer transactions. average revenue per ticket. they are also getting better leverage or returning their squares for so foot. -- for so far. tom: is home depot now alone in the group? guest: the threat is always on everyone's mind. home depot has created an omni-channel, or a platform where you can order online, the company stored, and again i mentioned the professional segment. those that needed it immediately doing jobs locally, home depot

has done a great job in that area. that drives growth as well. francine: if we were to see a recession in the u.s. economy, how would adversity affect home depot? guest: the guidance for next fiscal year's weight. the street was at $10.25 for $003.g, $10 for salary it may be higher and wage increases, but something may be on margins that is driving what looks to be week guidance ahead. francine: really interesting. thank you so much, ken leon, cfra global director of research. let's bring everyone up to date on what governor mark carney has been telling us. he's been testifying in front of

the treasury select committee with other boe officials. the governor says brexit is creating tensions for consumers and businesses. pound had been climbing all morning on two pieces of news from yesterday. one, the fact that jeremy corbyn is awaiting a second -- is avoiding a second referendum, while theresa may is meeting with her cabinet to discuss the possibility of extending the brexit date. tom: extraordinary news flow today in the united kingdom, and of course, also chairman powell testifying this morning as well. stay with us. this is "bloomberg surveillance ."

alix: brexit overtime. theresa may will speak in

parliament, where she will announce a brexit delay. neutral powell. chair jay powell the next to weigh in on the semiannual testimony to congress. the ftc is holding elon musk and contempt for violating a settlement when he was ordered to get approval for his tweets. david: welcome to "bloomberg daybreak" on this tuesday. is president trump going to hold janet yellen in contempt? alix: i've never heard of nx fed ex fed chair calling the sitting president stupid. oh, myit and i was like, god. she really ripped into him here. david: it doesn't help that