francine: may's concession, the prime minister allows a vote to extending talks if her deal fails. sterling surges. dinner diplomacy, president trump and kim jong-un begin talks. kashmir,ons in pakistan shoots down to indian jets in the worst military escalation is the war of 1971. welcome to "bloomberg: surveillance." here in london, head of the

historic vote. and haslinda amin in vietnam, ahead of the historic summit. what are the chances of a deal? aslinda: unlikely, but we have heard from president trump who has said he is unlikely to strike a deal unless kim stops with his nuclear and, but that is unlikely to happen here we have heard negotiations will carry on. suggesting that the deal we are looking for may not happen, but having said that, both sides have reason to come to some sort of compromise. we know that north korea wants to boost its economy, it has contracted 3.5%, its worst contraction in two decades. it is in a dire situation and could get worse from here. kim may be under pressure to make some kind of concession. and the u.s. is concerned, remember that the complete a

irreversible denuclearization of north korea is unlikely to happen, so they are looking at a phased denuclearization process. comesides have reason to to a compromise. for now, let's get a look at the markets with nejra cehic. ejra: we're seeing equity markets on the back foot, the stoxx 600 down. we are also seeing u.s. futures gathered steam. you are seeing air france away on travel and leisure stocks. rio tinto has given some boost but most stocks are in the red. 2.64 is where we are. we are seeing some of those safe haven bids. at 1.3le-based -- rate 280. eurosterling dropping to a two-year low following the prospect could get a delay to brexit.

also, we're showing you some headlines on norway's wealth fund buying stocks in the fourth quarter amid a slump. see a significant loss to the portfolio, $57 billion loss on the portfolio. now it's get bloomberg first word news. >> jay powell says a healthy economy is facing quote crosscurrents and conflicting signals. the labor market still have room to pull in workers. his immersed the banking committee showed no bias to the committee hikes or cuts. >> the outlook for the u.s. economy is a positive one, a favorable one. the predominant risks to the economy are slowing global growth. as you mentioned, particularly in china and europe, we're seeing a significant slowing and growth. neutral with the pressures and downside risks we

have talked about, this is a good time to be patient and watch and wait and see how the situation evolves. lawyerld trump's former classical the president a racist,, comment, and a cheat. con-man, he says thatand a cheat. he says that donald trump was aware of wikileaks. the prime minister winning a second four-year term, beating his main challenger 56% to 41%. it was africa's biggest vote ever, over 73 people million -- 73 million people able to cast votes. the opposition parties say the count was manipulated. global news, 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. has linda, back to you --

haslinda, back to you. haslinda: thank you, back the latest in handling. -- in hanoi. the plan is for the two leaders to hold a one-to-one meeting before dinner. the summit has already shown flashes of disorder as american journalist were convicted from a hotel housing the north korean leader. key details still remain a mystery. now let's get to the other big geopolitical story moving the markets, military tensions between india and pakistan have escalated to the most serious levels in decades. thatakistani military says the have shot down to jets. for all of this, we're joined in the indian capital i am south asia government reporter. yesterday, this

is the first time in decades that we have this tit-for-tat. doesn't escalate from here, or is there a political will to the escalate tensions? >> things are pretty tense here in new delhi. there are lots of claims and counterclaims going on at the moment. it is not quite clear where we go from here. yesterday, it looks like both sides were trying to be escalated the situation. pains to sayf at that when they did the bombing inside pakistani airspace, they said that they are only targeting a terrorist training camp, not any military installations or pakistan government installations. pakistan was also able to say that they had scrambled their jets and that the indian jets leftand drop their bombs in haste, is what they said. everyone thought that might be the end of it, and today, it turns out that is not the case. are said to have

launched an attack inside indian territory from their own airspace, they said with a moment, india has not yet said anything. pakistan said it has shut down to aircraft, and in an emotive development, and looks like to indian pilots that ejected from a downed plane landed in pakistan and were actually arrested. you so much for the briefing is always. as south asia reporter, he will be with us throughout the day. what does it mean for the markets? joining us now is credit suisse is global chief investment officer. such you for joining us on an important day, geopolitics seem to dominate the markets. as an investor, how difficult is it to understand these big ships -- big shifts?

what does it mean for the markets? michael: you have to dig below what they are signaling and see what it means for economics. i think it is a sentiment issue in asia and it bears careful watching. i would not be too concerned about it. as a global investor, it is much more important to go to the other side of the pacific, if you will, and look at what the fed is up to and where is global growth going. there, we have seen coming into this year. francine: how much does the fed look at geopolitics? of course, they look at inflation, the inverted yield curve, but if you look at these big power shifts to china, to some of the emerging markets,

does it change fed optics? michael: i don't think it impacts their reactions very much, they watching very carefully, and how it impacts is quite unclear. they care about the strength of the u.s. economy, the labor market building inflation pressures. and as they just heard, their patient, flexible, way too much. haslinda: michael, it does seem that goldilocks has argued priced in. -- already been priced in. but can that be sustained? michael: i don't think it can. i think the market has become too optimistic about the path of

interest rates in the u.s. and has become too relaxed. what we see is a slump of industrial production globally that has triggered a panic in markets in q4 into december. we have come out of that because the fed took that on board, but to us it is very clear, as the economy accelerates, as the labor market in the u.s. the feds to be strong, will react and, in our view, with another rate hike. and not a rate decrease as the market is not pricing. haslinda: jpmorgan and jamie dimon were saying they are pricing a recession. when you see the next recession? michael: that is, in our view, not on the horizon. we may have a slowdown further as we go into mid-2020, but not a recession. haslinda: thank you so much. francine: michael stroh back -- strobek will be with us later on. coming up, we will be speaking

to many people here at westminster as we prepare for a vote in parliament. we will also speak to a chief executive. this is bloomberg. ♪

francine: economics, finance, politics, this is bloomberg: surveillance. let's get straight to the bloomberg business flash in new york city. >> the dutch government has bolstered its stake in air france klm to 13%. ,t previously held under 6% this is part of a move to reach parity with france, a more powerful shareholder. in thell put the dutch position to ask for board seats

at the next agm. france's budget minister is saying that they were not aware of the purchase. at&t has defeated another effort to undo its purchase of time warner. the decision by the u.s. appeals court cement the $85 billion deal. this has become administration attempts to unravel the time, saying it would lead to higher prices for subscribers across the country. has boosted cash returns to a record $13.5 billion. the mining's and metals producer pointing to earnings and growth projects. a $4 billionup special dividend and announced a special buyback program, saying they will continue to focus on offering strong return. that is the bloomberg business flash. francine. francine: thank you very much. theresa may has promised parliament a vote to rule out no deal brexit and a vote to the

late you departure date. to avoid mass vaccinations and avoided another defeat in parliament. under her plan, if parliament rejects her deal, there will be a vote to leave the eu with no deal. if that fails, the commons will vote on a short extension, likely to the end of june, at the latest. what does this mean for business and investments? noining us now is ignacio gala from ebert roll up -- ib erdrolan. galan, always a pleasure to host to hear. -- you hear. is it a big impact? ignacio: not much, we're mostly deregulated. our revenues are in pounds, 80% of our investment is in pounds. the main thing is how this is

affecting fx. but we are that uncertainty has never been good. , nowif we are convinced they are ready in certain cases. now they are changing their minds to continue investing the country and continuing to provide with materials that we are already using. as soon as the uncertainty finishes, it should be good for everybody. even if our sector is not commitment isur to keep people connected. the british people can be sure we will continue to supply the electricity. francine: what does it all mean for markets? what is priced in? movedl: the market has towards a soft brexit, which is why the pound has strengthened.

the strengthening is a clear sign that markets are pricing in some kind of soft brexit that area. but we will have to work with or without an extension. they need more time, and hopefully get more time. francine: when you look at renewables and energy market, i think there is a plan proposed by the government looking at 2030. la?t does it mean for iberdro we have for seeing an makes moren, that opportunities for continued investing in the field we have been a leader in the sector, and now there is a plan for investing 34 billion euros from now until 2022. in more renewables, in britain, and now in spain, especially.

we are the leader there and will continue to be the leader. francine: yesterday, we spoke to the spanish economy minister, you're facing elections on april 20. -- 28th. are you damaged by politics, are investors worried? ignacio: i don't think so. what i have been hearing from politicians is that they would like the rule of law, to protect stability and productivity and make the country of for international investments. all of the parties with chances to run the party are sending the same message. and energy, finance, in all sectors. rule of law, stability, predict ability is the work they are -- predictability is the work they are repeating. francine: too short a time with

both of you. let's head back to haslinda amin handling -- in hanoi. still to come, the ceo of rio tinto joins us for his first interview. this is bloomberg. ♪

♪ haslinda: economics, finance, politics, this is "bloomberg: surveillance." let's get back to all the action on the ground in handling. -- in hanoi. , all eyes on the dinner, are they expected to endorse what has been agreed on? >> that is the thing. it is a social, but not really social when you have the secretary of state, the highest government aid to north korea. the people attending, if you look at the list, it is mike pompeo and north korea's top envoy. these two have been at the forefront of negotiating what exactly denuclearization looks

like, so it may not be such a social dinner after a. there will-- after all. be talkll probably about what they is ecowas and whatever denuclearization actions they might take. . before the dinner is the one-on-one with trump and making peoplet is nervous because they think trump might just make concessions. >> it is making people nervous, if you go back to the singapore summit, it was quite ambiguous. since singapore, since last year, not much has been done for kim jong-un deserve lifting of u.s. sanctions on north korea. so if donald trump just pulled the trigger, that is one thing analysts are worried about. francine: how much should we worry about president trump giving too much away? i don't know if that is too much away over dinner giving you

this, this, and the eighth saying we wanted a lot more -- aides saying we wanted a lot more? me?you hear how much do you think trump will give away? >> that is one thing, the lowest hanging fruit is declaring an end of war declaration. that is the easiest thing for both leaders to agree on. that won't take much for both sides. again, the person participating in these dinners, he has said that when he visited the oval pompeo, hemet mike said that this won't necessarily mean that u.s. troops in south --ea

would beid that, that grounds for normalizing relations and allowing economic exchanges north and south korea that could pave the way for ultimately easing economic section. haslinda: we will know soon enough because that dinner is coming shortly. jihye lee, a reporter joining me here for the summit. will be: coming up, we talking to the chief executive of brookfield asset management. he joins us live in berlin. in the meantime, we are live in handling, live in westminster keeping eyes on markets. this is bloomberg. ♪

haslinda: economics, finance, politics. -- francine: economics, finance, politics. this is "bloomberg surveillance." for the is in hanoi

second summit meeting with trump and kim. saying: a spokesman pakistan's air force shot down two indian aircraft inside pakistan. these latest moves it ramping up tensions between the two nuclear powers. goldman sachs says the global economy may have already bought out. current-- the bank's economist indicator saying there sheets emerging. >> we are prepared for a recession. things i came across a tape saying that jpmorgan was preparing for a recession.

you are not predicting a recession.we are simply pointing out that we are very conscious about the risk we bear as a company. viviana: republicans will not be forced to take a stand on president trump's declaration of a national emergency along the border with mexico. the u.s. senate has 18 calendar days to consider the house measure or act on its own version. miter chamber is likely to have enough -- night of chamber -- neither chamber is likely to have enough votes to override the president. 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. --s is bloomberg carried bloomberg. haslinda: thank you so much. the largest capital event is underway in germany. this brings together some of the biggest names in wealth management.

jason joins us with the chief executive of -- >> it is buzzing here in berlin. of brookfield is here with me. it is buzzing here. feels like these guys spent a lot of opportunity in this rather turbulent world we are living in. >> there is always opportunity. there is a lot of consternation and politics and things out there, but the world is generally in a pretty good place right now. the economies of the world are good or some are improving. i'm not quite as good as last year, but on balance, if you look back over many years, it is pretty good in the world and environment.

jason: in the world is brexit happening or maybe not happening. you are a huge landowner in london. this? you play all game. this is a long will make investments assuming you are going to have issues when you go through it. tesla happens to be political. -- this one happens to be political. it will be what it will be. we assume everything will work out in the long-term. placek london is a great to invest and it will be for a long. . -- for a long period of time. the underlying fundamentals of most of the businesses we have, which are $30 billion businesses are pretty good. we haven't seen a lot of change

it. there has been some. some are doing better than they were years ago. jason: you and i were just on stage together in front of an audience. one of the things you mentioned was across her asset classes, infrastructure and private billionaise about $15 -- $50 billion. you are $1.7 trillion in private equity loan. how worried are you right now? peoplei were operating in global nature and the scale of our business, when you are trying to do value things like we do, it is those three things combined that can give us an advantage. we don't see an issue with putting that skill of money to work. i don't know if there is so much money in the world for what other people do, but given the franchise we have, we can put that money to work and earn the

returns we need to earn for our constituents. jason: as you talk to your team around the world, do you talk to and what is the biggest thing you are worried about? bruce: we are 10 years into a cycle. as sometime, the cycle is not going to be as good as it is today. it always turns. if rates go up a lot, that is an issue with all asset classes. we don't think that is going to be the case, but those are two things that we worry about. we control some things. and finance our businesses ensure everything we buy and know that it is one to go through a recession at some point in time. jason: given all that we have talked about, are you a net

buyer or seller in the world right now? bruce: last year we invested $35 billion. we sold $12 billion. this year, i bet we will sell that.han the -- i would say on balance, we are more conservative than we were a number of years ago. jason: bruce, thank you so much. francine, back to you in westminster. francine: thank you so much. jason kelly in berlin for us. theresa may has bought herself more time to secure a brexit deal. she placated a hostile house of ammons by offering lawmakers house vote. there will also be a vote on

leaving with no deal. there are a lot of amendments. is a conservative member of parliament and a member of the committee on exiting the european union. for annse of this international audience who is confused with the vote. it is not a meaningful vote, it is a series of amendments. by tomorrow, will i in our viewers have a clearer view of what kind of deal parliament will vote for? >> i don't think tomorrow morning you will have a clearer idea. what i can say is that we are inching towards getting a deal through the house of commons. it has been incredibly difficult up until now because parliament has been subdivided about what kind of parliament it wants. there is a group in my party that once the maximum celebration possible. there are a group of mps in

a cleannt that want break altogether. i think people are starting to come round to the idea that even though they don't like the deal that is being negotiated, it is actually the only show in town. francine: do you think the eu will give theresa may something? it is basically her deal with maybe something extra? stephen: i got the sense they really want to bend over backwards to provide some kind of wording that provides greater reassurance around this thing called the northern ireland backstop, which the heart brexiteers say is a trap. they are not going to risk the draft deal being negotiated. i get the sense that they do want to help theresa may and provide

extra wording that can clarify things. hopefully that will persuade some of my colleagues to come around and back the deal. francine: have the chances of a second referendum increased? week, jeremy corbyn has given his clearest signal yet that he is ready to back a second referendum. 's don't wantr mp to go down that road.i don't think the chances have really got up materially. we are still as we were a few weeks ago, time to get the deal on the table through the house of commons. earlier, francine talk about how may is entertaining both sides. does she really have a strategy? atoes, the str -- strategy is to get the deal that she negotiated.

the strategy is to get it for the house of commons. people will say unless something fundamentally changes, how can we turn around such a majority amongst the mp's in the comments. on thes a realization part of my colleagues at that if we are going to do brexit and implement the outcome of the 2016 referendum, there is only one gateway to go through and that is this deal. she is trying very hard to get some new wording, momentum that can be attached to the deal to give greater comfort and assurance to colleagues that this is going to lead us into a long-term permanent arrangement that we don't want in our post-brexit future. i don't see that there is any realistic plan b or c. francine: because it is an imperfect plan a, could something else happened?

if we delay and by two years, could that be more damaging to the economy than anything else and how can they be so sure there is a no deal being taken off the table? sure, but ican't be think the prime minister's announcement yesterday will give assurance to businesses that we are not about to hit a cliff edge at the end of this march. in a sense we have postponed the cliff edge. we cannot say a no deal is not likely at all. there is still a possibility and we should not be complacent about that. we know how damaging that would be to our economy. very few mps actively believe in no deal is the best brexit outcome. most people want a deal and that is why i still think this deal -- eventually people will have to come around and get it passed. francine: it would also change the future relationship between the u.k. and the eu. how do you see that? how kind of relationship --

well that look like? stephen: there is a huge unknown there. there are people who think passing this deal will get clarity and businesses can move on with confidence knowing what our post-brexit future will look like. they're going to be very mistaken because this deal is only getting us out the door. there is still the much bigger negotiation about the trade deal. all options are still on the table. kim is the option of going for a canada final deal, which is a or a much closer arrangement like norway has. there are big arguments and deals to come. francine: thank you so much for joining us. haslinda: still to come, we will charles.ng to

he is joining us for our first interview of the day. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." i'm francine lacqua here in westminster. haslinda: and i'm haslinda amin in hanoi. francine: we are just getting breaking news out of china. apparently do with, we were speaking with the chief executive on monday. in probablyig stake -- pareli. chemchina istand

considering reducing its stake in pirelli. down some 3%. chemchina is a state owned firm. there are a number of options including a block sale on the market without increase pirelli's free flow. let's get straight to the bloomberg business flash. viviana: buyer facing a growing number of lawsuits over its roundup weedkiller. the german conglomerate saying more than 11,000 people in the u.s. claim roundup gave them cancer. bayer reporting fourth-quarter profits and sales that beat estimates. year, despite new --minal conviction in france the u.s. labor department says

any further convictions around affect thatuld status. wells fargo says it is losing its seasoned issuer status. easierignation makes it for companies to issue their own shares or bonds before waiting for approval from the securities and exchange commission. jpmorgan and bank of america -- buthey didn't have goldman sachs does. francine: thank you so much. hong kong exchange isn't clearing since 2018. record volumes in its cash market, an increase in trading and clearance fees helped boost numbers. earnings in the commodity division up some 10%. -- ielighted to be joined am delighted to be joined by the chief executive. thank you so much for making the

time.talk to me about what you are seeing in the pipeline for the future . are there ipo's? do people want to come to hong kong to list? does the markets seem mature for a? 2018 was a very big year. strong.the pipeline was we are probably not going to have a repeat of that mega ipo europe last year. we were number one last year and number one five out of 10 in the last 10 years. i think this year people are waiting a little bit. there is a lot of uncertainty in the market. biotech, the new economy chapter, even in the traditional space, very big chinese companies are suing the pipeline. we are not using number 1,

goal. 2 as the the market is going to do what the market is going to do. francine: this is also a pivotal time for your exchange. what do you see that you want to do in the next three years? give us a little bit of the flavor of what you really want to achieve as priorities for the next three years. charles: actually, we are announcing tomorrow, so i can't really particularly just talk about it, otherwise everybody is going to be -- because we just finished the result. is tok the key theme continue to connect china with the rest of the world, and to continue to make sure that the connection works. we hopefully will be able to extend the connection to whether it is commodities, fixed income and currency. technology is quick to be a very big part of our future. all of the key themes are going

to be defining the key elements of our strategy. you said you are not looking at being number one or number two, but it doesn't hurt to be the top two layers for the ipo listings. he also said before you want to implement measures to boost hong kong's competitiveness. what are these measures on how soon do you expect those measures to bear fruit? i think it is really two dimensions. one is to find -- we have two data sets of capital. sure they have as much exposure as they can in hong kong, but now they're also going to connect into china. global capital do not yet have other asian exposure in hong kong. that is one area we are looking at.

china capital is really looking at international exposure. we find ways to make sure the hong kong shelf are other products you are able to trade through connect. the on the is really the market itself. we are undertaking significant market structure changes to ensure the market is cost-effective and efficient because with traditional exchange, you always have legacy systems and ways of trading that ultimately is probably not fit for purposeful into the future. you are going to make those exchanges including access to our market, bryn mawr participant should -- .articipantship francine: thank you so much, the chief executive of hong kong exchanges.

he will have to come back and we will give you half an hour to explain strategy and what you plan to do with data for the next couple of years. up next, we take a look at some of the stock overs. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." i am francine lacqua here in westminster. haslinda is in hanoi. we just had confirmation that india has lost one jet and one --lic is missing in action pilot is missing in action. the latest headline basically just confirming what we heard from pakistan. we have to keep an i on this because it is the biggest -- eye on this because it is the biggest escalation we have had since the 1970's. haslinda: here in hanoi it looks like trump is pushing back on expectations. that kim jong-un

and him will try very hard to work something out on denuclearization and making north korea an economic powerhouse. he says he believes china, russia japan and south korea will all be very helpful. trump setting everybody straight saying, don't lower the expectations. you.ine: thank we continue in the next hour. tom keene joins me out of new york. do will be speaking or hearing from the president of the deutsche --.

francine: the prime minister of

grace to allow a vote on extending talks if her deal fails. dinner diplomacy. president trump in north korea's kim begin their summit. tensions in kashmir.pakistan shoots down two indian jets in the worst escalation since 1971. this is "bloomberg surveillance." i am francine lacqua in westminster today, tom keene is in new york and haslinda amin is in hanoi. this is the one thing we are trying to exactly figure out what can come out of it. is it armistice, a peace deal or is it to hopeful? haslinda: i think you may have to give way. there is no way a peace deal is going to come out of it, but trump did come out to say slightly earlier in his tweet that those less than

expectations are not true. saying he willul try really hard with chairman kim to come out with something more substantial. be a dealhere will because he himself has come out not in a hurry as long as camp is not continue with the nuclear test. we have heard from the white house as well that negotiations will continue even after this meeting, suggesting a deal may not come true. -- there are incentives for both sides to come out with some kind of edges best concessions. -- some kind of concessions. it is an economy that is struggling. two out of five currently are no nourished. kim will do what can to get the u.s. to ease on those sanctions.

as far as the u.s. is concerned, it demands for complete denuclearization. that is not working as well. a phased denuclearization may be in store. both leaders meeting over dinner tonight. before the governor with the aids, they will have a one-on-one -- aides, they will have a one-on-one talk. make it concerned trump into too many concessions if he is left on his own. we begin with fast developing news on the bloomberg. india confirming it lost one plane and one pilot is missing in action. this is the worst fighting between india and pakistan since their war in 1971. pakistani planes are said to

have hit targets in the indian controlled section of the region. all of this happening and day after india says it attacked it terrorist training camp inside pakistan. india says those terrorists were behind it that the car bombing earlier this month. senate republicans will now be forced to take a stand on president trump's declaration of a national emergency along the border with mexico. the house blocking -- voting to block the declaration. the senate has 18 days to consider the measure or act on its own version. neither chamber is likely to have enough votes to override a presidential. veto jerome powell says the central bank is in no rush to make changes. policymakers will take a patient approach to future interest rate changes. theresa may bought herself more time to get a brexit deal. she heads into a parliamentary

vote today on her strategy and appears to have staved off a substantial rebellion by pro-european ministers. may promising them to take in no deal departure off the table and to delay brexit. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. tom: thank you so much. check. data not all that much going on today. futures up -10. dow futures at -88. dollar weakness and euro strength. let's leave it there this morning. what do you have in the green? francine: on the green, i have brexit. i'm looking a little bit at pound and what it's doing. i think there is now in the market definitely a thought that a are either going to softer brexit are some sort of

formation we heard from the theresa may deal. we will get back to brexit in the impact that has on the markets, but our top story today, u.s. president trump and north korean leader kim jong in preparing for -- kim jong-un preparing for their second summit. joining us is robin from chatting house. on.k you for coming do we actually measure the enormity of what we are seeing? we are talking about a possible denuclearization, but just the optics of it. if we can take the trump-kim summit today, i think it is a continuation of all the cards that president trump through on the table in his first year, opened everything up from the u.s.-china relationship pullout of theoa iran deal and now the north

korea deal. i don't think he wants to close anything right now. he wants to show that he has opened up on satisfactory deals, that he is making progress toward something better than what was before. he has said before the world seems less dangerous. the threat from north korea at the moment is not escalating. for him, the most important thing to do is to show that this -- i am doing a deal from a tough position. i really don't see more than the theater right now. francine: is the world safer? seen these tit-for-tat kind of escalations since 1971 with india and pakistan. robin: i feel like we have entered a world where brinkmanship is now par for the course across the world. we have to in brexit, in the iran deal, the india-pakistan

standoff. this has been boiling for quite a while. i don't feel we are taking over the edge to some chaotic world at the moment. we are in a much more unstable, mobile world, but not one where i sense chaos about to take off. haslinda: for the trump-kim summit, we have the former energy sector of the u.s. saying this trustut everything and verify. everything and verify. how much can be achieved and how much can we verify? robin: i think until there is a framework deal that is properly established with the kim government, you're not in a position to verify. there is no agreement to verify right now, nor is their infrastructure for doing so.

i think the capacity to build trust, one in which the kim government can show it gives a bit more concession is the critical element. can there at least be talk if there is national agreement about the process. that would create a framework for exchanging diplomats. said, i think we are way early in this process. what we have done and what the trump administration and government have done is the escalate a situation. they still have not established a framework for moving forward. tom: good morning. thank you for being with us today. are we looking at a diplomacy that is a one-off and unique to a trump era? or do you sense this is a true sea change in the economic diplomacy of america? robin: i think we are in a sea change of the diplomacy of

america that will go beyond president trump. once a u.s. president has said america first, it is hard for a follow-up president to say america's second or everybody else. america is now a player and the most powerful country in the world and has put everybody on edge. everyone is up jostling for position and leadership in their particular regions, whether it is russia, and ron, -- iran, china. i don't think we're going to go back to normal. francine: thank you so much. robin stays with us. let me bring you up-to-date with some headlines. the president of bundesbank is presenting the 2018 annual report in frankfurt. he is talking about german

unemployment. he says there is no reason to be overly pessimistic about the outlook. i'm sure he is referring to the u.s.-china trade war. what markets really want to know is if he wants president draghi's.job draghi's job. we will be speaking to him after 12:00 this afternoon london time. this is bloomberg. ♪

francine: this is "bloomberg surveillance." i'm not type parliament in westminster, tom keene in new york -- i'm outside parliament

in westminster, tom keene in new york and haslinda in hanoi. theresa may seems to have staved off a potential rebellion by pro-european ministers. is nick nelson. he is in our london studio. still with us is robin of chatham house. will our viewers have a clear review tomorrow morning on what parliament once, where are these amendments -- wants, or are these amendments futile? robin: i'm not sure we will know what parliament wants. whatever deal she can bring by then, so close to the exit date, the action of do you like my deal, is a no deal and giving a frequent -- free

vote. the pressure cooker really heats up on the brexiteers who are starting to feel with the labour party opening up, a little bit more window on the second referendum. have they got enough and they just need to take the vote in ahead of brexit and get it over the line in that window between march 29 in june 29. i think she has put the pressure concede.o i will wait until march 12 or 13th before i start to draw conclusions. francine: the market seems to have drawn conclusions. are they right? i'm going to a soft brexit. it seems the market has discounted the possibility of a no deal brexit. what if they were wrong? nick: i think that is exactly right. here we are at almost two-year highs in sterling against the euro. that seems to be the way the market is expressing the view of the risks around brexit.

given the ftse 100 has this very high international exposure, some 75% of revenues coming from outside the cave, clearly it moves within inverse reaction to what sterling is doing. i think we're moving towards pricing out or moving it down on a very small probability, and no deal brexit. we will have to wait and see how those twists and turns play out. you see sterling strengthening, ftse 100 taking a negative impact from that. the domestic stocks, things like house builders, retailers, domestic banks, those things doing much better and those are the ones that have underperformed because of fears over a hard brexit or no deal brexit. francine: who are the main players in this brexit now? does thatmy corbyn, focus the mind of the er g, the brexit purists?

robin: i think it is back to those that of hardliners brexit not willing to accept theresa may's withdrawal deal. all we're talking about is the leaving part. talk of the future. if it -- even if we get to a resolution, you are still going to enter into a couple of years. the moment, the key players are jacob rees-mogg. we can live with this i respect that assurance deal providing it is not permanent. most importantly, geoffrey cox needs to sign off on it and say i believe this is not permanent. he says that, that gives room for the democratic unionist

party, the irish party and also the brexiteers to get the green light. they are the key players right now. you need tove that, take a victory lap around parliament this morning because you have absolutely nailed how toward marchange 29. will there be consequences of the next vote, the next general election? do you see district by district that members will face consequences from their electric? that is a good question and a very hard question. i think what we have is the activists in the conservative party are literally 5-1 would be happy with a no deal brexit. there is only about 120,000 of them. they are the ones to control the selection and choice of who will be in peas in the conservative -- mp's in the conservative party next time.

i continually over close relationship with the eu. they may end up helping select far more anti-eu conservative intake mp's to contest the next selection. we may end up with a very tough negotiation on the future relationship even if theresa may gets about by march 29. i think the punishment on the conservative party may still be labou is downugh in ther polls are now partly because of its own internal chaos. onncine: coming up shortly "bloomberg surveillance." we will have plenty more on brexit later this year, we speak with the cave labour party leader. this is bloomberg. ♪

a lot of the companies have been around for a long time. i still think europe has good cyclical exposure. over a third of its earnings are coming from emerging markets. it does have exposure to the rest of the world and it does have growth. it is not just exposure to slow eurozone. the difficulty is working out which stocks and sectors to buy to get exposure to that growth. francine: where would you invest to get exposure to that growth? nick: areas we look at, we look at commodities. we went overweight on mining stocks at the end of november. they have been the best performing sector year to date here in europe. we have also been overweight energy. we think there is recovery coming through in china. within policy action that will help. we saw this with money supply data a few weeks ago that things are starting to improve. policy responses coming through and we should start to see improvement in the data as well. francine: -- haslinda: nick nelson, thank you for joining us. robin at chatham house also staying with us.

pakistan has offered corporation to india and it is also said that pakistan has played a constructive role in afghanistan. pakistan minister says -- this in relation to pakistani fire jets shooting down two indian aircraft in escalation of tensions just today after india said it bombed a terrorist training camp inside pakistan. we will continue to monitor those developments. the worst tensions there since 1971. this is bloomberg. ♪

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vietnam and plenty more from the fed, jay powell, and brexit. first, let's get to bloomberg best word news. hi viviana. : president trump is set for his second summit with kim jong-un. he referred to the dictator as "my friend." he says kim wants to do something great and could turn north korea into an economic power. donald trump's former lawyer call the president of racist, and achieved. will also say roger stone was communicating with wikileaks about stolen democratic party emails, all according to reports of his remarks. over to iran, the president rejected a resignation of the country's foreign minister. there on the front line

of resisting pressure from the u.s. the resignation highlights the standoff between moderate iran he politicians -- iranian politicians. global news 24 hours a day on-air, and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. hurtado.ana this is bloomberg. you, this is making major headlines in london, less so in the united states, but nevertheless it means the importance in southern asia, india, and pakistan. is it war or conflict? a reporter discussed that with the terrific report yesterday and the summary today. thist to begin with simple use of language, is india at war? this pakistan war -- is pakistan at war? >> i don't think we can go that far yet. i think we can say they are perilously close to a broader

conflict. i think people are reaching back for analogies going back to 1999, when the two armies torred, but i think we have go back almost 50 years to see the kind of conflict we are seeing at the moment between these two countries. received thats have been reported and piloted down, clear images, he assembled masses around are rather extraordinary. territory -- where in this territory can india recover its pilot, or do they have to negotiate now? iain: this is unfolding in kashmir, which is contested between india and pakistan, so this is on the pakistani side of kashmir. the authority gotten the pilot -- they have already gotten the pilot. at the moment, there looks like there needs to be a negotiation.

the prime minister from pakistan has said in a statement a few minutes ago that india and pakistan should sit down and talk things through, so it looks like at the moment, we are in a tense situation, where we are not sure whether in deal go into negotiations to get the pilot court deescalate things or if there will be another military response. >> a few had to make calculated guess, where do we go from here? we have not seen this for the last 20 years. yeah, i think everyone is guessing at the moment. i think if you had asked me yesterday, i would have said things looked like they had escalated as far as they could possibly go, and then today, everyone was completely taken aback by basically reports of

what amounts to a dogfight of india and pakistani aircraft over sensitive territory in cashmere. we not only have downed aircraft now, but captured pilots. a is a very emotive issue at time when nationalist tensions in india and pakistan are running high. think theret, i will be a lot of backroom negotiations and careful diplomacy here. and for sure a lot of other beijingn washington and , which are obviously close strategic rivals were allies of india and pakistan, respectively. both are urging restraint and will probably be in discussions and monitoring this quite closely. thank you, iain marlow -- francine: thank you, iain marlow. let's get back to robin.

when you look at this escalation, we heard pakistan saying they would probably involve the u.n. india faces elections in the few weeks. how does that plaintiff elections and their psyche? to the need to escalated to be seen as a strong men, or do they need to de-escalated further party of power to win? >> as we heard from your reporter, we are in a fluid situation. if you did not have the issue of the indian pilot being captured, you might be naturally in the de-escalation moment, where both sides would be satisfied by the tit-for-tat steps, or the pakistani military strikes symbolically and they deliberately did not hit targets or kill anyone, but the problem sounds like it was a perceived by indian jets that got shot down. the difference is over the line of control. when you fly jets into someone's

territory, which is what india did as its form of counteraction to the bombings that took ways, is it did call out the pakistani military to demonstrate that they could protect their sovereignty. i think they thought they had done it, but the second encouragement would have been unacceptable. one point that went to make his traditionally we have been able to trust on the u.s. playing the strong role in pakistan to hold them back, but the relationship of the trump administration with front.n is much more they have pulled back a lot of military aid, they want to call them out for not cracking down on terrorist groups, so you don't have the same level of rp as before -- of rapport as before. francine: would someone else step in and play the role of the u.s.? robin: it is interesting, the avenue bankroll her, relationship-india

has been improving. i think you could see china trying to play more of a brokering role when u.s. has less leverage. tom: that is where i wanted to go. , imy book of the summer believe there is a road that wonders through territorial terrestrial rather, but bucking upright against pakistan. on the line of control, there was a china border, as well. how does china play into the tensions between india and pakistan within cashmere? i think in the end, china is a country for whom international law is all about not contesting the casualties. they will try not to overly pick sides in this particular conflict. each side has violated the area of the other. china hasve is

invested a lot in pakistan for its road initiative, and china-pakistane corridor, but the big game for china economically is a relationship with india. it is imperative for them that this relationship not worsen. on more can look mor from the outside. i see the chinese trying to play some role in india on this front. all the stanss that they have followed for many decades, how does the united reassert the u.s. force there if we have a president who really does not want to be on the other side of the world/ ? robin: it is interesting, my sense of how it is played out is the places where the president does not have a particular focus, i have given the western

balkans as an example, but you mentioned central asia. actually, the u.s. structure of policymaking has had free reign. activelyhas been involved in the balkans, including the recent solution of north macedonia, and similarly stans there is more room for u.s. diplomacy because i think the u.s. president does not focus a lot. i think there is a big desire and the policy community in washington not to allow china to become the new dominant player across central asia and to use its belt and road initiative to gain the upper hand. ironically, i think there will be room for the u.s. to play diplomatically because the president does not care about it. francine: we heard from xi jinping that he wants to play a bigger role in the formal economy, strategic issues, why isn't this a good time for china to play that role? robin: the problem with china right now is it is in the stage

where the feeling of positiveness about its role in infrastructure and so on has soured in the last year. in --ge to tension camps in that retention camps region turned out to be traps for the countries that invested in them, especially in malaysia, china in the way has been overplaying its hand. it has been quite high know. if you are in central asia, you could probably move more toward a policy of trying generation. china wants to be involved with you but there's more room for the u.s. to push back. i think china will have to play a slightly less assertive role in the next two years to five years. xi, others can-- playoff between the

triangulation between china and america that they cannot to a couple years ago. tom: thank you. robin niblett is with chatham house. we are looking at the international relations of the course of the president in hanoi. there is also other business being done. can a major german company keep up with the creative destruction of america? is out today with the real talk of significant job cuts to their 118,000 employees. this is what you do when you have single-digit total returns for the last 10 years. to our answers baumann. with werner stay with us. this is bloomberg. ♪

this is bloomberg

surveillance in westminster. is tom.in new york tb to his main challenger 56% to 41. the election was africa's biggest ever vote. we also want to talk about the developments in venezuela and some of the fighting and some of the death that the border we saw in the last couple of days. still with us is robin niblett of chatham house. you were one of the first voices we had on to talk about how this would end in the complications with hindsight , so it is basically six weeks since it started and it seems like it is more difficult to see a way out there we thought at first sight. what will happen next in venezuela? robin: really, all hinges, to my until theing, is that

military makes a real flip or commitment, you are not going to get change. the question is behind-the-scenes, does the u.s. have leverage it can play with any of the particular elements of the military to say, you will not because out of the future deal? you will have some type of a position. at the moment, the chinese, the have a very cozy arrangement with those in power. as we have seen in syria to other parts of the world, haveaging out leaders who got the military and security services on-site, and at least 40% of the population behind them, which i think maduro still has in the poorest parts of venezuela, is difficult. and there is a real political gain here. from the russian standpoint and chinese standpoint, having maduro in power is part of the anti-u.s. axis. and the more trump plays it about the changing room bring

about, the more it has to be resistant.the duo has to say, i'm back to the old narrative and keeping the old gringos out. americans have pushed us around before. this is all about domestic politics were president trump. he is getting more votes in the bag for the 2020 election. francine: we can also see this utilized with brazil. if you were to describe u.s. foreign policy now, how different is it from the past? robin: in this region, it is one that is not riven by human rights, so there is very much a sense that just because maduro is in trouble, this is an opportunistic move against the u.s. -- move for the u.s. to go against them. is that someone you would associate with the soft human rights policies you would have covered. you are not quite sure how long america will have your back or at one point it will lose interest. if you are maduro, you are thinking, if i will think out

longer, president trump will find something else to get excited about. andn hang gone with russia china behind me, and the europeans have other fish to fry. i think he is emboldened in the environments. before, you would have all of the west thinking up on the country and maduro -- on the country and maduro. i said a minute ago we can play one off the other, triangulate, but the weaker or stronger today. on u.s. policy in venezuela, the u.s. has not ruled out the military option. what do you make of that? what i make of it is it is a message to the military in venezuela to say do not test this too far, come to us right now because if you end up in a national conflict with us, there will be no chance of a resolution. i think this is trying to watch a late the temperature and create some splits within the maduro regime because so long as

he has the military on his side, i think it will be difficult to crack this one. francine: thank you, robin niblett of chatham house. coming up, we will talk more about the u.s. and china trade relationships and commodities at the center of that. coming up, we will also speak with the chief executive of reopened to -- executive of real pinto. and after that, you can look at the ecb end euro. this is bloomberg. ♪

viviana: this is bloomberg surveillance. shares of byer are surging after reported that event expected fourth-quarter results. demand for agricultural products prompting investors to look more kindly on their 63 billion dollars takeover of monsanto. since the deal closed last june, byer values have dropped to one third. the government's decision to buy a stake in the klm group had airline shares falling the most in nine months. the netherlands spot 13% stake.

this is gaining parities and the stockholder france, but there are worries that competing national interests will derail attempts to streamline the company. that is the bloomberg business flash. tom: thank you. it is an extraordinary moment right now. the summit in hanoi, and your thick news flow this morning. we thought we could slow down and talk about china. the newn the cover of york times today, they make no bones about it within the times reporting that the president is basically at war in disagreement with his trade negotiators. you have got to be kidding me that we can come to some successful outcome if the president cannot even get on with life kaiser. ghtheiser. how serious is this split? it is as reading i of

you move into an administration, people with a particular worldview are able to agglomerate around the president. but we have had here through the is a of the mattis's team much more hardline group coming in around the president, who share his worldview brought week, especially for china, but take a much more long-term view of china been president trump. is president trump, this about now, doing the deal, and being able to show a deal is done before he moves into presidential election term. thethe light kaiser's of world, this is the once-in-a-lifetime opportunity to change the structural relationship between china and the united states, and they do not want to give up when they have so much leverage to bring on china structurally. they are not looking for china committing to buy more soybeans or aircraft area they are looking for real change in the chinese model. i don't think china wants to

give it, and they are trying to play out that split in the u.s. administration. explained. what is the game theory of china?i see no evidence it is short term. think china, however, as we know, has its own challenge. number one, growth is really slowing whether you take the 6% figure literally or not. we know that growth has slowed thatina, and they are absolutely dangerous move where they had to go from the export led economy to the consumption led innovation economy. theirt precise time, relationship with united states, their second main trading partner, is on the rocks. they have to do a deal. president xi jingping has timeed more leadership in terms, yet, he is presiding over a more difficult time in the economy. he needs a deal, as well. you are right, this is playing chicken between china and america. i think a deal, personally, will

be done. i think the chinese will give on this in some structural areas. tom: we have got a technical difficulty, so i will take it up right now with robin niblett of china and house. i want to bring you over to china and what we are seeing in hanoi. what does china went out of these talks? i really have not had a clear explanation. save me on this. what does china went out of summit number two? robin: look, i think china would not onlyee north korea deescalate but ultimately remove its nuclear military program. they share that ambition with the united states, so long as north korea has a nuclear capacity, the united states has to retain a strong military andence in northeast asia,

their backyard, both to protect south korea and japan. in the long, china would like to see the u.s. less present militarily in the region, so they clearly have an interest in wanting to see a deal done, but they do not want one done such that it is that china's expense. for the moment, they would be happy with eight this united north korea and -- with a dis-united north korea and south korea. they would love to see some small step in that direction. francine: thank you, robin niblett, chatham house. also, our thanks to haslinda, who will be joining us from hanoi the next couple of hours and days. 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. tom: this morning, the president is a racist, cheat, and conmen,

so says michael cohen from a world away. the president says he disbarred attorney cohen to line to reduce his time in jail. so begins a fractured day of american politics from hanoi and washington. so begins another day of brexit. the prime minister "caved in." levers remain steadfast on march 29, yeah, right. -- question is, is march 29 is it march 29 of 2019, 2020 or beyond? meanwhile, the president is staying in the same hotel jane fonda slept in in 1972. all you have to do is look at hanoi.uty of the modern good morning, everybody. this is bloomberg surveillance, live from our world headquarters in new york. i am tom keene. on the green at westminster, francine lacqua with the british parliament.

parliament.day of francine, is it accurate to say the prime minister caved? yes, the prime minister caved on a couple of levels yesterday, which is why the market is now pricing in more of a chance of a soft brexit. what we find out in these votes on amendment today, i will not go into details because it is complicated, but it should give us an easier picture on what parliament once and what they could vote for. the endgame is trying to see whether the theresa may deal on the table gets voted through parliament. we will find out by march 29. tom: just one of the stories out there, just an extraordinary set of news like we saw yesterday. we need a briefing with our first word news in new york city. viviana: the pakistan prime ,inister address the pakistan saying he wants peace, this as one pilot is missing in action from india.

this is happening over the disputed kashmir region. pakistani planes reportedly hit target in the indian controlled section of the region. all this happening a day after found aid they terrorist packet in part of pakistan. is seti, president trump for his second summit with kim jong-un. the president referred to the dictator as "my friend." he said kim wants to do something great and could turn north korea into an economic power. they will meet one-on-one before dinner with their aides. donald trump's former lawyer reportedly plans to call the president a racist, con men, and cheat when he testifies before the house committee today. michael cohen will also say the president knew roger stone was communicating with wikileaks about stolen democratic party emails, all according to michael cohen's opening remarks. british prime minister theresa

may bought herself more time together brexit deal. she will head into a parliamentary vote today. she seems to have staved off a rebellion by promising them votes to take a no deal departure on march 29 off the table for a delayed brexit. global news 24 hours a day on-air, and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. thank you. equities, hans, and commodities right now. -- bonds, and commodities right now. today. stronger euro francine, are you doing your data checks or are you going right to the news of the morning? francine: i was going to go right to the news, but i am also looking at the pound. it strengthened quite a lot in the last couple of days.

today moving sideways, but it was significant that theresa may said it there was a delayed brexit, she would put a vote through parliament. it seems parliament will have a lot more of a say on every step of the way as we inch toward march 29. the u.s. president just a part of his hotel for his meeting with kim jong-un. joining us with more from hanoi is haslinda. optics?all this is president trump telling the world he is there, he will make it safer, more peaceful, though we will not have anything concrete in this summit? trump in we know that his tweet earlier today said it is fake news that expectations should be low from this meeting. that is not really the case. he says he will try with kim to come up with something more substantial. by substantial, we are looking at the definition of denuclearization, what it

entails, when, how much, and where is the starting point in the access to those nuclear facilities in pr ? we have not seen -- nuclear facilities? we have not seen that yet, but he also said he is not looking for a deal. he said that can wait as long as kim does not continue with his nuclear testing. those negotiations will continue beyond hanoi. the destination for trump and a hotel, a is beautiful french colonial hotel, that has been the destination for the likes of johnny chaplin, and john kerry, whom i met recently. aey are hoping to have one-on-one before the dinner with their aides, and herein lies the issue, the white house is pretty concerned that a one-on-one with kim could cause

president trump to make concessions that his team does not wanting to make. some say that is precisely the kim going into this meeting. they say he is pretty confident, kim is pretty confidence, and that is why he was all smiles before he jumped into the train which took him 3.5 days to get to the border between china and the amount. we will wait and see with this dinner happening tonight and with the aids coming with both leaders. aides coming with both leaders. we know that kim's will have his right-hand man and foreign affairs minister joining them for the meeting. francine: thank you -- tom: thank you. in way it is being played the new york times, trump signaling the softer stance on

north korea, and the wall street journal goes with the full-page journal of mr. kim and his team arriving. vietnam rolls out the red carpet for kim at the summit. and as in hanoi, mentioned, the dinner tonight will be extraordinary. the body language at the dinner will be closely monitored towards tomorrow's summit. there was other news, as well. absolutely remarkable as we last hour. francine in westminster on the green, and in new york, you can see the headlines out of india and images with the press. we go to delhi and ian marlowe of bloomberg news. he has done a wonderful job educating us on these hostilities in kashmir. you now have pilots down. they are a physical cargo, planes damaged. how does mr. modi in full election mode respond to these images of an indian pilot under capture? going to be

incredibly difficult and not everything will be in his control. i think indian anger has run extremely high since mid-february, when there was this terrorist attack earlier in kashmir. he faced enormous pressure to respond. he did so yesterday with airstrikes inside pakistani airstrikes, which was a big escalation. today, pakistan showed they were willing to respond and things got out of control. two indian aircraft are down and withodi is in a situation a few weeks of campaigning starting away, he will have to enter negotiations presumably to try to get at least one pilot back. pakistan says they may have two. even the prime minister con says he wants stocks, they may be a little bit more on his terms. what is so important in

their ports is all of the airspace of pakistan in northern india are shut down. what is the damage to the economy immediately beyond kashmir? it is hard to fully quantify. i think the tensions between india and pakistan the flair every once in a while. they are rarely this widespread. pakistan,at india and despite being the biggest economies in the region, barely trade with each other. international organizations have been a lot of research on this and say they could make tens of billions of dollars more in annual traded they just free up the economies to trade with each other more freely. at the moment, we have multiple airlines, include international airlines, canceling flights to delhi and across north india. india is on of the fastest-growing airline markets in the world with this new middle-class fall it -- flying on budget carriers. it is probably too early to give

a figure, but it is certainly millions of dollars. tom: very good, ian marlowe, thank you. greatly appreciated. we welcome you to bloomberg surveillance room hanoi, london, and in new york. we are looking at this international relations and international economics. we have the head of foreign exchange and macro strategy from credit suisse. us.form dollar ascended for there is a short-term tactical view, but can credit suisse say it is still a dollar world? >> i think that is changing at the moment. as we move towards looking at the trade deal with china, that takes some of the steam out of the dollar. most of last year, the dollar was strong partly because of issues like trade complex and the dollar loses steam. in awhat we see

rejuvenated vietnam, i have a chart but i will not show it now, but it is important to see the relative gross and cambodia over the last 15 years coming off the mat of those great wars. asian it is the eye of descendent. what is the difference? shahab: at this point in time, we have a much more closed financial sector in asia. tom: us leverage? -- less leverage? shahab: certainly compared to before. the amount of dollar debt in countries is far less than it was then, and the exchange rate regimes are a lot more flexible than they were. i think we will have a better environment in terms of being able to handle this flexibility, and with less macro volatility, better than the case in 1998. policy andwo foreign

some of the historic meetings we are seeing move currency? i don't know whether it is moving currency now or if it takes a couple of years. we need to talk about the appetite for china and other emerging markets the impact that has on the dollar. shahab: at this point in time, what is clear when you look at the developments on the trade front is there is a lot of emphasis in getting china to that theyarious norms should've agreed to a long time ago on all kinds of levels, whether on the ip side, but also in terms of the financial side and currency policy. the more we go down that path, that should actually be something that leads to greater financial integration over time fx overtime as the chinese become a more global currency. macroerall, less volatility, which is probably a good thing from the wider market perspective. is the mostat

interesting currency in 2019, the dollar or yuan? shahab: yuan so far has been more interesting than the dollar. it's volatility is in line with what we see on the china trade war story. i imagine that will continue the -- two months to to three months. towards 2020, that could change with the developments at the fed, whether they review the policy framework, and the potential discussion of some changes their that may be taken by the markets as a dovish development. we would have to look at the inflation over the course of the cycle rather than a few targets. that kind of thing may dip the dollar negative, but that is more of a 2020 story. tom: thank you. it is the usual conversation with an industrial of germany and that would be bayer. not. what, it is

the ceo will join us. and they confirmed they will do job cuts. bayer. this is bloomberg. ♪

tom: good morning, everyone. bloomberg surveillance. francine lacqua in london at westminster. very important day on brexit news. ian marlowe with us in delhi and othersd haslinda in hanoi for the summit. i would like to turn to business. we have seen creative destruction and strategic shift in the united states. memo, craft, and now it is

germans term. bayer guy, nt has 30 17 years on the watch that they year, and he joins us now, the chief executive officer. cuts,e announcing cost job cuts. they are done differently in europe and america. are these cuts coming because of the monsanto transaction and because it has not been is positioned to optimal as you expected? of all, thanks for having me. the structure at the end of last year's not real new news, but the new news is that we finished the year quite well with strong results. it is a little bit better than most of us would have expected. we beat our core eps guidance

and even higher than the upper range that they had guided for, and we have also reconfirmed our strong positive outlook for 2019. oft is against the backdrop a fairly volatile market, so we are going to grow about 4% and increase our margin by 200 basis points for 2019. of course, some of our structure measures will help. tom: the financial matter is in order. we will let bloomberg intelligence describe that in the coming days and weeks, but you have to execute job cuts. are you hindered because you have to work within german law versus being a more anglo-saxon model? actually, to the contrary, the great advantage of the european or german model is had we have actually intense discussions with our employee representative.

we have come to a good agreement that also takes care of our people who will not be working in the company going forward, so they are going to be taken care of very well. and with that, we get actually a very good implementation. and that is not to be underestimated looking at the quality of execution that you will see the company going forward. tom: let me ask a rude american question. can you give us a headcount or percentage of 118,000 employees? rightu give us a number now of how many bayer employees will be affected? so, that is a very good question. we have full transparency. we are going to reduce our workforce by about 12,000 employees over the next four that to come, and we do

with one of our employee representatives by taking care of our people so their life will keep moving forward. jobs?here are those i don't mean specifically in divisions, but you did a large transaction with monsanto. everyone in america has the reader up right now because of large transactions and the debacle with kraft foods and this, that and the other thing. what went wrong or is it right sizing for a more competitive time? werner: we have undergone massive change of the last few years in refocusing the company a company toing input company in the world. looking at all attributes, it is the best in the world. with these portfolio changes, we need to adjust and right size

our infrastructure. on top of that, the numbers i quoted include the integration related synergy effects that job productions. we simply have redundancies, so it is in that context. it is not the answer to a potential problem, so we are rightsizing as a means to become even more competitive and also to fill the support of our innovation going forward. me jump in here because -- let me jump in here because we are seeing live pictures. the motorcade of the president of the united states of america, donald trump, in hanoi as he is about to meet with the leader of north korea. i believe that motorcade or in the motorcade is the beast, being one of the most famous methods of transport for president trump, even more famous possibly than air force one.

let's go back to mr. werner baumann, the bayer chief executive. i wanted to ask you about the activist investor of elliott management that has been on your back. we heard about that in december, that he wanted you to think about making up the company into agrochemicals and pharmaceuticals. have you spoken to him since? has he backed down on his request or is that still something he wants you to do? we have a clearly articulated strategy that is fully backed by both boards of the company that we are executing against. we see great growth prospects, increase in profitability, for focus and portfolio measures that amounted at the end of last year, and that is what we stand for and what we are executing against. i also believe have gotten a lot of credit for what we're about to do and implement. shareholderdividual

discussions are concerned, we never comment on them, so please do understand that i will not comment on the one you quoted either. but what have other companies learned dealing with activist shareholders and how can you defend your business model? what is the best strategy for that? werner: well, i can only reiterate that we are as a company growing well. our business has performed against the best competitors in the world. we are the leading ag input company in the world, and our pharma business has been one of the fastest-growing and we continue to grow nicely into the next decade. on top of that, we see strong contributions from synergies going forward. we are very optimistic looking forward into 2019 and the years to come. mr. wernerhank you

baumann, the they year executive executivehe bayer chief officer. it is amazing to look at the pictures of the motorcade in hanoi, and you wonder what the leaders will talk about and what will be said. let's get back to brexit. theresa may has bought herself more time to get a deal. may heads into a parliamentary vote today on her strategy and has appeared to have staved off a substantial rebellion. votesa may promised them to take a no deal departure on march turning and off the table and to delay brexit. still with us is the credit suisse head of october trading strategy. when you look at pound, are they now pricing and strong brexit? >> i think we are getting there. there was more room to go, and when you look at the fx option, they are still relatively much

higher than other major currencies, and the risks are heavily still for sterling, so we would imagine that the risk premium will still go further, but this spot exchange rate for the pound will also go higher, so levels like 135 against the euro-sterling are still achievable in the next few days or weeks. i think the problem becomes maybe as to get into march and to the point where there is actually a vote in parliament, if we then get the extension at the end of june, the market may need to then start repricing in some risk that you do end up with a no deal at that point in time, so that could you are the pounds rally comes to an end. for the time being, it does have -- francine: let's speculate the theresa may deal gets voted through parliament.

as you say, you had to the relationship between the u.k. and the eu so what happens to the pound then? shahab: this is a good question because it is still a question for who will actually be leading the u.k. in those negotiations? there is a question as to whether theresa may will be asked to resign, even if she gets her deal through. the question comes will they get someone to the right of the party that might be more confrontational toward the eu or not? or maybe you get a new election. it is complicated in that point in time. for that, -- tom: we have to leave it there. stay with us. 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. want more from your entejust 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. the president just giving up some comments. let's see if we can listen in. >> [indiscernible] thank you very much. francine: international media gathered here. it was interesting to see some

sources from the white house say not to expect too much from this meeting, and president trump tweeting, saying we should not pour water on this meeting, saying it is important and maybe something will happen. afterader of north korea his 60 hour train ride meeting with president trump of the united states. we will see whether we can hear any of those comments between the and see what exactly vibe is between the two leaders. francine: extraordinary moment, as it was before in singapore, but this time very different. tom: it is the president beleaguered by all of the events in washington, clearly within the tweeting this morning for a global audience, the president was very active on twitter. we had some technical difficulties, what with the tweeting this morning, this is without question the president distracted. haslinda amin is in hanoi.

the secondhis is meeting in eight months, and it is significant. we heard from president trump, saying he expects something more substantial. this time going against the sentiment on the ground that perhaps this will be pretty muted. they're looking at a deal, perhaps, but maybe not. we know both sides are trying to make some kind of concession because at that meeting in singapore, nothing really came out of it. we know north korea continued to build upon its nuclear capabilities. now both sides are looking to amend that. this complete denuclearization, can be achieved or not? so many questions to be addressed, and that should be addressed at the dinner tonight. both leaders expected to have a one-on-one meeting before they are joined by their two aides from each side. tom: very good, thank you.

right now with a news update on a busy day, our first word news with viviana. airspace isistan's still closed, and they confirmed they shot down two indian warplanes in the kashmir region. both pilots captured as they say they lost one plane and shot down a pakistani jet. they say their planes struck indian targets in the region and are no reports of casualties or damage.this comes a day after india said it bond terrorist camp inside pakistan. tensions between pakistan and india are at their highest level in almost a half century. in the u.s., senate republicans will be forced to take a stance on president trump's declaration of national emergency on the border. the democratic-controlled house voting to block a declaration. the senate has 18 calendar days to consider the house measure or act on its own version. neither chamber is likely to have a vote to override a presidential veto.

president caps on rouhani rejecting the resignation of the foreign minister of the country. they say he's on the front lines of resisting pressure from the u.s., so the resignation is not the nation's interest. the resignation highlights the standoff the between moderate politicians and hard-liners who want to more aggressive foreign-policy. nigeria, a second term for the president. of they he captured 56% votes, but the opposition is expected to file a legal challenge for alleged irregularities. we are finishing up right now and sending it back to tom keene. so much.k you and abrupt end to the news with breaking news. the president of the united states meeting with the leader of north korea, mr. ken. -- mr. kim. let us listen to their conversation with translators right now.

mr. kim talking, as well. much going on here. we havetwo guests stick -- we have two guests to give us perspective. we are waiting to see a president trump will speak, as well. an the store, and in hanoi. i would suggest talking to kevin cirilli that this is most definitely a different moment in singapore. what we love to do on surveillance is speak to gues ts. a guest from eurasia group, who has an interesting background on international diplomacy and our guest from credit suisse. andwere with ian brunner eurasia group, but you had a tour of duty with brent schoolcraft. what would they think of this moment? >> they would think that

diplomacy is always preferred to military action, but it is important to get the specifics right. tom: right. i think of all that he represents and not so much of a republican diplomacy but an american diplomacy. is the word verifiable? in your research for eurasia group, are we just looking for an opportunity for a photo? todd: we do not have that sense of verifiability at, and that is what has been lacking so far. as everyone can see, we have historic images in hanoi, as well as what we had in singapore. president trump's challenge is to back that up with something a little bit more detailed, or credible this time around. tom: we will bring you the headlines within translation. president ise speaking. let's listen. president trump: hopefully we

will be equal or greater from the first. we made a lot of progress. i think the biggest progress was our relationship is really a good one. >> [speaking foreign language] president trump: as i have said many times, and i say it to anybody who wants to listen, i think your country has tremendous economic potential,

unlimited, unbelievable. i think you will have a great future with your country, a great leader, and alec for it to watching it happen and helping it to happen, and we will help it to happen. >> [speaking foreign language] president trump: thank you very much. we appreciate it. tom: the president finishing up -- president trump: we will see you i guess at some point during the news conference during the day. [honking] [indistinct chatter]

we will leave it there. the president of the united states at the second summit, and does todd has been telling this with eurasia group, any diplomacy is good diplomacy. let us set the scene. new hanoi is over and and southeast asia. we have our guest with us from .redit suisse you can see the terrorists out in the front of that friendship stork hotel, just iconic to say the least. this is a place where you could would like toou buy within the burgeoning capitalism of southeast asia. the china tone and the north korean tone and south korean tone is different than it was 10 years ago, isn't it? the think so, and from

markets perspective, what has changed over the past year is we have moved from outright hostility relative to north korea, and even on trade wars, to a more constructive environment. i think that is what is helping emerging-market currencies do well and the recovery overall in those assets, as well. francine: let's also go to haslinda, who has been covering the historic summit for us in hanoi. we were just trying to listening to the two leaders of the free world and north korea. are youd of language expecting from the two leaders? president trump was praising the economic possibilities in north korea. how far will this flattery go? well, the potential is looking towards be a non-. the u.s. has said vietnam could

be a model for north korea. that is because of the similarity and history of both countries. vietnam itself was at war for 40 years, pretty much cut off from the u.s. for 20 years, but now, the same thing could happen where north korea is concerned, and you talked about the possibility or the potential of the north korean economy. well, there is. if you take a look at the minerals, the iron or that is and can be found in north korea is estimated to be worth $6 trillion. in convincingeds north korea in convincing kim to denuclearize, this is precisely the potential he is referring to that it could open up and open up to foreign investments and perhaps bring the growth in the country that has seen the

contraction of the .5% in 2017. francine: when you look at the pictures there, moments ago, donald trump and kim jong-un arriving in hanoi, and that handshake of the meeting and sitting down to talk, how much of this will be overshadowed by the claims of president trump's former lawyer michael cohen? we are expecting him to call the president a racist and cheat in his first public hearing. how distracted is the president right now? he is fullyot think distracted from what is going on in hanoi, but as tom said earlier, he is certainly beleaguered with all of the goings-on in washington, not testifying but the house passing that resolution of disapproval and his trade representative is also testifying on capitol hill today to give an update on u.s.-china. in order for the president to

break that leader, he will be pressed to not only just look presidential in these extraordinary images that we are seen as at also be tough negotiator, someone who is not going to give away the store to a very fierce and determined negotiator in kim jong-un and the north koreans in general. you, i want of to open up a discussion on the level of trust that we are witnessing in hanoi. as i mentioned in the opening they, this is the hotel are having dinner in, that jane fonda selected in another time and place half a century ago. what is the level of trust right now on the china projection that was not there 10 years ago? this is the china projecting. trust inhe level of

china projecting? todd: there is little trust between china and the u.s. at the moment on this issue, and many others geopolitically in that sphere. the level of trust between the u.s. and north korea is similarly at a low level, starting from a different place. they are attempting to build this relationship. there is a continuity with what trump is doing with china and north korea in attempting to use these personal relationships to leverage an outcome. is perfect toisse discuss this with southeast asian moving beyond this bilateral trust discussion we are seeing in hanoi right now. withalism just moves on substantial growth rates and , and frankly,nam the dynamos of indonesia. they are just moving right on, away from this political trust issue. thatb: the other benefit

southeast asia appears to be deriving at this point is the trade war story between the u.s. and china that has forced multinationals to think of other places they can make things. like indonesia and vietnam are high up on that list. i think that is another factor that is help will and having so much complexity at this point in time. you all forank joining us on this historic day. hanoi.a is in coming up, we delve deeper into the strength and weaknesses of the chinese economy. coming up, the chief executive of rio tinto joins us for his first interview of the day. this is bloomberg. ♪

this is bloomberg surveillance. tom keene in new york. i am francine lacqua outside parliament as we discuss the president's summit in hanoi and as we discussed brexit. rio tinto saw the last of its mines forthe -- coal the year, and they have a record $13.5 billion. $4 billion announced special dividends and an expanded by that program.that is one way of keeping shareholders happy . joining us now is the chief executive of rio tinto from our studios in london. welcome to the program, jean-sebastien jacques. when you look in how much you get back to shareholders, how much is coming from asset sales?

is that like peak shareholder return or is this something you are worried they will get used to? jean-sebastien: as you said, the day for rio tinto. we just closed returns to our shareholders, the highest in the 147 euros to the company. it is a combination of the items. ,ne is the dividends around 40% around 30% of special dividends driven by diverse meant -- by diversity. we deliver this on the back of -- our employer of year was around 19%. and this is an uncertain and volatile environment. we believe we are well positioned in terms of balance sheets, in terms of growth, and we continue to look at our mrs.. francine: what will returns look

like going forward without major asset sales? jean-sebastien: as i just said, we are well positioned. we look at the work area we have. when you look at the strength of the balance sheet, you see the programs that will give us another 1.5 million dollars. if you look at the 2% growth every year going forward, we believe will be able to return superior cash returns to the shareholders and that is what you're focusing on at this time. i think you are the only minor to have sold off all of your coal mines. do you think it means shareholders will look at you different? is that a different selling point for rio tinto? jean-sebastien: absolutely. theelieve in terms of tension, we at knowledge that

point for a long time. we want to be part of the solution. miningthe only large company that does not have coal or oil and gas. we really fought the solution in terms of climate change. we are well placed in terms of -- aluminum,per, copper, and better technology. yes, it is a big difference. francine: talk to me about your sheet. it is extremely strong, but a lot of investors want to find out exactly how you will grow, so what are your plans for growth? at what points will you deploy some of that balance sheet for m&a? jean-sebastien: we have three lovers in terms of growth. the best one is productivity. i have $50 billion of investor cap company, and we believe we can run it better. we have one point bill -- $1.5 billion of additional free cash

flow per share. the second one is we have multiple growth options. we will continue to grow our copper business. all in all, when we look at the next five years, we will be able to deliver our 2% growth, which is in the context of gdp between 3% and 5%. it is significant. we invest in businesses that over 20ivered more years, so it is about the quality of the growth. in terms of our position, it has not changed in terms of m&a. if there is an opportunity, we will look at it. otherwise, we are patient. we know that it takes some time to pick the right target at the right time. i think we have a lot to offer in terms of growth for shareholders. francine: jean-sebastien

jacques, thank you for joining us, the executive of rio tinto. my promise i will be in the studio to do the interview. now time for our single best chart. todd mariano with this with eurasia group. this is the scope and scale of the communist experiment in southeast asia. withapita gdp, down here the growth of south korea and the united states, dominant countries from 1990, and then we have the communist model. vietnam up here with growth, much like china, cambodia, and laos with a little growth, as well. what is the character of the "communist leader" that this president is meeting with? todd: i think what he is attempting to do, ideally, is mimic that experience, and engage in a hybrid model of economic development, where they

do not have to give up the political structures or the control over the economy, but they try to harness the economic growth. of course, he is starting from a very different spot than vietnam and china started from. tom: very good. we will have to leave it there because we have to go to the green for an important conversation. thank you for your perspective on the hotel and annoying -- in hanoi. francine? francine: let's get back to brexit, back here at westminster. with us is the u.k. liberal democratic party leader. , is this now it for the possibility of a no deal brexit or are we complacent? >> nothing is certain. that is the problem. we are almost three years on from the referendum and we are no closer to deciding whether we believe, do not leave, or we leave with a deal or no deal.

postings are still in play. what happened yesterday took no deal of its fervor and it has not killed the problem but made it less likely. that still quite possible the theresa may deal will not get through parliament. nothing has fundamentally changed. the thing which some of us are arguing for, which is we have to go back to the public and offer them the choice of the government's deal or staying in the european union, that is still a live possibility. francine: is it more likely that jeremy corbyn said he will support that? vince: marginally. he is not doing it because he believes in it but because he has a gun pointing at his head. haveuld much rather not the damaging consequences or the ones that will help his party, or so he believes. i have always believed that if we have got a decent vote, it would happen because the government realize it is the only way of getting it through.

withine: what do you do these independent groups, some of the mp's, should they merge to form a new party? ance: they have established independent entity because they want to establish something you. i understand that. i respect it. common.a great deal in i think we will find a way of collaborating because we have great strengths, too. established party with strong grassroots and 2000 counselors across the country, and our strengths are complementary to there's. in a sensible and rational way, we could work together under already good relationships. thecine: do you think theresa may plan, maybe with tweaks from the eu, will be voted on on march 12? vince: probably later in the day, but i don't think it will get through now. possible. i would think of the various possibilities in terms of probability, theresa maydeal may well get there'.

i think there is high probability. i think no deal is unlikely now. francine: vince cable, thank you for giving us a little bit of your busy day. that is the u.k. liberal democratic party leader.we will have more from bloomberg surveillance on radio and on t.v. we will go through brexit, the next onnoi meeting, and radio, tom keene with jonathan ferro, and we have the testimony of the former lawyer up president trump, michael cohen, and jay powell. a busy news flow. this is bloomberg. ♪ you.

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