largest carrier best characters suspending aircraft after aircraft is in ethiopia. during no hurry to hike. saysed chair since -- interest-rate policy is in an appropriate pace. feeltient means we don't in any hurry to change our interest-rate policy. francine: good morning. "bloomberg surveillance." this is"bloomberg surveillance." -- this is "bloomberg surveillance." for our european audience, tom start an hour early because we change the clocks in u.s. tom: the ft on the cover today of deutsche bank

and commerzbank. francine: we will have a full roundup on what that could mean to come. coming up later this hour, we talk brexit in the future of the labour party. don't miss that interview. first, let's get straight to the bloomberg first word news in new york city. viviana: pressure on boeing is mounting after the second crash in five months of the newest version of its 737 jet. all 157 people on board died when an ethiopian 737 crashed minutes after takeoff. other countries are likely to follow grounding. that is a blow to boeing's reputation. it is also a potential threat to the finances. saudi arabia is extending those deep oil output cuts into next month. willberg has learned they supply and customers with significantly less oil than they

were arrested -- requested for april. this is the latest move they are determined to regain control of the oil market. turkey has fallen into recession for the first time in a decade. gdp shrinking last quarter from the previous three months. that is when it fell 1.6%. that is a blow to the president. this month, his party faces municipal elections. fizzling.conomy president trump will propose a budget that wouldn't balance for 15 years. the president is calling for the domestic spending cuts. these have little chance of passing congress. 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: thanks so much.

we see a list of the market. to the market. o -- aftereset the meeting last week. the 30 year yield was a 3.01 on jobs. german 10 year yield is unchanged. that is a remarkable statistic. 0.07. look at that with our brexit coverage today, sterling under a 130. francine: i'm going to spend a lot of time focusing on brexit. the crucial vote for theresa may tomorrow. a lot of the press has said she could lose quite big. i'm looking at stocks overall in europe and asia gaining. i think the market is trying to shake off the worst week of the

year, that was yesterday. china reportedly moving to ground flights involving that model that crashed off ethiopia. we will have a full roundup of what that means. tom: we will touch on boeing in just a moment. i want to show the boeing chart in a moment. this is the jobs report. -- this puts in perspective 20,000. it's not that unusual to have one data like that. the remarkable stability of monthly job growth at 200,000. i just wanted to bring that up to show the one-off this of 20,000 right now. francine: what i'm looking at is what jay powell said over the weekend. he was saying interest rates can remain on hold as the u.s. central bank wait to see how conditions abroad involved. this is what i'm looking at. theation, if you look at

university of michigan outlook and the employment outlook, they're looking at a couple of things to see if conditions are stabilizing or evolving. best selling plane is coming under increased scrutiny after another deadly accident. china has counted its fleet of 737 fax jets after a model operated by ethiopian airlines crashed sunday. ben katz joins us now. with think about the tragic loss of life and all of the victims, but we look also at the business angles to this. do we know -- there was a crash that happened in october, this one a couple of days ago. are they linked? ben: let me start off by clarifying that we don't know yet. the investigators are still looking into it. they are still analyzing data and information. the information we do have from seem to indicate that

there is a link. the lionat things like air crash in indonesia back in october, there was a very steep decline after six minutes after takeoff. in this case, it was about 10 minutes after takeoff. what we know it that crash is that there was an issue with the angle of attack sensors which monitors speed and led to the pilots to be slightly confused about how fast the aircraft was going, and overcompensated, losing control and causing the crash. francine: do we know how many more of these plans will be grounded? this is a very new plane. ben: at the moment, we're not sure. moment, it will be down to each airline any jurisdiction to decide what they do with their fleets. china has already grounded there's, ethiopia has grounded. a lot of the other airlines have

monitor.re going to so far things look ok, but we will wait for guidance from the regulators. tom: i don't want to put you in a difficult spot. the point sky, which is a fabulous blog in america gave a scathing review from a customer standpoint. they focused on american airlines. do you expect to see the put down theines 737 this morning? ben: i think it's a good question. obviously, the american airlines article the close to boeing and ge. they are readily close to the faa. if there is anyone having a thorough conversation about the 727 about safety and quality, it is those airlines. i can't imagine myself personally that this would necessarily impact the american airlines orders. tom: why not? two planes are down and we don't

know why. where's the transparency on a monday morning? you are telling me somebody is going to get on a plane in denver and fly to jacksonville on one of these things? ben: it is an excellent point. it is always interesting to watch how companies and even stocks react to an instance like this because you never really know how much the concern and fear around general air crashes impact how people travel. in the u.s., this is a big question, maybe the airlines will drop. maybe there will be concerned that carries across, but i think there will be more scrutiny over what ethiopian air to preempt this issue. what actually happened in hownesia after looking at the regulators operate and whether they are doing enough sufficiently to train pilots and ensure they protect against this type of incidents. francine: how much does boeing rely on this plane? ben: this is a critical plane

for them. the narrowbody market is what they are relying on. the 737 max is a plane that is reinjured, it is a bestseller. foregoing, the question -- four boeing, the question will be whether to start delaying orders or canceling. the two planes we can heat -- compete. it is an incredible story about how they compete and how competitive it really is. this is a major setback for can't, especially the quickly justify and explain what is going on. tom: thank you so much. difficult questions there. an eventful weekend. for those in economics, scott

pelley front and center. here is the federal reserve on cbs. >> patient means that we don't feel any hurry to change our interest-rate policy. what is happening in the last 90 or so days is that we have seen increasing evidence of the global economy slowing down, although our own has continued to perform well. ♪

>> we are within a few days of the next meaningful vote. it really is vital to the european union that they take very seriously this of the repair proposal set up by the attorney general and brexit secretary to enable us to get this deal to pass on tuesday. that is what this is all about. in the event we can get the changes parliament wants, they

will be given opportunities to support the deal. we are focused on trying to win the spoke on tuesday. that is why the government is absolutely 100% determined to seek the changes that parliament wants to see. the prime minister has made clear that we will be having that meaningful vote on tuesday. what we are seeking to do is to make some further changes to the arrangement, to deliver on what parliament said it wanted which was alternative arrangements to the backstop. certainly see myself as a guardian of brexit. i'm determined to make sure that we deliver on the decision by the united kingdom. i do you feel great responsibility. that is why i stated government, to help the prime minister deliver on that. francine: that was the leader of the house of commons. u.k. cabinet members have called for last-minute concessions by the eu so theresa may can get her brexit deal through parliament this week. there is ais isabel,

small thing called a meaningful vote tomorrow in parliament. what happens to pound depending on how it goes? will she be able to get it through? >> that looks very unlikely at this point. this morning, there was even talk of the vote being pulled. if she was able to get that deal through with perhaps any last-minute concessions from the eu, which seems very unlikely as of now, this approach push the pound at least temporarily until people realize we still don't know anything about the future relationship. that is not present in right now, so that would be a good surprise. we don't expect that. francine: what is pricing the pound at the moment. will that really be an extension? it changes everything. we went to 133 when it

seemed for sure that there would be an extension and no deal was off the table. we back to 130, 129. markets are nervous that maybe it is not in the back that there will be an extension, or maybe it will be back in the same place in two or three months. that is definitely a risk. i think we have to get through this week to release the how much support there is for no deal and how much and how long is the extension. i think there is still this question of do we get a short extension or 21 month extension. for united kingdom business, why can't they united kingdom be norway? one report said the sensible outcome is for the united kingdom to be switzerland, to be iceland, norway. why can't that happen?

isabelle: because the prime minister has set out a red line, which is no freedom of movement. norway and others have expected freedom of movement. simple.very if the red line of the u.k. were to change, and the eu has made that very clear, a solution similar to switzerland or norway would solve the problem, would make the backstop redundant. we are not there yet. we are not anywhere near that. tom: we are not there yet as well. we are going to have a vote in let's say the prime minister goes down in flames. what do you and blackrock look for in the coming days? two more there are votes scheduled for this week. they will be on the schedule if the meaningful vote on theresa tomorrow.ected

the day after, there should be a vote on no deal brexit. we expect that to be rejected because there is no majority in parliament for that. on thursday, there will be a vote whether or not to seek an extension. that will give us a bit of clarity on putting off no deal for a bit longer. francine: does europe actually give them anything? atseems like we are looking your up to see if they can make this easier for theresa may. isabelle: i think it is very hard. public opinions on the continent are not focused on this at all. in the european newspapers, there is very little discussion on brexit. two, the europeans are probably be willing to give something if they knew for sure they get the deal for parliament. right now, there is no such thing that is clearly a game changer. unfortunately, the embodiment in a move right now to make a

concession for theresa may to get the deal through. francine: thank you so much. coming up, we speak to the u.k. shadow chancellor. we will talk brexit and what is going on on wednesday, the u.k. budget. this is bloomberg. ♪

viviana: this is "bloomberg surveillance." close to an agreement

to buy an israeli chipmaker. bloomberg has learned a deal could be announced today. it has a market value of about $5.9 million -- $5.9 billion. tesla will raise average vehicle prices about 3%. they will shut down fewer stores than previously announced. the move coming days after the alarm analysts by announcing it would close most of its brick-and-mortar stores and moved to an online platform. bloomberg has learned the company is in talks with a chinese company about ordering batteries to power its model three cars. the bank of england reportedly wants some u.k. banks to hold three times as much assets in the event of a brexit breakdown. toks reportedly were told prepare for a scenario in which for several days, they couldn't swap the british pound four u.s. dollars.

that is the bloomberg business flash. tom: isabelle with us this morning. we offer december and january and february. here in march, there is a massive now what? let's begin with correlation across assets between bonds and equities. what does it tell you? what is a linkage between fixed income and equities? isabelle: it is looking back to normal, finally. we had difficult with that one for most of last year with the correlation that wasn't as negative as historically it has been. now we are back with a fairly strong negative correlation between stocks and bonds. has that provide this every investor wants to have been a portfolio when they learn it is a bit uncertain. tom: what have you changed in the last number of days,

particularly since mr. draghi's relative bond shall -- bombshell? much.le: not very in truth, we do expect this market reaction to the ecb announcement last week to fade over the coming days because we are not sure it deserves this kind of risk off market reaction. in reality, the ecb implemented a bit earlier than expected. a step that frankly everyone was expecting them to take, which was not pressing the panic button, but rather preventing automatic contraction to come into play. that is keeping the level of stimulus confident, which seemed appropriate. the weaker outlook that the ecb announced is something that had already been recognized by forecasters that had revised

their outlooks earlier. the ecb was a bit behind schedule. there wasn't all that much new news. we have had stimulus measures announced by china, the fed clearly signaling a more dovish tone. the ecb being dovish. financial conditions have eased since the start of the year. all of this is telling us that the global growth pronounced slowdown we saw 20 and of last inr should start to these should look a bit better from here on. we are not taking much in portfolios. we remain with a bit of a risk on tilt at this point. francine: overall, how much worst is gdp in europe become? isabelle: not that much worse. what we have seen is a regression to trend. if we hadn't had a more dovish

stand from ecb, maybe we would have seen further contraction. financial conditions have really rebounded since the start of the year. that should help push gdp at current levels. likewise, the rig celebration we expect to see in china and the second half of the year should really help lift european growth prospects. we don't expect a further contraction from here. francine: thank you so much. isabelle stays with us. we will have plenty more on brexit. we will speak to the shadow chancellor. this is bloomberg. ♪ want more from your entertainment experience?

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and see how you can have an even better x1 experience. simple. easy. awesome. tom: futures up. the dow down 180 points. there is always one and there, boeing.

further deterioration. down to 383. this will put in perspective the drop in boeing going back a year-and-a-half. the chart is simple. we are down off that white circle. this is the story of the morning to watch. francine: boeing has to speak up. i don't know if they have anything in the pipeline, but pressure on the company. this follows the second deadly crash you were talking about. tom: let's get to first word news. boeing, we begin with

ethiopia grounding its boeing 737 mass jets after a jet crashed minutes after takeoff. blow to boeing and could threaten the company's finances. all 157 people on board were killed when the plane crashed. it is the second fatal accident in five months. china is pushing back against trade demands. making it clear any enforcement mechanism must be to way and address china's grievances. in venezuela, electricity returning to caracas after four days of a blackout. with the unstable power grid, it is unknown whether the lights will stay on.

the country remains largely in the dark. the struggle over electricity is fueling another power struggle there. global news 24 hours a day on air and on @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine: two sides have reached consensus on many crucial issues. isabel, we were talking about interest rates in the future of europe. how do we know how these negotiations are going? can we have a long-lasting agreement? are we expecting this to last for some time? >> we are hearing different news daily.

there is an indefinite truce. there does not seem to be new escalation triggers. an upside from here. at the minimum, we get a trade deal that addresses some issues. a morescenario would be comprehensive agreement, where the tariffs get rolled back. that would be received positively. it is not a big deal we do not reach closure immediately. as long as the u.s. remains entangled in these negotiations, we should not expect intensification of hostilities between the u.s. and europe. the sooner we get clarity, the

better our base case would be for an agreement that does not resolve everything and we would see a continuation of tensions between the u.s. and china going forward. how much stimulus do chinese authorities put on the chinese authorities? >> we would not expect more stimulus in particular. guess is we will see how this measures impact the economy. they seemed positioned to reach their target. tom: what is the measurement of a hard landing. at it this morning. extremely detailed. a possible undershooting of nominal gdp.

what is the likelihood of a hard landing? how do you gauge that? >> we follow a large number of activity data series. they indicate the same, the activity has not troth yet. we are seeing a positive momentum. we expect the economy to bottom out around the midpoint of the year and re-accelerate. it is not like chinese authorities are out of bullets. they have announced meaningful fiscal stimulus. if you compare what they have done in 2015 or more so in 2009, they could do more if they had to. the sensibleounced growth target. u.s. completely break down, we are all bets off.

tom: is there an equity opportunity in china? think so. the chinese market got battered last year in excess of what was happening in the fundamental macro space. now,ok at chinese equities they have bounced back. you need to be selective. we see strong potential, particularly for sectors exposed to chinese consumers. brokers, health care, consumer discretionary, and the like. are going to drive this conversation forward. we are thrilled to bring you must-listen, must-watch. nicolas will be with us this morning.

6:00 hour, must-watch. this is bloomberg. ♪

this is "bloomberg surveillance." let's check in with what is trending on tictoc. solo female film, "captain marvel" raked in the biggest opening weekend. ocasio-cortez blasted an irredeemable system that is responsible for income inequality. unknown datase an

growth to make hundreds on nintendo. tom: a lot of important stories we are going to cover. swiss 10-year, german ten-year, it is a new world. mario draghi comes out, rates are low to begin. could you explain how negative interest rates benefit europe? is different. the view is europe needs monetary stimulus. the negative rates are providing that, at least in countries that are -- favors, where banks do not have access reserves.

perhaps that is not the policy they would like, but may be in those countries, you could take policy actions, like fiscal policy, to reduce domestic savings. it is not all -- when you look , ithe german ten-year bunds is related to german fiscal policy as well as ecb policy. tom: maybe this week we will get a big bank merger. who knows. what is the immediacy of where these rates are? >> there has been a growth slowdown. if we see a turnaround in chinese growth, it will lead to growth prospects. we would expect long-term rates to start rising.

the reality is, prospects are sluggish. we could use fiscal stimulus. this is a fed story, going back to what jay powell said. today, we find out it is in a recession. macrole: the global context is looking good. we have a dovish fed through the middle of the year, probably longer than that. that should keep the dollar tame against em currencies. we have china doing what it needs to do in terms of stimulus. we like em assets right now. there are a lot of good things to say. woods, butout of the if you compare to last year, where we had game changing

elections in some of the largest economies, it is looking more manageable. turkey is in a recession. not a surprise. they had to go for a large adjustment. not a surprise. the worst is behind us. mean we do not like emerging markets. for the most part, we do like them. francine: is there opportunity in india? you can go broader. a range thate in pleases everybody. avoid those places. election.has an

that could be a game changing one. in places that have had their elections, we are seeing reform drive taking shape. we like asia, which will benefit from this rebound in china. cash an asset? is that 2018? are we beyond where cash is an asset? isabelle: we are not keen to think of cash as an asset. if you are a u.s.-dollar based investor, you get paid decently for cash. we are in late cycles. it is fair to ask -- do you get paid enough for taking this extra risk compared to what you can get on cash. if you are european investor, given the rates on cash, it is

close to zero, but cash is not an asset. how much volatility are you expecting an 2019? around the long-term average, the vix around 20. up next, johnng mcdonnell, we will talk about the future of the labour party and brexit. this is bloomberg. ♪

tom: good morning to all of you. america.ing across the subject is boeing. they are down. down 9%. we were down a little more than that earlier. , not one, but now a second plane crash of their 737.

stocks adjusting down, 70 three points. the second plane crash. there is no question all of the world is looking towards boeing. that ae: a reminder also day after this flight, which was the ethiopian flight 302 crashed, ethiopian airlines, the largest carrier in africa grounded all planes which are the 737 max 8 and china ordered of carriers to ground all 96 its aircraft that it recently bought. we are hoping for a response from boeing soon. tom: we will see from boeing, i am sure. a merger of deutsche bank and commerce bank is shaping up as the likely endgame. are runninglenders

out of time to show they can grow as standalone companies. given upbank's ceo has his resistance to doing a deal. citigroup wants to boost liquidity in asia. with all join ubs pricing platform in singapore. they have fx systems set up in new york, tokyo, and london. talk ofis time to banks. we can do that with jonathan of bloomberg intelligence. i want to bring up a chart that says it all. there has been great analysis. i recommend eliza, as well. here,, spank -- commerce bank worse. bnpe was a point where paribas and deutsche bank parted ways. many were saying why doesn't bnp

paribas take the opportunity to acquire commerce bank. is it about opportunism? >> domestic france is a difficult place to be. they have enough capital, but not too much capital. they have a little in germany. they do not need germany. germany is so competitive. tom: bnp paribas does not need germany. what does commerzbank need? they jettisoned investment banking. find a commerzbank better deal than deutsche bank? says 6%: commerzbank return on tangible capital in 2020, we are not going to make that anymore. cost income ratio is 80%.

tell me they did the right thing. i will give you a bank who .annot make 2% anything left is cost. the only deal available they can is withhe table, deutsche's. last year,eal because there is nothing they can do, the prospect of rate hikes has disappeared. revenue will track lower and lower. they need to adjust cost space. francine: it is not only about cost. you hear about a big merger, you are told is it about culture. our two banks a good fit. jonathan: the only item they can improve on the p&l is the cost ratio. provisions have not gone up. they have gone down. they will go up. that will erode the p&l that the only lead management has is the

cost. you need new people. thisld argue the culture, is not about revenue synergies. it is about cost synergies. is two bankss trying to go through turnaround efforts and both are failing. is that fair? jonathan: they have spent the last decade failing. francine: why are they stronger together? getthan: the cost, and you the opportunity for the kitchen sink rather than tweaking constantly. none of that has made a difference. you need something material, to reset the balance sheet. kitchen sinkoper and a chunky number. francine: how much will they shrink the new entity? jonathan: they have been shrinking in terms of revenue. you look at the headcount, it

has not been shrinking. it is an unreasonable job for what they should do. 10%, 15% minimum of the ad and more of the stock cost. tom: does jp morgan need to buy commerzbank? should an american bank come to the rescue? jonathan: no. germany, look at the return of assets. why would an american bank need to go there? if you want to get people, you can get stocks. if you want to get business, you can use your balance sheet. tom: what is your timeline on this? it is a huge deal. don't you want to get this out of sooner rather than later? should i postpone lunch and look for something this afternoon? jonathan: this afternoon is a tad early. you have to be talking first half. either they walk away or they

have explored it and here is the two-year synergy plan and coordination and consolidation plan. i think, one half, we have to get something concrete. francine: who will they compete with? jonathan: internationally, not many people. which is -- deutsche bank is pulling back in the u.s. barclays has been growing in europe. americans domestically in germany. the retail market share is not great. you are competing with numerous banks. it is not like you could say look at jp morgan or morgan and say here it is. you have the domestic issue, shrinking international bank accelerated by this deal. atncine: jonathan looking the banks for us, thank you very much. theresa may looking at a second brexit defeat after ministers called for a final push from the eu

and at sterling is dropping again. brexit talks are deadlocked as ministers urged the eu to do more. we are hearing from the u.k. it is unlikely may will be able to push through her deal tomorrow when parliament convenes. am: this is becoming substantial move in brexit. let me bring up the chart. jason, see if you can grab that as we go to break. down we go. please stay with us. this is bloomberg. ♪

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"all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. ♪ tom: this morning, it is a trade war. it is assumed by many that china will lose about trade war.

in this hour, nicolas lardy on the trade war and on the future of president xi jinping. for now, china avoids a hard landing. tomorrow is maybe the ides of march for theresa may. criticaln, a tru vote, and once again, the tories are divided. and outside investors are pushing the enforcing of a merger of deutsche bank and commerzbank. superficial talks, they are so last year. good morning, everybody. this is ""bloomberg surveillance." francine, everything of "bloomberg surveillance type pushed aside this morning by boeing. it is remarkable, francine, to see what the stock is doing. all in aerospace wait to hear from boeing. remind oures, let us global audience, this is the

second crash of this new boeing plane. we don't know if there is a link between the two crashes which is why we are expecting and hoping to find out a bit more from boeing. for now, china has temporarily banned its fleet of boeing 737 max 8 planes from flying after this disaster? tom: let us full of the chart very quickly, kris bryant will be here momentarily. for all of you flying worldwide today, the chart puts in perspective the drop in knowing level, down 9%. here is a vno rotondaro. >> we begin the first word with boeing. pressure on the company after five months.ash in all 157 people on board dying after the 737 max jet die crushed after takeoff. other countries are likely to

boeing planes.g it is a blow to their reputation and also a potential threat to the plane makers finances. saudi arabia is extending oil put cuts to next month. the move is the latest time the saudis are determined to regain of the oil market. turkey has fallen into recession for the first time in a decade. quarternk 2.4% last from the previous three months, when it fell 1.6%. erdogan. president this month, his party faces many support elections. the economy is fizzling following policy missteps and it diplomatic rift with the u.s.. global news, 24 hours a day, on air and at tic-toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am viviana hurtado. this is bloomberg. francine: liliana, thank you so much.

the dow goes red, down -146 now, 8% or 9% now. 112.50, sterling pounded even more in the last 12 minutes. that is a big deal, francine. german ten-year comes in one basis point lower yield as well. francine: yes, i think the pound actually flipping, this is ahead of another key vote tomorrow in parliament on prime minister theresa may revised deal, whether she can get it through, whether she can't come a order loses by a big minority. i am looking at stocks in europe, they are up a tiny bit. higher.lso nudging on to boeing, their best-selling plane is coming under increased scrutiny after another deadly

accident. china has grounded its fleet of 737 max eight jets, after a model operated by if european airlines crashed on sunday killing all 157 on board. bloomberg's kris bryant journals from berlin. thank you for joining us. do we know whether this crash couple of days ago in the crash that happened five months ago are linked? >> we don't, and that is obviously the number one thing investors and the public need to find out, and pretty quickly, too. there are obviously similarities between the crash that happened in october and the one this weekend. a brand-new jet crashing soon after takeoff. so far the circumstances are unexplained. but in the meantime, investors are drawing their own conclusions come at the stock is down the 9%, buster of market cap which has just -- investors think it is generally a very serious problem.

francine: chris, when do actually find out there is a link? chris: not sure what the answer to that is. clearly, boeing has sent a team to the crash site, and the fia is monitoring this closely. it is in everybody's interest -- this asa. is monitoring well. we had china ground its fleet of s, others saying that they might do that as well. many airlines have ordered hundreds of these planes. reststure of the company on this aircraft, so it is no wonder that the shareholders are getting a bit queasy. indonesiaing news, climbs on board with if you have in china in limiting their 37 max eight from flying. given the exact limit of the headline -- a ordered the

grounding of those 737 max jets. today, youed don't mince any words about this. you and i will be nice about this and understand that everybody is innocent until proven guilty -- pilots or not lien of the software change which forces the nose down. do american pilots, british pilots, first world pilots, are they aware of that software? that iset us be clear, a question as to whether all islets were aware of that software last october when the lion air flight went down. but of course, any pilot flying the playing today would be aware because it was the subject of many news stories, as to

whether boeing had provided enough information on this functionality. the question is, is there something to do with the design or functionality of the lane or the software -- of the main or plane or the software. francine: are you going to get on american airlines like 149 from dallas to o'hare this morning? if that is a 737 max? chris: a fair question. think the, to have any flight plans today, but i can appreciate that all customers will be concerned. passengers asking, is this plane safe? the airlines so far are saying, yes. but in global aviation, this sort of thing since it doesn't happen. you don't have a crash of two brand-new aircraft within the space of five months. it is almost unprecedented. hopefully, there will be some explanation that doesn't point

to the design of the plane. that would be a relief for all concerned. the right now those questions haven't been answered. everyone is rattled, including passengers. one could understand why someone perhaps wouldn't want to fly. francine: chris, thank you so much. this is an outstanding piece on this tragedy. shadowup next, the u.k. chancellor, john mcdonnell, will talk to us about the budget, mostly about brexit and the labour party. this is bloomberg. ♪

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francine: this is bloomberg surveillance. tom, every time we talk about brexit, delighted for our next interview. theresa may's government has a deadlock. the u.k. shadow chancellor, john mcdonnell, has said that not many from his opposition labor party will back her deal. he joins us now. thank you, mr. mcdonnell for joining us on number television. is labor planning a new conference of votes is theresa may cannot get a deal tomorrow ?ight john: it is on the table. it is chaos at the moment in government. we don't know whether or not tomorrow as promised, we will have a vote, or whether or not she will come back with anything different than the deal that was so heavily defeated a few weeks ago. it is really chaos. we are in uncharted waters.

francine: do think she will stay in power if there is no vote? john: there are no divisions in the conservative party -- there are several divisions within the conservative party now. you have been reports of plots against the prime minister in party. the are some who argue that they may support her deal but on the basis but she goes really quickly. the conservative party is in chaos now and to be honest, it is embarrassing for the prime minister to be in this sort of situation. i have never seen it before. francine: what is the most elegant way out? john: this week, without thought we would concentrate on the government on meaningful vote. we were expecting the government to come forward with its proposal and we were expecting to be able to defeat that. then we were assured by the prime minister last week that she would give us a vote to rule out a no-deal brexit, it would economy.rophic for our

. that is what we were expecting by the looks of it, today, things are shifting. we are not sure. francine: so at the moment, you will make a decision in the next 40 hours, but at the moment, what amendment would you support? john: basically we are saying that we will work across parties to prevent a no-deal brexit to defend theresa may's deal. we put out a proposal for a closed single market of thenship, protection regulations around consumer, employment and environment to rights. francine: do you want a second referendum? john: if necessary, we will. might voteross party for the deal only on the basis of a second referendum. if that is the case, that is how we will go. we took this deal to brussels a few weeks ago and we had a fairly positive response, that it was something? tom: they could negotiate around? tom:? tom: mr. mcdonnell, it is wonderful to speak to you this morning. many across all of global politics would consider you to be the definitive left voice

within the united kingdom, even more so than mr. corbyn. iain duncan smith was on the show eight or nine days ago and talked about a reformation for those that want to leave. what is the labor refer mission either the to have to get back in power? john: i think now at the moment we are in a situation where we are the only party trying to give some security to business decision-makers, trade union representing their workers around the issue of brexit. reason we are doing that is because we can't go on with this chaos we have with us government . we put forward a proposal which i just mentioned, this relationship, a new customs union that we can work together with our european colleagues on, a relationship with a single market and all the protections we need about important consumer and environmental rights there.

we think it is a deal we could win and also a deal that would be supported in europe. we are becoming the party that is putting fourth commonsense solutions. people are looking to us, not just constituents, but the city of london and business looking to us? we are seeingty, this new advent of democratic socialism and all that. i am sure you're up to speed on that. the great fear is that if that mcdonnell guy gets into power in the u.k., he will trot out marx, lenin and trotsky like a few years ago. where does the new labour look like if it doesn't look like blair and brown? john: it is based upon the broad that the labour party is. we have always said we are a coalition of a whole range of views ranging from social reform , but also those on the left to want to see the expansion for example of trade union rights, public ownership, etc., and more

accountable economy, a more democratic economy and a fair distribution of wealth. , and wet we have done have been completely open about this, we have set out basically a program of social reform. in the last election, it almost took us into government. we came very close, having been written off before that election. we were very close and we believe those policies remain , it willnd actually transform our society. i will give you one example. over the weekend i have been speaking at conferences and what is the big issue that has come up there, particularly for young people, it is climate change. a green industrial revolution, it has proven to be actually popular. those sorts of ideas giving people hope again, that is mobilizing the support we have got. francine: we're just hearing from the irish prime minister

saying that it is now too late for the u.k. to tell the e.u. what it wants. he is also saying that nobody wants rolling brexit on a cliff edge. that may come back to what you said about what you party stands for. is the independent group a threat to labor winning a majority? john: no, i don't think it is. so far a slump. small number of our mps have left us. i can't understand why. . one of the big issues they raise was not having if people's what on the referendum. francine: and anti-semitism? john: they left before we made our announcement, we are vote.lling for a people's on anti-semitism, genuine concerns have been raised and have said that we will move it out on the figures -- wrote it out.- root it on the figures, even if there is one anti-semite, that is

not good enough. francine: what about your leader, jeremy corbyn? why do people feel that he supports anti-semitism? john: i don't think we were quick enough to identify the problem, and i don't think we were ruthless enough in dealing with it. jeremy said that. what did he do? he brought in a new general secretary and said, your priority is to sort this out. there is a jewish man leading the legal aspects of tackling anti-semitism in the party. we are doing a huge education program. beingde ourselves on antiracist party and actually we are an example to other parties. francine: very quickly, has labor been an effective opposition to brexit or could you have done more? john: i think we have been extremely effective. i know some of the papers are saying we haven't done enough. we are the ones who actually forced the government to have a meaningful vote, who forced the government to publish all

economic analysis and we're the ones at the moment providing a really realistic alternative? tom: john mcdonnell, we will continue this important conversation before the important vote tomorrow. francine and i will be in westminster tomorrow morning. please stay with us, much more to come. this is bloomberg. ♪

♪ friend is this is nurse francine: tone, we were talking about brexit in the future of the labour party.

we are back with john mcdonnell, the u.k. shadow chancellor. when you look at the polling when it comes to the labour party, what do investors ask you the most? they worry about the far left coming to power, how can you reassure them? john: the questions i get asked the most are issues on amortization and ouronalization, and also investment policies. 500 billion over a ten-year figureshe actually came from our ministry, and they say that if we don't invest that money, we will lose from our competitors. it is interesting that they have got the same diagnosis of the economy as me, which is a lack of investment in riyadh as a

productivity crisis. there are saying, how can we help the invest in infrastructure? taxation? top 5% will. play a bit more a corporation tax, yes, we will tax them, but not all. and most people signed up for that. a lot of companies and business leaders say, we pay our taxes, so why shouldn't others as well? francine: do you welcome efforts by one of your leaders to hold the party together? john: there is a tradition of outsiders and different groups in the party advocating different styles of policy, there is the socialist campaign group with jeremy corbyn, we have a tribune group which is a social democratic left, we have about half a dozen and they all add to their weight to discussions about policymaking. and i think that is a great idea? tom: mr. mcdonnell, it is no different in america. forhave been doing it

decades as one of the great socialist voices of labor in the u.k. how do you get the trust of the people in the u.k. back so they will vote for the labour party? that front is trust has evaporated -- the fact is that trust has operated. how do you get the pixie dust back? evaporated.n't we were 24 points behind before the last elections. when we got a semblance of balance coverage in the media, which legally you are required to do in this country, we shot up in the polls because people so our policies and supported them. the way in which we build trust is actually being completely open and transparent. go to different meetings with business leaders, asset managers, co. chief executives, community meetings across the country and there are no tricks up our sleeve. this is what our objectives are, this is a way we will advocate

those objectives and we're company transparent. and actually we are finding that most people agree with us. where there is a difference of view, i say to people, offer me another alternative and we will work on it together. being open transparent and in gauging is bringing people with us? tom: john mcdonnell, thank you us.uch for joining he is the united kingdom shadow chancellor, a member of the labour party. .e have an ipo -- levi is out when was the last time i could fit into a pair of levi's? i think they cost $9.95. much more on boeing as well. and nicholas lardy joins us from the institute. this is bloomberg. ♪

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ethiopian national television, that the black box of the crashed airline has not been found. we will have a look at one they come out, what they found inside the black box, and it will give us a little more clues as to whether there is a link with this crash and what happened five months ago let's get. to the first word news, here is viviana hurtado. >> president trump will propose a budget. he is also calling for a deep domestic -- calling for a deep domestic spending cuts, they have little chance of passing congress. in venezuela, there was a four-day blackout. with been a zone is unstable power grid, it is unknown whether the lights will stay on. much of the country largely remained in the dark. the struggle over electricity is fueling the other struggle there between

opposition leader and the president. a dismal start to the year -- disney's marvel division film opened with $150 million. captain marvel had a global opening of $455 million, the sixth biggest ever. global news, 24 hours a day, on air and at tic-toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am viviana hurtado. this is bloomberg. tom: thank you so much. this is my interview of the day, and if you like china, whatever your beliefs, trust me, this is wonderful. dr. carl weinberg joins us. way up front with his weekly letter on china. to bring a heavy nicholas lardy from the peterson institute, absolutely definitive on china. wonderful to have you with us. let me begin before we dive into

the present tense with carl. you look at the fragility that we see in president xi jinping. tenure ase is his leader of china? >> it is difficult to tell. it suggests fragility, and there is something that suggests he is a very strong leader. there is a very broad range of opinion? tom: your book -- the state strikes back -- what is distinctive now is that carl studies china, what is distinctive about the politics you observe with this national people's congress? dr. weinberg: i think we're seeing a pullback from the emphasis on the state, a recognition that the private sector is important, but that is a direction that have been moving in for some of month. it is not a revolutionary change. i think the problem is the state-directed economy, a move

away from the market orientation those characteristic of earlier years. francine: carl, how do you view china? we saw a lot of stimulus last week on the chinese economy. and we wait to see how it pans out, or are the chinese authorities ready to act more? dr. weinberg: they seem very motivated to deal with the economy right now. the planned growth rate of a announced a 6% last year was 6.5%, and they came very close to falling short of that goal. which is unacceptable. i think the focus is on the now.lus right . . i. think president xi jinping got a near full of the congress on focusing on pushing the economy forward we see the people's bank of china. doing its thing, lowering the reserve requirement. pushing tochina is make 2019 a better year than 2018. francine: nick, do you agree with that? i don't: i am not sure, think they can exceed the 6.6% of the head last year.

they went to get something in range, i don't think they are preoccupied with what is to the right of that decimal range, as long as they go with 6% plus, they are in good range? tom: we saw over the weekend that the son of hu jintao has been parachuted into a province to take over. that is business as usual, isn't it? nicholas: what we have seen under president xi jinping, he talks about that the party should be in control of so wehing, everywhere have. seen a resurgence of the role of the party, particularly in the economy. but given this new chinese way, can they still run the economy? dr. weinberg: a lot of what we know about development economics says that once the takeoff and economic growth occurs, it is hard to disrupt with political systems, corruption? tom: you agree with that?

nicholas: i have a little bit of a dim view. i think the increased role of the state over the last six years is the reason the economy has slowed down by several percentage points and i think if they don't go back to a market-oriented reform, they could slow down more? tom: critically, where are the mechanisms to affect that away from president xi jinping wants other than the brute force of his supporters? nicholas: the mechanisms are to allow the market have a greater role, more efficient allocation of capital, the removal of banks -- zombie firms that lose money. efficient from sticking over the firms.of inefficient . there are a lot of things they. can do to improve my argument in the book is that they could be growing at a percent or more if they went back to market-oriented reform. francine: could that also create. francine: doubles?

-- could that also create bubbles? maybe there weren't about other assets of the economy that maybe we don't see? nicholas: china has dealt with a number of bubbles over recent years, but we see very low inflation on consumer goods and moving towards a more market-oriented economy does not more aggregate demand, means changing the structure of aggregate demand so that you have more efficient firms with more access to capital and less efficient firms would less access to capital. it would improve productivity and reduce the possibility of bubbles. francine: what happens to the -- two chinese investments, if the remainder goes to 7? nicholas: better think domestic investment is very sensitive to the exchange rate. it is a major concern for foreign investors, portfolio and direct investors. but the domestic economy, modest movements in the exchange rate are not very significant? tom: carl, what is your insight?

you have been following this for years and you are very up front with a weekly market letter on china as well. what is your insight about how they will adapt and adjust to whatever happens in washington? dr. weinberg: washington, i think, is a sideshow to the main chinese objective. nick, i agree with you. about the business of moving to a more capitalistic-oriented economy and liberalizing? tom: this is critical. you guys have decades of experience. five and six others we talk to say the same, washington is a sideshow. one brea: that's right. : theirnberg main goal is a they haven't moved to capitalism and just on the one fault to exports alone, that is a trillion dollar a year proposition for chinese industries if they succeed in made in china 2025.

duties on 50% of their exports to the u.s., much of which they could sell elsewhere in the world, that is peanuts in comparison. i don't think we will see them abandoning their core goal. it will become the dominant manufacturing country on the planet, that is their gold? tom: i will come back with a great chart. right now, an important discussion with cvs and scarpelli -- cbs and scott kelly. feel means we don't in a hurry to change our interest-rate policy. what has happened in the last 90 or so days is we have seen increasingly evidence of the global economy slowing down, there are only can has continued to perform well. ♪

♪ tom: good morning, everyone. francine lacqua in london, tom keene in new york. with us is carl weinberger of high frequency economics, and nicholas lardy from the peterson institute of international economics. slope matters. before seen this slope in the 1990's, but that was a different time. this slope is persistent. is it a good slope of a maturing economy or is that a problem letting slope of gdp in china? nicholas: i think it is problematic. i don't think it is a natural result of a maturing economy, that is one argument. china is large in the aggregate that in per capita terms, it is

smaller, there is tremendous growth still in per capita growth. it reflects the grantor interference of party in the state and resource allocation -- it reflects the greater interference of party and state resource of a cushion. tom-- in resource allocation. tom: is of red phone still predominant? dr. weinberg: i don't know, they are not calling me, tom. importantt is an symbol of what nick is talking about? dr. weinberg: ic state owned banks having a smaller share in all of their sectors. to be fair, if a company gets a lot of subsidies to increase its productivity in a specific sector like pharmaceuticals or high-tech cars or something like that, the question is, how strong is the state's intervention going to be? i don't believe companies in

china can survive on a purely state-owned basis as the move forward. they have to yield to some capitalism in order to be over to compete with a capitalistic -- with capitalistic companies around the world. the state to me is a fading influence and about slowing growth is more of a demographic factor. the demographic dividend. pays less when you are moving 25 million people are year from the farm to the city and it pays less every year when you have more people in the farms and less to play the city's. francine: but carl, this is not the same slow down we saw in 2014, when the government had to put extreme stimulus in, it is a different kind of slow down? dr. weinberg: you say slowdown, i look at the chart and i see china growing at 6.5, 6.75% for the last four years. there is a tiny bit of a slowdown when you look at the percent of changes. over all, growth has been pretty constant in this range, it is

slower than what they want, but quarter to quarter, there hasn't been a substantial decay of growth. more importantly, there is no alibi in china's growth story for american companies who can increase themselves in china. the economy is still growing by 6.5%, that is huge. if they are having a problem x, y or z z in china, that has to be something within them, not the economy. nicholas: we get some high-frequency data. the service sectors over half the economy now, and it should be the subject of a great deal more analysis and attention on the part of investors. tom: nicholas lardy is the death star in washington known as the brookings institution.

they said, growth is there, but the industrial is most measured. nominal gdp in china is less than what we think real gdp is, fractionally less. the you buy the idea that we really don't have the correct statistics behind their economic growth? nicholas: their statistics are theyerfect, but i think are broadly directionally correct. for example, last year people were saying they were only growing at 2%, but imports grew at 15%. you can't have that with 50% growth of imports. you had a cupat of coffee with the president. what do you tell him, if he is sitting with robert lighthizer, -- nicholas lardy walks in, it is like mike pence walking in -- what do you tell the president? nicholas: i would tell him that he is overestimating china's weakness. his view formats months has been that china will cave because their economy is slowing down

dramatically. i agree with what karl just just sad.hat carl 615% growth, they are doing very well. tom: what if we get another hanoi? dr. weinberg: i don't did we are going to. i don't think we will actually see trump and president xi jinping sitting together in the same room anytime soon. i agree completely with nick that the president underestimates the power of china and its position in this negotiation. tom: but we don't get a press conference at 2:00 a.m. in the , withg, i get all that secretary of state pompeo, but the bottom line is the risk to the markets is "another hanoi." is that a legitimate risk? nicholas: it is a risk, but i , i do think they will sit to a meeting. i think the president learned

his lesson, you don't go to a meeting unless all the i's park crossed.d the t's are francine: what does this all mean for the markets? we look at geopolitics and we say, maybe they should have met because he didn't prepare enough, but the markets largely ignored it? dr. weinberg: we sit here and talk about the politics of the art of the deal, blah, blah, blah, but a company looking to grow sales in the round will look to china. whether there is a deal or not, there is still a growth opportunity in china. companies have shown they are willing to go to china even if they have to up some technology or make concessions in terms of their business plan and take on a local partner to do it. business as usual if anything fails, still offers a lot of opportunity to american companies, many of which are making more money in china now than they are making in the u.s. business as usual is not such a bad deal, although politically,

it is a problem for the president. tom: this time with them with the width of the together has been fantastic. thank you both of much to both of you. the state strikes back, from nicholas lardy, one of his many books. he has had 722 books over the last year or so. from the peterson institute. outave in you slope coming on a boeing this morning. i really want to say thank you to ban cats and others -- ben katz and others this morning. if you pay has found that the flight data for the crash -- ethiopia has found the flight data for the crash. stay with us. this is bloomberg. ♪ us. this is bloomberg. ♪

♪ vivienne -- mason andarla mitsubishi are planning to form a single board for their alliance. carlos ghosn wanted to extend himself to the board of directors, but it tokyo court said that would violate the terms of his bail.

citigroup wants to boost liquidity in asia's biggest foreign exchange hub. it will join ubs with an electronic currency trading and pricing platform in singapore. the bank also has fx systems set up in new york, tokyo and london. it top republican is blasting president trump's demand that allies a more to host u.s. troops in their countries. liz cheney says the cost. would be devastating. the proposal is in line with president trump's efforts to encourage allies to boost their defense spending. that is a bloomberg business flash. . francine: thank you so much, viviana. boeing's best-selling plane is coming under scrutiny after the latest accident. groundia and china have of their fleets of the 737 max 8. the flights cockpit box and they do recorder have been found.

let us get straight to "bloomberg markets": european close anger and also aviation expert, guy johnson for the latest. we just found out from ethiopian airlines that the data recorders have been found. how quickly do they analyze it. guy: they will certainly want to get as much information as they can about what happened. it will also be a great interest to who ever is trying to draw similarities between this crash and what happened with lion air. they will want to understand whether or not it was the same system that caused problems, whether it was a private issue with the way they responded to the aircraft, so they want to find out because that is what the authorities will be looking for. if they are linked, we have a bigger problem. if they aren't linked, there are different ways we go. francine: the market seems to think they are already, is that wrong. guy: the markets don't have anything to go on at this time, the obvious thing to do is assume the worst. that is how investors will react.

i don't think we can read much more into that. as. information becomes clearer, it will be easier to make a more rational decision on that. tom: i want to talk about the maneuvering characteristics augmentation system. a guy like you goes to that european fancy boeing show that you go to and it is all technology. what we're talking about is the engine on the plane is ahead of save what designed to is reported, 14% in fuel consumption. have togetheryou thing off the ground, it naturally wants to go up because are ahead, so there is a system to bring the plane down. that is a focal point here, isn't it. guy: that. guy: was the issue with the lion air crash. we haven't formally had that confirmed yet, we've had preliminary reports on that. subsequent to the crash, boeing issued new training to pilots

system.w to manage the basically, what we understand is that with the lion air crash, the angle wasaw too high and took action to bring the nose down. the pilot was trying to override that, we understand, around a dozen times. subsequent to that, there was the training issue. this is why it could be a problem when trying to link two. would think that anybody flying the plane would now know how to deal with that. tom: that we are talking about third world airlines. if european, engine the -- ethiopian airlines, indonesian airlines, they are not the same u.s. airlines, american airlines, is that what we are talking about. guy: i don't know. ethiopian airlines flies modern aircraft, it is a big user of , in787, not just the 737

fact, it only has a few 737 maxs at this point. it is one of the well-known and highly regarded african carriers. everybody who flies the 737 max, at this point it would know how to deal with this. the information around the crash that took place with lion air and how that feeds through is something that every. tom: pilot will be talking about. tom: stay tuned for guy johnson and it later today with his expertise on these issues of the boeing aircraft. thank you so much for being with us today. we have much more coming up. this is bloomberg. ♪

is i ♪ >> patient means we don't feel any hurry to change our interest

rate policy. >> chairman powell in no hurry to raise rates. waiting for the world to catch up with the u.s. growth. it happens again. and boeing 737 max 8 crashes right after takeoff in if european, putting regulators worldwide on high alert. pbc governor -- pboc governor says there is work yet to be done to rid welcome to bloomberg daybreak on this monday, march 11. i am a david westin here with lisa abramovitz. alix steel is on assignment. lisa: and, we get a sense of how president trump is going to balance the budget. he is not. even considering faster than expected growth. let's get a check on those iskets and can , boeing leading the news after that crashsee david mentioned, the second in six months.