nejra: the eu and u.k. agreed to a deal until halloween. fed minutes show the fomc grappling with significant uncertainty, while the ecb sees growing threats. lvmh smashes estimates due to strengthen its fashion division is by fears of a china slowdown -- despite fears of a china slowdown. ♪ welcome to "surveillance." let's get a check in on the

markets, a little bit of a pause in the global equity rally, stoxx 600 in the red. , theines coming through oil market is tightening yet global demand may falter. some opposing forces they're coming through from the iea comments. were central banks dovish enough? have the banks run out of steam? higher,ear yield edges but we stayed below 2.5. oil back from the five-month high, it has been low for all of today's session, 64.07. that is what seems to be dominating the market at the moment. coming up, we are live from the imf world bank meeting.

do not miss our interview with christine lagarde as well as the governor of the bank of italy and the south african reserve bank. that is with francine lacqua and tom keene in washington dc. let's get first word news now in new york. wall street chiefs face a grilling from congress yesterday, question about everything from income inequality to ties to politically controversial industries. ofpite the wide array topics, there was a consensus that cybersecurity is a major issue facing the system. >> cyber security is the biggest risk the financial system faces. >> i do believe that cyber is a clear and present danger. >> this is the single most existential threat to the financial system. >> we are in a war on cybersecurity. >> today in india, a marathon six-week election begins. 900 million voters are eligible,

the prime minister is seeking another five-year term. the opposition is meant by that led by a congress party. sudan's president is reportedly stepping down following months of antigovernment protests. state media reports the army is preparing to make an announcement. sky arabia reports he is now under house arrest. omar al-bashir will be the second leader in the region to be removed this month. lift shares taking another nosedive on reports uber could be filing for an ipo as soon as today. the offering is expected to be the largest in the u.s. this year and could be amongst the 10th largest of all time. bloomberg learning uber is seeking to raise about $10 billion. tap the designto talent and is paying off. sales beating estimates with the fashion of leather division posting a 50% gain. this was helped by new sneakers and utility harnesses.

the luxury industry is in its third year of rapid growth. millennial and jens lehmann shoppers are warming up to the revamped offerings. 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. nejra, back to you. nejra: thanks so much. britain and the eu have reached a compromise and the divorce is now tabled for october 31 with a progress review in june. there is huge frustration from many that i requested this extension. i want to leave with a deal so it is an orderly exit as soon as possible. this decision enables us to do that. >> we have delivered the best possible compromise. please do not waste this time. nejra: but first, theresa may must sell the extension despite

previous is saying a delay would be unacceptable. joining us from brussels is anna edwards, great to have you with us. talk us through what has been agreed. is actually the worst of all worlds? anna: [laughter] it might be by somebody's definition. it is awkward, according to one analyst i was reading this morning. awkward because the fact this is not long or short, something in between. not the date anybody set out to achieve. a delay of 6-7 months, halloween, as many have noted, as you noted in your headline. but it is important not to lose sight of what has been achieved, we do not have a no deal brexit looming tomorrow. at the side of the week, that was still the case. we seem to have averted that, so it has proved into the long grass. it does mean the u.k. could leave before the end of october. if they are able to get their

act together, it would be necessary to do that. to reprove a path forward with in the house of commons. right now with looms on the agenda in may towards the end of may, european elections in the u.k.. promise they to will participate in elections if they cannot pass a withdrawal agreement in the first few months, which at the moment looks a long shot, but never say never in the brexit story. nejra: what are the implications for theresa may, and how much could of that figure into where negotiations go from here? anna: it is interesting to think about. supposedly, she is safe, because she was challenged in a leadership contest december. in theory, she cannot be pushed out until december of this year. but at the same time, she is under so much pressure.

there is already a leadership contest going on, even if it is not entirely over. that is something that is not lost on the leaders here. they do not know who they will be given with next week. -- dealing with next week. at the moment, theresa may is firm and seeking to craft a cross party solution. this is interesting, something that seems to be a dividing opinion. about --macron talking seemingly more comfortable with a no deal brexit, while the irish suggesting this is not the last chance for the u.k.. they do have time to craft a solution. maybe some risks merging their. there. nejra: anna edwards, finding some life in the black hole that is brexit, her words, not mine.

great to have you both with me on set. . i was talking to one of our colonists who was saying that in -- an extension would spur consumers to start spending more. is that the outlook? sarah: it could well be. there's been a lot of caution and we have we've seen it clearly in the market weather as been a frozen market people are unwilling to make large commitments ahead of brexit. whether this extension to the end of october is enough to get consumer spending again, i'm not sure. the uncertainty is still lingering on to a limited extent may encourage more spending for businesses. moreves us a little leeway, but overall, it is just not the environment would want to make any serious investment decisions in. that may spill over into large

spending decisions for the household sector. nejra: the pound frozen in the brexit headlights. favoringand you are u.k. equities. are you making any big bets from your -- here? bets, -- patrick: no big i would be long pound if i had to have a position. the hard brexit risk has definitely been pushed off until halloween, at the earliest. that is the real downside for sterling that is the scenario you can discount for another six months at a minimum word -- at a minimum. i don't think it will be at previous levels. the referendum and uncertainty has just been extended and that is a headwind. nejra: mark carney, hoping for the best, prepared for the worst. does what we learned change anything for the bank of england? sarah: if anything, it makes it

more difficult. it extends the uncertainty. we're still looking for the bank of england to raise rates so we are probably very much outliers. our rationale is we can see underlying pressures building, of course, the extension, as patrick said, is a headwind for growth and may well start to have an impact on how far wage settlements continue to rise. the bank of england does suggest they will have to be on hold through the november meeting and probably beyond. what sectors do you see the most opportunity and -- in? patrick: its play on the u.k. so much, but oil. cash flow dividend yields of five or 6%.

we like the strategy were we are selling call options on the u.k. version. in the get a 9% return next five months. it is much higher listed in the u.k. of and it is in the netherlands because of sterling uncertainty. nejra: interesting, playing the implied volatility. patrick armstrong and sarah human stay with us. don't miss our interview with managing director of the imf christine lagarde. as well as the governor of the south african reserve bank and bank of italy. that is coming up, this is bloomberg. ♪

>> why so many americans five your income inequality, -- common? can you see white strains credibility? credibility?ains we have been sending trillions of dollars of capital overseas. >> how can we make america competitive? number of young people graduating and see no future. >> we played all of our employees quite well, including medical. minimum wage $18. competitive business will drive wages over time. nejra: that was jpmorgan ceo and new york democratic havingntative velasquez

a discussion during a congressional hearing on the theme of holding megabanks accountable. more from those hearings throughout the show. let's get your business flash in new york. nomura is valued at a discount to global financial shares. its decline is outpacing even notoriously poor performance. the latest attempt to revamp is falling flat with investors and is also the widest gap since bloomberg began tracking data. ted baker names a new chief executive. this is after the founder left following allegations of inappropriate workplace behavior. says it hasalso concluded investigations in the former chief contact. baker says it will introduce new training for employees. bank at commerzbank are reportedly at odds over how quickly they should update shareholders. commerzbank once in asap

decision, the christian sewing wants more time. the companies have been informal talks for nearly a month. that is your business flash. nejra: thank you so much. fed's march minutes illustrates a flexible approach to policy. as mario draghi puts off a decision a negative rates but warns against negative risks. is sarah from standard chartered and patrick from the readme wealth. were you surprised by the dovish tone in terms of weakness persisting into the end of the year? sarah: i was a little surprised. we have seen some signs of bottoming out. it is not a turnaround in data. clearly, the manufacturing sector is struggling. trade volumes are very poor.

on the services side, we see them turning up and retail sales turning up. it is still at relatively high levels. i was slightly surprised that the overall tone was so dovish. of course, it was a holding meeting. saying they needed more time to see the data develop, to make decisions on how to structure the tltro program and how to investigate if banks are being penalized by negative interest rates. an interesting combination. nejra: and on interest rates particularly, how they might offset. was interesting that mario draghi said he did not know how that would affect guidance. patrick, you are overweight european equities. that is that based on and doesn't include banks? banks.: it does include

they are trading at 50-60% of tangible book value, dividend yield six or 7%. there is a lot of bad news priced into those multiples. anything good, whether it is a cheering of interest rates, i don't know the catalyst that locks these values, that 6% dividend yields, tier one capital at 12%, i think that is conservatively managed. anyone short banks is already short banks, anybody who has sold is already out, incremental buyers come in at some point. you get paid well to be in the. -- in them. nejra: fed minutes told us to be on hold until the end of the year. cap u.s. equities gotten all of the jews they can get? can get?they patrick: 100%.

it is going to be down for q1, almost certainly. it is based on fears of a fed that is going to hike hawkish the to now no worries. i don't think we get a cut because i think growth is going to surprise on the upside. the main would be some inflationary pressures. from me is a hike next year, but i do not think that is bad news because the economy is coming along. cut, that is not good news either because the only way there are cuts is it recessionary pressures are building. that: would you agree inflationary pressures are building in the next move could be a hike? sarah: we have not seen real pressures so far. it is possible we could see a further pickup in wages, employment data is still strong. the fed was questioning how far underemployment was being correctly measured, of course, that could way on further

earnings increases. significant is that, at the last meeting, the fed it made clear that they are more tolerant of inflation. do get inflation moving above target, we would not expect them to raise rates. we do have the fed on hold for the for seeable future. nejra: in terms of markets, pricing in that rate. quite a way to go to patrick armstrong's prediction. patrick and sarah stay with us. -- lvmh'svmh is designed shakeup has paid off. we look at those numbers and the wider sector next. this is bloomberg. ♪

nejra: a reshuffle of top design count is paying off at lvmh, gaining after sales be assets and its key passion and leather division hosted a 15% gain. still with us is sarah from standard chartered and patrick from plurimi. you sold me you sold off your shares early, looking to get back in? sarah: they are expanding

somehow -- patrick: they are expanding somehow, the measures are currently good. valuations is where we had concern. we decided we wanted emerging december,owth and in we tilted torch emerging markets rather than domestic selling into emerging. buying companies trading at 12 , nothing to do with the company so much, but just relative earnings differentials are key. nejra: interesting. and buying companies with exposure to emerging markets, if you were to do that, means having some faith in the chinese consumer. do you have faith? sarah: absolutely. if we look at the short-term, policies we have seen taken are supportive of the consumer with the tax cuts, the cuts coming through, and also, it is a great

medium to long-term story, particularly this sector where you see comprising middle classes and urbanization. backdrop which is definitely going to be supportive for luxury goods overall. nejra: sarah from standard chartered and patrick from plurimi stasy with us. nightmare on downing street, officials say there could be even more extensions ahead heard this is bloomberg. ♪

nejra: economics, finance, politics. inlondon, i nejra cehic for francine lacqua.

here is viviana or tonto in new york. viviana: the u.s. and china "pretty much agree on enforcement." that is according to steven meetings inr recent beijing. negotiators are discussing when president trump and president xi could sign off on the agreement. election for may 18, keepg an uphill battle to the labour party. a policy differences are likely to include taxes, wages, and reducing emissions. this follows months of antigovernment protest. state media reporting the army is preparing to make an announcement. sky arabia reporting he is now under house arrest. omar al-bashir would be the second leader in the region

removed this month. and the closure of 1000 branches in spain is according to a confidential earlier this month. investment would be ramped up in digital business. and shares taking another nosedive on reports its larger rival uber could be filing for an ipo as soon as today. the offering is expected to be the largest in the u.s. this year. it could also be among the 10 largest of all time. whom are learning uber is seeking to raise about $10 billion. uber isberg learning seeking to raise about $10 billion. powered by more than 2700 journalists and analysts in more than 120 countries. thank ceos face members of the house financial services facedtee -- bank ceos

members of the house financial services committee yesterday. >> it is a global risk. >> i believe ciber is a clear and present danger. this is the single most existential threat. >> we are at war on cybersecurity. nejra: jamie dimon and brian moynihan voiced concerns. risky parts are being embraced by wall street. ni: it's not just the banking ceos. thinks that the fed it could infect the broader market. made are essentially loans to heavily embedded companies. the sector is rapidly deteriorating as corporate leverage skyrockets. goldman warning investors that

there is downside risk, but you would not believe that looking at this chart. is the price of the loan market and this is trading at a record high. this is the best quarter since 2010. nejra: it is also first-quarter results season for u.s. banks. numbers could be the last to get a boost from monetary policy. dani: and we will see what happens when jpmorgan kicks off the swath of results tomorrow. the concern here is that it may have peaked. because jpmorgan jumped 10% in the fourth quarter. the group warns that it expects the numbers to have little change this time around. then we get into next week. will start and

bank of america will follow the next day. rates could counter and expected drop in revenue trading. that is expected along with weaker investment banking results. nejra: still with us is our guest from sarah chartered and -- standardtrong chartered and patrick armstrong. jpmorgan patrick: reports tomorrow. they really lagged in q1. all of america had downward profit revisions ask you wonder -- as q1 progressed. that is one of the sectors we would be looking to buy into if we get a string of reasonable results. as long as the outlook remains --d, which we expec -- which we expect, it would be bearish value.

on thei want to pick up leverage loans issue. a lot of policymakers come at expressing concern around this. -- come out expressing concern around this. what causes you concern in this cycle? are wortheraged loans keeping an eye on. if we look at the level of stress in general, that is relatively low. the signs that we would get ahead of a recession are just not, at the moment, ringing alarm bells. if we look at previous recessions, then debt has played a big role. the housing market, of course, is another example. that was the warning of the downturn this time around. this time it is different. housing is a small part of the economy.

the u.s. still seems to be putting in a pretty good performance. nejra: are you concerned about the credit markets, patrick echo we have talked about how -- patrick? it.ave talked about youick: as leveraged loans have always been attracted to, you get a percentage paid back through different assets. it gets more and more strong all the time. companies like loans. but you don't have the same protections you used to have lying into alone. loan.ing into a i think that there are investors that could be getting a false sense of comfort. to quickly ask about broader earnings as well. you were saying equity markets have gotten all the juice that they've gotten. can they get any more juice from

earnings? the chart shows -- the chart shows trying times ahead. toshows nothing compared 2018. patrick: i don't see her you get another leg up in u.s. equities unless you have a follow-through with earnings. it starts to translate into further economic growth, which we think it will, it will be good news for equities. but to have it based on the output back in place, we had that in q1. both ofood to speak to you, sarah from standard chartered and patrick. out morning, reports are that one company is planning to cut a thousand jobs in spain. it proves to be a brutal 19 for a number of bankers. bank mcallen poland is cutting nearly 1000. and there are more at risk.

commerzbank could see 30,000 jobs asked. managing director of the imf christine lagarde as well as the governor of the bank of italy. that is all coming up. this is bloomberg. ♪

nejra: economics, finance, politics. surveillance. brexit divorce is now tabled for october 31 with a progress review in june. but first, theresa may must sell

the extension to u.k. lawmakers despite telling the previously that a delay would be unacceptable. joining us is petered out, shadowed -- peter dow. i heard the comment that the six-month extension is in a way the worst of all worlds. is it? it isn't because we haven't got a deal at the moment and we need a deal if the -- and we need a deal. if the six-month extension insurers as rights and gets us a certain amount of progressive alignment, so be it. it is important to get a good deal. if the prime minister would have spoken to labor may be a year or two ago, we would not be in this situation. nejra: yes. and the prime minister and jeremy corbyn are speaking now.

are you optimistic about the outcome of those discussions? peter: it is always good to talk. in these times of crisis, it is important to continue with those particular talks. much progress has been made is a different kettle of fish. but as you have indicated, there is an extension. so it gives us the opportunity to talk further. and that is what we would continue to do. nejra: will you vote through the withdraw deal as it stands? the deal isecause linked with a political direction or declaration. it doesn't give us sufficient protections as an economy to support it. , in effect, to do is to get the protections that we have set out two years ago. the government doesn't know what they are, the prime minister

doesn't know if they are for a -- what they are for a considerable period of time. labor tow committed is getting a deal rather than calling her bluff and hoping for a general election? what we wanted, we said that we respected the deal that we preferred a better deal. the people have spoken in relation to the referendum. we wanted the best we can possibly get. of course, a referendum remains as does general election. the conservative party is in complete meltdown. we don't want all this trouble going on. we are not in the business of just creating problems. quite the opposite.

i am glad at this late stage that we are discussing these matters with us. you have supported a second referendum, but what form would you want that to take? a vote on whatever deal that we end up with or how would you like it to be framed? ater: i think that is question for parliament to decide once we get through this. talking to a democratic council of the other day that told me that they just wanted to stop exit. stop.xit full we have ans if referendum? what will be on the ballot paper? and what happens if that goes in the wrong direction that we remain? it is so volatile that it is important that we take time to think what should be on any

referendum. us,a: thank you for joining peter dowd, shadow chief secretary to the treasury. 900 million indians will be voting today in a democratic exercise that will take a full six weeks to complete. the prime minister hoping for a second five-year term. let's head to mumbai and speak to bloomberg executive producer. rate coverage so far and great to heavy with us. talk about what is at stake for india. >> 900 million voters will be deciding the destiny of the country in the next five years. there are 20 states across the country. , some are stake hoping to repeat the performance of 2014 when the single largest party emerged.

inaking to financial markets mumbai, they will tell you that they have the edge. a farmer inalk to the south of india, it may be different. but they have been working to ensure that the prime minister does not come back. we will have the answer to that on the 23rd of may when the results will be out. if you look at the way equity markets are positioned going into the selection, what does that tell us about investors expectations? >> it is important that they walk the walk. for indian equity markets, global fund managers believe that the incumbent government coming backward bigger for the financial markets. it is a key question. bel the people of india

voting for change? it has ramifications. the libby remind you that there are challenges facing the indian economy. -- but let me remind you that there are challenges facing the indian economy. a large part of the youth coming into the workforce have no clarity on jobs. and there is a crisis in the country where farmers are looking for a better deal. whether it be the government or anyone else, they will have to face these challenges and face the deep-rooted issues that the economy is facing. in mumbai, thank you. still with us, sarah he went from standard chartered and patrick armstrong. i wanted to pick up on what you were saying earlier about exposure to emerging markets.

for example, european equities have exposure to emerging markets. but in india, stocks are not far from a record high. is this an equity market that you would be wanting to get into? or is valuation too high right now? patrick: it is trading at a premium multiple, probably 22 times or 23 times earnings. china is 12 times earnings. and you face higher interest rates as well. that is what you have in india right now. i would be underweight the indian stock market despite the growth this year. atra: and if we look economic growth more broadly in emerging markets, sarah, we were talking about assets. emsxne said ems ask -- might be the canary in the coal mine for outlook. or could that be the wrong signal? think the outlook for

emerging markets, there is a bit of differentiation according to individual countries. what we are seeing is that india and indonesia are coming up to elections. making economic players somewhat cautious for the moment. until we get more clarity about the outcome and who is going to be in the government. overall, if we look at the global backdrop, we have the fed on hold for some time now. and that ought to be supported to the emerging-market classes overall. that is another factor. and broadly on china, there are early signs that the chinese economy is starting to bottom out. that is one reason to be cautiously optimistic. i recognize that some individual

countries will have it harder going. and that chris to the question of the day, sarah. -- and that goes to the question of the day, sarah. how impactful will emerging markets be? it is juxtaposing idiosyncratic risk versus the broader issues that you talked about in terms of the fed and china. patrick, how will it impact local assets? patrick: emerging markets is not a bigger risk. it sounds strange to say, but -- nejra: not strange at all. sarah: what we see on the ground is that people are being cautious. decisions are held back until elections are out of the way. a very near-term economic impact we're feeling. ultimately wants the decisions

confidence will recover and that will be more positive for the outlook. nejra: great to have you both with me today. sarah and patrick, thank you both. at your we take a look stock movers including the cable maker plunging after announcing a review of its 2018 earnings. this is bloomberg. ♪

economics, finance, and politics. this is surveillance. i am here for francine. kickoff -- bank of america said that these results

are exceptional. is upather goods division 15%. some of the design reshuffle is starting to pay off on the bottom line. oh -- sodexo is up over 5%. bernstein saying they are impressed with their first half organic sales growth. prysmianhan -- plunging 8%. going tothey are examine their 2018 financial statement. it is having an earnings impact on the italian cable maker. nejra: thank you so much, for the stock movers. francine lacqua and tom keene are live from the imf spring meeting and washington, d.c. don't missed -- don't miss managing interviews with

christine lagarde and the bank of italy governor. init of a downbeat tone european equities today, the stoxx 600 is red. yesterday, we saw u.s. equities gain but we had a struggle for direction today. we are up a basis on a 247 handle. was the fed not dovish enough or mario draghi more dovish than expected? closing slightly higher than yesterday on the euro-dollar today. from a retreating five-month high with u.s. stockpiles undermining the opec cut. we have the iea forecast coming under pressure. this is bloomberg. ♪

>> symbolic withdrawal. eu leaders except a second delay to brexit.

the u.k. will take part in elections for europe's parliament. the fomc grappling with significant uncertainties while the ecb sees growing threat to the eurozone. moment,most delicate the imf taking a fragile the of global growth today. an assessment of risk with christine lagarde. good morning, everyone. this is bloomberg surveillance. d.c. ascine with tom in we get prepared to cover the world bank. a lot of this is looking at the outlook with folks on the central bank and what happens in the next 18 months. tom: it has been a big change, 10 years on from the crisis, 12 years on from the crisis. the theme to me today, we saw overnight. president trump very quietly going after europe on trade. the intertwining here.

and the tariffs that the administration is thinking about imposing on europe. we will kick off our today coverage with a conversation of the world bank chief executive. i will sit down with the managing director of the imf. always a great conversation, with christine lagarde. with thell sit down board of governors. tom: extremely timely because we have stephen more this afternoon across bloomberg. so to ask about fed independence and the controversy, it will be very important. and i heard imf officials talk about that independence. here is viviana hurtado. uncertainty over u.k. ties to the european union, british prime mr. theresa may accepted the offer to delay

brexit until october 31 and she must now sell it to lawmakers in london. made previously said a delay was unacceptable. >> there is huge frustration from many people that i had to request this extension. the u.k. should have left the eu by now and i sincerely regret the fact that i have not yet been able to persuade parliament to approve the deal that would allow the u.k. to leave in a smooth and orderly way. president trump's choice of herman cain for the federal reserve board could be in danger. three senators have said they will not support the pizza mogul. nominatedent has not cain and said he would not put up a fight. omar al-bashir is stepping down after protests. he is under house arrest. he has been in charge for three decades. the latest protest movement

beginning of a rising living costs. and the second bomb cyclone storm in less than a month is hammering the central u.s. up to 2.5 feet of snow expected in south dakota. in colorado, the national guard is preparing to rescue stranded motorists. to four hours a day on air and on tictoc on twitter powered by more than 2700 day onists -- 24 hours a air and on tictoc on twitter powered by more than 2700 and analysts in more than 120 countries. of aa little bit more global feel today on the depth of the mario draghi press conference. then they were up in the last 12 hours or so. oil part of the story at these meetings. a little bit of a list for oil.

then the great bull market worldwide. and the backstory we saw in davos. here, -.60 is a huge deal. oil elevated out over 70, many people calling for more. and jeff curry as well. up those of you waking across the atlantic, no question about it that madame lagarde is moving off of some of the late-night news. headline, what we call a hot headline. members areboard said to be seeking a meeting to actually block the merger. this goes back to the mother --

merger with deutsche bank. .e were looking at regulators these were concerns that it would be a domestic player that was pushed by politicians. people say they are doing great. you can see 7.19 on the screen, that is a huge deal for deutsche bank. the share prices are eroding away. the other issue is this raging debate we saw and italy. -- in italy. the you do an in country merger or a cross-border transaction? francine: these are not strong banks. these are failing banks. this is the only way to cut cost and get rid of people.

this might be one of the first signs that people on the board don't want this. much going on in the markets. i'm looking at oil. it tom is also looking at oil. i'm looking at american oil, retreating from a five-month high. overshadowingbe efforts to ease production. and we have this from the eu leaders summit. britain and the eu have reached a late-night compromise on the laying brexit. -- on the laying brexit. also sell thest extension to u.k. lawmakers, despite telling them previously that a delay would be unacceptable. anchor annag edwards has been camped outside for the best part of today's. first of all, it was emmanuel

macron among the eu leaders that want to play hardball and he probably got his way. is a what we've got here date that didn't seem to be anybody's plan a. the 31st of october, halloween, that is a day that they have settled on. , a flexibletension deadline. or whoever isay leading the government, if they are able to pass a withdrawal agreement before that time, brexit could happen sooner but some of the diplomats are speaking to bloomberg and talking about how if it is necessarily the last deadline. it is not the last chance for the u.k., they have time to come up with a cross party agreement.

the french side seems a little happier with no deal if that transpires in the future. emmanuel macron suggests the rest of the eu is an slight denial. francine: talk is what will happen -- talk us through what will happen in the next few months. will we see new election? will theresa may survive this? elections? will theresa may survive this? : we have been talking about black holes globally. you can look into the black hole of brexit and you can see any path ahead of you or none. but essentially, you could say that the cross party talks might

reach some kind of conclusion and that is a way that he withdrawal agreement can finally get over the line. can see a disorderly brexit taking place. or maybe the cross party talks won't go anywhere and we end up in a general election. frankly, who knows? that the many things general election gives answers to but brexit might not be one of them. be chaptert resignation today, tomorrow, into the weekend? : she is going home to parliament. she is addressing parliament. she will continue to try to push the withdrawal agreement. she is continuing conversations bour.la sitting down with labor party, we know how divisive that is for some parts of the conservative party. we spoke to a leading member of the er g yesterday that put forward publicly the figures that he would back.

there is already a tory leadership battle taking place. leave. theresa may will that is what is awkward about this timing. a shortne hand it is delay. on the other hand, it is a long delay. she will last until october or goes long before them is really the big question. october is conference season. if we have not seen heightened in may, the political rhetoric will be ramping up for october. tom,ine: in the meantime, rupert harrison from blackrock will be back again in october with the same result unless people are prepared to compromise. in the last 10 minutes, commerzbank, some labor

representatives and board members are seeking to convene a meeting of the body to and talks about a tie up with rival deutsche bank. the meeting of the board, they are trying to figure out a way forward. we have the uber ipo we are watching as well as tesla. freezing cost would be the right way to put it right now. along with madame lagarde is madame brainard. their board of governors. we must talk. and of course, brainard on the stance of the fed given the political winds of this washington. stay with us on the meeting of the international monetary fund and the world bank. this is bloomberg. ♪

tom: we say good morning. francine lacqua and tom keene together in washington at the meeting of the international monetary fund. this year with brexit, a global slowdown is more than interesting. the years with the international monetary fund, our guest will be with us through the hour to provide a tapestry. ?s it all clear the real job is crisis.

>> we have a crisis of lingering debt. that is the real topic. tom: they will have structural problems but the president of the united taste does not care about structural problems. does it as soon u.s.-china and then u.s.-europe for a trade war? >> when he is done with china, he will go right to the european conundrum. that will keep uncertainty high and that will be investment growth. tom: we saw that from peter coppin f a few days ago. right now, let us get a view from europe. we can always do that with the former prime minister of finland

. alexander stub has been a great value to surveillance over the many years. wonderful to catch up with you on skype. the president goes after europe, talking about brutal trading partners with brexit. how does europe unify against a president who want to trade war? -- who wants a trade war? alexander: the european union on exclusive competence trade. when john kline juncker met with president trump, things ended up going quite well at the end of the day. if we want to look at the silver lining of brexit and trump, it is bringing the european union together. francine: i was reading articles on you where they call you the former finnish prime minister and triathlete. what do we need in a commission

president right now? how do you sell the project to the citizens? alexander: three things. you need someone who has experience in policy because the think the global situation is such an edge. they talk about the jungle growing back. whoer two, you need someone can focus on climate change. the most colossal and most important issue of our generation. and you need someone who is tech savvy. someone who understands technology, artificial intelligence, and robot is asian -- robotization. francine: how do you deal with president trump right now? talking about $11 billion on tariffs for european goods. should the union retaliate? alexander: the retaliation. i think there needs to be

dialogue. that is always important. the eu and the united states hip to hip, we are allies. we need to try to find practical ways for cooperation. and also i would engage in a closed dialogue with president trump at the moment. francine: how would you do with president xi? italy is going at it alone and france's second-best trying to get investments. what would be the common eu policy? beginning,in the most european states were sort of on the extreme. let's open up and work with china to do as much trading as possible. doing the exact opposite, they are mining the ip. protectionist. i would find middle ground.

cooperation in the united states and then with china. mr. prime minister, can you explain a fiscal solution in europe? we dream of a fiscal solution for italy, a fiscal solution for germany. will there ever be a united fiscal front in europe? might be: i think that difficult because the way that i see the european union is excludes -- is closed to monetary policy. ,ut a lot of the member states obviously, have exclusive rights to work on that. so it will be difficult. i do see convergence in the long term. finland primeer minister and vice president of the european investment bank. coming up, christine lagarde and managing imf director. some are too big to fail, so would she support consolidation

in that space? 10:30 a.m. in new york, 3:30 p.m. in london. this is bloomberg. ♪

this is bloomberg surveillance. at and francine in d.c. today for the imf spring meeting. grappling with uncertainties, that is the message from the most recent fomc minutes. the next rate move could be in either direction and they suggest u.s. growth is going to slow to around 2% this year. and that will put the fed at

odds with president trump. he says expansion at 3% is unacceptable. tom, talking about central bank independency and the trump remarks and the administration's dealings with the fed it, whether it makes -- with the fed, whether it makes jay powell good at his job or not. should we worry about central bank independence? >> what we're talking about will be notable. my old days of the board, the board staff pretty much sets the framework and the set -- and sets the tone of the discussion. i think we can keep these guys on track. tom: it is mass polarity for market economists. one is looking for to rate increases, and the others are looking for rate cuts. have you ever seen it is divided? >> never.

this bipolar look at the world is what the fed wants. there is nothing going on and we will not be doing anything. investors say that we have to sit here and be patient. tom: can politicians do nothing going on? if you have nominal gdp 4% or less, to any politician in any party, that is unacceptable. bill: that is why president trump's harping on trade because that is his lever to get things going. he thinks that we will be able to stimulate the economy but we know that it is aggregate demand and supply. but bill, what makes you most worried? i don't know if it is trade, tariffs, or politics going to the 2020 election. bill: a lot of the uncertainty is restraining investments. we more technology and productivity up. everybody is holding back on these kind of investments. i think as long as we rely on

more debt, we will not get the kind of investments that we are looking for. someine: bill, thank you much. from the milken institute, bill will stay with us. coming up, the governing member and from the dutch central bank, they will talk to us a little bit later ron here in washington. -- later on here in washington. and tom, i'm looking forward to your conversation with brainerd. tom: brainerd will be timely on the fed. the stay with us from our studios in washington. this is bloomberg -- please stay with us from our studios in washington. this is bloomberg. ♪

♪ >> i know that there is huge frustration for many people as i had to request this extension. i want us to leave the e.u. with

a deal so it is an orderly exit as soon as possible. >> i think we delivered the best possible compromise. [indiscernible] francine: some of the leaders talking last night at the e.u. leaders summit in brussels. we are seeing a live shot of 10 downing street where we are seeing movement. it is true that we are focusing on parliament, but as she sees remind resignations, yourself of her cabinet, pro remain ministers, pro-brexit ministers. people need to compromise if she wants to get something done or she may be out. tom: mr. macron yesterday went at it. he is under a lot of domestic pressure and he did a charles de gaulle imitation in the last 24 hours.

francine: we understand from our reporting on the ground, jean claude juncker said, focus on political problems at home. the french will choose the commission and there will be european elections. if we have a withdrawing country macron says it will be problematic to integrate into your. -- europe. tom: we will have more from our brexit team. francine: here is the first word news. south korea's president is in washington to meet with president trump. he wants to get nuclear weapon talks back on track. the problem, kim is demanding release from economic sanctions. in australia, the prime minister calling and election for may 18 as he faces an uphill battle to keep conservatives in power a

third term. the center-right coalition presided over a hiring boom, but stagnant wages have cut living standards. the crashes of two boeing 737 next jets are focusing attention on a little known device. rely on the angle of attack sensor. the sensors automatically force to avoid a nose down stall but have been vulnerable to failure. 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. tom: thank you so much. news, reporting the news, a little bit tawdry as well with speculation. julian assange, the president of ecuador says they will not provide him protection within

their assembly -- their embassy, rather. diplomatic asylum is done for julian assange, that from ecuador. this is a real joy. if you play football for brown university, you think of fixed income. the charge of john could do this kaduna's -- koudoun is. what did you think of the event yesterday of gentlemen put their hands up, and the sparring back and forth of maxine waters and the too big to fail banks. imf group of the 30 going on and a lot of people there were supposed to be at the meeting, and they were held up being testified -- testifying by miss waters.

they will have their way at it and i think we have some pretty bright people that are answering the questions pretty well. they are open as to what is going on. tom: there is across the land a financial repression, a nominal basis, on an adjusted basis it is not well. what is the best strategy to find better return and make a little bit more? john: there is no question, we are in uncharted waters, whether it is volatility in the markets. our strategies which we have been using over 41 years has been one that manages risk very well. it has been able to capture as much of the upside as you can and protect the downside. managersur portfolio have done a good job in performing predominantly more recently liquid alts.

tom: i had a liquid alt last night. what is that? john: i am not sure it is what you are describing. francine: maybe it should be. john: liquid alts are derivatives in terms of, some of our funds, market neutral. we have a long short fund, hedged equity fund, not just straight long type of funds, that is what liquid alts are. mos, we haveof cala been pioneers in convertible bonds and that protects you in terms of the downside and gets you mostly upside. francine: is there anything the financial markets do not understand? what caught my eye when these wall street guys were testifying , a lot of people asking questions brought it back to the financial crisis and the chief executives did not know what

they have in their books. do we know they know what is in their books today? john: they are much better off today than 10, 12 years ago, no question. my previous job which was one of the global banks, like jamie --on, he tries to make sure even though he did have some dongs happen in the u.k. -- things that you completely understand. ,f you cannot understand them if people come into your office and you cannot explain it in 10 minutes, do not do it. because of the crisis, a lot more people are doing that. having said that, markets and people tend to forget. the co-acid -- coalescence for this year continues to put pressure on wall street to come up with different tools that

they can capture yield. that is why i think we had some positive effect site touch upside -- upside in the u.s. equity market. francine: do you agree? bill: the key is stress testing so if you do not know what is in their, the portfolio shock. is the stress testing and the torture they put the banks under. tom: we greatly appreciate it and this time of low coupon, to say the least. assange,news with mr. ecuador not giving protection to mr. sans anymore and the u.k. police -- mr. assange anymore and the u.k. police have arrested him. as we look at the international monetary fund, our conversation lagarde, she has wonderful assistance from port saville -- portugal.

vitor gaspar on your debt and deficit. stay tuned from our studios in washington. this is bloomberg. ♪

viviana: this is bloomberg "surveillance." jet lu plans to start flying from the u.s. to london in 2021. it will leave from hubs in new york and boston. no word on which london airport will be used. it is a major gamble for jet pluto -- jetblue. the controversial tabloid the national enquirer is being put up for sale. jeff bezos accuse the paper of extortion. they admitted to killing

embarrassing stories about president donald trump. the publisher is backed by management,t reportedly pushing for the sale. in germany, one faction of commerzbank's board objects to a merger and want to end the negotiations, concerned about the possible loss of thousands of jobs. francine: thank you so much. brexit has been delayed again. after six hours of talks, they have agreed to postpone it until the end of october. it was a compromise between theresa may's desire for a short extension and donald tusk's desire for a long one. europeanhave to host elections next month. or in legalasons

terms, the u.k. has to hold elections. an exitament ratifies deal by may 22, britain may not have to take part in those elections. joining us from london is the director of the institute of government, which works to per better promote government. thank you for joining us. when you look at the endless delays to brexit, what comes next and what pointers would you give to the government? they need to surrender to parliament or can they find a way forward? >> it is very difficult. the six-month extension to halloween pleases no one at the moment. it was longer than the prime minister wanted and shorter than -- possibly with

a challenge to the conservative leader. what should the prime minister do? she will still try to get her divorce agreement through the parliament, but there is not a lot of incentive on either side to get a deal. is labour opposition suspicious of being dragged into something supporting the government deal they do not want to be captured into supporting another round of votes in parliament where the government and they would agree to be bound by the outcome, that that might mean he got behind the prime minister's deal finally. labour would be obliged to support that. we know the prime minister will want to try to bring her deal back to parliament and is saying to mp's, you can have all kinds of visions of the future, but

you have to get the divorce through. francine: brexit has been pretty symbolic. how can the u.k. repair its reputation? bronwen: good question. when it is done -- and brexit will have to be done in some way, either we stay or leave -- then the u.k. needs a stable relationship with the e.u., that goes without saying. it comes back to economic growth. a good part of britain's reputation has been based on economic growth. andeeds a migration regime foreign policy that do not shut out the world, that really say britain is trying to forge its ties with the world, and it needs to manage this whole process so it doesn't have the accident of losing either northern ireland or scotland from the united kingdom. if there is one thing that could make britain even worse, it

would be either of those two parts making a successful bid for independence or the case of northern ireland, reunification with the republic of ireland. tom: you have been a very thoughtful student. i want to go back to your westminster school which goes back to 1560 and henry the eighth. is this business as usual for the united kingdom? day after day after day, parliamentary battle, is this just another battle along the continuum of britain or is this different? bronwen: i would say this is, in [no audio]-- don't have a constitutional crisis.

the mechanism is parliament challenging the government, the two of them and a tug-of-war, this is the way it is set up and thes the uk's version of balance of powers that the u.s. constitution has, that parliament can challenge executive repeatedly. i would not rush to say the whole system is broken. old, twoew is the big, parties, conservative and labour who have been there for pretty much centuries, our fracturing deeply within side -- deeply inside themselves. the u.k. is a big, complicated country, lots of different kinds of people, different regions with separate identities. the question for any politician or any party is how to speak to that. we may be looking at a future where you get more complicated political scene. francine: bronwen maddox, thank

you for joining us. let's get back to bill lee. when you look at a divided u.k., you look at the world and it is a tale of two stories. the countries are growing. in china, there was concerns they were not but the imf raised the forecast, and the u.s.. how should review china? transition is in a of going from an emerging to developed economy. they are trying to go into 5g and high-tech industries and that is their challenge. the trade conundrum has gotten them to a place where they had to stall and put in fiscal stimulus. if they get through this phase, chances are china's technology might accelerate their growth to a point where they will be the leading economy. the u.s. has to be competitive and that is the challenge, to have investments to get u.s.

growth to the potential it can be. tom: our intelligence 1989 in the soviet union during the time of gorbachev was to be kind, weak. do we know anything about president xi's china? bill: a lot of people working in china were trained in the u.s. so they know what technology we are working with and they are at the frontier. the challenge is for the u.s. to push our frontier to be competitive because we are in a bipolar world with two global heldmies and everybody is down. tom: wonderful conversation, thrilled you are with us, bill lee of the milken institute with us for precious minutes today. drive forward the

conversation that the international monetary fund spring meetings. we are thrilled to have catherine man with us, dr. frankel of jp morgan, the president of counsel of economic advisement. , we saw him in italy and we will see him in his washington. ♪

♪ we will have the elections soon but with india, economic policies tend to be rather insensitive to who is in power. reforms tend to go on, which is why we are optimistic about the future outlook. is an extraordinary election, the scope and scale defies any understanding in america and frankly in europe. -- and is bill lee in harsha subramaniam. and twoe 18 states union territories.

900 million voters, is that correct? harsha: absolutely right. 900 million voters will decide the destiny of india in the next five years. 90 constituencies will be pulling across 20 states. these will take lace all the way until the 19th of -- place all the way until the 19th of may. it is a huge exercise involving millions of people. are how many parties involved? we see the fracture in britain and the parties in italy. how many are actually in play? there are two principal parties, the incumbent government of prime minister modi and the congress party, which is leading another alliance. this is a battle between two large alliances, of the congress

and the incumbent government. we have been talking about the challenges facing india on the economy and jobs. the challenge here is about the idea of india, india as we all knew is an issue that celebrates diversity, secularism, and inclusion. that has been challenged in these elections will decide which idea prevails. francine: if you look at the economic progress that modi promised in 2014, which has failed to materialize, how much has he changed to nationalism and how much will that sway voters? minister cameime into office with a lot of promise and most of it is the sense that there is a gap between what he promised and what he delivered. theimplementation of

national sales tax. the aspirations of people are so high that there is a gap between what people aspire for and what the government has delivered. that is the crux of the problem that policymakers face. joblessness.ems -- there are not enough jobs going around for young people and there is a serious farm crisis where farmers are not getting the true value for their produce. communities are up in arms against the government despite the claims the prime minister has made that he changed the country. the opposition has said that government has encouraged growing capitalism, but the narrative today is not one large and but smaller battles alliances for political policies

will be crucial on who supports the government in the center. francine: harsha subramanian, thank you. bill: how well these elections affect monetary policy? that will be critical. of the milken institute, thank you so much. we will have you back for a much longer conversation in the coming weeks. it is an important interview always, but today crucial, christine lagarde and the 10:00 hour. we will speak about her imf and mr. macron and the challenges of a weekend europe -- weakend europe. ♪

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customize each line by paying for data by the gig or get unlimited. and now get $100 back when you buy a new lg. click, call, or visit a store today. ♪ tom: this morning, forget the president, forget matt m

lagarde, this is maxine waters washington. the democrats take on president trump and wall street. trick or treat, forget an end to brexit. prime minister may takes the brussels.oom back to trump of 5th avenue calls europe a "brutal trading partner." uber, buried on page 278, francine lacqua took lyft in from dulles, competition. from our studios in washington, i am tom keene. francine: they did not let me through immigration. tom: you had a battle at immigration. francine: me and the rest of the imf gang. it took at least two hours. tom: this is a metaphor for

these meetings, and i want to go to president trump inserting himself into the -- himself into the festivities. francine: this is something we have been trying to figure out, if he signs a trade deal with china does he put his sights on europe with tariffs on cars and the 11 billion we were hearing about? we will kick off two days of the imf annual spring meeting with conversations. down with the sit managing director of the imf, christine lagarde, asking her about clearing the european banks and whether a certain possible merger would make it too big to fail. tom: lael brainard with the governors of the fed. in new york city with our first word news, here is viviana hurtado. viviana: a breaking story fast

developing, julian assange in the custody of london police. the president of ecuador announcing on twitter it pulled his diplomatic immunity. in 2012, he sought refuge at the embassy in london prompted by charges of sexual assault that were dropped in 2017, but he feared he would be the target of the u.s. and u.k. over the leak of diplomatic documents. a possible six more months of uncertainty over the u.k.'s ties to the european union. theresa may accepted the offer to delay brexit until october 31 and must sell it to skeptical lawmakers in london. they previously said a delay was unacceptable. >> there is huge frustration that i had to request this extension. the u.k. should have left the

e.u. by now and i sincerely regret the fact that i have not been able to persuade parliament to approve a deal which would allow the u.k. to leave in a smooth and orderly way. viviana: the choice of herman cain for the federal reserve board could be in danger. at least three republicans will not support him. so-called bomb cyclone storm in less than a month is hammering the central u.s.. up to two and a half feet of snow is expected in south dakota. in colorado, the national guard is expected to rescue stranded globalists. 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. tom: let me get to the data quickly. francine called it and she is right, a lot of international

relations. oil,levated with american $64.08. 13.31 on the vix. negative yields will be a backstory and we heard from commerzbank, a few selected individuals saying they have to move on from deutsche bank. francine: i would call it the economics meeting in washington. a pretty lackluster week for global markets and european stocks are drifting. areral bankers warnings probably not assuring anyone, but you are not seeing any market moves. the pound fluctuating as the e.u. gives the u.k. until october to avoid a chaotic brexit. oil, he sought move on the back of an increase in u.s. industries. u.k. -- orck to the

brussels to talk brexit. britain and the e.u. reached a late-night compromise, the 31orce tabled until october with a progress report in june. isning us now from brussels maria tadeo. six hours of talks and a day that no one was really focusing on, october 31, is this a macron play? he seems to have played it tougher than any other e.u. leader. is this a win for france? maria: a very good point, because it really was not about prime minister may. the real star was emmanuel macron. he wanted a short extension and pushed everyone to the limits. one diplomat told me he was isolated and needed to be brought down from history, and

if we did not get a compromise it would be because of the french. interesting to see that angela merkel and emmanuel macron for the first time in a long time did not ci ty. eye.d not see eye to it was a shorter extension then donald tusk put on the table but pressure from prime minister may, and this is what he wanted. he wanted the brits to make a decision under pressure. some of that has been relieved. tom: what does europe get in that six months? unclear, andvery you can see why this is so tense. it was not about prime minister may. there was a discussion between the e.u. 27 and a split of opinion to the point where jean claude juncker snapped at emmanuel macron and said, this is about you and your political problems.

angela merkel had to step in and say the ultimate all for europe is to avoid a no deal brexit because we do not know what the economic repercussions will be. moment atal brexit the time the germans feel weak and the economy has slowed, but in terms of answers from the prime minister, we did not find out much. we do not know whether she -- where she stands and whether she has moved closer to the customs union. europeans do not think the vote will fly for the time being. tom: it is well known that if you go to st. paul's girls findl in london, you will girls reading lemond. stephanie flanders was known to read lemond in the hallway of st. paul's girls school, so it

is time to talk about the nascent macron doing the degaulle imitation. stephanie: he did end up looking isolated. it is a slightly different context from the continuous noise from degaulle in the 1960's. what is fascinating is they ended up with just enough time for theresa may and the british establishment to hang themselves one way or another, whether it is a referendum or the prime minister leaving or a general election, but not enough time to get in the way of the european timetable. although it comes across as an odd compromise and macron got his way and having a slightly shorter delay, it makes sense that you have the same commission. the new president and commission would take over after that and you would have a whole new cast of characters. tom: how are the elites of

london doing? maybe they will all go as iain duncan smith for halloween. how do they react? stephanie: the overwhelming feeling is to get it done. paul people particularly who peopleave -- poll particularly who voted leave, are not focused on the ins and outs of no deal or the trade or the customs, they are fed up and want it done. i am sympathetic about that view. francine: it is the never ending story, brexit. what happens from now until october? is it across party that we find an agreement? do we need fresh elections? that six: the worry is months is not long enough -- is long enough that everyone relaxes so you lose momentum.

when theresa may came out and said she would seek across party consensus, a very unpopular choice that is still seething resentment from the conservative party, but there was a feeling of momentum. we have this day coming up which would have been imminent. now they will be sitting in parliament next week instead of being on their easter break -- no, they will be on easter break. all the air has gone out of that. getting rid of theresa may will not be able to proceed and he will end up with not much progress. francine: is she the right person for the job? --she not a prime minister she the right person? stephanie: you could argue jeremy corbyn is not the right person to reach out to. if you have a new leader of the conservative party, you are

exacerbating the fundamental problems, a lack of confidence in the future deal. you could come up with a deal that says customs union, no customs union, but how that will be negotiated will probably be for another leader. if you do not have confidence they will do the same thing, if you think they are boris johnson and will go for a radically different plan, you will not sign up. there is no other leader who would inspire confidence. francine: everyone is asking whether mark carney has to stay on longer. stephanie: are they going to want to go down that road of another delay? whoever replaces mark carney will be dealing with the consequences or continuing details of brexit for many years anyway, so ed is not like they will be able to come in and say brexit is done. they are quite far along in terms of thinking of candidates

and working through the possibility and resisting the idea of making him stay on longer. tom: did you really read lemond in the hallways? stephanie: i do not know where you pluck these things out of the air. tom: jonathan western told me. extraordinary story for those waking up in america, overnight in brussels. we are thrilled to bring lael brainard. i will be in conversation on the future of her institution, lael brainard on the spirit of america. meetings of the imf and world bank, this is bloomberg. ♪

♪ viviana: this is bloomberg

"surveillance." today, shares of lv mh surged to a record. the parent of louis vuitton and christian dior beating estimates. they posted a 15% gain. hired new talent. bank's isew -- nomura valued at a 58% discount versus global financial shares, the biggest gap since bloomberg began tracking the data. shares are down more than 20%. in germany, one faction of the commerzbank supervisory board as opposed to a tie up with deutsche bank. labor reps want to have a board meeting to end negotiations, concerned about the loss of thousands of jobs. tom: thank you.

and tom keenea from our studios in washington. we will move over to the shop of the international monetary fund to speak with christine lagarde. right now with us from bloomberg economics, stephanie flanders. migrate toted to -- the fed, i will speak with lael brainard. there is a real distinction of an america doing better than everybody else. how does jerome powell need to adapt and adjust to the other more challenged central banks? always withhere is the fed, how much they talk about the rest of the world because they are supposed to have a single-minded focus on the u.s. it is pretty rare. we only saw last autumn, was the first time we saw the fed delay

something because of concerns about the rest of the world. now, youare looking get this from the minutes, they are mostly focused on the domestic economy and what they think about inflation, whether the phillips curve relationship will assert itself anytime soon. we are back to a point where yes, what is happening at the long end is being affected by the rest of the world. that is where you get your inverted yield curve and these things are contributing. the focus is what will happen on domestic inflation. francine: if you look at the and european growth on one side, but they need to deal with trade and do not know what the president will do next. is this an unusual mix of risks? stephanie: the short-term

first-order impact is not necessarily significant when you are thinking about the impact on the e.u. of auto imports. if it is feeding its business confidence into investment, that is what they have been focused on, so that is hard for them to judge. we have been looking at stephan omics, talking about potential winners from the trade war, vietnam. ferro, pleaseon stay tuned. francine: stephanie flanders stays with us. -- next,ance mender finance minister with dooley and cuvee -- ♪th uli and

♪ bloomberg "surveillance," tom and francine from washington, d.c. agreement withan the imf on reforms. these include improving governance. we are delighted to be joined by --uli ncube, this and bob in finance minister of zimbabwe. thank you for joining us. is the new currency

market doing? mthuli: we are in about a billion dollars from the sale of tobacco globally. it is early days. months ago,w regime so it is trying to find its way and find equilibrium to get in the market. francine: is it difficult to know at what point the decline stops? is it a couple of months or could it take longer? mthuli: the decline could carry on because on the fiscal front, things are very tight. currencyfrom the because we were running a surplus for the last four months in terms of the deficit. we do not expect the currency to come under pressure. -- inspect inflation to

go negative in the next few months. the tell me about theoretical debate in the west. they argue, what do we need to do to help a greater africa? what do you need from these elite institutions in washington, or do you need them to get out of the way? mthuli: we need them. they help us in terms of discipline, accra reforms, but we need large -- macro reforms, but we need large infrastructure investors. the deficit is huge. investors, and the institutions work with these kind of investors, whether it is the world bank itself. tom: how will you adapt to david malpass from the trump administration? mthuli: we support the currency

and we think he is really pro africa. initiativerump's creating a $60 billion fund for investing in africa, we are looking forward to working with him. francine: when will the government central bank increased interest rates? mthuli: we do need to create a reference rate, bankrate, and we are establishing that. they need a bankrate which is the current of the fed funds rate in the u.s. it will help management of policy. francine: one are you expecting a fully fledged currency to be introduced? mthuli: in the next 12 months. francine: at the start of the second quarter quarter at the end? mthuli: recursive function can never be precise. i am saying 12 months to put in your mind it is coming. , theine: mthuli ncube

finance minister of zimbabwe. stephanie flanders staying with us. we speak with the south african therve bank governor about gyrations we have seen. tom: any number of themes, one was the drama from yesterday of the gentleman from wall street standing up in front of chairman waters. we will speak about banking and the state of capitalism in south dakota and america. important interviews including with christine lagarde in washington, the meetings the world bank and imf. ♪

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just say "watchathon" into your x1 voice remote, or download the xfinity stream app. xfinity watchathon week, free. now through april 14. ♪ findy so many americans your income inequality comments disingenuous. can you see why that position

strains credibility? >> yes, but it is incorrect. the american government reduced tax rates on businesses to keep america competitive. we have been sending trillions of dollars overseas -- >> how can we make america competitive when there is a large number of young people that are graduating and they see no future? >> this group pays their employees quite well, including competitive business will drive wages and jobs over time. tom: good morning, everyone. that is extraordinary, 26 years in congress, the first puerto rican woman in congress going after jamie dimon of park avenue. thate that they picked up video that caps elites the attention of new york city in a gilded age of washington --

gilded age of wall street. francine: he wanted to explore a little more, is what maxine -- she wanted to explore a little more, is what maxine waters wanted to do. tom: this is really important as you bring this up. it is not only who was there but he was not there, deutsche bank was not there, standard charter was not there. wells fargo was not there because they were there before. it is confusing. francine: we are on top of it. are going to take a look soon at live pictures from the ecuador embassy in london where a seven year standoff has come to an end. police arresting wikileaks founder julian assange after ecuador withdrew diplomatic asylum. theas been holed up at

embassy since 2012 and sought asylum over a sexual assault case in sweden. the charges were dropped but he feared he was in danger over the leak of official u.s. documents. theresa has to explain a brexit delay to ace cap goal parlor -- a skeptical parliament. that is to avoid a chaotic no deal divorce. waspreviously said a delay unacceptable. south korea's president is in washington to meet with president trump. weapons talkslear with north korea back on track but kim is demanding relief from economic sanctions. president trump once a greater commitment to disarmament. the australian prime minister calling for an on may 18. he is facing an uphill battle. they presided over a hiring boom

and rare budget forecast, but wage stagnation and rising power bills have caused issues. 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. tom: we could go one or two hours with kevin cirilli, as we visit his washington. right now, kevin cirilli on one of the themes of the last 24 hours, the veteran nature of 80-year-old maxine waters and the veteran nature of the lady from harlem. kevin: they were all on the same page yesterday and you almost had seniority ushering in the new activist classed democrats, led by congressman cortez. when i caught up with how chairwoman maxine waters, the

democrat from california -- remember, jesse jackson was on hand at that eating -- she told day," and itnew was a perfect illustration of every representation in washington, d.c. right now amidst the populace fear, -- of not just the republican party. the banking analyst i spoke with theythe ceo told their own were able to articulate their own story in terms of economics and they are trying to catch themselves. it was fascinating to see the democratic members take on the bank ceos where they are not only economic drivers, but also donors. for the financial services committee chairwoman, this was the first time, the first hearing of its kind since the

2008 great recession. tom: this goes back to thomas jefferson. some would say it goes back to the island of manhattan a few years back. how is it going to change, how will it play out, or is it business as usual in washington? kevin: i put that question to patrick henry, republican from north carolina. the top republican on the financial services committee said it was "a headline hearing." there is no major piece of legislation up for grabs in terms of deregulation or regulation. it is worth noting the moment that yesterday represented. i would argue this is the 2020 prologue that we will see unfold , last night. tom: thank you so much, kevin

cirilli. it is always good in washington to speak to michael rounds of south dakota. he is the oldest of 11 kids so he survived dinner in his childhood. what is so charming about him, he actually has executive experience. how odd is that? how do you look at the cacophony of washington, the democrats, including your president who had zero executive experience before taking over? >> mitch mcconnell would suggest whether you would ask any senator if he would rather be a governor or senator, he would lie to you about other things as well. it is probably the greatest job in the world because you can get things done. in the united states senate, it is a little more frustrating. south dakota balances our budget every single year. we have low unemployment and we

recognize the legislation -- the legislative session is 40 days and 40 nights. that concept does not exist in washington. tom: in london. francine: 30 days for brexit in 10 days to sort out the u.s. administration. how will brexit and immigration --? sen. rounds: we need to reform immigration. we have supreme court decisions including a decision in which it does not fit with our existing legislative laws today. because of that, what you have is a broken system that does not allow the individuals to come into our country in the numbers that we need to actually grow our economy, while at the same time you have individuals who feel they have better economic activities here than in their home countries in central

america. you have them moving in, trying to cross the border, and inundating the southern border. we have to have border security and a reasonable immigration policy. francine: how much pushback is the president getting in washington for what he has done to the department of homeland security? sen. rounds: it is a recognition of his frustration. he wants border security. he has expressed a desire to update the immigration system but he cannot do it alone. he has to have a congress prepared to make those modifications. he is not finding that in a divided congress. today, if you want to get things done, you have to work across the aisle. new democrats are coming in and saying, we took over the house and we will show people we are in charge. that is not the way it works in washington.

one of the more reasonable senates in terms of people trying to work across the aisle, but i think we will have to have a time when house members will learn it does take compromise to get anything done. tom: from the foreign country of south dakota -- and i look at the pheasant hunting which is completely foreign to the urban elite of the east and west coast -- the divides of america, it has always been this way and we cannot get back to one nation. how would you suggest we do it? sen. rounds: take a look at our founding fathers. they declared their independence and put all of themselves together. they fought a revolutionary war which if they have lost, they probably would have hung separately. instead, they hung together. these men of principle had to figure out how to create a country and have a governing system. it took them a decade or more to

get that done. they did not agree with one another, big states, little states, those with large cities. they came up with a form of governance that included compromises, the senate and the house. big states did not like the idea of a senate. little states did not like the idea of the house of representatives where big states have power, but they did it because it was better than simply continuing to fight. they indulged one another. where want to ask you south dakota and the united kingdom is. stephanie: obviously, there is so much theater in congress and that is what most certainly investors looking at congress are expecting, only theater, maybe through to the presidential election. unusuallyalk about an

reasonable senate, we will not see that much. where will we see reasonable, bipartisan consensus? sen. rounds: throughout our appropriations process this year, it not require a budget. we will agree on the top line, divided out, and make an agreement on where we spend on defense and nondefense discretionary. medicare,urity, medicaid, paying the debt are all on autopilot and will continue on. that is why we have a trillion dollar deficit that is increasing because the budget is on autopilot. tom: how do you tell your president that is not acceptable? he is focused on a trade deficit which economists tell us is a bogus and on -- analysis. how do you get them back to fiscal recep -- responsibility? sen. rounds: it is a matter of

voting on the entire budget. what the president wants to do is grow the economy. tom: do you see evidence that kudlow and stephen moore have a supply-sider theory that supports a growing economy? sen. rounds: stephen moore and i would probably agree the supply side is the way to go. if you have anything close to what i would call the laffer increasere you try to the amount of money in government on the lowest rates, and put that back in the economy instead of a high tax rate, we are creating more dollars in revenue than before the tax cuts. on: on the revenue side, but the laffer curve there is an expense side. sen. rounds: you cannot control the expense side by changing tax policy, you have to control the expenses. we have a congress which since

1974 has not voted on the entire market. tom: when will republican leadership ringback that process? sen. rounds: most administrations want to do it in their second term, not their first term. medicare, medicaid, social security are critical safety nets but they are on autopilot which means you are not managing them and they are inefficient. stephanie: the biggest increase in the deficit is coming from that hole in tax revenues last year. in terms of the change relative to last year, it is from the tax cuts, so you are saying those numbers are wrong? sen. rounds: i would respectfully disagree because where the increase in our costs are going is mandatory programs. medicare, medicaid, social security are going up faster than revenues. he would not even have an opportunity to fix our deficit if you did not have a scene tax

policy -- sane tax policy. tom: if you get fired up this early in the morning, i cannot imagine in the afternoon. senator of south dakota mike rounds with us. much more to talk about. we will look at the fiscal policy of the international monetary fund. discussion on tv, bob iger. they raised their prices. ♪

♪ bloomberg "surveillance," good morning from washington, francine lacqua and tom keene. we are here for the imf spring

soiree. madame lagarde coming up at are0, but just as important the interviews with her individuals who put it all together. one of those from portugal would be vitor gaspar. we bring him in to speak on the new purple book. he changed the color on the book. francine: i have it here. it matches his tie. tom: what is the message this year? vitor: the message we have under our baseline is for countries, most countries to rebuild spaces in order to create for them to be able to deal effectively with the next downturn. tom: did america get the message? vitor: concerning the united states, we have been concerned

about cyclical easing of fiscal policy. the tax cuts and jobs act has many positive aspects to the reform,e income tax bringing down the corporate tax rate is positive. futures having to do with international tax, this opens the way for a global deal. we believe having done it in a way which is a procyclical relaxation and letting the public of -- public debt increase was not the best policy option. how many years francine: francine: -- how many years have you been waiting for fiscal policy to deal with the world and where have you been getting correct fiscal policy? vitor: a lot of countries have brought down public debt levels. in advanced economies since 2012, public debt levels have slowly eased down on average.

we would have liked to have seen stronger building of buffers in good times because that is crucial to have a strong position to face downturns or say, even more demanding challenges. francine: what politicians are worried about, the electorate and central banks loom large. vitor: the question of monetary-physical interactions is a big deal. monetary-fiscal interactions is a big deal. in europe, you have countries with ample fiscal stays, say the netherlands -- space, say the netherlands, germany. the yield curve has negative interest rates up to 10 years. at the same time, there are ample opportunities in germany to invest in people through

education, through innovation and infrastructure. for example, the transport network or networks that have to do with the information technology of the future. both, vitorank you gaspar of the imf and stephanie flanders, both stay with us. , and dark, massive swallows everything in its path. we will give you the latest on brexit as theresa may heads to the house of commons. this is bloomberg. ♪

♪ know that there is huge frustration for many people that i had to request this extension. i want to leave the e.u. with a deal so it is an orderly exit, as soon as possible. this decision enables us to do that. >> we delivered the best possible compromise. >> this will not wait this time. francine: this is bloomberg "surveillance," that was some of the e.u. leaders at the summit last night. six hours of talks and they

announced the extension will be up to october 31. still with us are vitor gaspar and stephanie flanders. tom has gone to radio. when you look at, put together the purple study that we have come the fiscal monitor, what surprised you the most? is this year any different to 12 months ago? time, at this point in one of the things that is most policyis our fiscal advice is very country specific. the commonalities are not that strong anymore. we were talking a moment ago about europe and the contract with germany on the one side, and countries that have very high levels of public debt and debt, put bringing down levels of debt down.

that includes quite a number of countries -- belgium, france, italy, spain, portugal, and others. that is something i believe is correct to say for most advanced economies. it is important to bring down high levels of public debt so that countries are in a good position to face the next downturn. stephanie: it is about preparing for the next downturn and if you look at the u.s. and most developed countries, they will not have the monetary tools to respond to a downturn. even the u.s. will have less than half the space to cut rates next time, before it gets back to zero. surely, all of these countries including the u.s. running a big deficit, will have to run a bigger deficit come the next recession. isn't that something you have to adjust to? vitor: it is important to think

systematically on how to anticipate risks and create policy space that will allow decision-makers to manage risks effectively. answer --nately, you enter a demanding situation in conditions where the policy space is scarce, then the situation is more complex and you have to explore across the synergies of policies, the comprehensive approach that is also consistent over time. francine: thank you both. coming up today, we speak with christine lagarde, the imf managing director and we talk global growth and banks. ♪

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october 31 as theresa may gets her second frexit extent -- second brexit extension. some commerzbank executives want to block a merger with deutsche bank. in the fed signals it could move rates in either directions while pricing in a rate cut from the ecb. david: welcome to "bloomberg markets." one person in jail this morning is julian assange. alix: arrested. ecuador said we are no longer going to harbor him, took away his immunity, and boom. david: the president of ecuador after his repeated violations to international conventions and protocols. things went south between ecuador and julian assange. at one point they were going to