♪ francine: what is the hold up? donald trump says he is the one stalling a trade deal with china and demands a return to terms negotiated earlier this year. takes an interest in axel springer, valuing the publisher at 2.8 billion euros. the streetss flood of hong kong to protest a controversial extradition brill -- bill. welcome to "bloomberb surveillance." conference, a

bloomberg's flagship tech event in london. what comes to european stocks, the stocks are pretty much flipping globally. this is with u.s. indices futures also on the lower side. there is a sign that risk appetite may have overshot with trade concerns is still lingering. treasuries appear to be gaining with gold-yen also up. --ing up, we will speak that sit down with philip hammond, don't miss that interview. first, let's get straight to bloomberg first word news. a quote existential threat to the u.s., how joe biden cast president trump. president has weakened america's alliances and harmed u.s. workers. trump attacks of the former vice president, calling him a quote dummy and eak mentally.

entally.g's -- weak m hong kong's legislature is postponing a discussion on a bill after thousands of demented they withdraw the bill. the chief executive says the ,egislation is necessary arguing it makes the city a refuge for criminals. down the say it breaks wall intended to keep hong kong's justice system separate from china. radical move has won backing from across the political spectrum. theresa may says the move is ambition but is crucial. to reach the goal, they would need to fly less, drive fewer cars, and eat less meat. wall street executives continue to sound the warning bell over a slowdown. would beman says he quoted very surprised if the bank to be first-quarter results.

the fears were echoed by citigroup which expects city revenue and investment fees to drop. 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. francine? francine: thanks so much. donald trump says he is the one stalling a trade deal. he told reporters he would not sign off and an agreement unless beijing returns to terms negotiated earlier this year. hes comes a day after threatened to raise tariffs if xi jinping does not meet with him. so will china bubble? -- buckle? joining us is the previous chief economist at goldman sachs. trillion dollar question, will we have a trade deal or not? my guess is that trump is going to want something. , as youclearly likes

can see with the nonsense, he likes to present something as a won. that he has one -- my guess is that some sort of headline deal will be announced. that it has inadvertently created a much deeper angst about china. maybe this is behind what he has said. if he comes up with too easy a deal, he will be accused of being soft about china. i am bothered by that because it means we could be set for years and years of reoccurring strategic dilemmas about china. i think it is kind of nuts. i don't think the u.s. is being the slightest bit logical.

is this the price of supremacy or is this about trade? jim: both things. bits of it reminded me of the whole game with japan 30 years ago and the events surrounding the plaza accord. thing, toof recurring pick on some country. francine: they are picking on a big country. jim: a big country. but more importantly, it has now morphed into this thing where the u.s. appears to have, a mostly understandably, but otherwise completely lacking in logic, fear about china becoming bigger than the u.s.. it is almost like they will now do whatever they can to stop china becoming bigger. but i'm not quite sure what the purpose for such a goal is it looks to me like that is what it has become. francine: what is the impact on

the economy? -- is it inychology psychology of consumers or chief executives? jim: i think it is much more concerning them that. ,ooking at it from 40,000 feet the u.s. has made some structural recovery post crisis as evidenced with the deficit story. the u.s. was consuming too much 10 years ago and it was all borrowed for the rest of the world. today, it is back to consuming over 70% of gdp again. going forward the next decade and beyond, the u.s. economy's future is not about the consumer. it is about investing more in real stuff and exporting to the rest of the world. and if you are going to try and destroy the second-biggest place growing six or 7%,

it is extremely unhelpful to your own long-term interest. very logical and i find people just taking it for granted. because the u.s. cycle is strong that means the u.s. a strong, but i do not think it is the slightest bit true. francine: are you looking at a recession? and looking at the bond markets, the inverted yield curve, which i'm told is different this time. you think it is indicating an impending slowdown? fan of something that you would call a financial conditions indicator. it.we created and it is really powerful for the u.s.. but i would not dismiss the power of the yield curve. i think it is important information. i fear that the cycle has become

asymmetric relative to financial conditions. ofelatively modest timing financial conditions which could happen through higher bond yields or stock prices. when that happens, the u.s. economy seems to slow quite quickly. ,nd yet when conditions ease the response of the economy is not that big. that suggests to me at economy that is slightly addicted to extremely favorable financial conditions. , which makes them very vulnerable to adverse shocks. that they are relatively immune, i think it is mistaken. the president or the trump, would they pullback or is the president or the trump administration, whoever comes back, would they pullback or is it too late? jim: putting it in 40,000 feet

context and my experience, the u.s. does tend to lurch quite dramatically. this approach is all against the background of the strong belief that the u.s. is strong and the dollar can never be challenged, etc.. once that starts to become challenged by evidence, and if the economy does go into recession, i would not be surprised if he saw a radical move. how trump would do that, i have no idea. but for himself, you would imagine it is not going to be very helpful. back, is why i think you want to do a deal. the forcesunleashed of paranoia about china that he did not strategically intend. i'm not sure how you put that back together. francine: thank you so much.

stay with us, we will delve deeper on brexit. come what may believe in october, boris johnson launches his leadership bid. but could a labor plot scoffer -- labour plot scuttle his deal? sit down with philip hammond to talk about the future of the conservative party. don't miss that interview. this is bloomberg.

francine: this is "bloomberb "bloomberge." -- surveillance." it is hard to see these bills

working to the advantage of our opponents. that is what our managing editor in china is saying. we have a beautiful blog which explains what is happening and why this is important for people watching. ,f you are a bloomberg user just go online and you can follow that long-- blog. kkr has agreed to buy out a minority shareholder in axel springer in a deal that values the publisher at 6.8 billion euros. it has offered to pay 63 euros a share. company's founder owns the largest stake in the company and is supporting the move. they both plan to keep holdings. the investor who balked at uber's first-quarter loss will have to get used to it. the chief executive has about to focus on growth over profitability for the coming

years. this as the world's largest ride-hailing company is adding new modes of transportation. they face a that growing tech backlash from regulators. >> the biggest challenge we have is a common challenge you see with some of the large technology companies out there. there is an increasing that is comingen on some of the tech companies. some of it is deserved. i think we are becoming such an important part of everyday life. >> that is the bloomberg business flash, francine. francine: thank you so much. boris johnson launches his campaign to become prime minister this morning. he will promise to take britain out of the eu whatever happens. the opposition labor party is blocking another attempt for a no-deal present, attempting to seize control of parliamentary

agenda. another man launching his campaign today will argue the johnson is the wrong choice. we are back with jim o'neill. i'm not sure how to take this. it is more likely it will be programs at -- pro-brexit. does this mean a bigger chance of a no deal? jim: i am not sure. more importantly than the launch of horses formal campaign is oris's- boris is -- b campaign is no-brexit, which will be backed by prominent tory mps. whether it isre, a boris or anyone else, how they deal with that. and if you made the questionable assumption that he is the guy --

francine: questionable? there is the fact that, favorite as he is, the favorite has never won the campaign. it is his to lose, but boris is boris. something may happen where it suddenly becomes impossible for him to be the guy. but if we make that assumption, or if it is anyone else, i'm not sure how you deal with that. is to play the very small, of representative -- unrepresentative selection of leaders, that is not representative of parliament or the country. and the new prime minister will have to do with that. , i subscribed to the view that he does not have a deep philosophy about brexit. i find myself wondering if it might increase the probability of a second referendum. if you cannot get it through, he

will campaign on this. i am boris, i like brexit, we are out. but if he faces a reality we cannot do and the choices are vote of confidence or second referendum. he has craved being leader of the country for so long, last thing he will do is risk and election. default, i would say ok, what we have another referendum -- why don't we have another referendum? francine: looking at the latest polls, it would still give it to brexit. but then we are back to square one. jim: i have never been a big fan of the second referendum until we got to the stage. but if you are still stuck in this core impasse between our , at the end of the day, it was supposed to be sovereignty coming back. i think there is a genuine case to come back to the population

and say, actually, if what you would be happy to see is just a clean brexit -- francine: are you for a no-deal brexit? jim: a brexit that just says go out and ignore the consequences, or in hindsight, would you rather stay? maybe you could throw in, as a deal.part, theresa may's francine: which way would it go? jim: if you have the three options, you would not leave. i find myself thinking there is probably a stronger probability that we won't leave with a hard brexit. it is easy to make all this bravado stuff, but i just don't see how it will happen. francine: while we are looking at live pictures of mario draghi looking at the inflation forecast, how are europeans looking at brexit? jim: i have spent quite a time

in europe, and these guys are flabbergasted. not least of where we are. we don't seem to have thought -- thought through some of the basic things about where we are now. it is sort of amusing, but it is disappointing when you reflect back. had, withy that we've such a major influence on covert -- on global government standards, that when it comes to such an issue with ourselves, the whole environment solving the process has not really thought through any of this. to some degree, the political class is still live in a state of shock. which you can partly see with some of the romantic things these candidates are saying, which are not grounded in reality. the chancesat are

of jeremy corbyn being prime minister in the next 18 months? jim: oh god. higher than a hard brexit. francine: jim o'neill, he stays with us. we will talk more about central banks. up next, they are topping up the punch bowl. the ecb could boost the stimulus as needed as mario draghi speaks publicly for the first time since last week. we will have plenty more on that. this is bloomberg. >> remove trade barriers and the adoption of eu wide standards has considerably reduced the cost of doing business across countries. ♪

francine: this is "bloomberg surveillance." the here in london at sooner than you think conference, the flagship bloomberg tech conference. still with us is a jim o'neill. we were looking at pictures of mario draghi coming out with headlines, saying central europe needs sustained policy for convergence and that global went has displaced headwinds in -- global trade has displaced headwinds in recent years. do central banks around the world still have firepower to do what it takes? jim: they might have to find new versions of firepower. , therewe saw years ago

was a lot of fear they did not have any firepower. i am reminded of something i've heard larry summers say. the only time you ever need a central banks is when they are not trained to cope with what is going on, which is quite profound can actually -- profound, actually. they will have to find something when the need guns. but just because it -- comes. but just because it is not on the shelf doesn't mean they can't. as we see in the world cycle slowing down progressively, then they will be tested again. -- aine: was it aced mistake not to normalize before? jim: it probably was. i have found it odd that they did not earlier. if you look at the theory of , the central rates

bank mentality has been like, you never raise at all. you would have expected a premium above the inflation rates given how strong the cycle was 18 or 12 months ago. i probably would have retreated from qe earlier in europe. i would have tightened more earlier in the u.s.. that leaves them in a tricky position. but as i said it is not something on the shelf like, oh, let's take that one. but they may be tested, ecb in particular. francine: jim, thanks so much, the former u.k. commercial secretary treasury. "surveillance" continues. ♪

francine: what the holdup? donald trump says he has a trigger with china and demands a return to negotiating this year.

a search after buying a stake, the deal to value a publisher at about 6.8 billion euros. thousands for the streets of hong kong to protest the controversial extradition bill. leavezers say they won't until the draft law is scrapped. good morning, everyone. you're watching bloomberg surveillance in london. we are at the sooner than you think conference. for a check of what is moving the markets come here is an re-. -- here is annmarie. annmarie: the biggest shareholder looking to cut his stake by about one third. a swiss billionaire looking to divest and i just -- and his fortune. the third-quarter revenue was a little bit softer, but the markets are keeping a 4% to 6% growth.

and axel springer surging today on the heels of kkr offering 63 euros a share, valuing the company at 6.8 billion euros. much.ne: thank you so those are your main movers. its get straight to bloomberg first word news. viviana: president trump says he is personally delaying a trade deal with china. he won't complete the agreement unless beijing accepts the terms negotiated earlier in the year. this comes a day after he threatened to raise tariffs on she -- xiresident does not meet him at the summit. extraditions.ing a thousands of protesters converge demanding the government withdraw the bill. , they say, isn necessary to close the loophole.

opponents say it breaks down the wall intending to keep hong kong's justice system separate from china's. tory leadership campaign today, he will promise to get britain out of the european union on october 31 come what may. boris johnson is the favorite to succeed theresa may. he is the most well-known. global news 24 hours a day on-air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. francine? you so much,nk viviana. we are getting news out of the hong kong police chief. this is following the big protests that we are trying to how many are in hong kong. situation.is a riot

speaking to reporters and putting a message out saying that he's urging the public not to the embassy area. and they will not call the chinese military for help. we are live at "sooner than you think" in london. some of the biggest names i here from silicon valley and beyond. senior executive editor and author of the upstart and everything. it is a great pleasure to speak to you. we don't often have you in london to figure out what the view is looking at in silicon valley. look at the u.s. and china. is this about tech or a trade war? >> so much of this is about attacking a global supply chain. manufactured in

china and exported across the world. you are seeing a lot of companies communicate to the market with google saying that in china.st devices iphones are made in china. we can move it to taiwan, india, or wisconsin. they are indicating that we will be ok. they are lobbying the u.s. government to be able to sell to huawei. if you create an alternative that is bad for the u.s., it national security concerns. what am i looking at intech? echo should i worry about -- what am i looking at in tech?

should i worry about facebook being broken up? >> they see it as a growth company for a couple years and it will continue to spend and lose money. he sees growth in food delivery, bites, and maybe flying cars one day. for facebook, you have the assistant attorney general saying that they can apply not just for modern anti-competition laws to look at consumer pricing, but kind of classic competition law. and maybe hold google to the ame standard to microsoft couple years ago. are are -- francine: investors optimistic? uber wants to believe that it is the next amazon.

amazon has never lost that amount of money. it can be profitable. but, you know, companies here in europe. we don't know what the natural state of the business is and investors have to operate with a lot of faith. francine: what about the future ipo's? will they price it below? >> there is a lot of investor optimism. i think it is double the last private price. on ae seeing it case-by-case basis. this company developed over the last 10 years, powered by the cloud and smartphones now going public. happy.investors are francine: what is the next

frontier to be disrupted? is it health? >> silicon valley, to some, they are going to start it. theou look at ai in automation, it can have a great effect for the workforce if you are looking about driverless cars or robots and warehouses. there is potentially great fallout in terms of the political power they might yield if they are angry about it. we're right in the middle of this transformation into a technological society. i want to talk about driverless car's but we don't have the time. thank you for joining us. speaking -- plenty

more, next. this is bloomberg. ♪

this is bloomberg surveillance. i'm francine lacqua and central -- in central london. let's get to the bloomberg business flash with viviana hurtado. viviana: bill ackman is threatening a fight over the united technologies deal. he says the combination lacks strategic sense. he says the transaction will crimp the aerospace business. since the deal was announced, shares of both companies have fallen. elon musk dismissing concerns for tesla's

trademark electric vehicles. he says sales could hit record the pace the company is expanding at makes it hard to be profitable. lingering after a disappointing first quarter. >> it would be financially insane to buy anything except an electric car that is upgradable to economy. it is just nuts. that is the bloomberg business flash. francine: the french company has agreed to buy solutions software firm that analyzes clinical trials. the deal will bolster the offering to the pharmaceutical industry. it will also allow drugmakers a complete set of services. joining us on the phone from paris is the chief executive.

thank you for joining us on bloomberg. how much of this is a play on pharmaceuticals. how much is a play on the u.s. market? >> we had different sectors of the industry, especially aerospace and mobility. even life science equipment. that there ared players in the u.s. with a powerful ecosystem. and it is also a consideration worldwide. >> what will the system look like in five years or 10 years? does it mean investors should look for more diversity? or a change in life and science?

>> the diversification is already starting. 70% of the ecosystem is almost out of 4 billion. 32% is coming from new ,ndustries such as life science consumer goods, or high-tech. our dynamic to expand the digital transformation platform, they have a manufacturing and clinical trial. i think this sector has to apply the master reliability and performance. that is the reason for the acquisition. francine: is there anything else that you would like to buy in that space? health care?

>> health care is, in terms of total accessible market, is what is the manufacturing sector. acquisition on the focus search for what we call one lab. expanding that trial is a logical step for a digital totinuity from research basically a product of the market. bem sure that there would technology. but for the time being, i think it is a big change in the alliance between the two platforms. analytics are on our side. this is unique. how much do you worry about trade concerns in?

they in and day out we talk about the u.s. and china spat. he talk about a possible recessionary environment for the top economies in the world. to thes this plan thinking of diversifying and how global you want to be? >> there is mobility, high-tech. where already very global. it is clear that this concern .bout the trade dispute i don't think in anyway this is slowing down the enterprise dynamic for innovation to find out the solutions for the sectors that they serve. so yes, it is a concern in terms of competitive business, but we believe when it comes to us, the concern in terms of growth dynamic. francine: thank you so much,

bernard charles. about a and talk controversial bill that would allow extradition to mainland china. tens ofes with thousands of demonstrators protesting outside the council. carrie lam argues that the legislation is necessary but opponents say that it would throw up a wall that would separate the city's justice system from china. beijing says it will continue to support hong kong on the question of extradition. jodi schneider is on the ground. have the protests turned a little bit more violent? >> it became quite chaotic this afternoon. we saw last few hours, the move really change. the protesters waiting and watching.

it became as the police chief said, a riot situation. objects were thrown at the police and they used tear gas and water cannons to push back the crowds. people seem to be trying to push forward into the legislative complex although it would be difficult to get in there and it is closed. there was not the hearing this morning that had been scheduled, but there had been crowds all day protesting. our senior international reporter jodi schneider in hong kong for us. seeks to buy out minority shareholders with a deal worth 6.8 billion euros. that is next. this is bloomberg. ♪

francine: economics, finance, politics. this is bloomberg surveillance. i'm francine lacqua and central london. let's talk about the retail sector. it is set to rise over the next decade.

but more than expected will end up in a landfill. guest has developed environmentally friendly recycling technology. recycling 80% of all textiles. ,et's have more with our guest chief executive and founder. this is for a great cause. , i retail industry behind us buy a top or trousers. this gets recycled through technology. >> this is an issue that we have seen growing over the years and with a lot more awareness in recent years. the real challenges around resources. we are going through a fast amount of polyester and cotton never year. and in the end, we're throwing away the vast majority of it. we have textiles going back into new textiles. arebrand 10 industries dying for a new solution.

they realize they have any responsibility to get products back and finding a way of recycling men. for them, it is about the future of resources. there something more biodegradable than polyester? >> it is a complex area. the big issue is around polyester and linen. our clothing is made out of polyester and cotton, a high percentage made out of blend. you have to be able to deal with both polyester and cotton. dealing withly cotton, you're only dealing with part of the problem. and same with polyester. we are recapturing these raw materials. they are comparable in quality to raw materials. that is what the industry is looking for. do you have the technology or are you still developing it? it,hould be spearheading

is about a 10 year run way take a new technology like this from that scale to the industrial plant. and we realized trying to finance something like this is going to be difficult. and we went straight to the industry. we approached h&m and luxury caring. both innovators and businesses stay in ability. we got them involved very early on. they helped finance the project and we raised further financing. but crucially, the industry represents or the brands represent the market. the need them behind this to show there is a huge demand. there any political involvement? what role should governments play in this? >> government has a role to play, both now and in the future. in eu just banned textiles

landfills to 2025. there is a gap between where we are at today. the majority of textiles will go to landfill. large-scale solutions for recycling. we need to see an accelerated technology to market because once we do get those collections in place, we can really get the majority of textiles and keeping in a landfills. there is a solution to recapture the raw materials and get them back into the supply chain. francine: is incineration worse than landfill? >> these are perfectly good raw materials. we can be reusing them. we have enough textiles in circulation today. same thing with polyester. we have enough with the to satisfyo go back the annual demand today. lack the infrastructure and the scale technology that can process them. francine: is there a country

that is a heady? or are there cities that are ahead? >> it is a bit mixed. there are regions with a lot of activity happening in europe. in amsterdam. it is about circular resources for the future where we can use our existing resources to make new products. states are a little far behind -- a lot far behind, actually. but there is a difference in europe. francine: plastics are a little bit better, right? plastic recycling is being looked at in the industry. x there has been a huge shift in awareness for plastic bottles and plastic in the oceans. it has been helpful. textiles are coming up in terms of awareness. francine: think give for joining us today. that was the founder at rhoades. surveillance continues in the next hour with tom keene joining me to talk about the u.k. chancellor philip hammond.

and we will talk all things tech related. don't miss our excuse of interview at 10:30 a.m. u.k. time. in the meantime, we are looking at euro markets and euro data. i think it is actually quite significant to see a little bit of a shift compared to what we saw yesterday. stocks are slipping globally. we seem to have these signs of age and revival in risk appetite that may have overshot. i am looking at markets and i think they are still down 0.5%. treasuries gaining, gold gaining, and yen gaining as well. this is bloomberg. ♪

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every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. take your business beyond. francine: what's the holdup yeah could donald trump says he wants

to do a trigger with china. to with china. a return to terms negotiated this year. boris johnson promises to take the u.k. out of the eu in october come what may. and we will not be moved. thousands flood the streets of hong kong to protest the controversial extradition bill. organizers say they won't leave until the draft law is scrapped. it afternoon if you are watching from asia. the sooner than you think conference, it is the flagship technology conference. we have plenty more to talk about and we will talk a little bit about brexit and markets. the controversial extradition bill in hong kong. it is a little bit later. aroundiss that interview 10:30 a.m. london time. seen extra ordinary

images over the last few minutes in hong kong and viviana hurtado will have the briefing in a moment. for those of you that no central square and the famed mandarin hotel, this is half a mile away. down the road. downhe admiralty building the queens highway. the deterioration has been in the last hour. i know we will go to jodi schneider. it may be a little quiet now and what the police chief a riot situation. most interesting this morning to see that as well. now, we will go to hong kong. jodi schneider has been on the street this morning. like on the feel streets with many hundreds of thousands of protesters and the police? >> it has become chaotic in the last few hours. today, people gathered at the legislative complex building to protest again, as they have been ,oing over the last three days

the controversial extradition policy that would allow hong kong residents to be extradited to jurisdictions that they do not now have a next tradition policy. it has been extraordinarily controversial. largely peacefully protested, but in the last hour or so, things got chaotic. the protesters were trying to storm the legislative complex building to try to move forward and get in. the police used tear gas, water cannons, and batons to push them back. there is still a lot of chaos there. the smell ofs and two gases in the streets of central hong kong. tom: there are so many questions and you have decades of experience on the china and asia watch. why is this protest different from the other protest we have seen since chris patton gave hong kong over to beijing?

>> this is reminiscent of the most chaotic and the most widespread since the 2014 occupy event. this is such a concern among hong kong residents because the legal community, they feel that hong kong special status could be jeopardized. it allows people to do things like protest. it could be jeopardized or threatened. it could, in turn, threaten the status of hong kong as a major financial hub. so there is a lot of concern on all fronts. today it got out of control in terms of the protest. protests over the last few weeks and months.

today, it kind of fell apart and became somewhat of a chaotic situation that is still going on as night starts to come here. francine: we are looking at live pictures and monitoring the local media to see what we can. the police chief says it is a riot situation. will they call back up from china? if they did, what would that mean? what would happen? >> the haven't been any indications of that. have been outce in force. it has been contained to one area today. we are moving police from many places in town. and the legislative complex where nothing happened today. it was supposed to be big on that extradition policy. held a presscutive

conference on monday after the big protest on sunday saying that she was moving forward with the extradition policy that hong kong needed. there were supposed to have a second reading of the bill that morning. saidd not occur and people they won't leave until the extradition policy is scrapped. tom: you mentioned night comes 5:00 inor five clock -- hong kong. what can the government do to get control of the situation in the dark of night? >> it is unclear what happens next. the crowd is not anywhere near the front of the building. it would be very hard to get in that building. that situation they have been in the last two hours of yelling, pushing, and throwing things. at this point, we have not seen shots fired or seen any rubber bullets. done ate, that could be

some point if needed. we have not seen anything beyond that gap. butpeople are not leaving it does not appear that they are expanding the numbers. you jodi schneider, thank for the continued reporting from hong kong. i want to show you one of the jewels of the bloomberg terminal. tliv is outstanding under any event. but right now, the feed from the hong kong reporters and editors is just extraordinary at tliv . i can't say enough about this modern technology bringing the .mmediacy of news speaking of immediacy, she is expert at it. here is viviana hurtado. viviana: boris johnson is promising to give the u.k. out of the european union by october 31 no matter what. today, johnson's campaign to become prime minister kicks off. he is the front-runner in a

field of 10 conservative party candidates seeking to replace theresa may. it is the first time johnson has faced public questioning in months. preview of next year's presidential election, president donald trump and joe biden were in iowa taking shots at each other in the crucial political swing states. the president called reformers -- the former vice president a dummy that failed farmers. biden hitting back calling the president a potential threat to the u.s.. out with aagarde is warning on tariffs and other trade barriers. she spoke today at the ecb conference in frankfurt. >> global growth has been -- for more of an than six years. the largest economies are putting up or threatening to put up new trade barriers. this might be the beginning of something else which might affect us in a more broadway.

so this troubling development will create headwinds for all. viviana: global news 24 hours a day on-air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. datalet's look at the right now inequities, bonds, currencies, commodities. the hong kong index. futures a little bit soggy yesterday and the great reaffirmation of the bull market. crude, just interesting. jeff curry was brilliant yesterday. they really put it down the pipeline. the two year yield, won't give it up. it lower yield 1.89. renminbi was stronger. it is stronger in the last couple of minutes, francine. francine: i'm looking at the

risk appetite that we saw yesterday. it may have been overshot. down .5%.erns oilsuries are gaining crude .nd looking at gold todayr from boris johnson announcing his campaign. a number ofg stories. a joining us at queen victoria street is alberto. the bond market won't give it up. full faith and credit of states with low yields. would have you observed in the bond market away from full faith and credit in the last week? what is the dynamic distinction that is important right now in credit? alberto: in bonds, we have seen

a reach for duration. investors are very long central banks after the fed changed guidance in q1. there are some economies which are overburdened by debt. not the u.s., but for example, the eurozone, australia, new zealand, canada, and sweden. these are economies which are supposed to be safe havens during the crisis. investors consider them to be new. they have developed a bigger debt overhang. you look at treasuries, they are close to 2%, 2.13%. there is more tightening in this next area, sweden, new zealand, they have more overhangs than people thought. central banks will have to be more dovish. in credit, it is a similar theme. it is cyclical. stillgher companies are under law.

it is true that there is a dovish sentiment and a dovish turn. inflation is peaking. investors are very underweight growth and very long central banks. what is the bond market need from central banks right now? what is the bond market asking of central banks right now? there is not much they can do. that is the problem. a few years back, we started the concept that economies cannot sustain higher levels of interest rates because debt levels have not declined over the last 10 years. we would be trying to solve a structural problem. a cyclical one-size-fits-all tool is monetary policy. we can't solve this by keeping interest rates low. but it is something that central bankers can do in the immediate term. we think the market wants there

to be cuts by the fed. in today's data on inflation, it will be key. the g20 will be key to assess whether this is going to happen. i think the fed will do an amazing cycle. but and other parts of the world, the economies are growing well below potential as the imf said. the central banks have no other choice. francine: alberto, stay with us. ross joinswilbur bloomberg tv. we will talk about trade and president trump. blog tryingeat live to figure out exactly what will happen next. pictures of hong

kong police actually, continuing to disperse protesters. at times, we see clouds of tear gas that have been at stake. seeingwatching than and what the protest is. this is bloomberg. ♪

francine: this is bluebird surveillance. tom in new york. i'm francine -- this is "bloomberg surveillance.", new york. i'm francine lacqua in london. will promise to take britain out of the eu on october 31 whatever happens. the opposition party is launching another attempt at blocking a no deal brexit starting with a vote this afternoon to take control of the

parliamentary agenda. hisher is launching campaign on wednesday and will argue that johnson is the wrong choice. still with us is alberto. and joining us is kristen taylor. thank you for sticking around. when you look at brexit, i don't know if there is a higher probability that there will be a second referendum or a no deal brexit. how should the market do all of this? we think that the real risk here is another failure from the conservatives. it is very hard to see how the brexit deal that may was trying to pass is going to change and be appealing to both the hardliners and the more moderate part of the tories. for example, whatever leader is elected in the tory party and fails, you have

a probability of either a new referendum or potentially new elections. you have to think about what labor policies would mean for the u.k. economy. potentially more spending and monetary easing. you have the probability of policies like for the people. something similar to monetary theory proposals in the u.s. we think the market has been very complacent about meeting long-term and focusing on the candidates. christian, what moves should we see from now on? almost a given that boris johnson is the next prime minister. what is happening in parliament today? as we said earlier,

there is probably hope in the market that johnson's and -- johnson can square the circle. it can be quite similar to what may try to pass for many months. he was somehow convinced that the rest of the party, particularly hardliners. proposing it, it is more palatable and he can negotiate better terms. this is the one way that you get an orderly exit by the 31st of october. afterwards, we do look into corner solutions. then we have a referendum on new elections and a scenario that lead us to a path that markets are pricing now. we saw united kingdom data. as any prime minister goes to the new government, do you assume a weakening or tepid british economy? alberto: all of the data on

activity in the u.k. has been highly volatile. and we had some good data early on. always said that would happen. it we too surprised by the weakness in gdp. labor market data is holding up fairly well. what we see right now is a lot of tory candidates trying to present themselves as helping the economy with the use of fiscal policy. and we do see weaker global economy. and i think britain will be a weaker index for the global economy. thank you, christian and alberto. government to be kind in turmoil. francine lacqua, look for that in the 10:00 hour. this is bloomberg. ♪

tom: we welcome all of you worldwide. if you are waking up in america, the afternoon in hong kong is extraordinary. deterioration among the hundreds of thousands of protesters. .ifferent numbers being quoted this is half a mile to three quarters of a mile down the harbor from the mandarin, down from central square. that key point near the

legislative complex on the queens highway. and again, this is the admiralty area. according to jodi schneider, there was very sharp clashes among the protesters and the police. with us now in the markets, .lberto and christian good morning to you in london. alberto, on the bond market and the fed, i am trying to figure out the classic horse and cart. is the fed the horse or is the bond market the horse? and are the dots going to move because the card is not connected to the horse? i would say that the market is leading. the market is the horse part. if the fed does not intend to cut in july which is widely expected, then historically, it has communicated to the market

and has tried to correct expectations. it hasn't done that yet. it is a bit early. generally, if the fed doesn't intend to cut in a meeting, then by the end of this month, we should know. and the meeting on the 18th, we should know if they are loosening and having some idea of timing. in general, we think that this tradee a cycle because of uncertainty and political pressures on the fed. it is sort of an insurance cut on their own jobs, to some extent. and on the u.s.-china confrontation, we think it will continue. how soon and how many cuts from the fed? christian: by the end of the year. at it, it is pretty much the same. 75 to 95 in 1998.

, it is onnk very much the basis that we see the economy slowing. and we do believe the trade conflict between the u.s. and china would not be resolved. and we have tariffs of all the imports of 25%. and we think that would be enough to start moving. tom: very good. thank you so much. we appreciate you both this morning. the images from hong kong arts toward mary. i want to be very careful of the numbers. without questions, i can say hundreds of thousands of protesters. our jodi schneider reports from hong kong. this is bloomberg. ♪

♪ tom: we welcome all of you worldwide. kong, a waven hong of violence and protests an hour

ago. tear gas fired about 13 minutes ago. it is hundreds of thousands of protesters. kong, our of hong team in hong kong makes clear that the distinction is the protests are focused near the admiralty, three quarters of a square,m the central the mandarin hotel. it has not spread to other parts of hong kong. joining us now in hong kong, jodi schneider. significance of this protest contained near the legislative complex? jodi: that is right. on sunday, there was a peaceful protest.

,rganizers say a million people police say several hundred thousand people, but they have marched through the streets of hong kong. today is outside the legislative complex where they were supposed thatve a rating of a bill would allow extradition of hong kong residents to mainland china. continuum outhe to the president -- present governor. what does the hong kong leadership face now from beijing that is different from 10 or 20 years ago. jodi: the concern among not just the people of hong kong, but the business and legal community and rights groups is that hong kong's special status under the one country systems framework, there is the rule of law and the ability and right to protest for

freedom of speech, the press, and assembly. that could be lost if people are worried about being extradited to china for crimes. carrie lam has backed the proposal and says that will not happen. built into thes legislation, but others fear otherwise. ra: how likely is it looking withdrawn,ll will be which the protest leader is calling for? jodi: at this point, it is unclear. we have not heard from carrie lam. we heard from her monday in a press conference the day after the peaceful demonstration. she said hong kong needed this and needed it quickly, and they would move to the second reading today and get it passed june 20.

she has stood by this, and we heard from the chinese government saying they supported her. nejra: the pictures are extraordinary and they are catching everyone's attention globally. how significant is it that we have heard from the u.s. house speaker nancy pelosi on this is well -- as well? jodi: that is significant because nancy pelosi and in a rare instance of agreement with her republican counterpart mitch mcconnell, the senate majority leader, they have both called on the hong kong government to rethink the extradition policy. as far as toone call on u.s. congress dust went as far as to call on u.s. between for legislation the agreement between the united states and hong kong. they are saying the same thing,

they are very concerned. assume the people of greater china, mainland china are not seeing these images, are they aware of these protests and legal issues? jodi: i think they are aware of the legal issues. this has obviously gotten some attention in the chinese media. from people we have talked to, these are not on social media in china. i heard from a friend who is there saying she is not seeing any of this. clearly, they control social media in china and they control the press. these images, it would be hard to imagine these images would be seen. tom: who are the protesters? let us review. to say it is students is one thing, but who actually are they

as we see the protesters move downtown queens highway? jodi: on sunday, it was a huge swath of hong kong society, older people, people carrying babies, professionals and students. they at looks like protesters are younger. there was a strike called by students and there is a more activist crowd clearly then we saw on sunday. tom: jodi schneider, thank you so much. the feed that we have at tliv , you see the umbrellas in the images. that is to protect the protesters from teargas and police to bury, many him -- debris, many images. let's go to our first word news. viviana: donald trump says he has reached a secret deal with

mexico that takes effect when he wants it to. president holding up a sheet of paper, calling it the agreement everyone says he does not have. the deal would be put into effect if any agreement on immigration with mexico does not stop the flow of undocumented immigrants. the u.k. is set to become the first major economy to record cut in fossilre a fuels 20 by 2050. britts would need to drive clean cars, fly less, and eat less meat. the chief economic advisor under ronald reagan has died. martin feldstein persuaded mr. reagan to cut the deficit. the president boosted taxes on corporations, although not on working families. feldstein spent most of his career as a harvard professor. he was 71.

global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. hurtado.ana this is bloomberg. tom: thank you so much. i will try to get through this. marty feldstein, and he kept quiet, was the greatest modern educator in economics. extraordinary. this is bloomberg. ♪

♪ tom: our jodi schneider and our team from hong kong reporting, this is very close to our offices near hsbc, down the road from the acclaimed central square in the colonial buildings

and the mandarin hotel. this is the admiralty and the legislative complex. into the evening of hong kong, i would suggest, that we are seeing a protest and new bouts of surging crowds. the umbrellas are to protect the protesters from canisters, and the police as well steeled for a long evening. we consider the economics and hong kong with alberto gallo, his wonderful knowledge of financial markets and fixed income, and christian keller joins us with a -- looking at asia. it is hong kong. from where you sit and with your barclays team, how discrete is the hong kong economy from the rest of china? christian: obviously, hong kong

over the past decade or so has become more closely aligned with china and has benefited from the trade, capital flows that have found their way into hong kong. none of this has been clamped down. the bigger picture is whatever happened to hong kong, china overall may be getting to a critical juncture whereby according to our forecast, china growth will slow below 6% next year. that is something we have not had since 1990 and how does china deal with this, the party being a party that delivered rapid income growth, and the promise was to escape the middle income trap. now we are seeing the situation where chinese growth is likely to slow. will they accept it or become more draconian? this with a population, not only

in hong kong, which are, but in the chinese cities where there is a middle-class limited access to social media. this may be a crucial point for china in the coming year, and to hong kong to some extent it may be an indication of that. nejra: we often hear from the authorities they have the tools to manage the slowdown. the question is will they use them and how? christian: they can still issue more debt, particularly as a fiscal agent. the main questions will be what do they do with the currency? if we have a situation where it becomes clear they are going into a current account deficit, the economy is slowing, it does not make sense to keep the renminbi with the u.s. dollar. we may see the seven being broken and how does the population react?

those are crucial points in coming months. nejra: if we see the seven level being broken, what indication does that have for you and your emerging markets portfolio? alberto: fortunately, we do not have a lot of exposure to asia, but we have been looking at economies that can get affected by china's needs. call, australia has a bubble and a strong dependence on china from commodities and investment. there is economies that will get affected negatively. other ones are potentially winners like vietnam, where manufacturing can be repositioned if china is hit i tariffs. chinese government is playing by the rules of the art of war. stimulus, the pboc can ease reserves even more.

a move within different parts of the economy, they can monetize that and transform that into equity. the u.s. is playing by the art of the deal, a much longer-term strategy. mexico has been used as an element to embolden trump's strategy into the g20. the long-term strategy we think has a lot more tools and a lot more levers to pull. i think china in the end has some advantages in the long run, but the u.s. is winning the battle. tom: alberto gallo and christian keller with us. we see the protests continue and hong kong, jodi schneider and our team continuing their coverage. it will be a long evening for the chief executive of hong kong, carrie lam. no doubt she will receive reports and feedback from

beijing, as we look at these images. in london, an important conversation as we begin a prime minister race. the chancellor of the exchequer and conversation with francine right now. please stay with us worldwide. this is bloomberg. ♪ >> i believe and i hope the audience would agree with me, smart regulation is the u.k. competitive advantage.

♪ tom: continued protests into the early evening and hong kong. over the last three hours, a deterioration as hundreds of thousands of protesters -- some say millions -- hundreds of thousands of protesters clash with police. we are most interested to see carrie lam's response to these events.

we saw a real deterioration in the last 20 minutes. joining us right now, mark expert onxperts -- the markets and may financial hong kong as well. it is the hong kong stock exchange that has always been the beacon of capitalism in asia. nature offinancial hong kong. what is the state of hong kong finance now versus the last five years and 10 years? obviously, there is much more nuanced with the political issue that is coming to a head. that has been a backdrop for a bastion of capitalism in asia as there is a whole other tangent. it has come to a head with the occupied protests and we are seeing that with protests around the extradition bill. that is coinciding with outsized

market moves. we have seen a squeeze in local lending rates and that has made it more expensive to borrow a hong kong dollar in the front and. downkong-dollar has come and it means the hang seng index has been in under performer today. tom: there has been a history of trying to do more than hong kong. there is a nascent shanghai financial district, the politics of beijing as well. it has always been ascended from hong kong with people wanting to live there more than singapore. where is hong kong and the pecking order of stock and bond markets in asia? mark: good question. i am biased because i am in singapore and i feel that singapore is in the ascendancy and hong kong is in the decline. it was the place for chinese

markets to get capital out of china, out of the mainland. hong kong has been a dominant decision because japan has been dominant in asia for so long, but china has been more isolated. hong kong was the center. now in recent years we are seeing more movement into mainland markets, and singapore is seeing a rise, partially because of the transfer of power from hong kong to china, and the pollution issue means more banks are shifting to singapore. it has gone from being completely dominant 10 years ago maybe second or third in the pecking order. nejra: i want to pick up on a couple of things you said about the market. we have been showing the hong kong dollar which hit its highest since december. shorting the hong kong dollar has been popular since 2017, so

how long can the strength last? mark: probably a little while, but it will stay volatile. the squeeze and short-term funding rates has caused anyone who'd does not have desh who does not have the view to close it out. in basis point terms, this is not a dramatic move. dollar hong kong is in that pegged band and does not move much. it can get a little bit painful for traders who try squeezing a few basis points out of a currency that rarely moves. we will not go much further on the downside. once the funding squeeze finishes and plays through in the market, you will probably see the hong kong dollar we can -- weaken. nejra: comparisons are being made to the occupied protests of 2014. if we look at the equity market,

what kind of remote test recovery might we expect for the hang seng -- recovery might we expect for hank saying? -- for the hang seng? mark: the protests lasted something like 79 days. if that lasts that long, it could go into the summer parliament so protesters have a few weeks to hang on and delay the process. ultimately, i think markets will move on from this headline story. there was the first sunday where there was a big story and protesters set in for a number of weeks. overall, markets moved beyond it. this may not be a sustainable market story, but the tail risks are massive if it goes wrong. nejra: thank you so much to bloomberg's managing editor,

mark kudlow. tom: thank you so much. he is with chatham house and a fellow, but that verily describes desh barely describes -- barelyency of describes the competency. , you talk about back to basics. how does president xi go back to basics if he is sailing desh seeing these images on bloomberg? -- seeing these images on bloomberg? >> is an affirmation at the time for beijing has accelerated. the idea of hong kong being under a 50 year kind of arrangement up until 2047, i don't think they look at that anymore. think, no, they have been patient for 20 years,

22 years and it is basically one country. the system is more and more eroded. the fact that there has been such a huge response to the proposals politically, i guess shows the feeling in hong kong that the fundamentals of the one country two systems proposal are eroded and becoming nonexistent. thathow would you propose beijing and the military under the guise of the communist party will respond overnight to the protests? kerry: i think they will be wait, they will be patient. i do not think they will be too intemperate. time is on their side, everything is on their side. the symbolism of this is over defiance of the kind of power of beijing. this is a leadership and beijing

who are very sensitive of that. be i would say appraisal's, but there will be consequences later -- reprisals, but there will be consequences later. tom: it has been extraordinary, much.brown, thank you so brown is with chatham house. coming up next, this could not be better time. gideon rose of foreign affairs magazine on what we are observing in hong kong, and on what happened to the american century. ♪

♪ tom: this morning, it is late afternoon, early evening in hong kong.

tear gas andsed have moved in formation against hundreds of thousands of protesters. "a police chief called it riot situation." june 19 beckons with placing and the bond market says at some point the fed will cut rates. what happened to the american century washington squandered? everyone, this is bloomberg "surveillance." with nejra cehic this morning, francine lacqua speaking with the chancellor of the exchequer. a wonderful news flow, and one of the backdrops with hong kong is the right situation in conservative politics in the united kingdom. what have you learned in the last 24 hours about brexit, prime minister johnson or prime minister raab?

nejra: it is not clear exactly where we will go with brexit. we have got our eyes trained on those protests, extraordinary pictures we have been seeing throughout the hour. comparisons being made to 2014 occupy as well, but still contained to the admiralty area. tom: it is a long time from lord patton a number of 20 plus years ago. our senior international editor, jodi schneider. last twochanged in the hours? situation has gotten more chaotic, centered at the legislative complex area at the admiralty. basically, the protesters came today wanting this extradition

policy that they very much oppose to be called off. that did not happen, and they say they are staying until that happens. they have provoked the police and tried to charge forward. police responded with tear gas, spray,annons, and pepper and the situation has increasingly gotten chaotic. it seems to be at a standstill but not going away. tom: how does beijing assert its authority into this riot moment? jodi: i am not sure that is going to happen because this is in one area, and they are certainly enough -- a big enough police force to contain this. what is causing this is this extradition policy opposed by a large swath of hong kong,

including the business and legal community which say that if this is passed allowing hong kong residents to be extradited to china, it would effectively complicate things in a way that would make it almost impossible to maintain the framework of the one country, two systems framework which has allowed hong a majorstay international financial hub with rule of law, freedom of expression, freedom of assembly. as we are seeing today, there is still freedom of assembly. that caused a great deal of worry, including from nancy pelosi and mitch mcconnell. they say they oppose this bill and are concerned what would happened if it were to pass. nejra: the comments from the

--. lawmakers are certainly the extradition bill being withdrawn? jodi: carrie lam, the chief executive of hong kong who we have not heard from today, said at a press conference on monday after mass demonstrations on sunday, that she was moving ahead with bill, that she respected the right of the people to protest and knew they did it because they love hong kong, but was moving ahead because she did not want to see hong kong become a haven for fugitives, and it was necessary to pass this bill. it had enough protection for human rights that it should go forward. today was supposed to be the second reading of the bill in a debate process that would have culminated on june 20. that hearing was canceled and we do not know what will become of it, but she sounded like she was

sticking with the policy. tom: jodi schneider, thank you so much. this is off of central square, down to admiralty and queens highway, close to where many of us attend finance and politics in hong kong. we have the right people with the news flow out of hong kong. us, and also joins gideon rose, making a monthly visit with an extraordinary new issue about what happened to the american century. as we continue to look at hong kong, i think we can say what happened to the xi decade as well. proceed andr team how do you assume beijing response? gideon: welcome to the

post-american world. the theme -- michael: welcome to the post-american world. the world is going into more turbulence. powers have the right and ability to essentially maintain order and their areas because no one else is doing it. the unfortunate fact is the chinese have learned their crackdowns work in their political system instability is dominant for them. unfortunately, i don't see these protests as ultimately changing the system because this is a reflection of the chinese government increasing its hold. tom: it is an experiment almost in totalitarian modernity. a new regime, a new way of doing business for democracy. we talk about a post-american world. and has got to be almost a post-communist world from china

and they are grappling with the. gideon: nobody knows how to manage a country like china at the scape -- scale that it is now. anything they are doing now would be breaking new ground, and at this point, the democratic western model the u.s. pioneered and that europe was such a glory of, seems to be in crisis. if you are looking for models, it is not clear there is a good western model so the chinese can run things as they like. populismalks about the of europe and politics of the moment, buffeting of central bankers. it is central bankers overwhelmed by these moments, isn't it? michael: this is probably the reflection of the tensions when you have the global economy go into a ditch and experience slow growth after.

lay on top of that the chaos with trade wars and other irritants, and this is what you have. nejra: gideon, good to speak to you both. let me ask you what the implications are for foreign relations in the u.s., because we have heard from top lawmakers. gideon: that is not clear top lawmakers in the u.s. are doing anything constructive at home and it is not clear the u.s. has a foreign policy and it is not clear that congress is getting involved. i don't think there is any u.s. response that will be deeply significant in the crisis. the general trend unfortunately is that this kind of thing will contribute to the downward spiral in u.s.-china relations that unfortunately could be heading towards some kind of longer-term neo-cold war. this kind of thing reinforces everybody's views that the

systems are in conflict and it will be tough to pull things back together. nejra: on the u.s.-china relations, more broadly we are looking ahead to the g20 and that is preoccupying markets. can we see equity markets reach new highs for we get anything substantive out of the g20? michael: it is a possibility, given what we have seen in recent days and weeks. it would not be surprising to see a respite and equity markets. it seems like there has been a breath of optimism as trump backed away from the tariffs on mexico, but china will definitely be a tougher road. the administration has taken a tougher stance, so it will be difficult to not be looking down the path of the g20 with some skepticism of whether that will be a watershed event with trade tensions. tom: thrilled to have both of

you with us, michael darda and gideon rose, on what happened to the american century. some of you may have said, what happened to the data check? the churn of the markets a little negative yesterday, euro strength. 16.41, yields are lower. in by four basis points. renminbi was stronger and has given up a little bit off those protests. coming up later, a timely conversation with paul tudor jones, philanthropist. ♪

♪ this is bloomberg

"surveillance." today, more protests in hong kong and they have turned violent, protesters opposing a plan to allow extradition from china, throwing bricks at police who responded with pepper spray and water cannons. that led to the legislative council postponing the proposal. u.k., where boris johnson is promising to get the u.k. out of the e.u. by october 31 no matter what. you are taking a live look at johnson at westminster, his campaign for prime minister kicking off today. he is the front runner in a field of 10 candidates seeking to replace theresa may. a preview of next year's u.s. presidential election, donald trump and front runner joe biden

were both in iowa taking shots at each other. the president called the former vice president a "dummy," who failed farmers. firing back and calling him "an existential threat to the u.s." 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: now joining us on six themes and we only have time for one or two, kevin cirilli. the president loves to insert himself into foreign domestic discussions. we saw that at the united kingdom with prime minister johnson or whatever the president said. thewill he react to protests in hong kong? kevin: from his perspective, this will be something he will want to weigh in on.

when you look at the geopolitics of how the president will move the chess pieces, especially with the ongoing discussions going on with trade, and from the standpoint of how he looks to maneuver the region, that will be really the bottom line here, whether or not he feels it will increase his leverage in the short term with regards to trade talks. tom: tell us about the pentagon's and navy's exposure in the south china sea. we had the u.s. ship and russian ship buttress against each other in different water. kevin: there have been various maneuverings, and when you talk to sources in the intelligence community they will tell you that region especially is of note. the president campaigned on such a notion that he would continue to try to bolster that support

in the region, and militarily in the last two to three days, has said he increased the military capability. this is going to capture the attention of the region and the west. beast ifve to feed the i do not ask this question. who one the iowa battle yesterday? -- who won the iowa battle yesterday? kevin: senator elizabeth warren. speechbernie will give a saying he is a socialist and i was talking to a war and staffer who essentially said she is -- warren staffer who essentially says she is to the middle of senator standards -- sanders. the left of biden on issues of trade, so they like to see the president -- and this is

fascinating -- they agree with the president's attacks on biden of trade because of the populist streak. tom: kevin cirilli, thank you so much. michael darda with us and also joining us, gideon rose, expert on iowa demographics. the wonderful nicholas eberstadt is in your new issue and he goes to what vice president biden and the president were talking about in iowa, the demographics have profoundly shifted. gideon: great powers require great margaret fee and in the , and in -- demography the long run that means a population that is healthy, educated, willing and able to do things in large numbers. we will have a long run advantage with the wind at their backs and the countries not on

track for that will have headwinds that will constrain their growth. if the united states does not get its act together in terms of thinking about improving its human capital, even if it has good demography and base numbers, it will not be able to exploit that and get the advantages. michael darda and gideon rose stay with us. just going to recap some headlines coming through from boris johnson. you were asking earlier about an update on brexit, and we have been waiting to hear as boris launches his event, his take on brexit. he says we must do better than the current withdrawal agreement. i am not aiming for a no deal outcome. broadband against only 7% in

this country. ♪

♪ the union of our foreign nations. francine: this is bloomberg "surveillance." this is boris johnson, the frontrunner to be the leader of the tory party for the next u.k. prime minister. i have just had a

conversation with the current chancellor. asked him whether boris johnson was right in saying they could get the u.k. out of the e.u. by october 31 and the chancellor said he does not think this is the case because the dynamic is the same. he does not believe the e.u. will negotiate and parliament will not go for no deal. boris johnson is said he is heading for a no deal brexit because the u.k. must exit on october 31. considering the next episode on prime minister johnson. this is going to be entertaining. powers watching great behave like buddhist monks protesting and self emulating in plain view is depressing and mesmerizing at the same time. tom: why is there a debate about

no deal? gideon: because in the last few years, we have lost the accountability that basically forces people to deliver reasons and evidence they make. the people who went in favor of brexit have not been called to account for the things they said would happen originally, so anyone makes up what they wants to say and says, this is my plan. public discourse has been so degraded, that is what passes for commentary. tom: almost a nostalgia for bilateral trade. it is a trade deal an easy thing to do for those with the special relationship? gideon: trade deals are difficult to do and easy to screw up any time. of -- thel disruption united states as the financial manager of the world.

that is the big picture these trade disputes, part of. marty feldstein, the great economist who was part of our board and stood for nothing more than prudence, would be watching this and horrified. if boris johnson becomes prime minister, i don't know if this is almost a done was a jeremye corbyn-boris johnson election, boris johnson might win. what are the chances of a general election? political.rything is u.s. trade policy, u.s. foreign policy, and politics are political on both sides. predicting the actions of the countries are hard because it is the actions of the sub natural -- subnational political actors jockeying for power that is

governing the behavior of nations in the world and that is hard for rational analysts to predict. rosewhat we know is gideon is strengthening pound-sterling this morning -- pound sterling this morning. michael darda on the fed and rose,policy, and gideon celebration of what happened to the american century. if you are just waking up in america, true protests and injury in hong kong. this is bloomberg. ♪

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check it out! now you can schedule a callback or reschedule an appointment, even on nights and weekends. today's xfinity service. simple. easy. awesome. i'd rather not. ♪ nejra: bloomberg -- tom: bloomberg "surveillance," extraordinary news flow wrapped around markets that are somewhat stable.

francine lacqua at westminster. she just spoke with the chancellor of the exchequer as boris johnson launches his campaign. also with us are michael darda and gideon rose, whatever happened to the american century? we will dive into this, some important essays. we must stay on hong kong. asia with hist of work in bangkok and is our editor, youanaging are into an evening and things happening in the night. what would you expect would be the response of various parties overnight? happenede look at what in 2014 during the occupied protests, there was tear gas the first day and protesters managed to regroup.

there are still battles between police and protesters. they seem determined to occupy the legislative assembly where they are debating this controversial extradition bill, and they look very angry, like they are not going anywhere. they are keen to stay out there until this is scrapped. tom: there are chief executives extremelyng, successful in business, donald well shearrie lam, how balance her constituency without of beijing? dan: it is becoming increasingly difficult. she has insisted that calm, rational debate, everyone will see this is a good thing to do. she is up against hundreds of thousands of protesters that hit the streets on sunday and then you have clashes today with

police, so the hong kong people are speaking out. thisll be hard to maintain and debate this bill from now on. she will either have to accept some bloody battles on the street to get this through, or will have to back down. tom: what are the rights of someone arrested in hong kong versus someone arrested in chang kai -- shanghai? dan: in hong kong, there still is an independent legal system that will go through the courts. you cannot say that so much in shanghai. the court system answers to the party overall. that is not the case yet and hong kong but certainly people fear that will be the case. tom: thank you so much. here is viviana hurtado. viviana: donald trump says he has reached a secret deal with mexico that takes effect when he wants it to come at the president holding up a sheet of

paper, calling it the agreement everybody says he doesn't have. he says the deal relates to asylum and would be put into effect if it does not stop the flow of undocumented immigrants. the u.k. will be the first major economy to require a cut in fossil fuels 20 by 2050. britts would need to drive clean cars, ride less, and eat less meat. the chief executive officer under ronald reagan has died. to cut thed reagan deficit. hisstein spent most of career as a harvard professor. he was 79. 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. us, gideon rose with "foreign affairs" magazine, and michael darda with m km partners. we will get to gideon on his who is martin feldstein to conservative economics? gideon: he was a giant of the academic world and a giant and politics, policy, incredible career. tom: he was respected by liberals. gideon: 79 years old is way too young, a real tragedy, but he left a mark in a positive way. tom: and the public stewardship of policies, all these economists got a dive into policy and he did it in your shop. he was our chairman for more

than a decade, and was always marked by prudence and benevolence. he wanted to get the economy in the country working as much as possible for as many people as possible, and he was trying to use reason to achieve that. he was concerned not to do things that would be counterproductive and what achieve the best effects for most people. he was a mensch. withi had lunch one day anna schwartz and michael bordeaux. what was so great about her work and professor feldstein is there was no nostalgia. they did look at history, but marty feldstein was immediate into the future in every conversation. gideon: he used his knowledge of history and theory to inform his response to the current

problems. that kind of broadly educated, intellectualeral who was understanding the full economy and the full effects of things, that is why he was the giant he was. tom: we have lost pete peterson too early. now we have a debt moved out. these fiscal hawks, deficit giants, will they see the deficit come in? michael: it looks pretty bleak. fiscal conservatism looks dead and buried so both parties have the view that you spend and do not have to pay for it. what marty represented in terms of fiscal rectitude unfortunately seems to have escaped us. maybe it will return at some point because we will be forced to deal with it, that here we heredeficits rising -- but

we are, deficits rising in full employment. -- and for employment. francine: thank you both, michael darda and gideon rose. on radio, david harrod . he has a couple of holdings on european banks. tom and jon will quiz him about that at 8:00 a.m. in new york. we are keeping a close eye on what is happening in hong kong, protesters walking some of the key roads. we heard from the chief of police of hong kong who said protesters have been throwing bricks and projectiles at police. we will have plenty more on the anger surrounding this extradition bill. this is bloomberg. ♪

♪ allow aament will not no deal exit from the e.u., and our experience to date suggests it may not be that easy to agree a deal in parliament. boris and any other candidate is perfectly entitled to say they need to test this for themselves, that i can advise them that e.u. is not likely to be prepared to reopen the withdrawal agreement we have negotiated with them. part of ourat was conversation with the u.k. chancellor of the exchequer, philip hammond. this is just a couple of minutes before boris johnson officially launched his campaign.

a couple of leaders are now in westminster, boris johnson asking what people want. he promises he will leave the u.k. on october 31. just before i talked to the chancellor, he was in negotiation with the e.u. and said it is almost impossible for boris johnson to become the next prime minister. even with a new prime minister, nothing changes. the arithmetic and parliament has not changed and the chancellor is telling me if they go back to the e.u. to try to renegotiate, it will be a firm no from the e.u.. his boris johnson beginning campaign with nine others to be prime minister of the united kingdom. single best chart, gideon rose and michael darda with us. before we get to the single best chart of the dollar and its explanation, we need to look at

the news flow. i would not say news flow, but on the internet there is speculation of you and a list of people to replace kevin hassett. have you been contacted by anyone at the white house? >> know, and i do not expect to be. -- no, and i do not expect to be. i have zero interest. i think it is a joke. .om: we have to bring it up it was not a joke yesterday. michael: i think that role is typically filled by someone with an academic background. i am a market economist and strategist and that is not my role. tom: david malpass at the world bank does not agree. the dollar trade-weighted, the president tweeting out on tourism in europe and took it out to an overvalued dollar.

the blue line is the dollar average, the redline is the regression. fed ends upthe doing a surprise rate cut in june, which is not priced in, the dollar will probably fall. if the fed does a series of rate cuts, the dollar may move lower. in terms of overvalued, undervalued, you cannot say we want much faster growth, much lower interest rates, and much lower dollar and we enjoy really low inflation. you cannot have all those things. is the dollar overvalued? it comes down to where do you think policy is headed in terms of the federal reserve. i think they will be easing and i would advocate moving sooner rather than later, sooner and more forcefully rather than more belatedly and more tepidly. it probably means they will have

to do less in a cumulative fashion and it will be more effective. francine: talk to me about what the president said. he basically said the devalued euro puts the u.s. -- and he may have a point. we have the metrics. that is according to our latest think but overall, do you the trump administration will go after europe, go after germany with extra tariffs? not,el: i certainly hope but considering what we have seen with china and mexico, we cannot rule that out. in terms of what the motivation is, if you read the twitter feed which is probably what we should do rather than listen to surrogates, there is a theyercantilist feel that recover jobs back to the u.s..

i would not rule it out. tom: i love the david ricardo essay this month. that is where i wanted to go. what is the level of mercantilism we are doing now, and what is the damage to the global economy and volume of goods traded? gideon: our turn towards protectionism is helping unravel the system we created to get everybody to move away from protectionism and now we are joining them. the bigger picture is essentially for foreign a half decades after world war ii, the united states organized a western alliance and ran what they called the free world. it has been two or three decades running the world by itself seems to have gotten tired of that, and has walked away from the broader project of global management of security or the national economy, and is playing

the game for itself. that is fine for us in the short term. we are big and rich and can bully people. our prosperity and long-term health rests on a broader framework of growth in the world and a teamwork where we are competing with the world but in a framework we are all benefiting from. we are seeing the end of that period of postwar long jevity. longevity.g -- we are going into a new era. the walled order that has lasted the last few decades -- world order that has lasted the last few decades is transitioning into something else and we don't know what that is. francine: is the u.s. as rich and strong as you say, or should we ask ourselves if it is having an impact on investment and

having a lot of flaws? ,ideon: we are big and strong which is why you can do something like forced concessions in the short-term. in relative terms, we are large and powerful and it does not do americans good to talk poor because other countries are trying to eat our lunch when we are the stronger power trying to get more. we need to harmonize the longer-term interest with other players in the system so that everyone moves along together. tom: gideon rose and michael darda with us, thrilled they could join us on international nations and the linkage into the market. in the 7:00 a.m. our, wilbur r, wilbur ross as we

drive forward on china-u.s. trade. the protests in the recent minutes, a journalist and arch democratic supporter in hong kong has said she would like talks with the executive of hong kong, carrie lam, "as soon as possible." these are live images of hong kong into their early summer evening. worldwide, this is bloomberg. ♪

♪ tom: the hong kong of protest into the early evening, we have had waves of protest and a relative peace, and now with these live images, the discussion among the tired police force and tired protesters. some of the media involved in documenting this moment for hong kong and china as well. jodi schneider and our team in hong kong question what will be going on. we just heard from one of the democratic leaders who wants

talks with the executive leader of hong kong. we will stay abreast of this through bloomberg "surveillance" and all of our platforms. gideon rose, we now begin a two-hour conversation compressed into five minutes. you have the honor of having andrew nathan on china. he goes back to what we all witnessed last week, the remembrance of tiananmen 30 years ago. has anything changed from tiananmen square now -- to now? buton: a lot has changed, the basic fact remains the same, as andy points out, looking back at the tiananmen square , what the30 years ago chinese leadership concluded from the protests around tiananmen is the party was

always going to be under siege, that it was necessary to be unified in party leadership to survive, and politics trumped economics because the regime power was more important than medium short-term growth. they represented the ram position of the need of the party and the chinese state for stability, first and foremost. you have seen that for the last several decades. they want as much growth as possible, but the state and party remain in charge. francine: how what the authorities in beijing in china be interpreted the images through the livestream? gideon: they would be seeing this as yet more protests, yet more evidence of the downside of letting things get too democratic and letting popular protests get out of hand.

there are a lot of protests in china. we do not see a lot of them. there are lots of them that are suppressed. this is business as usual but it happens to me that happens to be -- happens to be airing of their laundry in public. essayareed dzhokhar areas essay on a ula pole -- unipolar world, how will that play into the future? gideon: president trump once a unipolar world in which the unity pole, the dominant player plays only for itself. that is what produces balance. the entire history of the world, when one power gets too strong and other powers use that power selfishly, and balance against it. the united states was able to

break that pattern after world war ii because it started playing the game as a team leader. what he wants is inconsistent over the long-term. tom: as we see these images from hong kong, a linkage of china and russia. how do you play that linkage? gideon: i am more worried about the long-term challenge from china than russia. china has a much greater long-term potential. the real answer is not so much china centric as getting the , and strengthening with regard to china. the best policy the united states can adopt is get its own house in order. tom: gideon rose, thank you so much. what happened to the american century?

just have up the marginal beverage of your choice to get a print subscription, adult font size as well. these are extraordinary images into a evening and hong kong, different kind of protest. jodi schneider making it clear this is truly different of the tensions in hong kong. francine: we have been following it really closely since yesterday. we look at pictures and see some of the smoke. police also using rubber bullets as the protesters vow no retreat. plenty more throughout the day. ♪

♪ kong takes to the streets.

thousands of protesters shut legislationy over to x right -- to extradite to mainland china. inflation gives the pboc some cover. food prices spike in china, giving the central bank more room to ease policy and navigate the trade war. we will speak with u.s. commerce secretary wilbur ross. elon musk delivers a show stopper performance at tesla's annual general meeting, where he says the company could see record deliveries this quarter, and that there's nothing wrong with demand. david: welcome to "bloomberg wednesday,n this june 12. we have all been concerned this morning watching that video out of hong kong. there have been riots in the streets as they try to shut down low distillation -- shut down that legislation for extradition. alix: